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THE SITUATION ROOM

Libya Victims Return Home; Anti-U.S. Rage Across Middle East; Protests Rage in Egypt's Capital; Libya Victims' Bodies Return to U.S; Romney's Day Of Mixed Messages; Romney Losing Ground In Latest Polls; The "Arab Spring" Takes A Deadly Turn; Deal Close In Chicago Teachers' Strike; U.S. Stocks Build On Fed Rally; Apple Store Thief Returns To Scene; New York Bans Giant Sodas

Aired September 14, 2012 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now: a deadly day of anti-U.S. rage across the Muslim world. We're monitoring events that have U.S. security officials extremely concerned right now.

President Obama leads the mourners as the bodies of the U.S. ambassador and others killed in Libya return to the United States.

And Mitt Romney ramps up his criticism of the president again, as the latest polls show him falling behind in several crucial states.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

But we begin with these live pictures. Look at this. This is Tahrir Square in Cairo. These are live pictures coming in not far from the United States Embassy once again, the protests escalating even as we speak. Earlier in the day, it had been relatively, keyword, relatively quiet, but now seems to be escalating for some reason.

Our own Ben Wedeman is on the ground for us. We're going to be going to him shortly.

At the same time as these scenes are unfolding, there also have been frightening scenes of violence and hatred directed at the United States and others around the region. It's spreading. And U.S. officials are very worried. Sources tell me they're especially concerned about today's penetration of the United States Embassy in Tunisia and the reports that the American school in Tunis was actually burned.

Remember, the Arab spring began with such great hope in Tunisia. They're also deeply concerned because other Western nations have become targets as well. Today, mobs in Khartoum in the Sudan attacked the U.S., German and British embassies.

And as we see in these live pictures happening in Egypt, we see some running battles continuing now between demonstrators and police firing tear gas, even though Egypt's powerful Muslim Brotherhood actually called off nationwide protests.

Militants also breached an international peacekeeping base in Egypt's northern Sinai, burning trucks and a watchtower. Some 1,500 international peace-keepers have been there since 1981, including 700 U.S. troops. They are there right now. Some of them have been injured, we're told.

This is an extremely volatile and dangerous situation unfolding in Sinai right now as well. Our sources also say the U.S. is paying very close attention to what's happening in Gaza. Reports -- Reuters is reporting at least 30,000 Palestinians burned U.S. flags and beat an effigy of President Obama.

As for security at U.S. embassies, a senior U.S. administration official is now telling CNN -- and I'm quoting -- "We are in a full- court press." The official says security's in place at every single post in the Middle East and anywhere there's a chance of demonstrations.

Our foreign affairs reporter, Elise Labott, has been looking into this part of the story for us.

Elise, very worrisome. What's the latest as far as protecting American diplomats around the region?

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, there's been a lot of talk, Wolf, about protecting American diplomats and American facilities.

And in addition to making sure that the U.S. has all personnel it needs and working with the host governments in terms of providing extra security, extra barriers, things like that at the embassy, they're also very concerned about U.S. Americans around the world.

And what the Americans can do, they're urging all Americans, Wolf, that are in the region to log on to the State Department Web site. They have a lot of travel information. That's travel.state.gov. We will put that up on our screen for our viewers.

To make sure they have the latest information to keep themselves safe, Wolf -- they're saying stay away from embassies right now, not so safe to be. Keep a low profile. Avoid these demonstrations where these crowds can get out of hand. And also might not be a good idea to frequent areas where Westerners are in some countries, but every individual country's Web site has the latest security information for Americans, Wolf.

BLITZER: Have you heard any reports of actual evacuations, either of U.S. government personnel or private American citizens?

LABOTT: Well, we know that all U.S. personnel have been evacuated from Benghazi, Libya, and very small skeletal staffs in Tripoli and also Yemen. But the U.S. is looking at other countries.

We have 10 countries that you just mentioned where there are U.S. protests. Clearly, they're looking at Tunis, looking at Sudan right now. Right now they're not evacuating people. But again, they're saying stay tuned. Make sure that you're registered with the embassy. Right now everyone's relying on commercial travel to get out. The roads are open. Everything's open, Wolf. Right now, it just seems to be localized just at these U.S. embassies and not kind of chaos spreading throughout the country.

