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THE SITUATION ROOM

Sources: Russia Hacked White House Computers; New U.S. Help After Airstrikes Kill Civilians; Contradicting Details Emerge on Nuke Deal; Sources: Russians Hacked White House; Pentagon's $10 Billion 'Flop' Left U.S. Exposed; Pentagon's $10 Billion Flop; Secret Mission to Sneak "The Interview" Into North Korea. Aired 5-6p ET

Aired April 7, 2015 - 17:00   ET

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


[17:00:11] WOLF BLITZER, CNN HOST: Happening now, breaking news. White House tapped. Sources tell CNN hackers working for the Russian government broke into White House computers and obtained sensitive information, including access to the president's schedule. How did they get in? And were they able to access important secrets?

Weapons and intelligence. As civilians flee a country in chaos and students die when airstrikes hit their school, the U.S. steps up aid to a key ally. But is it too late?

Ten billion dollars wasted? Your tax dollars spent on floating radar platforms and war planes that shoot lasers. Unfortunately, none of it works. Why was the money wasted?

And "The Interview" by air. Copies of the movie mocking Kim Jong-un are being air-dropped into North Korea. Will its citizens find out how the rest of the world views their leader?

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

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following two major stories. The United States now increasing military aid and intelligence to help Saudi Arabia with its airstrikes in Yemen. The one-time U.S. ally is in chaos right now, with gun battles in the streets and airstrikes meant to target rebels killing civilians instead.

Also, a very disturbing story breaking right now, exclusively, in fact, here in THE SITUATION ROOM. CNN is learning stunning new details about a computer break -- computer break-in at the White House by hackers working for the Russian government.

Our correspondents and experts have been working their sources. They have new details on all the day's breaking stories. President Obama's deputy national security adviser, Ben Rhodes, he's stranding by live at the White House to take questions.

But first, let's go to the CNN justice reporter, Evan Perez, with the breaking news on the White House hack. Evan, what have you learned? EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Wolf, these Russian hackers

got access to sensitive parts of the White House e-mail system. They could even see the president's schedule, the non-public parts of it, in real time.

They got access to all of this in a clever way, through the State Department. Once they got in there, they used that access to trick someone to get them into the executive office of the president. Investigators say it's one of the most serious cyber breaches of U.S. government agencies. Hackers are believed to be working for the U.S. government, Wolf.

BLITZER: Was this information classified, the information presumably that they hacked?

PEREZ: The White House said that this was an unclassified system, but, even an unclassified system has a lot of sensitive information that is very valuable to foreign spies. This is stuff that, you know, everything to do from the president's schedule, as we mentioned, to plans for major policy announcements. So there's a lot of sensitive stuff that they are -- that people are trading back and forth not only in the White House but with all government agencies.

BLITZER: Because when you say the president's schedule, the White House does release every day a public schedule that the president has. But there's obviously sensitive information they don't release publicly about meetings, conversations, other stuff like that.

PEREZ: Right. I think the conversations he's having with foreign leaders, the phone calls that, again, Russian spies or Chinese spies would love to get their hands on.

BLITZER: So has the government, the U.S. government, the Obama administration, acknowledged this hack?

PEREZ: Well, they haven't publicly. But you can get some hints of this from some statements, as some of the government officials have made recently. The director of national intelligence, James Clapper, was at a hearing a few weeks ago in the Senate. And here's how he put it, Wolf.

(BEGIN VIDEO CLIP)

JAMES CLAPPER, DIRECTOR OF NATIONAL INTELLIGENCE: Russia and China continue to develop very sophisticated cyber programs. While I can't go into detail here, the Russian cyber threat is more severe than we had previously assessed.

(END VIDEO CLIP)

PEREZ: And Wolf, the White House said in October that it had noticed some of the suspicious activity. It shut down the system to try to make sure that it could lock the doors, make sure the hackers could not get back in.

But, you know, one of the things that they -- that we can't begin to sort of understand is how much -- how much further this will go. Because the U.S. and Russia obviously, are at odds over very many policy issues, including Ukraine and Syria, and so officials tell me they expect a lot more of this activity.

BLITZER: So just to recap, what happened was they managed to hack into the State Department system --

PEREZ: Right.

BLITZER: -- and then back into the White House system?

