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THE SITUATION ROOM

Clinton to Testify on Benghazi Week Of Jan. 21; Flu Patients Overwhelming Hospitals; "Thank You America" for $182 Billion; Suspect Connected to Benghazi Attack Freed; Obamacare and Gun Control; Egyptian President Speaks Out; Government Wants Green Cars to be Louder; Google's Chairman Goes to North Korea

Aired January 8, 2013 - 17:00   ET

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


WOLF BLITZER, HOST: And you're in THE SITUATION ROOM.

Happening now, tens of thousands of lives potentially at risk in what could be the worst flu season here in the United States in years. A leading doctor tells me, though, it's not too late to protect yourself.

Plus, AIG says thank you, America, for $182 billion in bailout money, but could be -- could be ready to take the government to court.

Stand by.

And can the most important country in the Arab world help broker peace in the Middle East?

More of my exclusive far-reaching interview with the Egyptian president, Mohamed Morsy, this hour.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

A growing and deadly flu outbreak gripping much of the country right now, potentially putting tens of thousands of lives at risk in what could be the worst flu season in the United States in many years. You're about to hear what a leading doctor at the National Institutes of Health told me about what could -- what we all could be facing.

But, first, hospitals are being forced to take extreme measures right now to accommodate all the patients. Some emergency rooms have already had to turn away people.

Here's Jessica D'Onofrio from CNN affiliate, WLS.

(BEGIN VIDEOTAPE)

JESSICA D'ONOFRIO (voice-over): At hospital emergency rooms across the city, the scene has been the same during the past few weeks -- dozens of patients going to hospitals, looking for relief from the flu.

DR. ROBERT FELDMAN, COOK COUNTY HOSPITAL: We're seeing probably, between the adults and our children's emergency department, probably somewhere between 50 to 70 patients a day.

D'ONOFRIO: The numbers of flu sufferers have overwhelmed the medical staff at some hospitals. For several hours last night, eight local hospitals were all on bypass. That means ambulances with sick patients were urged to take them to another facility if safely possible.

(END VIDEO TAPE)

BLITZER: In Pennsylvania, one ER had to set up a tent to handle the scores of people coming in.

John Craven with CNN affiliate, WFMZ, has this part of the story.

(BEGIN VIDEOTAPE)

JOHN CRAVEN, WFMZ CORRESPONDENT (voice-over): If you've been sneezing and sick, you're not alone.

TERRY BURGER, LEHIGH VALLEY HOSPITAL INFECTION CONTROL: Right now, we are in the midst of an extremely busy flu season.

CRAVEN: So busy that Lehigh Valley Hospital is opening up this auxiliary emergency room just to handle the overflow of flu cases. Over the weekend, some patients reported up to seven hour waits.

BURGER: We've had to really mild seasons. So now we're being brutally reminded how bad influenza can be.

(END VIDEO TAPE)

BLITZER: And joining us now, Dr. Anthony Fauci.

He's the director of National Institute of Allergy and Infectious Diseases at the National Institutes of Health.

Dr. Fauci, thanks very much.

As you know, there's a lot of concern right now about this flu that's going around. I'm going to put a map up on the screen. And you can see in the red there, it's widespread in almost the entire country right now.

Why is it so bad this year?

DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: Well, you can never predict or tell why it's bad one year to another. So one of the things about flu, unfortunately, is that influenza, the only thing you can predict is that it's unpredictable.

We had a very, very light season last year. This year, there are a couple of ominous signs. It clicked up early, toward the very end of November to the beginning of December. And it went up on a pretty steep trajectory. The last time we saw that happen that way was the flu season of 2003 and 2004, which turned out to be a bad flu season.

And, also, the kind of flu that's circulating, what we call H3N2, is usually associated with more serious disease compared to other types of flu. That's the bad news.

The good news is that the flu that's circulating matches pretty well -- in fact, very, very well -- to the vaccine that is being distributed and administrated throughout the country.

BLITZER: Is this vaccine working, in other words?

FAUCI: Well, you -- you can't tell if it's working at this point in the season. But when you have a good match where the strains that are used in the vaccine match very well to the circulating strain, you usually get a pretty good degree of protection. It varies among age groups and among individuals, but for the most part, the protection is really quite good.

BLITZER: What should people be looking for right now?

A lot of folks are worried.

FAUCI: Well, what they should be looking for is to try and avoid, for example, individuals who are sneezing and coughing. If you yourself get sick, the things that we've spoken about over the years, personal hygiene, wash your hands, if you cough or sneeze, cover your cough into your -- the part of the crease by your elbow.

But, also, importantly, get vaccinated. It is not too late, Wolf, to get vaccinated. You usually like to see people get vaccinated in the early to mid-fall. But even though we're in Janu -- in February right now -- in January, excuse me -- we should absolutely tell people that it's not too late to get vaccinated.

BLITZER: Because this could also be, and you've pointed out to us over the years, a killer. A lot of people will die, especially older people and people whose immunes systems might not be great as a result of this flu.

Is there any estimate how many people you think could die as a result of this?

