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Heavy Gunfire Near Tripoli Airport; Mass Exodus From Tripoli; Saif Gadhafi Not in Rebel Custody; Dispute Over Lockerbie Bomber; Gadhafi Compound Under Attack; A 5.3 Earthquake Shakes Colorado; Transit Protests in San Francisco; Florida Prepares for Hurricane Irene; Hurricane Irene Gains Strength

Aired August 23, 2011 - 09:59   ET

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

KYRA PHILLIPS, CNN ANCHOR: All right. We are still following all the developments out of Libya right now. Still cannot confirm whether Moammar Gadhafi is hunkered down on his -- in his compound in Tripoli, but we are still watching the smoke rise in the air, also getting reports of gunfire and fierce fighting there at the gates of his compound.

Also our Arwa Damon calling into us now, she is there just outside the airport where she says she is witnessing fighting as well. She came in that part of the area with the rebels. What can you tell us, Arwa?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT (on the phone): Hi Kyra, I don't know if you can hear me above the sound of the outgoing gunfire. Rebel fighters here are most certainly using everything at their disposal to drive back Gadhafi's forces that are trying to launch a two-pronged attack onto this airport complex.

Rebel forces have managed to capture it around mid-day yesterday. Since then they have been saying that Gadhafi forces have been trying to win it back. They say that among their main concerns is that the incoming artillery shells, the gunfire could hit one of the planes here potential causing a massive explosion or even more damage to the airport.

Now, they have managed to secure the western areas outside of this airport complex. This is all coming in from the east and also coming in from the south as well. As the rebel forces were combing this airport -- and we're on the tarmac right now -- they said that they found a number of locations, these massive containers that Gadhafi forces had buried underground. They managed to obtain a fair amount of artillery weaponry from those stockpiles that they found. And now they say that Gadhafi forces are trying to recapture this strategic location.

This airport is critical. It is right on a main highway, that leads straight up to Gadhafi's Bab al-Azizia (ph) complex. Rebel fighters here have been trying to push up -- push towards that complex, but encountering heavy resistance along the way -- Kyra.

PHILLIPS: Arwa, you're -- you were mentioning the stockpile of weapons there in that area. We've been getting various reports of the type of weapons that the rebels have come upon. Do you have any idea of what is being stored there? Is there fear of the hands that these weapons could get into and where that might take the fighting?

DAMON: They have covered everything from bullets to rocket- propelled grenades. You hear artillery rounds to various types of weaponry.

They also -- quite a few missiles that have been buried underground. That outgoing fire that you hear, those are the anti- aircraft machine guns that they have mounted on the back of their trucks. And they have been fire them relentlessly in the direction that they believe that the Gadhafi forces are trying to launch this assault.

Now the weapons that they say they uncovered, some of them they are using right now, others they say, they put into storage for use in the future. When they took over this compound, they managed to capture 40 vehicles that Gadhafi forces had left behind.

In fact, if you walk various parts of the airport complex, the tarmac, you see a number of tents where Gadhafi forces had to evacuate incredibly quickly. But this most certainly has been a battle that has been going on pretty much ever since the rebels captured this location, but most certainly intensifying in the last hour.

PHILLIPS: Arwa, can you kind of describe where you are and how you are protecting yourself? It's calmed down a little bit there, but at one point I could barely hear you. It sounds like you are up close to this battle.

DAMON: Well, we are at close, but we're taking cover. We're a safe distance away. We're right on the tarmac. There are a number of airports. Firing is happening right now from one of the runways into what looks like a wooded area to the east of the airport.

It's pretty -- it sounds quite intense, but we also must note that a lot of this is outgoing fire. This is the rebels literally unleashing everything they have around them, and what they believe is Gadhafi forces advance.

Because they are, they say, incredibly worried that should any of the incoming artillery rounds hit one of these airplanes, it could cause a devastating explosion. They're also trying to preserve locations like the airport, as much as they possibly can.

Because they say they realize these are locations they're going to need in the future when they say eventually the Gadhafi regime does fall and they're trying to put their country back together again.

PHILLIPS: All right, Arwa, of course, I would like to keep you with us. We want to welcome our international viewers now. We are simulcasting. You are listening to Arwa Damon just outside the airport there.

You can hear the gun fighting that - the gun fights that are taking place. She actually came in to that specific area with the rebels.

Arwa, you were mentioning the runways. Did you get a good visual to see the status of in aircraft there at the airport? There were reports that there were airplanes on standby running hot, waiting to take Gadhafi out of there.

Other reports were saying that's ridiculous, all those aircraft have been destroyed, have you been able to get a sense of what the truth is?