BLITZER: These are live pictures we're showing our viewers now from Tahrir Square in Cairo. Not very far from the U.S. Embassy. You have been there, I have been there. It's, what only a few, maybe a block away. But they have apparently established all sorts of barriers around the U.S. Embassy to protect the American -- it's a huge embassy too.

LABOTT: It's a huge embassy. It's like a complex, if you will.

But even as you have the setback and these reinforcements, they're asking the local government -- in the last couple of days they have had a little bit of trouble with the government in terms of getting the security need, but now they say that the government is reinforcing the roads, closing roads, things like that.

BLITZER: And these are once again live pictures we're showing our viewers from Cairo. Elise, I know you're reporting on this. So stand by. We will get back to you.

The unrest also has been growing since Tuesday, when outrage over a crude video mocking the Prophet Mohammed sparked rioting in Egypt and a deadly attack on the U.S. Consulate in Benghazi, Libya.

CNN's Arwa Damon is where it all started in Benghazi. Arwa is joining us now live.

What's the latest, Arwa? What's going on?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, at this point in time, the situation in Benghazi is incredibly tense.

Everyone who we have been speaking to really expressing their outrage, their horror at what took place, but also demanding that the Libyan government take concrete action to try to bring about an end to these armed militias effectively that operate with pretty much complete and total impunity.

We were touring the site of the consulate earlier today. And there we saw the country's president, the head of the national council -- congress, rather. He was saying though that at this point in time the government quite simply doesn't necessarily have the capabilities to rein these individuals, these militias in.

And this is, of course, of growing concern for the population here and of growing concern for all the international observers. If the current Libyan government is not capable of taking these weapons off the streets, of controlling these extremist groups, one can only imagine what the future of this country is going to end up being, Wolf.

BLITZER: And we're showing, Arwa, video that you and your team has sent us. These are pictures from inside what was the United States consulate in Benghazi that was attacked.

It's pretty devastating when you see it. Describe -- because you walked through what's left of this diplomatic mission. Walk us through what you saw.

DAMON: You know, Wolf, it was very much like walking through a scene of a horror movie to a certain degree.

There's debris all over the place. A number of the buildings have been burned. The walls are scorched. You find bits and pieces of lives that once were. There were boxes of made-ready-eat meals that had been discarded and there were bits and pieces of paper, some notes.

The location had been looted though following the assault that took place. It really wasn't secured by Libyan security forces and it was very much a free-for-all. So not a lot was left behind. And quite surprisingly the location wasn't very secured. It's not like one would imagine this being a crime scene that it would have been completely locked off.

The government is actually asking for help from the United States, from the international community when it comes to figuring out exactly what transpired, but more importantly trying to prevent this from taking place in the future.

We stood inside the room where we believe the ambassador died. And that was just an utterly hair-raising experience. Along some of the walls, not necessarily in that particular room, but some of the other walls, there were bloodstains. There was a partial handprint on one of them.

So it most certainly is yet another one of those horrific aftermaths that one walks through and can't help but to be disgusted by what transpired and also horrified by what those moments must have really been like.

BLITZER: I understand, Arwa, that there were actual two scenes of anti-U.S. violence at what was the consulate, but also what was being described as a safe house.

Do your sources there on the ground have good insight into how those two American Navy SEALs who were there with the ambassador were actually killed and where they were killed?

DAMON: We're still really just beginning to piece this all together.

I did however speak with the spokesman for one of the battalions here. You had the initial assault on the consulate. It seems as if with the chaos and when the first grenade or rocket-propelled grenade impacted, the lights all went out. There was smoke billowing.

It seems as if somehow the ambassador and perhaps some others were separated from the main group. Now, after the sustained gun battle, members of the 17th of February Brigade, a Libyan brigade, were somehow able to evacuate them to this safe house. This is where it gets incredibly disturbing, because some are saying there must have been insider information, a leak somewhere, because when the rescue team finally arrived from Tripoli, numbering we are told seven to eight security personnel, the minute that they arrived on scene of the so-called safe house, they were attacked.

It was a very intense, quick hit-and-run attack. But it is very disturbing that these two attacks happened one after the other, especially since the second took place at what should have been a safe house.