PEREZ: Right. Exactly. This is what they call phishing. And once they got control of someone's e-mail -- e-mail account at the State Department, they tricked someone to allow them to get access into the White House. It's something that the government sees a lot. A lot of times you see the FBI warning average people, you know, consumers out there, that this is the way people get to steal your financial information. In this case, we're talking about national security that's at risk.

BLITZER: We certainly are. All right. Good reporting, Evan, for us. Thanks very much. We'll have more on this story coming up later.

[06:05:02] But let's get to another breaking story that's happening right now. The United States increasing military aid and intelligence to help Saudi Arabia's airstrikes on rebels in Yemen. This comes amid reports the Saudis are killing civilians and even hit a school.

Let's go to our Pentagon correspondent, Barbara Starr. She's working the story for us. What are you learning, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, so far no verification that those Saudi airstrikes have directly killed civilians on the ground.

But the question of civilian casualties is something that has the Pentagon concerned.

(BEGIN VIDEOTAPE)

STARR (voice-over): A Yemen government special forces camp under attack. Explosions in the street, as government and rebel forces battle each other in southern Yemen. Civilians run for safety as French troops evacuate children. More than 600 Indian, Chinese, Pakistani, and Sri Lankans getting out by ship. Tonight, the U.S. military is supplying more backup for the two-week-old Saudi bombing campaign against the Iranian-backed rebels.

ANTONY BLINKEN, DEPUTY SECRETARY OF STATE: We have expedited weapons deliveries. We've increased our intelligence sharing and we've established a joint coordination planning cell in the Saudi operations center.

STARR: The Pentagon appointed two-star Marine Corps Major Carl Mundy to run a 20-person U.S. support operation. The immediate question: Will the U.S. share detailed satellite imagery on specific targets the Saudis want to hit?

TOM SANDERSON, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: The United States would be in a terribly difficult and awkward position if it did not offer the Saudis support of this nature.

STARR: The Pentagon already urging caution. Defense Secretary Ash Carter Wednesday spoke to the Saudi defense minister and emphasized the importance of limiting civilian casualties when conducting airstrikes, according to a U.S. statement. Two sources say for now the Saudis pick the targets they want, discuss it with the U.S., which tells them where civilians may located.

No indication the Saudis will back off. They are worried that rebels increasingly have sophisticated arms and are being resupplied by Iran.

BRIG. GEN. AHMAD ASSERI, SPOKESMAN, SAUDI-LED COALITION: Hezbollah and Iran claim militias to harm, to destroy the structure of the state in Yemen.

(END VIDEOTAPE)

STARR: And there is another player on the battlefield here. That is the al Qaeda group in Yemen. How long before they take advantage of the chaos and plan, potentially, an attack against the U.S.? Just another worry for the Obama administration right now on this, Wolf.

BLITZER: So when the Saudis say that Iran is supporting the Houthi rebels, that Hezbollah, the Lebanese group, is supporting the Houthi rebels, are there -- is there evidence that there are Iranian and Hezbollah fighters in Yemen right now working directly with these Shiite Houthi fighters?

STARR: Well, the U.S. doesn't have intelligence assets on the ground, personnel to get that kind of direct information. The Saudis may well believe it.

One of the big things, however, that they are watching for in terms of direct influence from Iran is the resupply of weapons to those Houthi allies that they have. There is a good deal of concern that Iran is shipping in weapons by air, landing airplanes at airports and unloading weapons, and even trying to get them into ports that they control in Yemen. That was a proven tactic with Hezbollah in the past.

BLITZER: All right. Barbara Starr, reporting from the Pentagon, thanks very, very much.

Joining us now, the White House deputy national security adviser, Ben Rhodes.

Ben, thanks very much for joining us. We've got a lot to discuss. Let's go through point by point.

First of all, I want your reaction. You heard Evan Perez reporting now from his sources. He has confirmed that that hack that took place at the State Department, which was publicized at the time, was actually done by hackers working for the Russian government. Eventually, they managed to get into the White House computer system, as well.

What can you tell us about that?

BEN RHODES, WHITE HOUSE DEPUTY NATIONAL SECURITY ADVISOR: Well, Wolf, first of all, I'm not going to get into details about our cyber security efforts.

What I can say, though, Wolf, is, as you said, we were public about the fact that we were dealing with cyber intrusions in the State Department; was public about that. But the fact of the matter is, we have different systems here at the White House, so we have an unclassified system; and then we have a classified system, a top- secret system. That is where the sensitive national security information is, the classified information is. That was a secure system. So we do not believe that our classified systems were compromised.