FAUCI: Well, if you look historically at seasonal flus that we've had, it's gone from very light years, where there may be just a few thousand people die, to up to 49,000 people die. There's an average of about 200,000 hospitalizations and there's a lot of economic burdens.

So the range of people that will die are individuals, really, it can be anywhere from a few thousand to way up. The fact that we're having what looks like the -- a pretty bad beginning of a season and may turn out to be a really bad full season, and the fact that we're dealing with H3N2, means that we should be concerned in the sense of making sure we do everything we possibly can.

So the way to prevent it, as I mentioned, is the personal hygiene measures, but also getting vaccinated.

If you do get the flu -- and physicians know this and should know this -- that if someone gets hospitalized or has serious flu or is in one of the high risk groups, like a pregnant individual, a pregnant woman, a young child or an elderly individual over 65, or someone with a chronic condition, they should be treated with the anti-flu medicines, like Tamiflu, which work very well against the flu. And we know that this influenza is sensitive to the anti-flu medications we have.

BLITZER: Dr. Fauci, thanks so much, as always, for joining us.

FAUCI: Good to be here, Wolf.

BLITZER: Remember, he said it's not too late, not too late for you to go out there and get a flu shot. If you haven't gotten one, go get one.

Shocking news -- AIG is now considering suing -- yes, suing the United States government, despite a huge P.R. campaign thanking the United States government, thanking the American people, the taxpayers, for saving the insurance giant from bankruptcy with a record $182 billion.

Watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We've repaid every dollar America left to us.

UNIDENTIFIED FEMALE: Everything, plus a profit of more than $22 billion...

UNIDENTIFIED FEMALE: -- for the American people.

UNIDENTIFIED FEMALE: Thank you, America.

UNIDENTIFIED MALE: Helping people recover and rebuild, that's what we do. Now, let's bring on tomorrow.

(END VIDEO CLIP)

BLITZER: All right, let's bring in our chief business correspondent, Ali Velshi, with more -- Ali, it almost seems to defy reason that AIG might actually participate in a lawsuit against American taxpayers after what we did to save that company?

ALI VELSHI, CNN ANCHOR: Yes. Do you remember those days, Wolf?

It was -- it was -- it was like mob war. I mean people were so mad, they were saying let AIG fall through. And I remember struggling to explain that you can't let AIG fall through, because it's so interconnected that it will bring down the planetary financial system.

You're right, we -- they're right. We lent them $182 billion. And I say we, taxpayers lent them $182 billion, made a $22 billion profit on the whole thing.

But in 2011, a group of shareholders, including the guy who really built AIG into the powerhouse that it was, Hank Greenberg, sued, because they said the terms of that loan were too harsh. The government took 92 percent of the company. They took it into conservatorship. They -- they -- they charged them a -- a pretty hefty interest rate for the money. And it all got paid off and everybody is happy now. But they're suing.

Now, what's happening is the -- the board is being faced with the idea that the shareholders have this lawsuit and they have a responsibility to the shareholders to see whether they should join the lawsuit.

I think it's unlikely that they'll do so, but it is right out of the you can't make this stuff up bin.

BLITZER: Well, walk us through the, you know, why they're even considering joining this lawsuit. I can understand private individuals suing the U.S. government. If they want to do so, that's their right.

VELSHI: Yes.

BLITZER: But after what AIG was saved by -- by the federal government...

VELSHI: Yes.

BLITZER: -- even why -- why would they even be considering it?

Why not issue them a statement immediately saying, thank you, American people...

VELSHI: Yes. This is...

BLITZER: -- we're grateful for all your help.

VELSHI: This is ridiculous.

BLITZER: Yes, we repaid...

VELSHI: Yes.

BLITZER: -- that loan, the American taxpayers, the American Treasury, made a profit.

VELSHI: Yes.

BLITZER: But, certainly, we're not going to sue you after you saved us.

VELSHI: Yes, and I -- and, you know, part of me thinks why doesn't the company just put out a statement like that and get this over with?

But part of it is the company has what's called a fiduciary responsibility to do the right thing by its shareholders. So they have to consider whether they're going to join the lawsuit. Otherwise, the executives themselves, the board, might get sued. So that's what they're doing right now. The stage is that the company is looking at this lawsuit.

And the lawsuit, Wolf, I don't know, I'm not a lawyer, but it -- it's not nothing. I mean they -- they asked for 16 million pages that looked at the communication between the Treasury Department and AIG going back to 2005. You know, in the course of the hearings, it got whittled down to about 10 million pages.

So they're looking at real stuff. I think they're trying to determine, did the Treasury know this was coming?

Did they know that AIG was doing certain things and were the terms of the loans onerous?

Now, again, for most thinking people, particularly those who pay taxes, they're saying this is just weird that you're even looking into this, because this company could have become nothing. But the problem is it could have taken the world down with it, which is why we didn't let AIG fail. It was the right decision to make.

It is really quite amazing.