Exactly where those security personnel were killed, we're still trying to piece all of that together. One individual who we were speaking to say that when they initially arrived at the safe house following this brief clash and intense clash though that took place, they were able to recover the embassy personnel and some of the bodies, two of the bodies, we were initially told, of those who were killed.

Of course they then later on found the ambassador's body, according to eyewitnesses and sources here at the hospital. But there's still a lot of gaps, Wolf, and a lot of (AUDIO GAP) at this point in time, not just questions for the Libyan government.

Why, for example, were forces not responding to the initial attack? But questions for the U.S. as well. Did America perhaps underestimate the level of threat that existed here? When it comes to the Libyans, they fully believe that this was a pre-planned assault intended to wreak maximum damage, damage the relationship between Libya and the United States, Wolf.

BLITZER: And do they believe it was a coincidence or deliberate that it occurred on the eleventh anniversary of 9/11?

DAMON: Those officials who we have spoken to, in fact, the country's president himself, does say that he firmly 100 percent believes that they were timed to take place on 9/11, Wolf.

BLITZER: And there are still elements -- as Mike Rogers, the chairman of the House Intelligence Committee told me this week, there are still elements, pockets of al Qaeda terrorists roaming around not only Libya, but Tunisia as well.

And that's a very worrisome development. What are you hearing about that?

DAMON: There are a number of extremist groups that operate inside Libya, a lot of them really operating out of the east.

I have heard it described as them having their bases of operation, their training camps in the eastern desert. But they do tend to carry out their attacks here in Benghazi. This attack on the consulate is not an isolated incident. There have been attacks on Western interests in this city over the last few months. There was an attack on the ICRC. There was an attack on the British ambassador's convoy.

There have been a number of other isolated incidents. Some of these groups are affiliated with al Qaeda, others are not. But the thing that is of great concern here, Wolf, is the amount of impunity, the way they are able to operate at will, carry out attacks such as the one we saw take place, with such devastating and horrific consequences and have a government in place that admits that it is not capable of reining them in.

The great concern, and this is coming from some of the military commanders here, is that they're absolutely terrified of the security situation as it currently exists, not to mention how fearful they are of how the situation may in fact deteriorate.

BLITZER: Arwa, I want you and our entire team to be very, very careful over there. Security, security, security obviously comes first. But we will touch back with you shortly.

Arwa Damon is on the ground in Benghazi for us, where those four Americans, including the U.S. ambassador and two Navy SEALs, were killed on the 11th anniversary of 9/11.

Meanwhile, even as we speak right now, I want to show you live pictures from Cairo's Tahrir Square, only about 300 yards or so from the U.S. Embassy, a huge U.S. Embassy, the protests escalating there. You can see what's going on. This is -- these are live pictures.

We're going to Cairo when we come back.

(COMMERCIAL BREAK)

BLITZER: All of a sudden, the violence has escalated in Tahrir Square in Cairo. We're going to show you these live pictures of what's going on right now. Ben Wedeman is standing by. He's very, very close.

Ben, it was a relatively quiet day. All of a sudden the last 15, 20 minutes, we see an escalation in these pictures. Obviously pretty intense. What are you hearing? It looks like a real clash between these demonstrators and authorities.

WEDEMAN: Yes. We're right on the street right above the street that's right around the corner from the U.S. embassy. And what we've seen is that the protesters have basically tried to block the main road along this side of the Nile. And it's really a back-and-forth fight between those protesters and the security forces.

But it has been a pretty intense day of clashes, although surprisingly unlike previous times when there were clashes in and around Tahrir nobody since the beginning of these clashes Tuesday evening has been killed.

What is -- some more possibly important news coming out of this Sinai, Wolf, monitors the Israeli/Egyptian peace treaty, one of their bases housing about 1,500 soldiers and officers has come under attack this afternoon by what according to Egyptian security sources say are Islamist Bedouin militants who attacked that base with heavy weapons, with machine guns and RPGs. They say at least two of the members of the multinational force have been injured, that some of the facilities -- one of the towers was set on fire. And we are told that assault is ongoing -- Wolf.

BLITZER: Yes. I've been worried about those multinational force troops. There are about 750 American soldiers who are part of that unit in Sinai. They've been there as you point out since 1981 when the peace treaty between Israel and Egypt was implemented. They have relatively modest security out there. And this has been escalating the tensions in Sinai as you well know.

