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Cease-Fire Deal Closer; Speaking Live With Israeli Prime Minister; Israeli Soldier Confirmed Killed; Nabil Shaath Talking about Israel's War against Palestinian People; Putin's Preparing to Send More Powerful Weapon to pro-Russian Rebels in Ukraine; Personal Belongings of Flight Mh-17 Victims Appeared in Search Area Today

Aired July 25, 2014 - 13:00   ET

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


WOLF BLITZER, CNN ANCHOR: After the shelling of that United Nations school in Gaza, at least four Palestinians have been killed in the violent outbreaks in the protests on the west bank. And it's not clear who was behind the shelling of the U.N. school in Gaza. An Israeli spokesman tells CNN there is a possibility shells from Israeli forces hit the school but the sources also say it could have come from a Hamas rocket itself aimed from Gaza into Israel that fell short. An investigation by the Israelis they say is now underway.

Let's take a closer look at some of the cease-fire proposals now in the works. Here are what diplomatic sources are telling us. The one- week truce would be used to get medical supplies into Gaza and get casualties out. The hope is that the parties would use the opening to begin formal negotiations on a more permanent truce. The U.S. is clearly taking the lead right now, drafting the text in consultations with the Egyptians. Qatar is serving as a main contact with Hamas a long with Turkey. Hamas has not yet signed onto the plan.

The Israeli cabinet has been meeting in emergency session in Tel Aviv to discuss the cease-fire proposals. I want to bring in someone who has been attending those emergency meetings. Yuval Steinitz is the Israeli minister of intelligence. He's here now with me in Jerusalem. Minister, thanks very much for going on - for coming here.

YUVAL STEINITZ, ISRAELI MINISTER OF INTELLEGENCE: Hello. Good evening.

BLITZER: How close are Israel and Hamas, through the work of the United States and others, to a cease-fire?

STEINITZ: It doesn't seem close at all. If Hamas and Qatar want a cease-fire, it will legitimize. (INAUDIBLE) will legitimize (INAUDIBLE) of Gaza and, actually, will legitimize under certain conditions, launching rockets at Israeli civilians. One thing is clear, Wolf, terrorism shouldn't be a peace and there should be no price for terrorism for launching rockets on Israeli civilians.

BLITZER: So, it sounds to me, minister, and correct me if I'm wrong, that the deliberations Prime Minister Netanyahu, and you and your other cabinet ministers have been having, it doesn't sound likely that this latest proposal for a one-week cease-fire is something that Israel is going to accept? STEINITZ: No. Let's talk about two things. Israel was ready already

- also in the past and will be ready in the future, if necessary, to make a humanitarian cease-fire. Israel was ready to accept the Egyptian proposal for the complete cease-fire, an immediate cease- fire. It was rejected by Hamas. But one thing is clear, any -- the top - the goal should be a real enduring cease-fire and bringing security and confidence (inaudible) to the people of Israel, also to the people of Gaza. In order to achieve this, you have to demilitarize Gaza. Gaza was supposed to be totally demilitarized. That is a Palestinian commitment signed on the Abu Mazen on the White House lawn 20 years ago that Gaza will remain forever demilitarized. It was captured by Hamas and Islamic (inaudible) organizations very similar to Al Qaeda or ISIS in Iraq. And now, Gaza should be demilitarized again otherwise there will be no real solution to the situation.

BLITZER: What about a one-week temporary humanitarian cease-fire? That seems to be on the table, phase one. And then, all of these other issues could be discussed subsequently.

STEINITZ: Look, I hope that we can find a diplomatic solution that will enable the demilitarization of Gaza once more for the benefit of both the Israelis and for the Gazans. If Gaza would remain demilitarized, there would be no rockets launching on Israelis and no suffering in Gaza. This should be the closest of - and the prospect of any real solution in Gaza. We have to insist on the demilitarization of Gaza. We will not accept any proposal that will appease terrorism.

And please don't forget, it's true, that ISIS are fighting in Iraq and (INAUDIBLE) in Syria and Al Qaeda all over the world. And Islamic jihad and Hamas are fighting mainly against Israel. But (INAUDIBLE) is very similar organizations. We are speaking on Islamic zealots, terrorists, and nobody should appease such kind of terrorists and such kind of assaults on civilians.

BLITZER: So, where exactly -- because it sounds to me like Secretary Kerry wants to announce that there's at least a temporary cease-fire for a week or so. Is that going to happen?

STEINITZ: I don't know. But I think -- and I'm confident Secretary Kerry's well aware, you have to be very careful not to empower Hamas vis-a-vis Palestinian authority. Not just the Palestinian authority, but also Egypt and the whole Arab league are actually supporting the Egyptian proposal and not the Catalan approach because the Catalan approach is about empowering the terrorists, empowering the Zealots.