DAMON: Well, this airport most certainly looks like it's not been functional for quite some time. In fact, the rebels say it's not been used ever since the no-fly zone was put into place. There are a number of different airlines whose planes have been grounded here as well as some military aircraft, a part of this international airport.

The rebel forces are telling us was in fact used as a military base. So it really no surprise that Gadhafi's forces wanted to defend it not just because of its strategic location right on the main highway that will lead to -

The military location for them, and the -- really if there's any intensifying. Rebel forces are shooting mostly using machine guns that they have stationed on the top of their various trucks. They're also moving out with some -- right now.

PHILLIPS: All right. I want to apologize. That's our Arwa Damon. She's actually calling in from a satellite phone. As you could hear, we just lost her signal, but we'll try to get back in touch with her. Our Arwa Damon there just outside the Tripoli airport where she moved into that area with the rebels.

You can hear the gunfight that is taking place right now. She hunkered down. She tells us in a safe area, but is able to give us a bird's-eye view of what's happening there near the airport.

Meanwhile, our Sara Sidner also has made her way into Tripoli. Are we connected with Sara? OK, Sara, I don't know if you were able to hear Arwa and what she was telling us from the airport there where the gun --- it was calm about 45 minutes ago, then you heard the fighting that has broken out. What's your sense of the rebel activity there where you are?

SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT: Well, what my sense is that more and more people are coming out of the city. I have to tell you. This is one of the things that we've been reporting and that we've been seeing is that there just isn't anywhere that's actually safe.

I know the rebels are saying that there's a certain amount of the city under their control, but like you just said one moment things are very calm and suddenly things go completely out of control. You find yourselves caught in a firefight.

You're driving down these streets. You don't know who's coming from which side. You don't know how many forces are out there, who's behind the next building. It is a very intense situation not only for the residents of course for the rebels and for those that are fighting for Gadhafi.

But for the orders, the correspondents, the crews, the photographers, the teams that go in, we just don't have a real grip on which street is controlled by whom. So a very intense situation here, and we're all feeling, to be perfectly honest a little unsettled, because we're not quite sure what's coming from where. We're trying to keep our awareness very, very sharp in this tense situation, Kyra.

PHILLIPS: Sara, are you at a checkpoint? I'm noticing cars, trunks getting checked. Are these people behind you that are leaving?

SIDNER: Yes.

PHILLIPS: All being checked and who is actually looking through the cars?

SIDNER: OK, so the checkpoints have changed pretty dramatically since the first couple days when we came into Tripoli. At this checkpoint, for example, you'll see car loads and bus loads full of people. The rebels before were kind of waving people through if you throw up the victory sign.

Now that's changed. They are opening up these vehicles. They're looking in trunks. They are searching if they need to through people's stuff in the back to see what's inside, who's inside, if there are any weapons inside.

The only people they are flagging through are people who are clearly rebels that are throwing up the victory sign. We want to make this clear. One of the reasons why this is happening, why the checks are getting more and more severe is because the rebels have gotten word that Gadhafi forces are now posing as rebels.

So they could have a situation where let's say they come driving up, they're sitting in the car smiling, and then they're fired upon. They're afraid of that, so they're checking everything they can.

PHILLIPS: All right, our Sara Sidner there live in Tripoli with us. Sara, stay connected to us, please. You can see it now in full live pictures. That is smoke that is billowing above Moammar Gadhafi's compound.

We still cannot tell you if indeed he's hunkered down there in the compound or not. There are reports that he is. Other reports that he has fled to his hometown.

Our Fred Pleitgen is up for us as well. He's joining us out of Benghazi where he actually had a chance to meet with rebel leaders.

Fred, when you talked with them, what did they tell you directly about Moammar Gadhafi's son, Saif? We were reporting yesterday he had been captured by the rebels.

Then the next thing you saw overnight, he was walking freely by the Rixos Hotel saying that he had duped the rebels, and that indeed his father is still in charge.

Fred, are you able to hear me?

FREDERICK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Yes.

PHILLIPS: Fred, it's Kyra, are we connected? Fred, it's Kyra, can you hear me? Can you acknowledge that you hear me? It's Kyra. OK.

We're going to still try to connect with Fred there in Benghazi. Sara Sidner, are you still with me there at the checkpoints in Tripoli?

SIDNER: I am. Yes, I am, Kyra, I can hear you loud and clear.

PHILLIPS: All right. So Sara, what is your -- we were reporting this exodus --

SIDNER: I'll give you a quick update.

PHILLIPS: OK.

SIDNER: The exodus is more and more and more. I mean, we did not see this yesterday. Residents stayed in their homes. They would scream and yell at the rebels going down, cheering them on. Now we are seeing a major -- hold on a second. Hold on a second.

PHILLIPS: We can still hear you, Sara.

