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Awaiting First Exit Polls as U.K. Vote Ends; FBI Warned Police about Gunman Before Attack; ISIS Controls 80 percent of Key Iraqi Refinery. Aired 5-6p ET

Aired May 7, 2015 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, FBI warned of attack. The FBI director says his agents were tracking one of the Texas gunmen and alerted local police. And the director also warns there are other potential attackers out there.

Nail-biter. One of America's closest allies holds a crucial election as concerns about security and terrorism weigh heavily on the vote.

ISIS expansion. The terror group now controls most of Iraq's biggest refinery. How big an impact will this have on the world's oil supply?

Unemployment, capitalist factories employ thousands of workers inside communist North Korea. Will Kim Jong-un's threats end up costing jobs?

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

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following two breaking stories right now. There are startling new revelations about the terror attack in Texas. The head of the FBI telling CNN his agency not only sent out a warning that Elton Simpson was interested in the controversial gathering near Dallas, FBI agents were waiting at a command post when the attack came. We have much more on the terror threat. That's coming up.

But let's begin with another major breaking story right now. Polls are closing right now across the United Kingdom in what analysts are calling the most unpredictable British election in decades. The results are crucial to the United States.

The prime minister, David Cameron, has been President Obama's top partner in the war on terror and the battle against ISIS. Our correspondents and experts, they're standing by to bring you complete coverage of all the day's breaking news.

Let's begin with our senior international correspondent, Nic Robertson. He's standing by in London where the polls have just closed -- Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, Wolf, the doors closed just behind me here just a minute or so ago. They've been open for 15 hours. The understanding here, at least, is that the turnout has been higher than we've seen in previous elections.

And we're just beginning to get the first exit polls. That's the first, if you will, estimation of the way this vote is going to go.

Remember, there are 650 seats in the parliament. No party was expected to get a simple majority. The magic number is 323, because five parliamentarians from Northern Ireland don't take up their seats. So who -- so whoever is going to form the new government needs at least 323 seats in a coalition.

And these are the numbers we're getting on the first exit poll right now. David Cameron, the current prime minister, his party, the Conservatives, with 316 seats. Labour Party with 239. The Liberal Democrats who David Cameron is in government with right now, they have ten. That means David Cameron and his coalition partners, the Liberal Democrats, would

have 326 seats, which means that they would be most likely to form the next government.

However, I have to add into -- into those figures, Wolf, these are exit polls. These are estimations put together by political experts who study the -- who study the elections.

But these are not the results. The real numbers won't become apparent, and we won't know about them for about another four or five or six hours. The first result perhaps in the next 40 minutes or so. But to get a bigger, more realistic picture, that's going to take many, many more hours of counting, Wolf.

BLITZER: Stand by, Nic. I want to check in with Nic Robert -- excuse me, I want to check in with Richard Quest, who's also in London for us. First of all, where are you, Richard? What's going on over there?

RICHARD QUEST, CNN CORRESPONDENT: We're with the election band on the hashtag #bigredbus. Yes, it is literally a double decker bus. There is the Houses of Parliament behind us. We're traveling our way around the British capital, Wolf. We're bringing the views, the mood as the British capital comes to terms with what sounds like an outstandingly result, very unexpected, if it's true, the exit poll tonight. So all night, Wolf, the Big Red Bus will be making its way around London.

BLITZER: So basically, what these exit polls show -- and we're -- we want to stress to our viewers here in the United States and around the world, these are just exit polls. The real numbers could obviously be different. If they hold, it looks like David Cameron will be able, assuming he can get this minority party, the Liberal Democrats on board, he would remain as the prime minister of Britain.

So here's the question, Richard. What does that mean as far as U.S.-British relations, for example, are concerned? [17:05:03] QUEST: For U.S.-British relations, it would mean very

little change, especially as the U.S. heads towards a presidential election. David Cameron and Barack Obama have been tied at the hip on so many policies.

The fear in Washington, as we discussed last night, Wolf, was that a Miliband victory could in some way jeopardize that. If Cameron gets the result that it looks like tonight, there will be relief, I guess, in Winfield House where the U.S. ambassador lives, and certainly in Foggy Bottom in the State Department, they will be somewhat relieved that there's no change in London tonight.