I will tell you, Wolf, as a general matter, we're constantly updating our security measures on our unclassified system, but frankly, we're also told to act as if we need to not put information that is sensitive on that system.

So in other words, if you're going to do something that is classified, you have to do it on one e-mail system, one phone system. And frankly, you have to act as if information could be compromised if it's not on the classified system.

[17:10:06] BLITZER: So what you're saying, and correct me if I'm wrong, Ben, is they didn't get access to any classified information. But as you know, there's one system -- there's one category called classified, but there's another category just below it called sensitive information. Did they get access to what is described as sensitive information?

RHODES: Well, Wolf, I think we would view any information that is government e-mail that is even unclassified as sensitive. And again, what we've seen in the past is that there have been efforts to break into that system. And at times we have had that system compromised.

What we do, then, is take immediate precautions to better secure that system and try to stay one step ahead of hackers. So we've been able to implement a number of cyber security precautions to deal with the intrusions that took place last year. We believe that, again, those have been important and effective steps.

At the same time, the message that has gone out to everybody here continually since the time I've been here for six years is that, if you're going to do something classified, that you want to make sure that there's no way for a foreign adversary to access, do it on the classified system.

BLITZER: Do you believe it was Russia that organized this hack?

RHODES: Well, again, Wolf, I don't want to get into the details of how we trace cyber security operations.

What is fair to say, as you said as the director of national intelligence, Russia has been certainly active in the cyber space, and they're active in the espionage space. So we're always taking precautions against that cyber danger.

They're not the only country, by the way. We've seen Iran, for instance, be active in the cyberspace against different targets around the world. So we're constantly vigilant for potential cyber intrusions on any U.S.-based systems.

BLITZER: Was the recent order declaring cyber activities a greater national threat and new steps taken a direct result of this particular incident?

RHODES: No, Wolf. We've been increasingly focused and concerned about the cyber threat. And frankly, that doesn't just include governments. There are private hackers, individuals who may want to steal not just from the U.S. government but from U.S. businesses who could threaten U.S. critical infrastructure.

That's why we put in place new measures to increase cyber security protections in the government, new ways through an executive order that the president signed for us to cooperate with the private sector to share information about cyber threats.

But we're also working with Congress now, importantly, to support legislation that could authorize and facilitate greater cooperation between the U.S. government and the private sector to defend against any cyber intrusions and threats.

BLITZER: Do you have any reason to believe your e-mail, your White House e-mail, not classified e-mail but sensitive e-mail, was hacked?

RHODES: Well, Wolf, again, I can't speak to my personal e-mail and how that relates to whatever cyber intrusions we face beyond saying that, frankly, the guidance that we are given is to treat anything that is on the unclassified system as potentially at greater risk than what's on the classified system.

So we have to act as if those systems are more vulnerable, even though we do have many protections up. And so that's how we operate here. If there's something very sensitive that you want to discuss, certainly something classified, you do it on the secure -- most secure system.

BLITZER: But I take it -- and correct me if I'm wrong here again, Ben -- that in the aftermath of this particular incident, the hacking at the State Department and then the indirect hacking at the White House, all of you, you and your colleagues, were told, "Change your passwords, take new steps. Make sure you're not being -- that somebody can't phish and get into your account," right?

RHODES: Yes, Wolf. I mean, and frankly, these are things that I think all Americans should be attuned to. Which is, No. 1, you need to be changing your passwords frequently and choosing passwords that are not obvious so that a hacker couldn't deduce from learning a few things about you what you might have as your password.

And No. 2, to be very careful about opening e-mail attachments. So if you get an e-mail from somebody who's not familiar that has an attachment. That could be someone seeking to gain entry to your system.

So yes, we have cyber security precautions that we follow here that are regularly updated. And frankly, I think they're the type of precautions that Americans should take, particularly as we've seen hacks of very large systems in the private sector, as well.

BLITZER: All right. So stand by for a moment, Ben. Because we've got a lot to discuss, including the Iran nuclear framework agreement, what's going on in Yemen. We have many more questions. Thanks so much for joining us. We'll take a quick break. We'll be right back.