SIDNER: OK, you can still hear me. Whoever is speaking in my ear, can you please stop speaking because I need to be able to listen to Kyra. Look, what we're hearing from the National Transitional Council is they're saying the rebels have taking control of 80 percent of the city.

If that is the case, we are wondering why there are so many people leaving the city, and their faces are very tense. They look afraid. They don't want to speak to us on camera. They want to get out of the city.

We have to wonder exactly what's going on. It's very difficult for us to get into the city. A lot of us are trying to get into the city center. People had been turned around. Residents saying they were trying to go back to their homes and they weren't able to get there.

So there's a lot of tenseness in the residents that wasn't actually there yesterday. Things definitely changing rapidly here. The National Transitional Council is telling us that they have put in office in a secret place near Tripoli. So they are in the outskirts of Tripoli.

They have set up a small office according to our rebel sources. So the political wing, the people saying they are sort of the political wing of this rebel force is in and around the city of Tripoli, and that's an interesting development that's gone on in the last couple hours, Kyra.

PHILLIPS: All right, Sara Sidner, I know you are in a very tense situation there, and we appreciate you rolling with us. Thank you so much. Our Sara Sidner there live in Tripoli.

We'll continue to talk with Sara. You know, the imminent collapse of the Gadhafi regime has revived the dispute over the Lockerbie bomber. You know, politicians both in the U.S. and Britain are still demanding that Libya's new rulers try to extradite Megrahi.

The Libyan was convicted. You may remember of mastermining the bombing of Pan Am Flight 103 over Lockerbie, Scotland in 1988. Two hundred and seventy people were killed. He was released from a British prison in 2009 on so-called compassionate grounds.

Then he returned to Libya as a hero. You did remember that, Zain Verjee, that welcome that he got on the runway. It was appalling to those who lost loved ones in that bombing.

Now several U.S. senators are demanding he be sent to the U.S. for trial, but here's the question those demands have been going on ever since his release. Now you have Libya in turmoil.

Do we even know where he is? If he is still there? We saw him at a rally a couple weeks ago, a pro-Gadhafi rally, probably more than a month ago. What's your take on all of this?

ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: Well, it's difficult in this situation of total turmoil and chaos in Tripoli to establish exactly where Megrahi is. What's been happening over the past couple of years, he was released in 2009 on compassionate grounds because he had prostate cancer and it was believed that he really wouldn't have that long to live anyway.

What they've been doing is, every couple weeks, they call him by phone or video link, establish some kind of communication with him, but because of the situation right now that's going down in Tripoli, it's unclear exactly where he is.

A statement from officials was released to CNN where they say with the recent events in Tripoli, we want to contact him a little earlier than normal to make sure the lines of communication are open as usual. He was in prison in Scotland in about eight years, he was sentenced to 27 years.

But it caused a massive furor among families of victims of Lockerbie, as well as officials in the U.S. and U.K. really angry, because the allegations weigh made at the time that a deal what made with Libya, and Megrahi was released as a part of that deal.

The British government has denied that was the case, but this is something that's suddenly appeared front and center, where is Al Megrahi? It's difficult to get in touch with him given the situation to see how he's suddenly going to be extradited and sent to trial, especially as right now there's no authority in the country.

PHILLIPS: All right. Zain Verjee reporting to us out of London, Zain, thanks.

The other story that we're following here is Hurricane Irene. It's churning right now through the Atlantic, and it's gaining a lot of strength. Meteorologist Jacqui Jeras is going to have the latest on the storm's path right after the break. Stay with us.

(COMMERCIAL BREAK)

PHILLIPS: All right, well things are escalating in Libya and here's what we can tell you at this point. We don't have a live picture out of Tripoli right now. Is that correct?

Let me try to bring you up to date if you're just tuning in. This is what we know. So far no sign of Moammar Gadhafi and whether he's even in his compound in Tripoli. Rebels are continuing to attack the compound from the ground.

Also we're getting reports that NATO jets are attacking from the air, low-level flying there. There's also more fierce fighting near the hotel where our Matthew Chance is and other journalists where they are headquartered.

That we are getting reports of the clashes near Tripoli's airport that's where our Arwa Damon is, and now according to our Sara Sidner, we are seeing this mass exodus from the city. She's actually at a checkpoint there in downtown.

Now opposition leaders say that they don't know what really happened with Saif Gadhafi either. Yesterday, they say that they captured him the son of Moammar Gadhafi, and then today the Libyan leader said that he is walking free, that he duped the rebels, that his father is still in charge.

So we're trying to wade through, obviously as Professor Abubaker Saad says propaganda of war. He's joining us once again. We talked to him last hour. Professor Saad he's at the West Connecticut State University. He used to be a direct aide to Moammar Gadhafi.