But there is a real case here that could go forward. I don't think it's likely. Most experts we've talked to have said, A, it's not likely the executive and the board will support it. Bit's not likely the case will succeed. But it's real.

BLITZER: We'll know tomorrow, is that right?

VELSHI: Yes, tomorrow is when we'll find out.

BLITZER: Ali, thanks very, very much.

A suspect held in connection with the deadly Benghazi attack now a free man. Up next, we have details of this controversial release. Brian Todd is standing by.

Plus, guns making a somewhat surprising appearance in President Obama's historic health care legislation, known as ObamaCare.

So what could it say about the influence of the NRA?

(COMMERCIAL BREAK)

BLITZER: A suspect in the deadly attack on the U.S. consulate in Benghazi has now been freed from custody. His release means there are no other known suspects being held in connection with the attack.

Let's bring in Brian Todd.

He's got the details.

What are they -- Brian? BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, the suspect had been held by authorities in Tunisia. He was just ordered to be released. We have been pressing Tunisian officials on why they've set him free. We've gotten no answers yet.

This is clearly a major setback in the Benghazi investigation.

(BEGIN VIDEOTAPE)

TODD (voice-over): He was held for three months, a suspect in connection with the Benghazi attack that killed the U.S. ambassador to Libya and three others. Now, Ali Ani al Harzi, a Tunisian, is a free man. The Tunisian government news agency says Harzi has been released from custody there.

Congressman Frank Wolf, influential in the release of foreign aid, has been keeping track of the Harzi case for months.

(on camera): Your response to this?

REP. FRANK WOLF (R-VA), APPROPRIATIONS COMMITTEE: Well, I'm disappointed. One, he was involved in the attack of the American consulate in -- in Benghazi. He was there. So he's really partially responsible for the death of four Americans.

Secondly, we gave the Tunisian government $320 million a year in foreign aid. (INAUDIBLE)...

TODD: Will you now press for some withholding of that aid?

WOLF: We're asking the State Department to cut it off. And if they don't cut it off, sure, I will certainly do that, because here they have released a guy to walk the streets of Tunisia that's been involved in the activity that's resulted in the death of four Americans.

TODD (voice-over): Wolf had previously complained that the FBI had, for months, been denied access to Harzi. The FBI did finally question him last month, but in the presence of a Tunisian judge. We asked a former FBI assistant director, Tom Fuentes, a CNN contributor, whether that compromised the investigation.

TOM FUENTES, FORMER FBI ASSISTANT DIRECTOR: It doesn't have an effect, but in the first instance, a judge in another country isn't the same as a judge in the United States. You know, judges here are not involved in the investigation.

TODD: Fuentes says just the fact that FBI agents were allowed to ask questions is more than they often get in these cases. Some reports say Harzi was freed because of a lack of evidence.

(on-camera) We've pressed Tunisian authorities in Tunis and here in Washington for information on the release of Ali harzi (ph) and for response to the threat from Congressman Wolf to press for a cut off of aid to Tunisia. We've gotten no response. (voice-over) A U.S. official says American investigators were made aware of Harzi because he apparently posted details of the Benghazi attack on social media while it was happening. But a U.S. law enforcement official with direct knowledge of the investigation says Ali Harzi does not appear on the video from the Benghazi compound.

Harzi's attorney has denied he was involved, but his release means there are no suspects known to be in custody in connection with the attack. Will Americans ever see justice for benghazi?

FUENTES: That's a very difficult order in a case like this where there was so much chaos surrounding the actual attack itself, the nature of the attack, the nature of the people that conducted the attack and the fact that it was conducted in a place that really didn't have and still does not have a strong investigative partner for the FBI to work with.

(END VIDEOTAPE)

TODD (on-camera): But our law enforcement source says investigators have identified at least 15 individuals that, quote, "we're taking a serious look at." That's from our source. Our source also says that, ultimately, people will be indicted, Wolf. Waiting on that.

BLITZER: What about these reports, one individual was taken into custody in connection with the Benghazi attack in Egypt?

TODD: That's right. There was one person named as Mohammed Jamal Abu Ahmed. U.S. officials believe he's the leader of a terror network in Egypt trying to align with al Qaeda. They're examining whether he participated in the attack. He was detained last month by Egyptian authorities.

They say that he admitted that he traveled to Libya several times during the civil war, but he has denied any connection to the Benghazi attacks. So, right now, nobody in custody that we know for sure was involved in that attack. Frustrating for U.S. officials.

BLITZER: So, he was detained. Is he still being held?

TODD: Not clear whether he's still being held. We're trying to get that information now. But right now, it looks like there's nobody in custody that we're sure was involved at least as a suspect in that attack, and it's very frustrating.

BLITZER: A lot of work to bring those folks to justice.

TODD: That's right.

BLITZER: Brian, thanks very much.

