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Funeral for Israeli Teenagers Found Dead in West Bank; Potential Hurricane Spinning in Atlantic Ocean; U.S. Versus Belgium Less than 3 Hours Away; Dow Close to Record 17,000; Obama Takes Action; Dow Surges

Aired July 1, 2014 - 13:00   ET

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


JIM SCIUTTO, CNN ANCHOR: Right now an emotional joint funeral is wrapping up for the three Israeli teenagers found dead in the West Bank. Israel's president warning again that Israel will, quote, "get our hands on the murderers and punish them."

Also right now, potential hurricane is spinning in the Atlantic Ocean, threatening to ruin July 4th for millions of Americans living along the East Coast.

And right now, we're less than three hours away from the big game, the U.S. versus Belgium. A win, America's World Cup dream lives on, a loss, they go home.

Hello, I'm Jim Sciutto, reporting again today from Washington. Wolf Blitzer is off today. And we begin with the sorrow and anger in Israel over the death of three teenagers. It is a tragedy that threatens to make already strained relations between Israel and the Palestinians even worse. Israel accuses Hamas of kidnapping and killing the teens. Hamas denies it. Israeli military says it carried out more than 30 strikes against targets in Gaza overnight. Those strikes, say Israeli officials, were in response to rocket attacks from Gaza. A funeral service for the teens just ended a short time ago. And Prime Minister Benjamin Netanyahu delivered the eulogy. He said the image of the three will forever be in the hearts of Israelis.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER (through translator): Honest and decent young men. Who were cut down by the hand of evil men who wielded a knife over them, murderers.

(END VIDEO CLIP)

SCIUTTO: An emotional moment certainly for Israel. CNN's Atika Shubert joins us now from Jerusalem. Atika, I know there's a debate going on right now inside the Israeli government as to how intense the retaliation should be. Where does that stand right now?

ATIKA SHUBERT, CNN CORRESPONDENT: Still very divided actually. They will have a second emergency cabinet meeting later tonight at around 8:30. We're expecting to hear from the prime minister after that cabinet meeting. And what seems to be the division is what action to take against Hamas. Now, we've already seen air strikes on Hamas facilities in Gaza. We've seen that very aggressive manhunt in the West Bank, trying to find the two main suspects that Israel says are Hamas members behind this kidnapping. But we are expecting more of a reaction from the government. The division seems to be how much to punish Hamas. One of the ministers, Moshe Ya'alon, the Defense minister, has said apparently that they want to build a settlement and dedicate it, a new settlement, and dedicate it to the three teenagers. And that has really divided the cabinet for now. We'll see whether or not we get any clarity from Prime Minister Benjamin Netanyahu later today.

SCIUTTO: Yes, settlement will be extremely controversial because even U.S. officials, European officials, oppose building the settlements in the occupied territories. I want to play a sound bite now from the PLO executive committee member Hannan Hashrawi. She spoke with CNN International just moments ago about her thinking about Israel's response. Have a listen here.

(BEGIN VIDEO CLIP)

HANNAN HASHRAWI, PLO EXECUTIVE COMMITTEE MEMBER: Well, actually, Israel cannot just start accusing everybody without any evidence. It cannot decide who's guilty before due process. It cannot carry out a collective punitive campaign against all the Palestinian people. Though it has been doing the last 19 days. It has killed 11 Palestinians, including teenagers and children, so there are funerals every day in the West Bank, in Gaza, in Palestine. And it has decided that it's going to punish everybody. And it has decided that Hamas is guilty even though Hamas denies any involvement.

(END VIDEO CLIP)

SCIUTTO: So, she raises an interesting point, Atika. Hamas has denied involvement. That said, they had praised the kidnappings. I mean is there evidence - has it been established that Hamas was definitely behind these attacks?