Let's see what they do. Let's see if they start evacuating them or beef up their security in Sinai right now. Once again, 1,500 observers, half of whom are U.S. soldiers. So we're worried about them as well.

How close are these demonstrators now? It seems pretty violent, Ben, to the U.S. embassy? I know there's better security than there was only a few days ago when they actually got inside and started burning American flags.

WEDEMAN: Well, this morning, Wolf, the Egyptian security forces erected a concrete barrier with concrete blocks on the road really just about 100 yards from the American embassy. And the protesters are right on the other side of that.

And we watched as they were lobbing rocks over that barrier. And they were using street signs or poles they'd ripped up from the streets trying to dismantle that barrier. They have not succeeded, but they are in fact very close. But what we have seen over the last 24 hours is that the security forces are pretty determined to keep those protesters away from the embassy, trying to prevent a repeat of the breach that happened on Tuesday night. But surprisingly what we haven't seen is a real effort to drive the protesters completely out of this part of town.

As I said, nobody's been killed in these clashes yet. So it appears that the police, the riot police, are under some sort of orders to use not too much force to keep these protests under control. Just to keep them under control, but not really to push them out of this area -- Wolf.

BLITZER: These are live pictures we're showing our viewers from Tahrir Square.

All right, Ben. We'll get back to you. Thanks very much. Ben Wedeman is on the ground for us in Cairo.

President Obama and Secretary of State Hillary Clinton spoke at a very moving ceremony as the bodies of the United States ambassador and three others killed in Libya were returned to the United States. That's coming up.

(COMMERCIAL BREAK)

BLITZER: President Obama, Vice President Biden, and Secretary of State Hillary Clinton, they were all on hand this afternoon as the bodies of the U.S. diplomats and security officials killed in Libya arrived back in the United States. It was a very somber, moving memorial ceremony.

Our White House correspondent Dan Lothian is joining us.

Dan, this wrapped up just a little while ago. Tell our viewers who missed it, what happened.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, what you saw, Wolf, from the president and other U.S. officials is filling in a little more on the people behind those names. One, a father of three. Another a career diplomat, rather. Another one who enjoyed living on the edge.

What they all had in common though, said the president, is that they believed in their mission, they knew the danger and they accepted it.

(BEGIN VIDEO CLIP)

LOTHIAN (voice-over): In the same week that Americans remembered the pain of 9/11, another somber moment -- a transfer of remains ceremony at Joint Base Andrews as the bodies of four Americans killed in Libya came home.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Four Americans, four patriots, they loved this country, and they chose to serve it, and served it well.

They had a mission. And they believed in it. They knew the danger. And they accepted it.

They didn't simply embrace the American ideal, they lived it. They embodied it.

LOTHIAN: "They" are Ambassador Chris Stevens, Tyrone Woods, a former Navy SEAL who handles security for diplomats, along with fellow former Navy SEAL Glenn Doherty, and computer expert, Sean Smith.

HILLARY CLINTON, SECRETARY OF STATE: We have seen rage and violence directed at American embassies over an awful Internet video that we had nothing to do with. It is hard for the American people to make sense of that because it is senseless. And it is totally unacceptable.

The people of Egypt, Libya, Yemen and Tunisia did not trade the tyranny of a dictator for the tyranny of a mob.

(END VIDEO CLIP)

LOTHIAN: Now Secretary Clinton said that the leaders in the region need to work to restore security. In addition, they need to bring those responsible for the violence -- they need to be held accountable. And she also vowed that the U.S. would continue to do whatever it could to keep U.S. personnel around the world safe -- Wolf.

BLITZER: Very moving ceremony indeed. Dan, thanks very much.

Mitt Romney turned up his criticism of President Obama's international policies once again today. Stay with us.

(COMMERCIAL BREAK)

BLITZER: These are live pictures coming to us from Cairo right now. Tahrir Square, only a few hundred yards from a beefed up U.S. Embassy in Cairo, security obviously very, very intense. But it looks like the demonstrations of violence in Cairo escalating right now. We're all over this. We'll go back there soon.

Mitt Romney meanwhile seemed to be covering all the bases at once today. He and his campaign got tougher in their criticism of President Obama, but Romney also showed a much softer side as well.