(COMMERCIAL BREAK)

[17:19:16] BLITZER: Breaking now, the United States increasing military aid and intelligence help with Saudi Arabia's ongoing airstrikes in Yemen. Amid reports of an airstrike on Iran-backed rebels that killed students at a school.

We're back with the White House deputy national security adviser, Ben Rhodes.

Ben, what is the U.S. role right now in the Saudi military initiative to deal with these Houthi rebels in Yemen?

RHODES: Well, Wolf, since the beginning of this Saudi-led military effort, we have provided support to the Saudi-led effort, including intelligence and other means that we can bring assets to bear to facilitate and support their airstrikes inside of Yemen.

And this is an ongoing dialogue that we've had with the Saudis for years about Yemen and how we can support political stability. No. 1, again, that means supporting the effectiveness of their air campaign. No. 2, that means underscoring, as the Saudis have, that ultimately, we're going to get back to a political dialogue in the country that can restore stability.

I would note that the president has invited the leaders of all six GCC countries to Washington and to Camp David for a summit this spring to address regional issues in the context of both the ongoing effort in Yemen, as well as the Iran nuclear deal.

BLITZER: I want to get to the Iran nuclear deal in a moment. But as far as intelligence sharing, there are these reports that innocent civilians, including some kids, some students at a school, were killed in some of these airstrikes. Are you trying to help the Saudis have better preparation for launching these airstrikes so that innocent civilians aren't killed?

RHODES: Well, Wolf, we haven't, I think, verified independently those reports, but absolutely. When we share intelligence, part of what we want to be able to do is help the Saudis and their partners be precise in their targeting, be effective in their targeting, and certainly to try to aim to avoid civilian casualties.

Now, we have good experience working with them. They're in our coalition. That is conducting airstrikes against ISIL targets in Syria. And so we have a history of working with our Gulf partners, sharing this type of intelligence, and trying to be as precise as possible.

Of course, there's no such thing as zero risk in a military campaign of this nature. But the fact of the matter is, we have ways of sharing information, providing intelligence that can help them be both more effective and more precise in those airstrikes.

BLITZER: As you know, there was a prison breakout in recent days in Yemen. Nearly 300 prisoners, we're told, mostly terrorists, were freed. Were any of them, as far as you know, former Guantanamo detainees?

RHODES: Wolf, I don't think that we have confirmed the exact presence of Gitmo detainees or the nature of the individuals who were released. What I can tell you, though, is that we've had a very active effort for several years now to disrupt the al Qaeda affiliate in Yemen, AQAP, that has involved U.S. airstrikes, direct action through drones and other means, and we've made very clear that we will continue to do what is necessary to disrupt AQAP.

Now, this conflict that has been ongoing inside the country has been more about its internal political situation and the Houthi rebels who've been advancing inside of Yemen. But at the same time, we're going to keep a very close eye on AQAP. And the president's made clear that he's not going to stand idly by. He'll take action as necessary if we see plotting against the United States.

BLITZER: Yesterday, I interviewed the Saudi ambassador to the United States, Adel al-Jubeir. I assume you know him well. And he was pretty blunt. He's blaming Iran and Hezbollah. He says Hezbollah is directly involved in Yemen, as well, and they're supporting these Shiite Houthi rebels. What is the role of Iran and Hezbollah in Yemen, as far as you know?

RHODES: So Wolf, what we've seen over the course of the last several months is a relationship between Iran and the Houthis. That definitely includes the provision of materiel to the Houthis. And we've been concerned about shipments of arms to the Houthis.

We haven't seen Iran exercise the kind of command and control over the Houthis that they have with Hezbollah in Lebanon. But it's certainly a relationship that is there and that is concerning to us.

And part of what we've said is we need to confront Iranian destabilizing actions around the region, whether it's in Yemen or anywhere else, even in the context of this nuclear deal. We want to deal with the nuclear issue, but we're also going to support our partners and standing up to any Iranians to save lives and activities (ph).

BLITZER: What do you say to the critics of the nuclear deal who say, "You know what? You had an opportunity to try to tame down some of Iran's alleged terror activities in the region, but you didn't even raise those issues with them as part of this deal?"

RHODES: Well, what we say is this is a nuclear deal. It's not meant to address other issues. It's meant to address the Iranian nuclear program. That is, frankly, the biggest threat, Wolf.