SHUBERT: The fact is, no, we don't know exactly what happened that night. We do know, of course, they were abducted. But exactly by whom, there are two main suspects who are believed to have been Hamas operatives, but what's not clear is whether or not Hamas actually gave the order, whether this was a premeditated attack or whether or not these are two men that took an opportunity to commit this horrible crime. We're still waiting to find out the exact details. And that's going to take a lot more digging by the Israeli authorities. And in the meantime, what they've been doing is putting pressure on the Hamas community both in the West Bank and the Gaza, and Gaza to get more information.

But so far Hamas is saying they didn't do it, even if they do praise the abductions. Instead, a very small group has claimed responsibility. But frankly, it's a group that no one has ever heard of before, and so it doesn't hold a lot of credibility.

SCIUTTO: Well, there's also something else going on in the investigation on the Israeli side, how the teens were kidnapped and how the police responded. Reports in the Israeli media that one of those teens called police after he was kidnapped from his cell phone. CNN's still working to verify. What can you tell us about that story?

SHUBERT: Yeah, I've heard that recording too. What would be the local 911. Now, as you say, we haven't been able to independently confirm it. But it is a very chilling audio recording. It's exactly 2 minutes, 10 seconds long. And on that, you can hear one of the teenagers calling in, saying, whispering into the phone, we have been kidnapped or abducted. And then what you hear is barking orders, telling him to get his head down, telling him to stop. You hear sort of muffled sounds of a thump. And then what could be a gunshot. Now, if this is correct, if this is the actual audio recording, it's horrifying to know that this could have been the last minutes before they died. Now, what happened after that, in terms of the police response to that call, they tried to call the number back several times, but it went unanswered. And the police say they believed at the time that it was a prank call. And it took several hours later when the parents reported the teenagers missing before any action was taken, and that has been very heavily criticized here. Whether or not they could have been saved if the authorities had been able to move faster.

SCIUTTO: And possibly track that cell phone call if it turns out to be true. Thanks very much to Atika Shubert joining us from Jerusalem.

In the region as well, to Iraq now, and a new commitment of U.S. troops. You'll remember President Obama already announced the deployment of 300 military advisers. Now there will be a new contingent. Our Barbara Starr is live at the Pentagon. The Pentagon just announcing 300 additional troops to Iraq. President Obama said on Monday sending an additional 200 for security. Can you walk us through those numbers now? I believe the total is 800. What will they actually be doing?

BARBARA STARR, CNN CORRESPONDENT; Edging up to 800, Jim, indeed. This is the third additional transfer of troops in the last two weeks. So what we have now is the president ordering in another 300 security forces. About 100 of them were already standing by in Kuwait. Another 200 joining in. But here's what's so interesting. These security forces, this latest group of 300, are going to move to protect the embassy. That would be expected. Protect some roads and travel routes. But also protect Baghdad International Airport.

There is growing concern that ISIS fighting positions are moving closer towards the airport on the northwest side of Baghdad, and the U.S. feeling right now, is they have to do everything to keep that airport open and safe for operations. There's a lot of supplies and equipment going in and out of there. But perhaps even more importantly, to keep it open and safe in case, in case, the U.S. decides it wants to or has to evacuate the U.S. embassy very quickly if there's an attack on Baghdad, if there's an attack on the embassy. So, this is putting the things into place even more. Even more security than the U.S. had there over the last couple of weeks, Jim.

SCIUTTO: Well, it's an alarming prospect, the idea of the airport being threatened. Just flew in there last week with Secretary Kerry. Very important people fly into that airport with regularity. About these troops, so now it's up to 800. The stated mission is protecting the embassy, protecting the airport. But some of the military advisers would be advanced deployed with Iraqi units. Are we getting to the point where U.S. troops are getting closer to a combat role that the president said he would not put them in?

STARR: Well, what the Pentagon will tell you is not a combat role, because they are not going out on offensive operations. But look, you know, as you and I have talked so much together about this, in Iraq, combat can come to you very, very quickly. And if they feel that the airport is threatened, if they will the embassy is threatened they will take action to defend it. And that would put them into combat. So, it's not like they're going out looking for ISIS. I guess the question is, is ISIS going to come looking for them.