Let's bring in our national political correspondent Jim Acosta. Jim, so what's with the mixed messages? What's going on?

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, aides to Mitt Romney say he watched those slain diplomats, their bodies arriving at Andrews Air Force base on television here in Ohio before he paid tribute to them at a rally earlier this afternoon.

And that moment, I have to tell you, Wolf, stood out on a day marked by both the tough and light hearted talk.

(BEGIN VIDEO CLIP)

ACOSTA (voice-over): At a rally in Ohio, Mitt Romney set aside his attacks on President Obama's foreign policy to remember the U.S. ambassador and three Americans who lost their lives in Libya.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: And I'd ask that you might each place your hand over your heart in recognition of the bloodshed for freedom by them and our other sons and daughters who have lost their lives in the cause of America and the cause of liberty, and if we'll take a moment of silence together.

ACOSTA: The moment of silence was only a brief pause in his campaign sharpened rhetoric. Earlier in the day, running mate, Paul Ryan suggested the president was showing a weakness on the world stage that invited the diplomatic attacks.

REPRESENTATIVE PAUL RYAN (R), VICE PRESIDENTIAL CANDIDATE: They are extremists who operate by violence and intimidation. And the least equivocation or mixed signal only makes them bolder.

ACOSTA: On CNN, a senior campaign advisor claimed the violence would have been prevented under a President Romney saying he would have been more engaged in the Arab spring.

RICHARD WILLIAMSON, ROMNEY FOREIGN POLICY ADVISER: So we would be partners in this evolution, not running behind and not seen as part of that. I think that changes the dynamic and so, yes, there would be a difference.

ACOSTA: At a New York fundraiser, Romney slammed the president for not planning to meet with Israeli Prime Minister Benjamin Netanyahu at the start of the United Nations General Assembly next week.

Romney said it sends a message not just to Israel, but throughout the Middle East and in some respects it's a confusing message. The rhetorical jabs came as the president paid tribute to the slain diplomats as their bodies arrived at Andrews Air Force base.

Despite his campaign, serious posture, Romney and his wife took time to make some light hearted comments to daytime talk show host Kelly Rippa in a taped interview slated to air next week.

Romney weighed in on MTV's reality show "Jersey Shore" saying, I'm kind of a Snooki fan. Look tiny she's gotten. She's lost weight. She's energetic. Just spark-plug personality is kind of fun.

Ann Romney talked about how she one walked in on former President George W. Bush getting a massage in the White House. And when asked what he wears to bed, the GOP nominee disclosed as little as possible.

(END VIDEO CLIP)

ACOSTA: The Romney campaign is signaling that all of this tough talk on foreign policy is only the beginning and it comes as some polls show that he is falling behind in key battleground states like this one we're in right now in Ohio.

As one senior Romney advisor put it to me earlier this week, Wolf, it's a good thing elections aren't held right after the conventions -- Wolf.

BLITZER: Good thing indeed. Right now, we're watching these final few weeks. The clock is obviously ticking. Jim, thanks very much.

And as Jim just noticed, some new polls are giving the Romney campaign plenty to worry about. Our chief national correspondent John King is over at the magic wall taking a closer look at the numbers.

John, the numbers can change, but right now not so good for the Romney campaign.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: They can change, Wolf, but we're about to head into the final seven weeks of this campaign. National polls for the president pulling a little bit ahead after his convention.

A half dozen polls from the battleground states this week, we're going to walk through them, show you about the same thing. Very close race, very competitive. Still within reach for Governor Romney, but you have to say, advantage for President Obama.

Now this one is among the closest. Colorado, you see 49-47. It's within the margin of error, a statistical tie, but a slight advantage for the president in the state of Colorado out west.

Now we move to the Midwest. This one we thought we might call battleground state, Wolf, but I'm not so sure. I think we can probably take it off the list. We'll poll here next week and we'll see what our CNN poll.

But a new Epic MRA poll shows Michigan, the state where Mitt Romney's dad was governor, where Mitt Romney was born, a 10-point lead for President Obama there, the auto bailout a factor there.

Those numbers probably the reason Republican "Super PACs" have stopped advertising in the state of Michigan. The always key battleground state of Ohio, a mixed message here from two polls out.