And what I'd say to those critics is it is far more preferable to have an Iran that does not have a nuclear weapon, that is prevented from having a nuclear weapon, than having an Iran that does get that capability. Because if they were able to access a nuclear weapon, they would be that much more dangerous when supporting those proxies. They would have a nuclear umbrella, essentially, for those proxies, be it Hezbollah or anybody else.

So the first order of business for us is to deal with the biggest threat. That is to remove the threat of an Iranian nuclear weapon. That's exactly what this framework deal does. And at the same time, we've made clear that we'll continue sanctions on Iran for its terrorist-related activities. And we'll continue to focus on raising the good partner with our gulf partners and others to prevent Iranian destabilizing action.

BLITZER: So between now and the end of June, June 30, the deadline for actually signing a document is concerned, I take it you're not going to raise some of these other non-nuclear related issues like Iran's support for terrorism or its continued call for Israel's destruction or its refusal to release American prisoners from Iran? These issues are not going to be part of the next three months' negotiations?

RHODES: Well, Wolf, we raised them. So we raised very directly with Iran the need for them to release Americans who are held in custody in Iran, who we think should not be held and should be reunited with their families. We certainly raised our concerns about Iran's threats towards Israel and its destabilizing actions in the region.

[17:25:17] But it's not part of the deal that's being negotiated that is expressly focused on the nuclear issue. It's not just us at the table on that, Wolf; it's the P5+1.

What we have is a good framework that will prevent Iran from getting a nuclear weapon, that cuts off all of its pathways to the weapon and has unprecedented inspections to verify that. If we can get that done, that will be a significant accomplishment in terms of preventing nuclear proliferation.

At the same time we'll continue to express our concern to the Iranians and publicly about other activities Iran is engaged in.

BLITZER: What's your reaction to Senator Chuck Schumer. He's the third ranking Democrat in the Senate, likely to be the next Democratic leader in the Senate. He now says that he's going to join Bob Corker, the chairman of the Foreign Relations Committee, a Republican, and get some sort of legislation that will require you to go before Congress for some sort of up or down vote as far as this Iran deal is concerned?

RHODES: Well, first of all, Wolf, we want to be able to brief members of Congress on the merits of the deal. We are actively scheduling briefings for Congress this week and then as soon as they get back so they understand what's in the framework. We'll be prepared to do that after June 30 if we get an agreement.

What we've said is, first of all, let's give the negotiators the space to get this done and complete the work of getting an Iranian nuclear deal.

Second of all, let's be clear that Congress will have a role to play, and that includes they'll take a vote and lift sanctions at some point in the duration of the agreement. And we're open to discussing with Congress other ways that they can play a constructive role in looking at this deal.

But at the same time, if you look at the legislation that Senator Corker has advanced, it also includes a number of provisions that even go beyond Congress taking a vote.

Again, which we have opposed on the matter of precedent that Congress does not tend to vote on agreements like this. They have not in the past.

But at the same time there are provisions in there that bring in issues like terrorism that take away the president's waiver authorities that are already in existing legislation. So we'd have problems with this legislation in its own right, but our principle focus right now is let's give the time and space to the negotiators to see if they get this done. We'll put forward that deal before Congress. Then they'll be able to make a judgment.

But do not take action over the course of the next couple of months, that that could jeopardize those negotiations, and by backing the Iranians and the rest of the world away from the table.

BLITZER: We're out of time, but one final question. A quick answer. Are you about to remove Cuba from the State Department list of countries that support terrorism?

RHODES: Well, the president initiated a review of Cuba's president on that list, concurrent with his announcement on December 17 about the process of normalization with Cuba. The State Department does a review that is based on the facts. And looking at does Cuba play a role in sponsoring any terrorist organizations? They have not completed and sent over to the White House. Their recommendation that has to come from Secretary Kerry. When they do, the president will look at it and make a judgment about how to move forward.

But again, this review is expressly focused on the question of: does Cuba sponsor terrorist organizations? If they do, they should be on the list. If they don't, the recommendation will come to take them off the list. I think the State Department has done a lot of work the last couple of months. So we're awaiting that recommendation. But at the same time, Wolf, we have not yet gotten that and therefore are not prepared to make an announcement.

BLITZER: Ben Rhodes is the deputy national security adviser to the president. Ben, thanks very much for joining us.

RHODES: Thanks, Wolf. Good to be here.