Professor, as you are watching all of this unfold, what is your take with regard to Moammar Gadhafi. When we last talked, you said there's no way that he's hunkered down that compound. More than likely he's in his hometown taking refuse there or being protected by a tribe in another part of the country.

Yet we've got our reporter believing or a number of them saying, no, he is there. He is probably hunkered down in a bunker somewhere there in the compound. You used to be his aide. You know that compound, is that possible that he could be hiding out somewhere there?

ABUBAKER SAAD, FORMER GADHAFI AIDE (via telephone): Well, the compound I know way back in the '70s is definitely different than the compound now. But I know one of the two old buildings there that were built on top of bunkers.

One of those bunkers is actually four stories deep. So I don't know whether he's still in there or not. That's the thing because this compound has been bombarded for months by NATO and earlier on the U.S. when they started the whole bombardment back in March.

They actually used anti-bunker bombs, which basically, I mean Gadhafi he was a military man, you know? You have to remember that he is a military man. He knows they have weapons that ould penetrate those bunkers, that's why I'm dismissing the idea that he's in there because he knew that.

Everybody knows that. That there is a new technology that actually penetrate -- bombs with technology that penetrates bunkers so that's why, you know, I'm really hesitant to accept the idea he's still there.

PHILLIPS: Final question, Professor, before we let you go, you know, are you surprised that we have not heard from him this morning, and is that any -- does that give you any case of whether he is alive, not alive, in Tripoli, outside of Tripoli?

SAAD: Well, the fact that you didn't hear from him, he actually did not appear in public for months now, you know, for more than two to three months. All of his communication was through telephone calls to his television. All of them were audio messages.

That tells you that he didn't want anyone to know where he is the. The quality of the audio messages has begun to deteriorate in the past couple of weeks, and that's an indication that he is speaking from a distance. That's why I am not really convinced that he is in the compound right now.

PHILLIPS: Professor Abubaker Saad, former interpreter and also aide to Moammar Gadhafi, now a professor at West Connecticut State University. Professor, thanks so much for staying with us through this coverage.

The other story that we are following is Hurricane Irene still churning through the Atlantic, gaining strength and our meteorologist Jacqui Jeras will bring us the latest on the storm's path right after the break. Stay with us.

(COMMERCIAL BREAK)

PHILLIPS: And the stories that are making news cross country now. An earthquake shaking things up in Southern Colorado. The 5.3 magnitude quake hit overnight. There are reports of rock slides and damage to buildings there, but no word of any injuries.

There are new protests in San Francisco. The Bay area's rapid transit system otherwise known as BART last night, well, police closed and reopened train stations there to keep demonstrators from getting out of hand. At least three people were arrested. You may remember those protesters had been upset with the recent shootings that involved transit police officers.

In Florida, some folks getting prepared in case of Hurricane Irene. Generators, gas cans, flashlights flying off the shelves now and people are also stocking up on food. So Jacqui Jeras, should they be doing that still?

JACQUI JERAS, AMS METEOROLOGIST: Absolutely. Well, you always need to be prepared. I used to have all that stuff ready to do no matter what during hurricane season. But yes, folks in the Carolinas in particular need to be ready for this.

But other people need to be concerned, too. We've been seeing some changes in those computer models. They've been continuing to trend off to the east. So we might have some changes coming up yet with that forecast track.

So let's tell you what we know right now on Hurricane Irene. It's a Category 2 storm, maximum winds 100 miles per hour. The center of that storm is right up here to the north of the Dominican Republic, moving toward the Turks and Caicos and heading towards the Bahamas.

Now the center is pulling further north. That means it will start to intensify a little more as it starts to interact a bit less with Haiti and the Dominican Republic. A lot of mountains in this area and you can see the south side of the storm is starting to get beat up a bit.

So now as it pulls away from that, we'll start to watch this thing intensify a little bit. Now let's watch the official forecast track. This is what the International Hurricane Center is expecting to be moving through the Turks and Caicos, through the Bahamas, through the day tomorrow into your Thursday, and intensifying, becoming a major hurricane.

Now South Florida and Eastern Florida needs have a heads-up and pay attention because you guys might get brushed by this thing just a little bit. You see that turn to the north, the big bull's-eye here towards the Carolinas, but notice the Delmarva is in the cone as well.

Now let's show you the computer models that I was talking about. This is the latest run and that big thick white line that you see there, that's the official forecast track there from the National Hurricane Center.

But take notice, look at all the models, which are way out here now. So they all have been trending east, nothing brings it into Florida anymore and only one stray model brings it into parts of Georgia as well as the south Carolinas.