One an American Research Group poll shows a dead heat, 48, 47. An NBC/"Wall Street Journal"/Marist poll shows the president with a 7- point lead. Republicans say they don't like this poll. They say there are too many Democrats in the sample.

Too big of an advantage in registration for the Democrats, but in any event, the president appears to have at least a slight lead in the state of Ohio as well.

New Hampshire, a small state, but battleground state. Brand new poll out of New Hampshire, look at this, a five-point lead for the president, this is WMUR Granite state poll, remember that, five-point lead for the president in battleground New Hampshire.

As we move down the eastern seaboard we come to the state of Virginia. State the president carried last time, a must-win state for Mitt Romney this time, a five-point lead for the president. This is NBC/"Wall Street Journal"/Marist, going to sound like a broken record.

Come down to battleground Florida one more time. This is NBC/"Wall Street Journal"/Marist, a five-point lead for the president. So, Wolf, all these battleground states competitive.

However, when you look at them you see in the national polls and each of these battlegrounds, the president appears to be a little ahead and underscores for you that Governor Romney is playing from behind heading into the final stretch.

BLITZER: And just want to be clear, John, all these polls were taken before the recent violence that developed in North Africa and the Middle East. So I don't know if we can factor in that.

I don't know if that will have an impact one way or another. But I do know and I'm sure you do as well, a lot of Republicans are getting a little worried right now. So what does the Romney camp need to do to combat this trend?

KING: Let's flip it. It's hard to say how this foreign policy stuff will play out. We'll watch that play out. We'll watch the poll the Romney campaign hopes it brings the president's leadership numbers down.

I think that will affect them at home as well, but as we wait for that, here's the map, 237 electoral college votes either strong or leaning President Obama's way and 191 either strong or leaning Governor Romney's way. Simple math here, 270 to win. The president has the easier, I'm not saying easy, but the easier path to 270 because he starts closer. So we just went through all those state battleground polls.

What would happen if the president won just Florida? He was ahead there. If the president wins Florida, that puts him on the doorstep, Wolf. If nothing else change that would get him to 266.

Any one other state would do it for him. What if the president won Florida and Ohio? Well, that would be game over if nothing else changed. That would put the president over the top right there.

So you see the challenge for Governor Romney. They're the biggest battleground prizes when it comes to electoral votes. Governor Romney has to win Florida. Let's say hypothetically he does get Florida, he needs Ohio as well.

Because if you keep Ohio in the president's camp, he's at 255, he'd need only 15 more and he'd have eight states to do it with. So if you look at the math going in, when you're behind even just a little bit in so many battleground states, if it were just five points in Florida, you would campaign there a lot.

Just four points in Colorado or one point, go in there with resources and campaign. When you have five or six and need to change the math, he needs a national shift in the dynamic. That means he needs, wolf, very strong debate performances and perhaps he also needs bad economic news in October and November as well.

BLITZER: Yes. He needs something right now and we'll see what he gets. Thanks very much, John for that.

We're going to get back to the lead story right now. What's happening in Cairo at Tahrir Square, we got some live pictures. We're going to show you. It looks like it's heating up over there.

Had been at least a few hours ago relatively calm. But now police are engaged with tear gas, they're dealing with protesters there. We're going there when we come back.

Also, the "New York Times" columnist, Nick Kristof, as a lot of our viewers will remember he was in Tahrir Square when the Egypt revolution broke out and now anger boiling over once again for very different reasons.

This is the live picture that we've been talking about. You're going to find out why Nick says Egypt's new president in his words blew it and jeopardized Egypt's relations with Washington.

(COMMERCIAL BREAK)

BLITZER: Let's get to more now on the turmoil in Egypt and throughout the Middle East. The "New York Times" columnist Nicholas Kristof is joining us.

Nic, thanks very much for coming in. All of our viewers remember you were in Tahrir Square when that revolution was going down. If somebody would have said to you at that time that this Arab spring would result in what we're seeing over these past few days breaking into the U.S. Embassy, tearing down flags, murdering American diplomats, you wouldn't have believed it, would you?

NICHOLAS KRISTOF, COLUMNIST, "NEW YORK TIMES": Well, actually, I don't know about that. I mean, I think when democracy comes, you get this kind of turbulence. I remember I covered South Korea after democracy arrived there.