BLITZER: Because Qatar has been the intermediary between the U.S. -- the U.S. doesn't talk to Hamas because it regards it as a terrorist organization. But Qatar has been talking to Hamas, together with others, including the Palestinian authority, right? The Palestinian authority president, Mahmoud Abbas, met with the leader of Hamas in Qatar. So, I'm not exactly clear what, if anything, is going to emerge from this current diplomatic frenzy -

STEINITZ: I don't know but - BLITZER: -- towards a cease-fire?

STEINITZ: -- let's not forget, maybe the Arab league can handle it with the Egyptian which Egypt is the major, the most influential Arab country that can make the mediation.

BLITZER: Yes.

STEINITZ: Qatar is very dangerous. Qatar, like Iran, is the main supporter of Hamas. We know Hamas is getting most of its rockets from Iran and most of its financial aid from Qatar. So, this is a country that supports terrorism. Not just against Israel but also other terrorist groups in the Middle East. If Qatar, one day, will change its attitude against terrorism, then Qatar will be more legitimized. But we cannot ignore the fact that Qatar hosts Marchel (ph), the chief terrorist, the chief leader of this terrorist organization. And Qatar, like Iran -- Iran is supplying Hamas with missiles and rockets illegally against U.N. Security Council decisions and against all previous agreements and Qatar is supplying with money.

Now, if we like to have any hope to future peace process in the Middle East, such groups of terrorism, of terrorists, cannot be legitimized. Don't forget, Hamas captured Gaza from the Palestinian authority, killed several hundred Palestinian Fatah, official Palestinians, exactly like ISIS did in Muslims in Iraq.

BLITZER: Minister, I must say, going into this interview, I was a little bit optimistic that there would be at least a one-week cease- fire but from what I'm hearing from now, knowing what Hamas want, knowing what Qatar want, it doesn't sound like there's going to be much of a deal.

STEINITZ: There's only one thing will work for the benefit of both Israelis and Palestinians, the demilitarization of Gaza. If Gaza will be demilitarized, we will be able to lift this -- what is so-called the cease with restrictions. And people, both on the Israeli side of the border won't suffer from rockets and terrorist activities and people in Gaza will be able to improve their standard of living. This is the only two solutions. All other proposals won't because they don't touch the core of the problem. The fact that Gaza was supposed to remain demilitarized and there are currently thousands of Iranian missiles and other missiles in Gaza.

BLITZER: I know you're going back to that security cabinet meeting in Tel Aviv. Minister, thanks very much for joining us. Yuval Steinitz is the Minister of Intelligence of Israel. Thanks very much.

STEINITZ: You're welcome.

BLITZER: We're going to get Palestinian reaction to what we just heard, a possible cease-fire deal, although it sounds to me like that is becoming increasingly more remote, at least for now. But we'll check in with former Palestinian foreign minister, Nabeel Shaath. He's going to join us live. He's in Ramallah. We'll get his reaction to what we just heard and what is going on. Meanwhile, there have been angry protests that broke out today on the west bank. Palestinian leaders called for a day of rage in response to the deadly shelling of that United Nations school in Gaza. There were also violent protests overnight, at least four Palestinians have been killed.

CNN's Karl Penhaul is now joining us from Gaza City. Karl, do we know more about what happened that the U.N. school? You were there overnight. Because there have been so many casualties.

KARL PENHAUL, CNN CORRESPONDENT: So many casualties, so many different versions of events of what went on, Wolf. But the United Nations has promised that they won't let this incident just disappear in the fog of war. On fact, this afternoon, the first U.N. team headed to the school in there in northeast Gaza to try and gather some preliminary details. They said that they were on the ground a very short time because despite, in their words, having informed the Israeli military of their intentions to carry out that investigation, the area is still in a combat zone.

And the U.N. spokesman told us that because of heavy, heavy gunfire in the area, that preliminary investigation team had to leave. From the wording, it is seen that they were blaming Israeli gunfire, but I think we shouldn't be drawing inferences here. It is very clearly a delicate situation.

What we do know, though, overnight, the Israeli military has told us that yesterday, there was fighting in the area. The Israeli military says its troops came under fire from Hamas militants and they responded to try and dispel some of that threat, which they said was in the area around the school. That, of course, stopped well short of taking responsibility for the munitions that apparently fell on that school.

The United Nations, for its part, still embroiled in this debate over whether the Israeli military did permit a humanitarian window to allow those civilians to be evacuated. Initially, the U.N. said that they asked twice. The Israeili military allowed them to evacuate civilians. The Israeli military said they did permit that. But when I talked back with the United Nations this morning, they said, we have no clue what the Israeli military is talking about. They simply did not response to our desperate pleas to allow civilians out of there. Of course, to put this all in perspective, the U.N. is accusing both the warring sides of violating the neutrality of civilians and violating the neutrality of U.N. installations. We know that the U.N. has accused Hamas twice in the past 10 days of storing rockets in two different schools. We also know that the United Nations has accused the Israeli military twice in three days of shelling two other U.N. schools -- Wolf.