Lawmakers here in Washington want to hear from the secretary of state, Hillary Clinton, as soon as possible about the Benghazi attack. We're just learning she will now testify on Capitol Hill the week of January 21st. Her testimony had to be rescheduled after her bout with a stomach virus, a concussion, and later, a blood clot in her head. Let's bring in our foreign affairs reporter, Elise Labott. She's been working the story. She's got details. What are your sources telling you?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: Well, Wolf, it will be the week. we understand, of January 21st. That's the week of President Obama's inauguration on the 20th. We understand that it won't -- maybe not be exactly the same day after the inauguration. The committee staffers on the Senate Foreign Relations Committee are aware of the optics here.

They don't know if they want to have the Benghazi hearing the day after the inauguration. It might slip a day, but it does hold up the confirmation of Sen. John Kerry to replace her, but we understand it will probably all be done that week.

BLITZER: We're very happy to see her go back to work in state department yesterday. She's working once again today. What are you hearing? How's she doing?

LABOTT: Well, she's apparently back at work. Full schedule. She met today over lunch with national security adviser, Tom Donilon and secretary of defense. Leon Panetta. That's a regular scheduled weekly lunch. Aides say that she's back on top of her brief asking a lot of questions indicating that she was doing a little bit of work while she was home resting.

But, she also made clear to her staff that she wants all of those recommendations on that independent panel implemented or on the way to being implemented before she testifies before Congress.

BLITZER: Senator Lindsey Graham of South Carolina says he's not going to vote to confirm John Brennan to be the next CIA director until he gets more answers, answers from Hillary Clinton, from others at the CIA, from the White House, presumably. What are you hearing about this?

LABOTT: Well, Senator Graham is saying it has nothing to do with John Brennan per se. What it does is centers around these questions about these talking points that a U.S. ambassador to the U.N. Susan Rice use in those Sunday talk shows. As you remember, there was this deleted reference to an al Qaeda involvement which was in the classified version.

It was taken out when used by Ambassador Rice and Senator Graham has questions about who changed that. The intelligence committee has spoken to this. They said that they changed it, and more specifically, that the CIA changed those talking points, but Senator Graham is not satisfied.

He says he has more questions before John Brennan is confirmed and while he's not on the Senate's committee on intelligence, he could hold up the nomination.

BLITZER: Yes. We're going to be speaking in the next hour to Senator John McCain. He still got a lot of serious questions about Benghazi as well. Elise, thanks very much.

The Boeing 787 is called the Dreamliner, but some days it's not so dreamy. Why one flight was canceled today just as it was about to take off.

(COMMERCIAL BREAK)

BLITZER: Napalm, trip wires, and more frightening details all coming out about the alleged gunman in the Colorado movie theater shooting. Lisa Sylvester is monitoring that and some of the other top stories in the SITUATION ROOM right now. Lisa, what's the latest?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, the second day of a preliminary hearing, prosecutors today detailed the way the alleged shooter, James Holmes, booby-trapped his apartment. He had home-made napalm with bullets inside, tapped with a material that burn so hot it is nearly impossible to put out.

An FBI bomb technician described the trip wire attached to glistering ready to cause a fire sending sparks onto carpets soaked in oil and gas. The prosecutors also played the first 911 calls from the movie theater. And in one, you can hear at least 30 gunshots in just 27 seconds.

In other news, Boeing new 787 Dreamliner is dealing with another incident at Boston's Logan Airport a day after a fire broke out on one empty 787. Today, another flight was canceled after crews discovered a fuel leak. Forty-nine Boeing 787s have been delivered to airlines so far with about 800 still on order. Experts say new planes are going to have, quote, "teething problems."

And it is a official. Last year is the hottest year on record for the continental United States, and boy, did it take its toll. The U.S. government says the average temperature in 2012 was 55.3 degrees Fahrenheit, more than three degrees warmer than the average for the 20th century. Eleven weather disasters carried more than a billion dollar price tag including a lingering drought.

And a giant sea creature is caught on tape for the first time ever. This elusive giant squid, his huge black eyes, was about ten feet long, but it would have been longer if two of its arms weren't missing. These are incredible pictures. Scientists and TV broadcasters went down in a submarine to its natural habitat in the Pacific Ocean sometimes at depths of nearly 3,000 feet.

And I don't know about you, but I am actually pretty excited about this. My son really likes animals, so we read a lot about the giant squid. So, first time ever caught on tape, which is something else. The eyeballs are apparently like the size of a ball.

BLITZER: I'm scared. I'm going to have nightmares tonight because of those eyeballs and giant squid.

(LAUGHTER)

BLITZER: Your son might like the giant squid, not me. Go away. Thanks, Lisa.

SYLVESTER Thanks, Wolf.

BLITZER: Coming up, more of my exclusive interview with Egypt's president, Mohamed Morsy. I spent some time with him in Cairo this weekend. You're going to hear what he says must happen before there's real peace in the Middle East.

Also coming up, how the NRA made its mark on Obam care and how it could change conversations you have with your doctor.

(COMMERCIAL BREAK)

BLITZER: Former representative, Gabrielle Giffords, and her husband, Mark Kelly, are entering the political battle over gun rights. The couple now launching a political action committee with one focus, counter the funds and the influence of the gun lobby.