And then as well the American flag was burned in the main square in Seoul. You know, there's a lot of anti-Americanism in a good deal of the world and when people have more power, they unfortunately express it in some really unhappy ways.

BLITZER: Yes. I had very high expectations, obviously, that were unrealistic. But that was just my hope more than my estimate at the time. What do you think of the initial reaction of the democratically elected government especially the President Mohamed Morsy in Egypt to what happened in Cairo?

KRISTOF: President Morsy blew it. He blew it badly. I don't think it's fair to hold actions of a few hundred crazy protesters against the country of Egypt. It is fair to hold the actions of President Morsy against Egypt and he went AWOL.

He was every bit as missing from action as the new Chinese leader Xi Jinping. I think he's been called on account. Subsequently he's behaved much better, but he blew it. He jeopardized American relations. He jeopardized American investment in Egypt. It was really a major screw up.

BLITZER: It was a major screw up. But it took a phone call from President Obama to President Mohamed Morsy to turn things around a bit. But you know, public attitudes here in the United States especially on Capitol Hill.

Listen to Peter King. He's the chairman of the house Homeland Security Committee speaking about the U.S. aid that still continues to Egypt right now.

(BEGIN VIDEO CLIP)

REPRESENTATIVE PETER KING, CHAIRMAN, HOUSE HOMELAND SECURITY COMMITTEE: Egypt is not acting like an ally. And if it does not act like an ally, it should not continue to get over a billion dollars in military aid.

(END VIDEO CLIP)

BLITZER: You know there's going to be pressure to suspend that U.S. military and economic assistance to Egypt. What do you make of that?

KRISTOF: Well, actually I think at the end of the day, it's unlikely to be suspended and that those threats and that kind of rhetoric may actually get some leverage to the White House to get President Morsy, you know, back in the game.

Indeed, I think President Morsy did get that message. You know, the irony is that until recently he had actually been pretty pragmatic and had behaved pretty well. In this case he just blew it dramatically.

Since then and more recently he's behaving much better. So I hope that was just an aberration and he's learning on the job.

BLITZER: I spoke to David Ignatius, the columnist for "The Washington Post," someone you know and admire as I do.

KRISTOF: Very much so.

BLITZER: He suggested that maybe as conservative shall we say as the Muslim Brotherhood-led government right now, there are salafists even more extreme out there and would like nothing more than to undermine President Morsy and his government. And they actually may have played a very significant role in trying to go into the U.S. Embassy. Have you heard that as well?

KRISTOF: Yes. I think that's exactly right. I think it's true not only in Egypt, but I think there was a similar dynamic in Libya, in Sudan. And we made to system degree pawns of this.

In several of these countries, you've had salafists who feel them feel as if they played a major role, took huge risks in these democratic revolutions. And that then they've been kind of marginalized since then.

And they see this as a chance to gain public support, to embarrass their governments and there's kind of a competition between the -- well, in Egypt between the Morsy government and the salafists.

And the attack on U.S. Embassy is part of the drama. But it's less about us than that competition between Morsy and the salafist, I would argue.

BLITZER: This anti-Islamic film out there on the internet. How much of that is responsible for the anti-U.S. violence or is that just an excuse?

KRISTOF: Well, I think it's both. I mean, I think if you talk to an awful lot of just ordinary Muslims around the world, there's real indignation about it. It just hit every button possible.

And I think a lot of people who didn't grow up in a free society assume that the U.S. government is somehow behind it or condoning it. And so there's that backdrop.

And then I think on top of that then you have extremists who take advantage of that and inflame it and seize upon it to embarrass and attack their own governments.

BLITZER: You want to venture a prediction where the region will be a year from now? Let me repeat the question.

KRISTOF: I'm sorry.

BLITZER: Nick, do you venture a prediction where the region will be a year from now?

KRISTOF: I think it's going to continue to be messy. I don't think it's going to be a complete rupture. Yemen might be a little more extreme. But in a country that really matters the most, Egypt, and even for Libya as well, I think it is going to continue to muddle along.

I don't think the American embassy in Egypt is going to be seized the way it was in Iran. But you look at Eastern Europe after 1989. Countries like Romania were a mess for years. Indonesia after 1997- 1998, that was a mess for years as well. It takes a lot of time to re-stabilize these countries.