BLITZER: Thank you.

Coming up, we're looking into reports that the Pentagon wasted $10 billion, your tax money, $10 billion on fancy new weapons and radar systems that simply don't work.

Also, copies of the film "The Interview," the movie mocking Kim Jong- un, they're being air-dropped right now into North Korea. Will it change how its citizens view their leader?

(COMMERCIAL BREAK)

BLITZER: Breaking news, hackers with ties to the Russian government broke into the State Department and the White House computers and gained access to sensitive information, including the president's movements. Let's discuss what's going on.

[17:33:41] Joining us, retired U.S. Army General, CNN military analyst Mark Hertling; the former CIA operative and CNN intelligence and security analyst Bob Baer; former Republican congressman and the former chairman of the House Homeland -- House Intelligence Committee, our national security commentator, Mike Rogers; and former FBI assistant director, the CNN law enforcement analyst, Tom Fuentes.

Mike Rogers, you were chairman of the intelligence community. Is this a surprise? Evan Perez, our justice reporter, breaking this story here this hour that we knew the State Department had been hacked, but now he's saying the hackers were Russian hackers, working directly for the Russian government. And they not only hacked into the State Department, but then they got into the White House computers, as well.

MIKE ROGERS, CNN NATIONAL SECURITY COMMENTATOR: To have the breaking news on CNN, that the Russians got into the system, certainly is news. I will tell you, as chairman, nation states have penetrated government systems before. This is not the first time.

BLITZER: U.S. government systems.

ROGERS: U.S. government systems before. And the quickest way to get to a classified system is by the adjoining unclassified system, meaning those individuals that use unclassified networks and cross back and forth in the course of their daily work, that's a great place to be to get on that classified.

BLITZER: To do a fishing expedition.

It could be phishing. You could follow. You could do man-in-the- middle-type exercises, where you follow that piece of information back over onto what they would call the high side or classified side in those cyber systems. And so, again, they got into the State Department, clearly, by the

news that you all broke and then followed it back to the White House. This is exactly the way they do it in the private sector when they're trying to penetrate companies. This is exactly the way they're doing it in the government systems.

BLITZER: Tom Fuentes, what's the FBI role in all of this?

TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: They'll be running the investigation, trying to see what kind of penetration, how it was done, where it was done from.

But you know, don't forget here that the person that perpetrated the biggest penetration ever of U.S. government systems is sitting in Russia, Snowden. So you know, whether he provided assistance to the Russian government in getting into our systems or just the general type of stuff that he's leaked out over time the last few years enabled somebody to have a pathway to get into the system.

BLITZER: I'm sure there's a lot of nervousness going on right now.

Bob Baer, the director of national intelligence, James Clapper, he told that Senate hearing that the Russian cyber threat, in his words, more severe than previously assessed. Is this why, you think? Because clearly, officials in the U.S. government were aware of this Russian activity for some time.

BAER: Well, Wolf, you have to look at the whole picture here, and the Russians are pressing us everywhere, whether it's on our air defenses, whether it's in the Ukraine, Europe, Norway. And they certainly have stepped up cyber-attacks on the United States, and they would love to get into these classified systems.

And remember, if you have a cell phone and you're communicating next to a desktop that's classified, there's certain emanations that can be picked up. And this is very dangerous.

I mean, intelligence communities won't even allow unclassified systems in the same room with classified systems. That's how severe it is, and that's how vulnerable we are. And Russia uses this organization that's called FACSY (ph), their NSA, are very good at manipulating this stuff. And once they come after Washington, they could get some successes.

BLITZER: So supposedly, General Hertling, the Russians had access to sensitive information at the State Department and at the White House. Does that include the president's not only public activities, public movements, if you will, but private ones, as well. How big of a deal do you think this is?

LT. GEN. MARK HERTLING (RET.), CNN MILITARY ANALYST: Well, it's a big deal just because of everything that Congressman Rogers and Bob just said, Wolf.

You have those systems which Ben Rhodes described very well. You have the sipper system, the secret Internet protocol, and you have the nipper (ph) ones, the unclassified ones. In the military -- as Bob just said, in the military and the intelligence community, we grow up with both. And we know you can't take phones and put them next to a sipper device. There's a tendency for some that are uninitiated to transfer information between the two. That's a really bad thing.