The move comes exactly two years after a gunman changed their lives forever, killing six people, injuring Giffords and 12 others as she met with constituents in Tucson. Last week, they visited another city to become the scene of a mass shooting.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We saw you in Newtown. How was Newtown?

GABRIELLE GIFFORDS, FORMER REPRESENTATIVE: Tough.

MARK KELLY, FORMER NASA ASTRONAUT: It brought back a lot of memories about what that was like for us some two years ago today. And you hope that this kind of thing doesn't happen again. You know what, it does happen again. I have a gun. Gabby and I are both gun owners.

We are strong supporters of the Second Amendment, but we've got to do something to keep the guns from getting into the wrong hands.

(END VIDEO CLIP)

BLITZER: In an op-ed in "USA Today," they write and I'm quoting now, "special interests purporting to represent gun owners but really advancing the interests of an ideological fringe have used big money and influence to cow Congress into submission." The couple is calling for laws that require responsible gun ownership and reduce gun violence.

One surprising piece of legislation showing the gun lobby's influence, the Affordable Care Act. Yes, the Affordable Care Act. Using language pushed by the National Rifle Association, the new health care law bans doctors, all doctors, from collecting data from patients on if they own a gun, if they use guns or ammunition or keep them in their homes.

And joining us now, Dr. Sanjay Gupta, our chief medical correspondent. Sanjay, how did guns end up in Obamacare? That seems so strange. DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, you know, Wolf, as you pointed out, the NRA has been lobbying for this for some time and they're quite public about this. That part of it is not a secret. It was Senator Harry Reid who ultimately actually got this small provision, really only five lines, Wolf. It was Senate Harry Reid who ultimately got it into the Affordable Care Act.

And I should point out, it doesn't specifically forbid doctors from asking patients about guns but it's more about them being able to document it, being able to use this for research purposes and for research into gun safety.

Now, you know, folks in the NRA will say, well, look, we don't want patients to be discriminated against because they own a gun. We don't want their insurance premiums to be higher, things like that. There's been no history of that ever happening but that's sort of their argument, they say. People who want these conversations to happen and be able to be documented between patient and physician say this is how we make things more safe. So this is sort of the friction back and forth over this, again, very small five-line provision, Wolf.

BLITZER: It's a very sensitive provision, though. And as you know, in Florida and some other states there are some who were even trying to make it a crime to ask questions about this.

GUPTA: Yes, it's really interesting. And in Florida, as well as seven other states, very fascinating what is happening. Florida, for example, the governor specifically wanted the idea of a physician being able to ask the patient about guns to be illegal, to be forbidden. That was subsequently overturned by a federal judge but now it's on appeal again. And again, Wolf, not just Florida but seven other states.

It would -- it would completely stop the conversation from ever happening. And that's a step further even than what we're talking about in this provision in the Affordable Care Act.

BLITZER: As you know, there are doctors all over the country and they are strongly concerned that guns could be a factor, a public health factor out there and they want this -- want this to be known, if you will. So what is their basic bottom line as far as guns and public health is concerned?

GUPTA: I'll tell you, I've been digging into this a bit. And I'll tell you what it's not. At least from an organized medical level. It's not about getting rid of guns. I think the sort of the best example would really be to liken it more to swimming pools, for example. The doctor, if you have young kids in the home, they may ask you if you have a swimming pool, may talk about swimming pool safety, may suggest classes, for example, for that sort of thing.

So it's really not about getting rid of guns but rather looking at the data that you can collect and seeing if guns could be made more safe or, you know, increase the safety, especially among kids.

Wolf, there's some numbers which people may have heard about, you know, this comes from the Centers for Disease Control, looking at the number of deaths over a two-year period, 2008, 2009. Look there, Wolf, 5740 children and teens were killed, and there were a lot more injured -- nearly 35,000, 34,387.

But the bottom line here, Wolf, guns are the third leading cause of death for children aged 5 to 14. And that's where a lot of doctors come down on this, much in the way that you'd ask about smoke detectors in the home, carbon monoxide detectors, swimming pools, as I mentioned. A lot of doctors want guns to be a part of the conversation and also to be able to use that to develop more gun safety studies -- Wolf.

BLITZER: As prevention tips, if you will. Is that what the bottom line is?

GUPTA: That's right. As prevention tips. And you can find out certain things that may be surprising. For example, with swimming pools, it may not be picnics and birthday parties that are the most dangerous time of day, but rather mornings and evenings. So, you know, things that may not surprise you emerge from research like this and the same kind of thing about guns. That's what people in organized medicine are talking about -- Wolf.

BLITZER: Sanjay Gupta, thanks very much for that excellent, excellent explanation.

GUPTA: You've got it, Wolf. Any time.

BLITZER: So can the most important country in the Arab world help broker peace between the Israelis and the Palestinians? Stand by for more of my exclusive interview with the Egyptian president, Mohamed Morsy? We met in Cairo.

(COMMERCIAL BREAK)

WOLF BLITZER, HOST: I've just returned to Washington from an extraordinary weekend visit to Egypt.