SCIUTTO: No question. Great reporting. Thanks very much, Barbara Starr at the Pentagon. Also in Iraq, the new Iraqi parliament met for the first time to consider a change at the top of the government. But things did not go exactly as planned. CNN senior international correspondent Arwa Damon is in Baghdad. This first parliament session ended badly. I was there with Secretary Kerry last week. One of his key missions was urging the Iraqis to make a political deal, a political compromise. It doesn't look like there's any real chance of that right now.

ARWA DAMON, CNN CORRESPONDENT: And that's not entirely surprising, Jim. The Iraqis have been under a lot of pressure to even hold their first parliamentary session. One of the main reasons why we saw the date of July 1ST announced. Things seem to start off fairly well. 255 members of parliament showed up. Quorum was achieved. They were all sworn in. And then they took a half hour recess. And about half of them did not return. Mostly Sunnis and Kurds. At the core of all of this is the Iraqi politicians' inability to come to consensus on the various positions. This is something of a package deal and has always been a very lengthy and painstaking process. The last government's formation took months, but without the various positions being pre-agreed upon. That is the Sunni speaker of parliament, the Shia prime minister, the Kurdish president. You're not going to see the political process here moving forward. What makes it all the more frustrating and angering for the Iraqi politician is that there was a sense that given how dire the situation in Iraq is right now with ISIS threatening to destroy the capital, that perhaps their politicians would have found a certain level of maturity and capacity to put aside their sectarian divide, their own personal political gains, and actually get this process started. But the Iraqi population once again, Jim, was left very bitterly disappointed.

SCIUTTO: Were you aware there's a lot of talks here about Iraq splitting up. Some people even in favor of Iraq splitting up and in addition to what's happened in the parliament, you have Kurdish leaders effectively declaring independence in Kurdistan. As you're there on the ground, do you feel that there's momentum towards an effective split? That that's the more likely outcome now? If politicians cannot reach that compromise agreement?

DAMON: It's something that's being talked about more and more, Jim. Albeit somewhat reluctantly. Because people at the end of the day did not want to necessarily see their country split into three different sections. But we are beginning to see the start of that, as you're mentioning there, the prime minister of Iraqi, the president of Iraqi Kurdistan, Massoud Barzani, coming out and effectively annexing the oil-rich city of Kirkuk, saying that it is now a part of the autonomous region of Iraqi Kurdistan. Coming out, also saying that they would be holding a referendum of independence in the upcoming few months. You have these growing bitter divides between the Shia and the Sunni possibility. Some Iraqis will say to you, look, clearly, we aren't able to make this work, and it's something that we don't necessarily want to accept, but maybe moving ahead that is the only choice we're going to have. But again, further complicating all of this is that ISIS has taken over large portions of the country, Sunni lands, and so either way one looks at it, Iraq is finding itself in a very difficult and challenging situation at this stage, Jim.

SCIUTTO: No question, the other part of the political compromise, the U.S. has made that a condition of additional military action there, saying that, in effect, has to come first. Thanks very much to Arwa Damon, who's live now in Baghdad.

Returning to the U.S. now, and another storm, the first named tropical storm of the 2014 season could put a damper on our July 4th holidays. It may develop into a category one hurricane, just in time for this weekend. Right now, it is off the coast of Florida. We're joined now by meteorologist Chad Myers at the weather center. Chad, looking at this now, should we just accept this is going to spoil our weekend along the East Coast?