And just the sensitive information, like the president's schedule, is critically important, because you connect dots of intelligence. And that's a bad thing.

So, yes, it's important. It's certainly not as important as getting on the sipper side, the secret side, but it's still critically important. And there's more to it than just changing your password and watching out for phishing attacks. You've got to wipe those computers clean to make sure those kind of -- that kind of information doesn't get out.

BLITZER: Yes. It's a good point. Stand by, everybody. Stand by. We have a lot more coming up, including a new report that says the Pentagon has spent -- get this -- $10 billion, with a "B," billion dollars on missile defense programs with absolutely nothing to show for the $10 billion. Were your taxpayers -- tax dollars wasted?

And a secret mission in South Korea. Activists now are air-dropping copies of the satirical film "The Interview" directly into North Korea. What's behind the operation? We're going to the Korean Peninsula. Stand by.

(COMMERCIAL BREAK)

[17:43:05] BLITZER: A cutting-edge shield meant to protect the United States from a sneak missile attack, using lasers and unmatched radar technology, that's what the Pentagon promised for a $10 billion investment, $10 billion worth of projects that critics now call a total flop and say left the United States dangerously exposed. Were all your tax dollars wasted?

CNN's Brian Todd has been digging into this story. What are you finding out, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, these missile defense shields were impressive on the drawing board, and they had some flashy names like the multiple kill vehicle.

But according to one report, they were expensive, impractical, and some experts say they never should have been built.

(BEGIN VIDEOTAPE)

TODD (voice-over): It's massive -- 26 stories high -- weighs 50,000 tons, and sits on top of a modified drilling platform. It's called the Sea-based x-band radar, SBX. It's designed to defend America from incoming missiles by tracking them and guiding rockets to intercept them. Its only drawback? It doesn't work.

RICHARD FAHER, INTERNATIONAL ASSESSMENT AND STRATEGY CENTER: It was rushed to deployment on a sea-based platform. The sea-based platform had problems with corrosion and limited the availability of the radar.

TODD: Tonight, instead of being called a technical marvel, it's being labeled a $2.2 billion bust. That's according to an investigation by "The Los Angeles Times," which reveals four expensive anti-missile systems which it says have been mothballed over the past decade. The cost to American taxpayers, according to the newspaper? Almost $10 billion. All of it spent, the paper says, by a wing of the Pentagon called the Missile Defense Agency, tasked with protecting the American homeland from attacks by adversaries like North Korea and Iran.

DAVID MONTAGUE, FORMER MISSILE DEVELOPER, LOCKHEED MARTIN: It's an organization of technologists, and they have lived in a hobby shop world for a long time and they were suddenly faced with the requirement to actually go deploy something.

TODD: A spokesman for the agency says it respectfully disagrees with that characterization but doesn't deny the allegations of failed systems now shelved.

[17:45:05] Among them, a project called the Airborne Laser, 747s equipped with chemical lasers that would incinerate enemy missiles. That program cost $5.3 billion according to "The L.A. Times" but was scrapped because the planes would have had to fly too close to an enemy's borders.

Then there's the Kinetic Enemy Interceptor. Cool name but the "Times" says it was too long to fit onto Navy ships and the range was too limited for land launches. Cost? $1.7 billion. And the Multiple Kill Vehicle, a bundle of miniature missile interceptors. Ground- based rockets would have had to be retrofitted to make this work. That one set the taxpayers back $700 million.

Supporters of the agency don't call these projects waste saying these innovations could eventually save lives even if they come with a hefty price tag.

RICHARD FISHER, INTERNATIONAL ASSESSMENT AND STRATEGY CENTER: We do face a real threat, such as the North Korean ICBM, which could be deployed within one or two years. This missile can hit Anchorage, Honolulu, maybe even Seattle. Our citizens in those cities are definitely worth $10 billion of effort.

(END VIDEOTAPE)

TODD: Contacted by CNN, a spokesman for the Missile Defense Agency said, quote, "The investments we've made in advanced missile defense technologies have not been wasted. The programs that were canceled have all provided valuable research which they're going to use to build better systems in the future."

And as one expert told me, this agency has got an almost impossible task, trying to shoot down bullets with other bullets, Wolf. And developing those bullets is not easy.

BLITZER: So some of these air defense systems obviously not working. So how vulnerable is the U.S. to -- let's say to an intercontinental ballistic missile from North Korea, from Iran, or someplace else?