So we might have a change in the track. That will happen before the end of this hour, Kyra. So any big changes, of course, we'll let you know right away.

PHILLIPS: All right, Jacqui, thanks. Jon Huntsman tells Piers Morgan he would be open to being Michele Bachmann's VP is she wins the nomination. So is he losing confidence in his campaign or gaining confidence in hers? The political buzz is next.

(COMMERCIAL BREAK)

PHILLIPS: All right, we're checking top stories for you right now. Forecasters say that Hurricane Irene could become a Category 3 storm later today. Irene could impact the southeastern coast over the weekend, but it's too early to say how much.

Police in Pakistan say they have arrested three suspects in the kidnapping of an American, Warren Weinstein. The development expert has not been seen since he was taken from his home in LaHore 10 days ago.

And there's fierce fighting between Libyan rebels and loyalists in Moammar Gadhafi's compound in Tripoli right now. Gadhafi's whereabouts, still unknown.

All right. It's time for our "Political Buzz," your rapid-fire look at the hottest political topics of the day. Three questions, 30 seconds on the clock. And playing today, CNN political analyst Roland Martin. Political columnist John Avlon. And CNN contributor Will Cain.

Oh, yes, they're all smiling right now. This is going to be good, I can tell. First question, guys: this week's battle in Libya, the first big chance for the GOP presidential hopefuls to show their foreign policy savvy, to say what they would do.

OK. Why haven't we heard from them? Roland?

ROLAND MARTIN, CNN POLITICAL ANALYST: Hmm, wimps! Because they are stuck between a rock and a hard place. They know the actions the president took was the right action, but then you have the folks on the right who say, like Senator John McCain, he should have done something sooner. But then remember you also had the House Republicans who also wanted to pass a resolution saying you should not be taking any action in Libya, and so they don't want to say anything.

That's called weakness. You want to be president? Say something. They are simply wimps.

PHILLIPS: Will?

WILL CAIN, CNN CONTRIBUTOR: Boy, Roland, you will die on your own words with that. You mean these Republican candidates haven't said what the goal is in Libya? They haven't said how long we'll stay? They haven't said how we'll get out and under what conditions?

MARTIN: They have said nothing, Will.

CAIN: Which would make them very similar to the president of the United States of America.

MARTIN: They have said nothing.

CAIN: Isn't that interesting? I say the one thing they have said, though, is they said they wouldn't go into Libya in the first place. And that's not just backwards-looking. That informs how they would make decisions about Syria, the Congo, and every place in the world that's under these same, similar situations.

PHILLIPS: John?

JOHN AVLON, CNN CONTRIBUTOR: All right. I think the reality is there's a lot of confusion inside the GOP when it comes to foreign policy right now. You've got everything from neo-isolationists to neo-cons. And there are a lot of folks who simply approach politics with a partisan lens, one who reflexively opposes anything that President Obama does, whether it turns out well or not.

So I think there's a fundamental confusion here, and the president does deserve some credit for committing us to this multilateral strategy that it appears has borne success. A lot of challenges ahead, but I think it's time to rally around our efforts, military efforts and the people in Libya.

PHILLIPS: All right, guys. Recently a jihadist Web side posted violent threats to comedian David Letterman. So, what did Letterman do? Of course he joked about it. Take a listen.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": Tonight, you people are more to me honestly more than an audience tonight.

UNIDENTIFIED MALE: Really? More than an audience.

(LAUGHTER AND APPLAUSE)

LETTERMAN: You're more like a human shield.

(LAUGHTER)

(END VIDEO CLIP)

PHILLIPS: Will, did you laugh?

CAIN: Did I laugh?

PHILLIPS: Yes, as he smiles and laughs.

CAIN: Yes, I think it's great. You notice what this does, Kyra? This says, we win. Terrorists do things to adjust the way Americans live or to adjust how any people live. And you know how we've adjusted? We've taking your core concepts such as Fatwah and jihad and made jokes out of them. We win.

PHILLIPS: Roland?

MARTIN: OK, first of all, David letterman is a comedian, so obviously he is going joke about it. I would say that if this was someone who wasn't a comedian, the reaction would be different. But there's no doubt that David Letterman is going to make a joke out of it, so of course it's funny. They keep trying to threaten him, he'll just keep making more jokes.

PHILLIPS: John?

AVLON: Look, I do think there's always a danger that we return to the summer of the shark, where we underestimate the serious threats out there. But the reality is this was not a credible plot. This was an online statement. David Letterman did exactly the right thing, which is to mock those folks who try to intimate date through fear.

That's a good response for a free society. So, rock on, Dave. One for Letterman, one less for the Fatwa folks.