Egypt, the most important country in the Arab world, now embroiled in new tensions over its new democracy.

On Sunday, I spent more than an hour talking exclusively with the Egyptian president, Mohamed Morsy, at his presidential palace in Cairo.

Throughout this week, here in THE SITUATION ROOM, I'm sharing that discussion with you.

Among the issues that we discussed, Egypt's critically important relationship with Israel.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Israel came very close to a full scale war only weeks ago, when its long conflict with the Palestinian group, Hamas, reignited. Behind the scenes, Egyptian President Morsy was playing a decisive role in brokering the cease-fire.

MOHAMED MORSY, PRESIDENT, EGYPT (through translator): I want peace for Egypt, for the Egyptian people, for the Palestinians.

BLITZER: It was an extremely tense time in the region and I was there when a truce agreement was reached.

(BEGIN VIDEO CLIP)

BLITZER: Happening now, historic developments in the Middle East. The secretary of State, Hillary Clinton, and her counterpart from Egypt's new Islamist government announce a major deal between Israel and Hamas.

(END VIDEO CLIP)

BLITZER (voice-over): President Morsy's role in the truce negotiations earned him praise from President Obama, Secretary of State Hillary Clinton and Israeli leaders.

(BEGIN VIDEO CLIP FROM NOVEMBER 21, 2012)

BLITZER (on camera): And he's been doing a good job, you believe?

SHIMON PERES, ISRAELI PRESIDENT: I think he's doing a responsible job, from his point of view. I don't want that somebody will think that he is acting on behalf of Israel. He's not acting on behalf of Israel. His heart is somewhere else.

But his behavior is responsible. And because responsibility is needed for everybody, not only for us and for them.

(END VIDEO CLIP)

BLITZER: Now, Morsy says he wants to reconcile the differences among the Palestinians themselves that might help lead to a long-term peace.

(on camera): Do you believe in that two-state solution that will allow Israel and Palestine to live side by side?

MORSY: The Palestinians have the full rights, without any interference from anyone, to decide whatever they want for themselves. And now I'm looking forward and I'm working on achieving reconciliation between the Palestinians, between Fatah and the other factions, Hamas and others, to reach consensus. And it's they who will decide. I support them in what they decide. They are -- they have the right. They own the right. It's only they who have the right to decide on their destiny.

And, by the way, this is stated in the peace treaty. The Palestinians decide on what they want. I'll respect their decisions.

BLITZER: Morsy told me he's invited Palestinian Authority president, Mahmoud Abbas, to meet with Hamas leader, Khaled Mashaal, in Cairo this week. A critical question that may be up for discussion, does Israel have a right to exist? MORSY: The truth is, I have already answered this question before this many times. Israel is a U.N. member, so the question seems strange, because the party who needs a place and state are the Palestinians. I'm not discussing the bias of one party against the other, but I am talking about the real situation that exists now. Israel is a member of the U.N. The ones who need a state and to have an entity and for this state to be a full-fledged member of the U.N. are the Palestinians. So that's why I'm talking about a reconciliation among Palestinians.

It is not possible to achieve peace and stability unless it is for everyone involved. So if the Palestinians continue suffering from attacks, if the Palestinians remain without a state, if the Palestinians remain without a full acknowledgement from the whole world that they have full rights, this means peace will not be complete in the Middle East and the world.

What did we want for this world?

With came with a message of peace. We want peace. But we want real peace and a peace treaty. It is stated at the beginning of it that peace should be comprehensive and just. And this matter is known and it must happen. And it has not come true yet.

We want a comprehensive and just peace for this world.

BLITZER (voice-over): I've covered the Middle East for decades. I was CNN's senior White House correspondent during President Clinton's peace summit with Israeli prime minister, Yitzhak Rabin, and Palestinian leader, Yasser Arafat, back in 1993. Every American president who has tried to ease Mideast tensions has found that face to face talks can certainly make a huge difference.

(on camera): Under what circumstances would you be willing to meet directly, face-to-face, with the Israeli president, Shimon Peres, or the Israeli prime minister, Benjamin Netanyahu?

MORSY: When peace prevails in the Middle East, when the Palestinians take their full-fledged rights, when the Egyptians, with their free will and complete freedom, see that there is no Palestinian bloodshed and that the Palestinian rights are not wasted and that the public platform in Palestine has one government, and that it is stable and it has free will, land and borders, the whole world should realize that there can never be peace without having peace for all and without having all rights for the Palestinians' rights, according to their own will.

This is something that the whole world should realize. I cannot move forward and it is not possible for me to move forward outside the will of the Egyptian people. The Egyptian people can see, listen and live and feel and understand. And they do see the Palestinians as their brothers. They can see their sufferings, etc.

This matter requires longstanding and strenuous efforts and the will and understanding of the Egyptian people. I cannot work outside the will of the Egyptian people. The public option in Egypt now sees that the Palestinians are marginalized and their rights are wasted and that Gaza is still destroyed and it has not been reconstructed and that they do not have a state, that they don't have complete passports. They don't have freedom of movement. They don't have a central bank or armed forces or a real capital.