BLITZER: Nick Kristof of the "New York Times," as usual, thanks very much.

KRISTOF: My pleasure.

BLITZER: Some would-be robbers tried to smash their way into an Apple store with a BMW. You're going to find out how police nabbed them. That's next.

(COMMERCIAL BREAK)

BLITZER: Here's some good news. Chicago teachers could end their strike very soon. Lisa Sylvester's monitoring that, some other top stories in THE SITUATION ROOM right now. What's the latest?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, I think that's news the parents have been waiting to hear. A source with detailed knowledge of negotiations tells CNN the school board and striking teachers have reached a tentative deal.

They hope to have a new contract proposal by Sunday and schools back open as soon as Monday. The 350,000 public school students have been shut out of the classroom for five days now. Union delegates have to sign-off on the new deal though before it is finalized.

And U.S. stocks end in gains for the second straight week. The Dow Jones rose nearly 54 points adding about 2 percent for the week. The Dow and S&P 500, they are now at the highest point since the end of 2007. This all comes after the Federal Reserve announced another round of stimulus to spur the economy.

And check out this scene inside an Apple store in California. Take a look at these pictures. Some robbers drove a BMW straight into the front of the store. They loaded up a bunch of iPhones and iPads and then they try to back out.

Well, you can see there not so easy. They got stuck in the security gate. Eventually they rammed their way out, but they left the license plate behind. And when the driver came back for it, police were waiting and arrested him. Not a good thing to do, especially when they come back for that license plate -- Wolf.

BLITZER: Should get a job, make some money, go buy an iPhone and then you don't have to go to jail. Now these people are going to jail for a while, as they should.

SYLVESTER: Yes, not very bright though. I think that's our not very bright story -- Wolf.

BLITZER: Very stupid. Thanks very much.

Meanwhile, anger at the United States is exploding across the Middle East right now, the latest flash point, Egypt's volatile Sanai region. Protesters stormed an international peace keeping base where 750 American troops are located.

And a controversial big soda ban will soon go into effect in New York City and a lot of people are very unhappy about it. Not necessarily though the mayor, Michael Bloomberg. He'll tell us why. That's coming up as well.

(COMMERCIAL BREAK)

BLITZER: New York City's Board of Health approved Mayor Bloomberg's ban on large size soda and other sugary drinks at restaurants, the movies and even streetcar attendants infuriated many.

But Mayor Bloomberg is standing firm. He just spoke exclusively to our chief medical correspondent, Dr. Sanjay Gupta.

(BEGIN VIDEO CLIP)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Mayor, we've been reporting on this issue for some time. Was it a personal story for you? I mean, did you have issues either with the chronic effects of obesity in your own family, yourself?

MAYOR MICHAEL BLOOMBERG (I), NEW YORK: No. But I can tell you and I think I speak for almost everybody, if it's in front of me, I eat it. I love Cheez-its. If you put a two-pound bowl or box in front of me, I'd probably eat them all.

That's not very good for you, but if you eat anything in moderation, there's no harm, almost anything. So if you put a small bowl of Cheez-Its in front of me, that's fine. We all do the same thing.

All we're trying to do with full sugar drinks is to have a smaller portion in front of you. If you want to take another portion, you can. Nobody's banning you from doing that.

You can buy it -- as a matter of fact you can buy two 16-ounce cups or four 16-ounce cups any time you want and take them all back to your seat or your table. GUPTA: When you were sitting down with your team and thinking about the future at the beginning again of all this, what was the biggest obstacle to getting this done that you envisioned?

BLOOMBERG: Well, I actually think this is relatively simple. I think when people think back on what happened with smoking, smoking was very controversial to ban it in public places.

But if you go around now and say, well, who was against the smoking ban back then? You can't find anybody. Everybody remembers that they were for it. The big difference between smoking and obesity is that if you smoke and I'm in the same room, I get hurt. If you and I are in the same room and you're obese. I don't get hurt short term, but I do have to eventually pay your medical bills because that's what actually happens.

(END VIDEO TAPE)

BLITZER: And you can see more of Mayor Bloomberg's exclusive interview with Sanjay Gupta. That will air on "SANJAY GUPTA M.D." Tomorrow, 4:30 p.m. Eastern, Sunday, 7:30 a.m. Eastern.