CHAD MYERS, CNN CORRESPONDENT: Much of it, yes. North Carolina, South Carolina, Georgia, Florida, for sure. And then some rip currents up into New Jersey, into New England by that Saturday and Sunday timeframe. So let's go tick tock this as we go where we are right now, on shore flow coming into Atlantic beach, all the way up to Jacksonville. A lot of rip current activity already taking place. Offshore flow in Miami, no real problem down here. And then we will get rains. Every time a rain band comes by today, you'll pick up a little bit of wind. Not a lot of wind today. The storm is about 35, 40 miles per hour right now, but it is gaining strength. It is getting deeper in color. And it's going to continue to get into this very warm water right off the East Coast. We call it the Gulfstream. So, by tomorrow, we're already at 60. And then to 70. And then 80 miles per hour. Very close to North Carolina. Now, remember, haven't had to do this much lately with no land falling hurricanes for so many years. Here, right here, that's our cone. It could be all the way almost to Raleigh or completely offshore missing the U.S. altogether. If we're staying out here, though, in the Gulfstream for much longer, this could be a bigger storm than 80 miles per hour. There's all that potential, all that energy in the atmosphere, all that very warm water off the Florida East Coast. Already some watches and warnings posted along there. If you're going to the beach this weekend, you will see those big red flags stuck in the sand. And go ask a guy what that means. It means don't go in the water. Especially if you are seeing two of them. Because I don't even need anybody in this water, I know it's going to look, let's go play in it, but without a life jacket on, the rip currents are going to be tremendous this weekend, Jim. SCIUTTO: Well, looks good, looks like you just spoiled my weekend. Sorry to say.

(LAUGHTER)

MYERS: Go to Kansas, it's going to be beautiful.

SCIUTTO: Thanks very much, Chad Myers in Atlanta. Coming up next, President Obama doubling down on his go-it-alone strategy. But what message is he sending to Congress? Our Gloria Borger joins me to talk about that. And later, we'll be live in Brazil as the U.S. team and the U.S. fans get ready for their knockout match against Belgium. Stay with us.

(COMMERCIAL BREAK)

SCIUTTO: As we come back now, our eyes are on Wall Street. As you see there, it is inching towards 17,000 on the Dow Jones Industrial Average. That would be a record. It's already a record, 17,000. First time it would have ever crossed that threshold. The market just seems to go up and up.

Back here in Washington, President Obama today doubled down on his go- it-alone strategy on issues affecting the middle class. At the start of a cabinet meeting, the president said he'd prefer to work with lawmakers, but he's not willing to wait while they do nothing.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If Congress can't act on core issues that would actually make a difference in helping middle class families get ahead, then we're going to have to be creative about how we can make real progress. Keep in mind that my preference is always going to be to work with Congress and actually get legislation done. That's how we get some more permanent fixes.

(END VIDEO CLIP)

SCIUTTO: CNN chief political analyst Gloria Borger joins us right now. You know, you listen to the president there, you listened to him yesterday, he seems like he's given up with Congress.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes, he's frustrated, he's just had it. And Republicans in Congress are starting to talk about his so-called imperial presidency and how he's trying to legislate through executive order. And he started giving it back to them and saying, okay, I'm going to tell the American public why I'm doing this. I'm doing this because you guys won't do your job. You won't do anything. He keeps saying, I prefer legislative fixes. But I guarantee you, one of the reasons we saw him meeting with his cabinet today was of course maybe he would like to poll them about what he could do in each of their agencies vis-a-vis some kind of executive order --

SCIUTTO: Without Congress' help.

BORGER: Yes.

SCIUTTO: And how much can he do, for instance, on immigration reform, through executive order?

BORGER: He did his own little version of the DREAM Act. He's done that. On minimum wage, for example, he said that federal contractors have to pay the minimum wage. On Obamacare, he issued a lot of regulations, changing that. So there are -- there are things he can do.

Don't forget, though, this is a president who came into office saying he was going to be transformational. Now, and you could argue that Obamacare, for better or worse, is a big piece of legislation, but now he's talking about using the pen and the phone as he calls it, through executive order. That's not big stuff, that's littler things, because he can't work with Congress, and they don't want to work with him.

SCIUTTO: We know where Congress' approval ratings are. They are just about 10 percent, but the president's aren't great either. I mean, in this battle, who do Americans blame and how does this affect the 2014 election?

BORGER: First of all, I think Americans are sick of everybody. And the president's approval rating is in the sort of low 40s. And I would argue, that's probably a set point that he is not going to get much higher or much lower. In the sixth year of the presidency, people kind of figure out they know who you are, right?

SCIUTTO: They're not going to change their opinion.