PHILLIPS: All right, your "Buzzer Beater." Twenty seconds each on this one, guys. Our Piers Morgan asked Jon Huntsman about the idea of joining a Bachmann ticket.

(BEGIN VIDEO CLIP)

JON HUNTSMAN, REPUBLICAN PRESIDENTIAL CANDIDATE: If you love this country, you serve her. And you know, if you're in a position to better the country, to bring whatever background you have to bear, whatever experiences to use in fine-tuning our future, I'll be the first person to sign up, absolutely.

MORGAN: See, that's an unusual admission I would say. I think it's to your credit that you've done it, but it will get headlines, you know? And people will pick up on that and say, "Jon Huntsman says yes, I would happily serve under Michele Bachmann."

(END VIDEO CLIP)

PHILLIPS: Well, Huntsman says that he'd be Bachmann's V.P. So, what do you think, guys? Is he losing confidence in his campaign's chances or is he gaining confidence in hers? Roland.

MARTIN: First of all, he's had more people leave his campaign. Everybody has lost confidence in his campaign.

Look, if you're running for president, you never entertain any conversation as it relates to trying to be somebody else's VP. You simply say, I'm running for president. I get the -- first of all, one reason he answered that way, because as a Republican, he served as ambassador to China under President Obama. But again you say, no, I'm running for president.

(BUZZER SOUNDS)

MARTIN: She can serve with me.

PHILLIPS: Will?

CAIN: I don't think I heard the same thing. I don't think I heard him say he will be a vice president candidate or he would accept the vice presidential candidacy under Bachmann. I think he was being very magnanimous in saying he would serve the country under very many situations if that was actually presented to him. If she were the nominee, I would be really curious.

But I don't think Huntsman is insecure in his bid. I think he thinks he can win this.

(BUZZER SOUNDS)

CAIN: One more thing. Pierce, it's Michele, not me-shell.

(LAUGHTER)

MARTIN: He's from England, Will!

PHILLIPS: Come on, he's got a very sophisticated speech. Go ahead, Jon

AVLON: All right - yes, exactly. Listen, he was not making either of those points. And the problem with this whole spin is it's exactly what puts politicians on the defense. He was talking about service, and I think he deserves a lot of credit for trying to throw the shackles off, talk about this common-sense conversation he wants to have and stop the B.S. He was talking about service, not strengthening Michele Bachmann or trying to be Bachmann's VP. We need more folks who are more willing to take that risk of telling the truth.

(BUZZER SOUNDS)

PHILLIPS: Gentleman. Oh, boy. Roland always has to be such a smart-aleck over there --

MARTIN: What? No. I love Will's cute plaid shirt. That's very GQ-ish, Will.

(LAUGHTER)

CAIN: Thank you, Roland. Thank you.

PHILLIPS: I'll let you have a lovefest together now about each other.

AVLON: No ascot, Roland!

PHILLIPS: We're moving on. That's right, he is missing the fancy set-up there.

All right, Dominique Strauss-Kahn could soon be a free man. A judge is expected to dismiss all sexual assault charges against the former head of the IMF. We'll have a live report.

(COMMERCIAL BREAK)

PHILLIPS: Our live picture back up there out of Tripoli. The smoke you're seeing there is coming from Moammar Gadhafi's compound. You can actually hear the gunfire as well. And this is what we can tell you - and not tell you, actually.

We can't confirm if Moammar Gadhafi is indeed holed up on his compound, but we can tell you that NATO has been doing some low-level flying above the compound there. We can tell you that rebels are on the ground, engaged in fierce fighting. Rebels are claiming that they have actually breached the gates of that compound, but we cannot confirm that. We're just getting words from the rebels that are telling us that at this point.

But it is clear that the U.S., NATO, they are eager for an official overthrow of Moammar Gadhafi. They are eager to get him face-to-face, dead or alive. At the same time, they are also very concerned about the transition and in particular, all the weapons that Gadhafi, a former military man, has hidden in various places throughout Libya. And of course there on his compound. In particular, the tons of mustard gas that we have been talking about, stockpiled among other weapons.

Major General James "Spider" Marks joining us now. He's the former commander of the U.S. Army intelligence center. And Spider, we are going to go a different way with our conversation. I still want to touch on the weapons. But as you are watching these live pictures, the smoke in the air there, that you can hear the gunfire. What's your take with regard to what Gadhafi could have there on the compound if indeed he's there or not? What do you know as a former intel guy with regard to what could be there on the compound?

MAJ. GEN. JAMES "SPIDER" MARKS, FORMER COMMANDER, U.S. ARMY INTELLIGENCE CENTER: Well, Kyra, having seen this in several different places around the world, number one, we don't know where Gadhafi is. That's the key question.