BLITZER: And as far as Britain remaining in European Union, what would -- what would be the impact if Cameron stays in power?

QUEST: Now, I'm glad you reminded me. In the excitement of the poll, I forgot about that. Yes, that's the big story tonight. I managed to lose it somewhere along the way. There will be a referendum in the United Kingdom if the exit poll is right. If it's right, there will be a referendum in the United Kingdom on staying in the European Union by the end of 2017.

David Cameron made that a firm election pledge this election. So there will be a renegotiation. And the result of which will be a referendum.

Washington has mixed views on that, as you are well aware. Tonight, I think many European leaders: Angela Merkel, Francois Hollande -- I think many of these leaders in Europe will be dismayed because they know Britain is about to become a very troublesome member of the E.U.

BLITZER: And quickly, what about Scotland? Because that was a big issue in this election, as well.

QUEST: Scotland, absolutely. The good numbers of Scotland. What about the rest -- The SNP should be about -- yes? They've got all the seats in Scotland. The SNP is a big force in that building. They are hugely important now.

The question is, since Cameron may be back in power, will they be able to get another referendum on Scottish independence? Very unlikely, bearing in mind Cameron doesn't need them, doesn't particularly like them, and certainly, he can govern without them.

BLITZER: Yes, the exit poll shows the Scottish National Party would get 58. Remember, these are exit polls. These are not the actual numbers.

Richard, stand by.

QUEST: Yes.

BLITZER: Today's vote across the United Kingdom could have an impact on security here in the United States. Tom Foreman is taking a closer look at what's at stake. What are you seeing, Tom? TOM FOREMAN, CNN CORRESPONDENT: Hi, Wolf. Let's look at those

numbers. I don't have a band like Richard had. But we do have exact numbers here that we've been talking about in all of this.

Conservatives up here, 316 right now is what we're looking at. Labour, 239. Liberal Democrats here with ten. And if you throw in the Scottish group, that's 58. These are really the numbers everybody is interested in. Conservatives here and Liberal Democrats here. Because of what is at stake.

If you look at what David Cameron has been talking about here, if we consider this idea, what we're talking about is this question of possibly leaving the E.U. That would be on the table if this is happening. That's a potentially big thing in the U.S. We keep saying it will be unchanged. It's not necessarily unchanged, because if that happens, then you have questions about trading partners, how they react to it, and whether or not this becomes a hiccup in the worldwide economic recovery, which could affect everyone, including the United States.

That's why we care about this so much. Obviously, the Labour concern over here was a different question. With Labour, it had to do with military support in large measure, whether or not they would continue to fight against ISIS, with Russia and all this. If this is off the table, though; if this is off the table, and in fact, we're back here looking at this equation with David Cameron, things are not exactly going to stay the same. They will just be one of the more similar outcomes, something people could bank on, compared to the past without seeing gigantic, enormous changes heading into the future. That's why Washington may be excited about the exit polls, if they hold true, as Richard pointed out and Nic, as well.

BLITZER: It's a big if. These are exit polls. I want to stress once again, the real numbers should be coming in over the next few hours. Let's get some more now on the impact of today's elections.

Joining us are chief national security correspondent Jim Sciutto. Richard Quest is still with us, as well. He's aboard that Big Red Bus in London for us.

Jim, I know you're speaking to a lot of U.S. officials. They're closely watching what's going on with one of America's closest allies in Britain. What are you hearing?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: I spent ten years in the U.K. I've covered elections there before.

The big question here from the American perspective is, does this make the special relationship less special? And the truth is, whoever won, it would be so. Because you have a real pressure within this Conservative Party for -- as Richard mentioned, to have this referendum to leave the E.U. And E.U. without the U.K., and the U.K. without the E.U., is both bad for America. They're both weaker.

[17:10:14] The E.U. is America's biggest trading partner. Enormous partner when you're talking about issues like Russia, Ukraine and et cetera. And the U.K., America's closest military partner in Iraq, Afghanistan, et cetera.