TODD: Rick Fisher, the expert we spoke to, says Americans does not have any missile defense systems capable of defending against some types of missile attacks from North Korea or Iran. That those systems might have defended against but the Missile Defense Agency points out some systems like that SBX, that massive floating radar platform, they have not totally been scrapped, that that thing, at least according to the Missile Defense Agency, remains a vital defense asset.

But it does sit often for idle, just very idle in Pearl Harbor for sometimes weeks, months on end. So it's not really being deployed effectively right now.

BLITZER: All right, Brian Todd, very disturbing stuff. Thanks very, very much. $10 billion.

TODD: $10 billion.

BLITZER: Apparently wasted.

Coming up, our exclusive report. Hackers working for the Russian government broke into State Department and then White House computers. We have details on what the sensitive information they accessed may show.

And months after it was pulled from U.S. theaters, over a cyber threat, the film "The Interview" is making its way now to North Korea. Will Kim Jong-Un's people finally see what so many others around the world think of their leader?

(COMMERCIAL BREAK)

[17:52:15] BLITZER: A secret mission is under way in South Korea right now to send copies of the film "The Interview" into North Korea. The movie grabbed headlines last year when Sony Pictures was allegedly hacked by a group with ties to North Korea after that country's government threatened merciless retaliation against the United States for the film's release.

CNN's Paula Hancocks has more -- Paula.

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Wolf, the question is, could North Koreans be watching the Hollywood movie "The Interview" right now? If one effective plan has worked, maybe.

(BEGIN VIDEOTAPE)

LIZZY CAPLAN, ACTOR, "THE INTERVIEW": Take him out.

SETH ROGEN, ACTOR, "THE INTERVIEW": You want us to kill the leader of North Korea?

CAPLAN: Yes.

JAMES FRANCO, ACTOR, "THE INTERVIEW": What? HANCOCKS: A silly comedy in the United States, seen as an act of

terrorism in North Korea. A devastating cyberattacks and months of recriminations followed. Now the movie may have found its way into the most isolated country on earth.

Lee Min-bok has been studying the wind direction from South to North Korea for weeks. A defector now living in the South, he's sending thousands of copies of "The Interview," dollar bills and political leaflets across the border.

Lee very much doubt North Koreans will find the movie funny. He certainly didn't. But he says that doesn't really matter.

"The regime hates this film," he says, "because it shows Kim Jong-Un as a man, not a god. He cries, he's afraid like us, and then he gets assassinated. It destroys the idolization of the leader."

In the dead of night his precious cargo hidden black bin liners, Lee travels from his home to an area close to the border, an area South Korean police and military following him do not want us to disclose. They also asked us not to film them.

These propaganda balloons infuriate North Korea. Its military fired on similar balloons several months ago. The South fired back. But Seoul says it can't stopped them as they're civilians and this is freedom of speech.

Residents who live near the border disagree. Last October, they physically intervened to stop activists sending these balloons, angry that they were being put in the line of fire, which is why Lee says he flies his balloons at night and does not usually invite media.

"I want my people to know the truth," he says. "That is when revolutions happen. If you tell the truth in North Korea, you die. But by sending balloons from here, I can tell the truth in safety and in secret."

Lee doesn't know for sure who, if anyone, will see this movie but he says he knows he has to try.

(END VIDEOTAPE)

HANCOCKS: Lee sent more than 80,000 DVDs of "The Interview" in this batch. This is his fourth launch. He's assuming the more he sends, the greater the chance that Kim Jong-Un's illusion may be shattered -- Wolf.

[17:55:02] BLITZER: Paula Hancocks in Seoul, South Korea. Thank you.

Coming up White House hacked. Russian hackers broke into computers that contain sensitive information, including the president's movements and calls. How did they get in?

And a Saudi jet striking Yemen. The U.S. is coming to the kingdom's aid with intelligence and arms. Is America being dragged potentially into a wider proxy war in the Middle East? (COMMERCIAL BREAK)

BLITZER: Happening now, breaking news, Russia hacks the White House. Hackers said to be working for the Kremlin accessed sensitive information on the White House computer system, including details of the president's movements. Has the attack put national security at risk?

[18:00:06] Ally on fire. A critical U.S. partner is descending into deadly chaos with airstrikes killing an increasing number of civilians.