BORGER: Not wildly, unless there's some kind of huge crisis. They know how they feel about Congress. They don't like either party in Congress. They don't think they're doing their jobs. What the midterm election will be is an election that brings out the committed, motivated voters of both parties.

SCIUTTO: Most extreme.

BORGER: Most extreme and most committed. And what the Democrats are worried about is their turnout is going to be low. Because people aren't excited about President Obama anymore, and it's the Republicans who have the motivated voters. When you have those motivated voters in midterm elections, which are usually lower turnout to begin with, then you have an advantage.

SCIUTTO: So this is Obama about motivating those voters, trying to find the thing that's going to --

(CROSSTALK)

BORGER: Hey, guys, these guys wouldn't work with me, this is why I have to do this, this is why your vote counts. They're going to call me an imperial president. I'm not. I'm just trying to get something done here. He's trying to motivate Democrats out to, you know, out to vote. And he will use something like the Supreme Court decision yesterday, the Hobby Lobby decision. SCIUTTO: Right, sure.

BORGER: Which I guarantee you, they will bring it up on the floor of the Senate. Even though Democrats know they will lose. But they can sort of reignite the so-called war on women again.

SCIUTTO: And motivate women voters.

BORGER: And motivate women voters to come vote for Democrats.

SCIUTTO: Thank you very much, Gloria Borger. As always.

Coming up next, why General Motors is recalling another 8 million cars. We're going to ask if the company can turn things around. We're also keeping an eye on the Dow. Very close to 17,000. Just three points, less than three points above that mark. Stay with us.

(COMMERCIAL BREAK)

SCIUTTO: Welcome back. Let's do a check of the markets. As you watch there, the Dow inching towards 17,000. It's been within 2, 3 points for the last several minutes now. We'll keep watching that. That will be another record in the Dow Jones Industrials. The market just seems to keep rising. I want to bring in Rana Foroohar, she is CNN's global economic analyst and assistant managing editor at "Time." Thank you for joining us. Rana, as you look at this market, we've had so much mixed economic news. GDP growth was negative in the first quarter. How does the market keep going up?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: You know, it's amazing, I think this really speaks to the fact that we've been in a low interest rate environment for so long, and typically when you have low interest rates and you have a lot of easy money sloshing around, stock prices go up.

That said, corporate profit margins are also the highest they've been in a long time. Companies have been able to keep those margins up not only because they're growing in fast moving places like emerging markets, but also because they've been doing a lot of cutting, and they've been buying technology that allows them to downsize workers. So in some ways, there's still this split between how buoyant the markets are and what people are really feeling on the ground in the real economy.

SCIUTTO: No question, no question. One of the stocks surprisingly that's helping the Dow up today is GM, General Motors. It was up more than 2 percent from the start of trading. This is happening as the company issues yet another recall. This time, 8 million cars, bringing the total number of vehicles recalled this year to 27 million. That's more cars than they've sold this year.

And they're also moving forward on compensating the victims of some of the faults in the cars. I wonder, Rana, is GM successfully drawing a line under this controversy?

FOROOHAR: I think that it's too early to say they're drawing a line under it. But Mary Barra, the CEO, is being very true to her word. She's said many times in the last few weeks in interviews she will do whatever it takes and recall as many cars as it takes to put trust and faith back in this company. She was asked as little as a week ago, are there going to be more recalls? Can you say that you're done? And she said no, we can't. You may still see more recalls.

I think the key thing is she is trying to live up to this commitment to bring a new level of security and a new culture to GM, and that is a deep, long process. This is a company that has for decades had a culture of secrecy, of different divisions not speaking to one another. We saw that in the internal report that GM released. That was one of the key problems and the reasons for this ignition switch crisis. So I think it may not be done yet.

SCIUTTO: Well, tough way for her to start in that position, as CEO, Mary Barra.

FOROOHAR: Absolutely.

SCIUTTO: Thanks very much, Rana Foroohar.

In sports, it's win or go home. Time for the U.S. national soccer team. They're gearing up to face Belgium. And we're gearing up as well. We're going to be live in Brazil. That's coming up right after this break.

(COMMERCIAL BREAK)