When those two are separated, that is a less strong partner for the U.S. potentially overseas. Keep in mind: even though the Cameron government -- he's been under enormous budget austerity. He's cut a log of weapons programs, which makes Britain not as close a military ally for the U.S. The fact is, you know, their troops are out of Afghanistan. They're out of Iraq. Their aircraft carriers don't have aircraft capable up to date to landing and taking off. That's a big decrease in their ability to support us militarily.

On the Labour side, if they were to win and somehow cobble something together here, that's even more inward looking. There were questions about the nuclear deterrent, because Britain's nuclear deterrent is basically four submarines now in Scotland. There will be pressure in Scotland to take them away.

For both sides, it's not moving in a great direction. But if the Conservatives hold true, as it seems to show here, that's a better result of two lesser results from the U.S. perspective.

One thing to keep in mind, there is less pressure for the Conservative Party to come out of the E.U. when that U.K. Independence Party -- which a lot of Americans may not have heard of. U.K. Independence Party, it's very right-wing. It's very anti-immigrant. It's very anti-E.U. They only got two seats. That's a big result.

BLITZER: Yes, with virtually no seats at all.

Let me go back to Richard Quest. He's aboard that Big Red Bus, driving around London for us. Give us a little flavor of how this has been going on, Richard, behind the scenes. Because we know for example -- go ahead.

QUEST: Right. I just want to say, we're about to pass 10 Downing Street. Just coming up there on -- this is what this is all about. The man who's going to move into No. 10. So we're giving you a real tour of London, at no extra cost to THE SIT ROOM.

There is Downing Street. That's where the prime minister lives. And that's where we think, if the exit poll is right, David Cameron will be returning. Joining me is Harry Cole. Harry, just tell me quickly, the exit poll as you look at it at the moment.

HARRY COLE: This would be a phenomenal result for David Cameron. He's up on his 2010 number of seats. There's an almost wipeout of there, not just of Scotland but of Labour.

QUEST: Is there any -- Harry Cole, by the way, is one of Britain's leading political observers. Listen, quick question before we head back. Is there any way on the exit poll -- is there any way on the exit poll Labour does it with the SNP?

COLE: Absolutely not. The Labour total plus the SNP total does not even add up to 300. David Cameron is on 316.

QUEST: Right. So there you have it, Wolf. Putting this into perspective, let's just pull the strands together. One of two things happens tonight. The exit poll is wrong, in which case that's a mammoth story in its own right, and we find out who won. Or the exit poll is right, and David Cameron is back in No. 10.

Whichever way you look at it, Wolf, political tremors have been -- have happened here in London.

BLITZER: Certainly right now. Richard Quest having a good time in London, as he always does. Richard, thank you very much.

Once again, it looks like -- if you believe the exit polls, David Cameron will be re-elected, will stay in power as the prime minister of the United Kingdom. We're going to stay on top of the story, get the real numbers for you.

But there's other important news we're following, as well, including a stunning new revelation that the FBI actually gave local law enforcement a heads up before the terror attack in Texas. Even as it warns that there are other potential attackers at large right now in the United States.

And ISIS is on the verge of a major victory, taking control of most of Iraq's biggest oil refinery. Can U.S. airstrikes make a difference?

(COMMERCIAL BREAK)

[17:18:41] BLITZER: Breaking news. A striking new revelation about the terror attack in Texas in which two gunmen were killed as they targeted a controversial Prophet Mohammed event. The FBI was zeroed in on one of the gunmen, tracking his online activities. And now we're learning the FBI actually sent out a warning shortly before the attack.

Our justice reporter, Evan Perez, is here in THE SITUATION ROOM, joining us right now. You had a chance to speak to the FBI director, James Comey. What did he tell you about what the FBI knew in advance of this attack?

PEREZ: Well, Wolf, the FBI in March opened a new investigation on Elton Simpson, one of the two gunmen who made this attack in Garland, Texas. This is a warning that -- a generalized warning they sent to the Garland police. It didn't have any specific information, per se. It only said that he had expressed interest in some of the social media activities about this Prophet Mohammed cartoon contest event.

It did not -- the FBI did not know that he was planning to attack. They did not know that he was actually en route to Garland, Texas. And so the FBI is careful to say that the Garland, Texas, Police Department did not have any indications this guy was on his way.