BLITZER: And I must say, Karl, it doesn't look like that. I was -- as I said earlier, I was a little bit more hopeful there would be a cease-fire. Based on that interview I just conducted with Israel's minister of intelligence, Yuval Steinitz, it doesn't look like that cease-fire is by all immenant at all. We'll see what happens in the next hour or two. We'll see what Secretary Kerry has to say. We'll get a statement from the Israeli prime minister as well. But this fighting may continue, at least for the time being. Karl Penhaul, be careful over there in Gaza.

The high death toll in Gaza is provoking a strong backlash around the world. Muslims are marking the last Friday of the Ramadan with demonstrations of solidarity with the Palestinians of Gaza. The rallies and the marches, they are likely to grow if the fighting in Gaza continues. Israeli police have boosted their presence in Jerusalem. The "Jerusalem Post" reports the officers have been told to expect violence in and around Jerusalem. The Gaza fighting has also sparked some anti-semitic attacks. A soccer game in Austria was suddenly interrupted when people with Palestinian flags ran onto the field and began attacking Israeli players in Austria.

Meanwhile, the Israeli military today confirmed that one of its soldiers listed as missing in action was killed in Gaza on Sunday. The soldier, Staff Sergeant Oron Shaul. Hamas had claimed it was holding Shaul after capturing him during an ambush. But a committee led by the military's chief rabbi says he's now been classified as, quote, "a soldier killed in action whose burial site is unknown." But the Israelis say he is dead.

Still ahead, we're going to get Palestinian reaction to the diplomatic efforts to work on a cease-fire between Israel and Hamas. The former Palestinian foreign minister, Nabil Shaath, he's standing by live in Ramallah on the west bank. We'll speak with him.

And Russia appears to be preparing to flex its military muscles in Ukraine. We're going to have the latest on U.S. intelligence and the transfer of weapons over the Russia-Ukrainian border.

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BLITZER: We expect to learn soon whether Secretary of State John Kerry has been successful in forging a temporary truce between Israel and Hamas or will the secretary return to the United States empty- handed right now? The former Palestinian foreign minister Nabil Shaath is joining us now live from Ramallah on the West Bank.

So, Mr. Shaath, thanks, first of all, very much for joining us - joining us. We just heard from the Israeli minister of intelligence, Yuval Steinitz. He was pretty pessimistic, he didn't think Israel was going to sign on to this latest proposal. He says it's a proposal that Qatar has put forward for a temporary ceasefire. He says Israel is not ready to reward Hamas. What do you know about where the ceasefire efforts stand right now?

NABIL SHAATH, FORMER PALESTINIAN FOREIGN MINISTER: There is no war against Hamas. There is a war against the Palestinian people. One thousand Palestinians in Gaza have already been killed. 700 of them are women, children and elderly civilians. Schools are being bombed. Hospitals and mosques are being bombed. And so, the victim is the Palestinian people. And the war is against the Palestinian people. And the soldiers of Israel are inside the Gaza Strip, among the houses and destroyed buildings of the Palestinian people. The cease-fire is now really the total responsibility of Mr.

Netanyahu. He must respond today to Mr. Kerry and tell him yes, he accepts the Egyptian initiative with the additions that have been made by Mr. Kerry after his investigations that a cease-fire should be starting tonight and that in the next few days agreements should be reached to really end the siege of Gaza and proceed to a normal and safe life for the Palestinian people in Gaza. This is really what's on Mr. Netanyahu's table. And this is what we are waiting a response for. This is a proposal that all the Palestinians and Mr. Mahmoud Abbas and the Palestinian authority are backing. And you could see that the Palestinians, the West Bank, are all really united behind this cease-fire and its effect and it's Mr. Netanyahu's call to say yes tonight.

BLITZER: Basically, what I think I heard from the Israeli minister of intelligence is they're ready for a cease-fire, but they don't like these new conditions that have been attached to the initial Egyptian proposal. I'm not exactly sure what those new conditions are. Maybe you could tell our viewers what else would be in this immediate new proposal that Secretary Kerry has put forward with the assistance of Qatar and others.

SHAATH: I mean, I just - would you please just repeat the last part of your question?

BLITZER: What are the additional conditions, in addition to a cease- fire, Hamas no longer fires rockets and missiles into Israel, Israel stops firing at Hamas targets in Gaza. What else would be included in this initial proposal for a cease-fire that the Israeli cabinet is now considering?