Let's assume for a second he's in his compound. And if he is, he will be extremely well protected. He'll have his fierce loyalists with him. And it goes well beyond small arms. I would think they would have some critical capabilities, and they'll protect them until the very, very end. I don't think he's going to try to kill himself. I don't know that that's in his DNA.

But clearly this will be a very, very tough fight. I think what we're seeing on the streets in Tripoli is clearly the unknown, a lot of chaos. What you don't have with the rebels is a command-and- control system that allows great young fighters in the streets to report up. Do what they have to do and then report up to the higher headquarters to kind of give them a sense of the next step.

Because what you want to have, these series of engagements have to be tied together. So, the question I have is, in Tripoli, with the rebel forces, who is at that operational level, that senior tactical level that's tying these different engagements together. I'm certain there isn't real clear reporting that's coming up that gives us on the outside a sense of what's going on.

PHILLIPS: All right. If you were the intel guy in the middle of this conflict and you were advising NATO forces, what will you tell them with regard to tracking and securing the stockpiles of weapons that are known to be there in Libya? What would be your biggest concern right now?

MARKS: Kyra, that's a great question. The higher headquarters, the responsibility of higher headquarters is to take care of the next task. The task that's ongoing right now has kind of got its own momentum and it's happening.

It is the security of the weapons of mass destruction, and it's those weapons systems that Gadhafi is not using right now, obviously. Those need to be sequestered away.

So, the higher headquarters needs to be looking over the horizon for that next task. And that is, where does she secure his weapons of mass destruction, the mustard gas that we have talked about, all the tons of precursors for saran. Saran and nerve gas? Where is that stuff located? I would guaranteed you NATO has a good beat on it, the international community has a good beat on it, folks know where this is.

But what we don't know is, who is taking care - who's minding that right now? That's either being done by Gadhafi's forces, some international body that we don't know about, or the rebels. The fourth alternative needs to be what force will walk in there and say, OK. You boys haven't sorted this out yet, I'm here to make sure the next issue, WMD and these other weapons systems don't get out of control and into the wrong hands.

PHILLIPS: Look, if they're not secured, they could be sold --

MARKS: Absolutely. And Kyra - and I apologize. It gets very personal. We've been at war for 10 years. Our sons and our daughters are buddies. They're still in combat, despite what America may think. And this stuff shows up in Iraq or Afghanistan or elsewhere, some unknown where we're going to go eventually? Totally (INAUDIBLE).

PHILLIPS: "Spider" Marks, thanks for weighing in.

MARKS: Thanks, Kyra.

PHILLIPS: You bet.

We'll continue to follow the breaking news out of Libya. Live pictures right now out of Tripoli. You can see the smoke there coming from Gadhafi's compound. You can also hear the gunfire, rebels reporting they are engaged right now in fierce fighting right there at the gates of the compound.

We're not going to take you to break. As you can imagine, we are getting a lot of information coming to us by the minute here from our reporters there on the ground. And we're now able to stay with this live picture that's coming out of Tripoli. It was calm for about -- or it was a lot more quiet, I should say, about 20 minutes ago. Now, as you listen to his live pictures, it sounds like the fighting once again is increasing.

Our Matthew Chance is actually not far from Moammar Gadhafi's compound here, where you're seeing the smoke rise. He's hunkered down at the Rixos Hotel, trying to give us reports every so often. He has to be careful with his communications due to the threat of possible snipers not far from where her is staying, but that kind of gives you an idea of how this is a fluid situation and how the fighting picks up at certain moments.

And right now, we can tell you rebels are saying they have breached the gates of Moammar Gadhafi's compound. That's where this smoke is coming from. Earlier, we reported NATO flights, jets doing some low-level flying over the compound there. NATO wouldn't confirm if indeed they had dropped any bombs, but we did - we were able to report the number of explosions were heard from the compound there.

We still have not been able to confirm if indeed Moammar Gadhafi is there holed up on his compound. We talked to one of his former aides that doesn't believe he is there. However, we've talked to other journalists who say that rebel forces are reporting that they do believe he is inside that compound.

So, we're going to continue to follow these live pictures and get in touch with our various reporters -- okay. We do have Fred Pleitgen with us, joining us out of Benghazi.

Fred, as we watch these live pictures, we listen to the fighting that continue to intensify there around Moammar Gadhafi's compound, you actually met with rebel leaders this morning. What are they telling you about the fighting here, and do they believe that he is hunkered down somewhere in there?

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: That's a very good question. It's also one of the questions, Kyra, that I put to one of the leaders of the National Transitional Council. And basically, he was telling me that he believes that Gadhafi is in fact still in Tripoli. Wouldn't tell me what kind of intelligence on the ground they had to support any of that, but their feeling is that Gadhafi is still in Tripoli.