They suffer a lot everyday. When the Palestinians get their full rights, then we can look toward the Egyptian people and see what they want their president to do. And then the president will act based on the will of the Egyptian people, not alone.

BLITZER: In other words, if the -- such a meeting, between you and an Israeli leader, will have to wait until there's an agreement between the Israelis and the Palestinians?

MORSY: I believe this question is not in its place now. Between us and the world, there are diplomatic relations and everybody knows that. So I see that this is not the place for this question now. I respect the peace treaty. I'm keen on respecting what Egypt has signed as a state previously, at the international level. I respect the will of the world, but this does not conflict at all with my support for the Palestinians and their full-fledged rights and that they attain them. When this happens, the Egyptians are going to express their views.

BLITZER: Old hatreds can explode in violence at any moment. I saw that again on the day when the current truce was reached.

(BEGIN VIDEO CLIP FROM NOVEMBER 21, 2012)

BLITZER: It's a cease-fire that's supposed to end eight days of terror and bloodshed on both sides of the Israeli-Gaza border. But the hours leading up to the big announcement are marred by violence, including a bus bombing that injured nearly two dozen people right in the heart of Tel Aviv.

(END VIDEO CLIP)

BLITZER (voice-over): Egypt made its peace with Israel more than three decades ago. The two countries signed a treaty at the White House in 1979, just after President Jimmy Carter finalized the pact with Egyptian president, Anwar Sadat, and Israeli prime minister, Menachem Begin.

It survived all these years and Morsy insists he will continue to honor it.

(on camera): For about 30 years, the United States has had about 700 American soldiers as part of a multinational peacekeeping force in Sinai.

Do you want those troops to remain in Sinai?

MORSY: Egypt is a large and old country, a member of the United Nations, and before that, the As a state and as an institution, Egypt knows the meaning of international organizations and respecting agreements and treaties and international laws. We have ambassadors in almost all countries of the world. We respect and appreciate international institutions and the international law.

And we cooperate with it. We develop and move forward and we want the world to cooperate with us, also.

Therefore, we appreciate these agreements. We appreciate those treaties. We respect them. We retain them. There is no room for criticizing them or talking about anything against that, since we're all committed to the content of these agreements. All the parties that sign any agreement or treaty are committed to them. If any party breaches these commitments, every party involved needs to confront itself and be honest with itself.

But we respect all the agreements that Egypt signed previously and Egypt is moving forward with the international community, and we respect the international community and the will of the international community.

(END VIDEO TAPE)

BLITZER: We're going to have much more of the interview with the Egyptian president tomorrow here in THE SITUATION ROOM. And we're going to go in-depth on what's going on as far as the democracy movement in Egypt is concerned.

The Muslim Brotherhood, its grip on power, the opposition, how much freedom will they actually have?

Much more of the interview coming up.

Also, I'm going to take you behind the scenes in Tahrir Square.

What's going on in Tahrir Square right now?

It's the symbol of the Egyptian revolution. You're going to see that and more in THE SITUATION ROOM tomorrow.

We're seeing more and more hybrid cars, electric cars on the road as well. But are they -- but are you hearing them? Up next, what you need to know about the changes one government agency is now proposing.

(COMMERCIAL BREAK)

BLITZER: They don't take a lot of gasoline, they are good for the environment and pretty quiet out there on the roads. But now the Transportation Department is saying some electric and hybrid cars are simply too quiet to be safe.

Rene Marsh is here in THE SITUATION ROOM working the story for us.

So, Rene, what are they proposing to do about this?

RENE MARSH, CNN CORRESPONDENT: Well, they are asking that these vehicles have this sound technology placed inside of it, so that people can know that, hey, this vehicle is coming my way. The concern is that these cars are awfully quiet and pedestrians are possibly going to be injured because they don't know that this vehicle is on its way -- Wolf.

(BEGIN VIDEOTAPE)

MARSH (voice-over): They're green, fuel efficient, but too quiet and a potential threat to cyclists and pedestrians. That's what the Department of Transportation says about hybrid and electric cars.

The federal agency just proposed rules that would require new, green vehicles make sounds, loud enough to alert pedestrians and cyclists, like George Abbott.

GEORGE ABBOTT, CYCLIST: I have experience going alongside them and not -- like not realizing that there was one there.

MARSH (on camera): It's what's under the hood that makes these hybrid and electric cars so quiet on the road.

This Nissan Leaf already has technology similar to what the government wants in all electric and hybrid cars. Do you hear that sound? Well, the government believes it could save lives.

(Voice-over): Eddie George sells the vehicles at DARCARS in Maryland.

EDDIE GEORGE, DARCARS NISSAN: The car is very quiet. You cannot hear anything. So I mean, you have some people, when they're coming to test drive the car, is the car on?

MARSH: But a flip of a switch, and its pedestrian alert feature turns on. Without the feature, a much quieter drive.

UNIDENTIFIED FEMALE: I think that would help, but I think -- you know, again, I think people just need to pay more attention.