SHAATH: Well, the proposal that was made by Egypt and supported by Mr. Kerry will basically allow an immediate cease-fire and few days afterwards to have meetings in Cairo between Israelis and Egyptians and Americans and Palestinians to reach a normal life for Gazans after the cease-fire, i.e., a peaceful and safe Gaza for its people and an end of siege and a big effort to rebuild Gaza that has been destroyed for the first - third time by the Israelis. What's on the table is not to give Mr. Netanyahu time to destroy what he has not destroyed, to continue the presence of his army in Gaza is totally unacceptable. He must withdraw his army in order that we can proceed to the day after the cease-fire.

BLITZER: Would Israel be allowed to keep its troops in Gaza during this first week of this interim phase, shall we call it, humanitarian pause in the fighting? Would Israeli troops be allowed to remain in Gaza, or would they have to pull out?

SHAATH: No, the Israelis want to keep -- to stay with their forces in Gaza, so that they can continue to destroy and to bomb and to acquire. This is not a cease-fire. This is the declared objective by people like Ayalon and Avigdor Lieberman and the right wing coalition of Mr. Netanyahu. They don't want the Israeli army to pull out without going back with something tangible to his people to justify the thousands killed by the Palestinians and the 50 or 60 Israeli soldiers killed. That is, they want to stay in Gaza to continue their military operations and that is something that's inconsistent with any attempt to reach a ceasefire. BLITZER: So I want to make sure I fully understand. When the Israelis say they'll do all of those things, they'll ease what the Palestinians call the siege of Gaza, but only if Gaza is demilitarized, is that part of the deal right now? Will Hamas accept the demilitarization of Gaza?

SHAATH: No, I don't think that's really on the table. What's on the table is a real cease-fire maybe - with their international inspection, whatever other means. It does not mean neither the demilitarization of Gaza or the demilitarization of Israel, for that matter. The question is, a real enforcement of a cease-fire. But that enforcement of a cease-fire can only really become possible if Gaza is allowed a normal natural peaceful life for its people.

BLITZER: Nabil Shaath, we'll stay in very close touch with you. These are very, very delicate moments that we're watching unfold right now. And the situation very tenuous. So much at stake when we see what's going on. I must say, that I've said it now a few times, it doesn't look very hopeful to me. At least not now. We'll see what the Israeli government announces after their cabinet meeting. We'll see what Secretary Kerry announces. I know you are the physician of the Palestinians, you want a cease-fire, obviously, and we'll see what happens. Nabil Shaath, thanks very much for joining us.

BLITZER: Coming up, a new disturbing revelation about Russia's intentions in Ukraine. U.S. military officials say, they are preparing to transfer powerful weaponry into Eastern Ukraine, possibly today. We'll have a live report from the Pentagon.

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BLITZER: The Pentagon says Russian President Vladimir Putin is preparing to send more powerful weaponry into Ukraine, perhaps as early as today. Let's turn to our Pentagon correspondent Barbara Starr. She's standing by. What are you learning, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, Pentagon reporters had a bit of an update earlier today. And we've been told by the Pentagon spokesman the intelligence now indicates Russia is preparing. The movement could be imminent, as soon as today, to send something called 220 millimeter multiple launch rocket systems into Ukraine. These are some of Russia's heaviest weapons. Large projectile warheads. They can go about 20 miles or so. The sense is that Russia is going to send perhaps half a dozen, a dozen systems into Ukraine, try and get them over to the pro-Russian separatists and get them to take back some of the territory they may be losing to the government forces which have really been on the move in the last couple of weeks. This would be another destabilizing escalation by Putin according to Pentagon officials. What they want to see, of course, is Russia ratchet back. Instead, Russia is escalating. And they still see those Russian artillery pieces on the border. There is also intelligence indicating that they have, indeed, been firing across the border from Russia into Ukraine. So another day, Wolf, when none of the military signs look like anything is deescalating in that area. Wolf.

BLITZER: Tension clearly - clearly continuing. Thanks very much, Barbara Starr at the Pentagon for that update.

Meantime, outrage over how pro-Russian rebels are handling Flight 17's crash site is intensifying around the world. Eight days after the Malaysia airliner went down, Ukrainian and Dutch officials say access to the debris field continues to be restricted by pro-Russian rebels. Members of a small European monitoring group allowed in this week report that personal belongings including credit cards and passports suddenly appeared in the search area today. More than half of the people aboard Flight 17 were from the Netherlands.

And the Dutch prime minister says he's determined to get answers as to how this tragic incident occurred. He says he's talked to the Russian President Vladimir Putin six times since the crash. Putin isn't just facing questions about Moscow's possible role in this tragedy, he's also getting hit with more economic sanctions over the Ukraine crisis. Today, the European Union announced they are expanding sanctions targeting dozens of individuals and companies.

Coming up, U.S. jetliners have resumed flying into Tel Aviv even as fighting continues. Will the FAA once again potentially ban flights in and out of Ben Gurion international airport? We're going to Washington for a live report.

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