But he was among a list of people that the FBI was keeping an eye on. Because they knew that this event was drawing a lot of controversy. BLITZER: He also had an ominous warning about future attacks

similar to this, maybe even worse.

[17:20:06] PEREZ: Absolutely. He said that the way ISIS recruitment is changing online, Wolf, he's saying that it's getting harder and harder to figure out who is going to move from just being talked to online and communication with ISIS recruiters and actually carrying out an attack.

What he said was, there are more -- there are other Elton Simpsons out there, and he knows it. He says he's monitoring hundreds of investigations around the country, and it's getting harder and harder every day to find these people.

BLITZER: Yes, he's a serious guy, James Comey, the FBI director. When he speaks like that, it's obviously based on serious intelligence, serious information. Even, thanks very much.

BLITZER: We're also learning that the Texas gunman, Elton Simpson, may have been more closely connected to ISIS than anyone imagined. And also had an apparent link to another terror group.

All this coming as lawmakers are briefed on the long arm of ISIS, hearing chilling new details about how it reaches deep into America through social media, influencing and apparently instigating sympathizers.

Let's bring back our chief national security correspondent, Jim Sciutto. He's got more -- Jim.

SCIUTTO: Wolf, this case shows that the net designed to catch lone wolf attackers have gaps that have to be filled. The U.S. is aware of Elton Simpson. They reopened an investigation of him. They put him under monitoring and knew that he was interested specifically in the Texas event, and yet he got through.

And the FBI director saying today he is sure there are other Elton Simpsons out there on the U.S. homeland.

(BEGIN VIDEOTAPE)

SCIUTTO (voice-over): An alarming video showing the gunman explaining the attraction of his conversion to Islam.

ELTON SIMPSON, GUNMAN KILLED IN ATTEMPTED ATTACK: ... provide for you weaponry to go out into the real world and use that weaponry to change it.

SCIUTTO: Tonight, CNN has learned that Elton Simpson had deeper ties to terror groups like ISIS than officials previously knew, including direct private communication with this well-known British- born ISIS recruiter, Junaid Hussain, currently thought to be in Syria. And this American, Mohammad Abdullah Hassan, believed to be in Somalia as a member of the al Qaeda affiliated terror group al Shabaab.

Investigators now suspect that the ISIS and al Shabaab members had a more direct role in Sunday's shooting, pushing Simpson to carry out an attack. Though there is no evidence yet that the men had operational control, such as choosing the Texas target or the timing.

Today on Capitol Hill, lawmakers heard the latest on ISIS's reach to the U.S. homeland through social media.

SEN. RON JOHNSON (R), WISCONSIN: Our authorities can follow the open source social media. The minute those individuals who are really serious about it go offline, we go dark.

SCIUTTO: The Texas shooting raises hard questions about how many other potential ISIS recruits are lying in wait and communicating overseas.

This week, ISIS claimed it had 71 trained soldiers in 15 states. Today, a senior administration official called the claim propaganda, saying instances of U.S.-based ISIS recruits are isolated.

Still, a recent study of public record by CNN terror analyst Peter Bergen has found that some 62 people in 19 states have attempted to join the terror group.

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: The only profile that these group really share are 53 of the 62 individuals were very active on social media, downloading and sharing jihadist propaganda and in some cases, as Elton Simpson was doing, directly communicating with members of ISIS in Syria.

(END VIDEOTAPE)

SCIUTTO: The Texas shooting is refocusing attention from returning fighters from Iraq and Syria to recruits here on the ground in the U.S. The FBI director saying there are hundreds of investigations in the U.S. of possible extremists influenced by known ISIS recruiters. And they are increasingly using, Wolf, peer to peer applications. These are difficult, impossible for law enforcement to track.

And one more thing, I've mentioned, Wolf, we've talked a lot about how post-Edward Snowden, that terrorists in the field and terrorists at home are changing the way they communicate. Now they know how the FBI and others are tracking them in the past. This is one example of that.

BLITZER: Thanks very much for that report. Let's get some more now from Republican Senator James Lankford of Oklahoma. He serves on the Intelligence and Homeland Security Committees.

Senator, thanks very much for joining us.