MARSH: DOT says the sounds would need to be loud enough to still be heard, despite other street and ambient noises when the vehicle is traveling under 18 miles per hour. The National Highway Traffic Safety Administration estimates the proposal would mean 2800 fewer pedestrian and cyclist injuries per year.

(END VIDEOTAPE)

MARSH: All right. Well, each company can actually pick the particular sound that they want their car to make. For example, the vehicle we looked at today, the Nissan Leaf, the technology was developed with the help of students from some of the country's schools for hearing impaired. So they helped them out in trying to get that technology together, so they can pick just the right sound for folks as they're trying to cross those streets.

BLITZER: So when they add a little sound, how loud is that car going to be?

MARSH: Well, I'll tell you this. Don't expect a blaring sound to come from any of these green vehicles. Actually, it was a lot louder in our piece than it actually is, only because our mics were picking up the sound there. But do expect a softer, a more subtle sound, but still something that is recognizable, that, hey, a vehicle is on its way -- Wolf.

BLITZER: Rene, thanks very much.

MARSH: Sure.

BLITZER: He's the executive chairman of a company you might use every day, but what is one of Google's top leaders doing in one of the most reclusive nations on earth. Stand by.

(COMMERCIAL BREAK)

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

In Australia, swimmers rise early for their exercise to beet the record heat. In Sri Lanka, mourners light candles to remember a slain journalist. In Lebanon, a man rides his motor bike through the snow. And in Afghanistan, a herder walks his sheep on a cold day.

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

The State Department isn't very happy about it, but the Google chairman Eric Schmidt and the former New Mexico governor, Bill Richardson, are inside North Korea right now.

Our foreign affairs correspondent, Jill Dougherty, is monitoring the trip for us.

Jill, when I traveled to Pyongyang myself two years ago, with Bill Richardson, we were, obviously, watched very closely by the North Korean government. What do we know about this trip so far?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: You know, Wolf, I think you could call it a mystery tour. Because, actually, there's very little known to one of the most cutoff countries in the world.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): One of the first stops in North Korea for Google executive Eric Schmidt, a rare sight in one of the most isolated countries on earth, the computer lab at Kim Il-Sung University.

So why is the head of the world's largest search engine visiting a country where average citizens are forbidden to have access to the Internet? Schmidt is in Pyongyang with former New Mexico Governor Bill Richardson. The official North Korean news agency calls it a visit by, "a delegation of the Google Corporation."

Before leaving the U.S., Richardson told CNN's Wolf Blitzer that Schmidt is going as a private citizen, not a Google representative.

BILL RICHARDSON (D), FORMER NEW MEXICO GOVERNOR: We're going to look at the human situation in North Korea, the poorest nation in the world.

DOUGHERTY: Richardson also hopes to win the release of an American tour guide being held by the North. But the Obama administration is not happy with the trip, just weeks after provocative and successful rocket launch by the North Koreans.

VICTORIA NULAND, STATE DEPARTMENT SPOKESWOMAN: We are not accompanying them, we are not sending any messages with them.

DOUGHERTY: Two years ago, a North Korean delegation visited Google headquarters in Mountain View, California. And aspects of this four- day visit leave Korea expert Victor Cha to say Google's head could be trying to encourage a more open North Korea.

VICTOR CHA, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: They have an iron grip on information and to the extent that you can loosen that up, with a trip, for example, by Eric Schmidt of Google, that's the first step that you can make in terms of starting to pierce the information bubble in North Korea.

DOUGHERTY: The trip falls on the 30th birthday of North Korea's young leader, Kim Jong-Un. In his New York's address he talked about a modern industrial revolution for the North. But that revolution right now, says Korea expert, John Park, is mostly focused on using technology as a way to generate revenue for Kim Jong-Un's regime.

JOHN PARK, HARVARD UNIVERSITY: There will be modest beginnings, but this breakthrough and connection with the Internet, as we know it on the international community stage, I think is quite far in the distance.

(END VIDEOTAPE)

DOUGHERTY: We actually did ask Google for a comment. Of course they refused. A spokeswoman saying, we don't comment on Eric Schmidt's private travel -- Wolf?

BLITZER: Tell us, Jill, a little bit more about the State Department's concerns about the timing of the visit.

DOUGHERTY: Well, one of the problems is, as we mentioned, remember, just a few weeks ago, the North launched a missile and that was very provocative. In fact, at this very moment, the United Nations is trying to figure out what it should do in response. So the State Department says this comes at a very bad time. It's like giving them a gift at the moment when they have done something that the world community thinks is bad.

And then also, when you get into that American being held, the United States and the State Department is working behind the scenes to try to get him freed and that's another -- although it would be wonderful if he were freed with, the State Department, really, at this point, it's a delicate time and they're trying to do what they can. That's at least what they're saying.

BLITZER: In our next hour, we're going to speak a little bit about this trip with Senator John McCain, who also is not very happy that Bill Richardson went to North Korea. Stand by for that.

Jill Daugherty, thanks very much.