Whether or not he is actually inside the Bab Azizia compound is something they say even they do not know at in the point in time. But some do believe he might in fact still be there. Because this is a very vast compound, one that is of course very large in size and the size that it covers. But it's also one where a lot of people believe there's a lot of layers underneath that compound, under the ground that you don't see. Several layers of possible bunkers and other sort of rooms that will be there in that underground area.

So there's certainly people in the Transitional National Council here in Benghazi who are at this point in time gearing up before possibly going to Tripoli if in fact Gadhafi is finally ousted and is brought away from power. And they say they believe he is inside that city, most probably inside that compound.

One of the things, though, Kyra, that we have to keep in mind is that Bab Azizia has been hit a number of times by NATO airstrikes during the past couple of months. I was of course, inside the Rixos Hotel, a couple of months ago. And Bab Azizia was just the target of air strikes all the time. So, it's very much unclear whether or not Gadhafi would have still felt safe being there in the first place.

But certainly you get the mood here in Benghazi, you talk to the Transitional National Council, the guys running the rebel operations, they say they believe he could very well be inside that compound at this point in time, Kyra.

PHILLIPS: Fred, stay with us. We're going to take a minute to listen, as we're getting live pictures out of Tripoli. You can hear more of the fighting that's taking place there, as rebels are reporting they have surrounded Gadhafi's compound. They do believe that he is holed up inside there. Conflicting reports about that, but we can tell you the fighting has increased. Rebels reporting that they have breached the gates.

Let's see if we can take a listen.

(LIVE VIDEO)

PHILLIPS: Live pics out of Tripoli, Libya, as the fighting intensifies around Moammar Gadhafi's compound. We are following this story for you and are talking to our reporters on the ground. Live pictures once again out of Tripoli.

Stay with us for continuing coverage. Quick break. We'll be right back.

(COMMERCIAL BREAK)

PHILLIPS: Live pictures once again out of Tripoli, Libya. We have been able to hold this live picture as the fighting intensifies around the compound. Still cannot confirm if indeed Moammar Gadhafi is holed up there on the compound. A lot of different information coming from various sources. We talked to a former aide of Gadhafi saying he doesn't believe that Gadhafi is still on that compound. There are journalists saying they're getting words - or word, rather, from the rebels that he is there.

But we are going to continue to follow that live picture once we get it up again. Do we want to head to business now?

OK. All right, let's go ahead and check in now while we're trying to reconnect there out of Tripoli, Libya.

Alison Kosik, you've been very patient, on standby there, watching the markets for us. Following all the developing news in the Middle East. And I guess still good news to report. I haven't had a chance to see the numbers, but compared to last week, we are in better shape, yes?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It's an improvement, yes, yes. The gains that we saw at the open, Kyra, have intensified. The Dow up now 125 points. This is despite the fact that we got a report showing that sales of newly built homes have dropped.

So, what Wall Street is thinking is kind of backwards. They think with each piece of bad economic data, it could give Fed chief Ben Bernanke more reason to step in and possibly help the economy and prop it up. He's giving a big anticipated speech on Friday. Wall Street is going to be watching it for any clues. Any announcement of any kind of stimulus that could come the economy's way.

Kyra?

PHILLIPS: Okay. Alison Kosik from the New York Stock Exchange, Alison, thanks.

More from the CNN NEWSROOM straight ahead.

(COMMERCIAL BREAK)

PHILLIPS: Stay with CNN throughout the day. We're going to continue to following what's happening out of Tripoli, Libya.

What you're looking at -- and we're trying to reconnect with our live signal, it's been very fluid this morning. This is actually tape of moments ago, the smoke coming from Moammar Gadhafi's compound.

Here's what we know so far. Fierce fighting outside that compound. Rebels are saying they have breached the gates. We still cannot confirm if Moammar Gadhafi is holed up on the compound there. NATO has been doing some low-level flying with their jets; there's been reports of explosions but NATO will not confirm if indeed they have bombed Moammar Gadhafi's compound.

We have Sara Sidner - now we've got our live pictures are back up. Thank you. And you can see still smoke coming from the compound there and the fighting increase.

Our Sara Sidner is in Tripoli, as well as Arwa Damon, they have been calling in when they can. Arwa Damon right near the airport where fighting continues. And then our Matthew Chance also hunkered down not far from the compound here. He's still at the Rixos Hotel, concerned about possible snipers that have been roaming in that are. So, we don't always have a chance to get him moment by moment.

Suzanne Malveuax is also following everything that's happening out of Libya. Suzanne, are you ready to take it over at the top of the hour?

SUZANNE MALVEAUX, CNN ANCHOR: All right, Kyra. Thank you very much.