SEN. JAMES LANKFORD (R), OKLAHOMA: Glad to be with you.

BLITZER: The FBI director, James Comey, says -- he tells our own Evan Perez that they issued a police warning about this one Texas gunman, Elton Simpson, that he was interested in this very controversial event that was going on outside Dallas. But they didn't know Simpson was actually traveling to Texas. Is that some sort of failure there? What was going on?

LANKFORD: It's not. You have a lot of people around the country that may express an interest, that may use the word "jihad." Just because someone says something at some point on some online resource, anyone who uses social media will know how many different conversations are going on out there.

BLITZER: This guy had a criminal record. He had already been convicted of lying about some alleged terror connection, if you will. He got probation. He wasn't sentenced to jail. He did get three years' probation. Shouldn't he have been higher -- they should have been watching him a little bit more closely?

[17:25:11] LANKFORD: I don't think so. He hadn't shown any kind of tendencies on that. You start connecting the dots after the fact. And you realize, there are a lot of these conversations that happen through social media.

So the challenge now is to filter through and find out what's legitimate, what someone is bragging, what someone that's basically mentally off, they're making all kinds of wild statements or what's serious. So that's our intelligence community has got to filter that and filter it quickly.

BLITZER: What was really ominous is to hear what the FBI director, James Comey, also said today, that there are others out there, including already in the United States, who have similar, if not worse plans in place. What can you tell us about that?

LANKFORD: Yes, that's correct. There's the great challenge. If someone travels to the region, we don't know if they were legally crossing the border out of Turkey into Syria. You're aware of individuals as they may move around. But they haven't committed some kind of crime. So you have to pay attention to that.

And so our FBI has a unique responsibility not only to protect our Fourth Amendment freedoms and that we're free from search and seizure, but we're also guarding the homeland, as well.

BLITZER: It takes a lot of personnel to engage in this kind of surveillance. Do they have enough people to do this? There's a lot of people who are expressing sympathy, shall we say, from these terror groups?

LANKFORD: That's right. There's a difference between someone saying that they have some sort of sympathy for it and someone actually planning, plotting to attend -- plotting to actually travel to the area. We're aware of some Americans, a handful of those that are actually planning to go. That's an intervention at that point to be able to be able to step in to someone and say we're aware of what's happening.

But we're also aware of individuals that come back from the region. And they have to determine where they there to fight or were they there visiting?

BLITZER: Senator, I'm going to have more questions for you. I want you to stand by.

We're going to continue our conversation with Senator Lankford of Oklahoma. He's a member of the Intelligence Committee, the Homeland Security Committee. Much more right after this.

(COMMERCIAL BREAK)

[17:31:25] BLITZER: We're talking about the domestic terror threat with Republican Senator James Lankford of Oklahoma, who serves on both the Intelligence and Homeland Security Committees.

These two attackers, Elton Simpson, Nadir Soofi, one of them did have a criminal record. The other one apparently did not have a criminal record. The one without the criminal record presumably could go out and buy AK-47s, bulletproof vests, body armor, if you will. These guys were pretty well-armed.

LANKFORD: Yes, they were well-armed. They're not buying automatic weapons. That's not legal to be able to purchase in the United States. You can buy assault-type weapons is the appearance and the profile of it.

BLITZER: They had assault rifles?

LANKFORD: Correct. So it was legal to be able to purchase. It would be legal to actually buy that, possess it, own it.

BLITZER: How well-armed were they?

LANKFORD: You know what? I haven't seen the final report. They were very well-armed, though, and they were very well-prepared for this attack. What's interesting is they were well-armed, well- prepared for the attack. They pulled up, fired the initial shot and were put down still at the curb. They didn't get very far at all. So they were better armed than they were better planned.

BLITZER: What was their intention as far as you know? What did they want do?

LANKFORD: There's no way to know inside the heart of those guys at this point. But there's no doubt, based on how they were armed and where they were planning (ph) they were coming in to kill individuals in that spot. And whether they were planning to shoot from the curb, fire and try to kill individuals then drive away, we'll never know.

BLITZER: They wanted to kill as many people as possible?

LANKFORD: It has that appearance.

BLITZER: Is -- were they inspired to do so, or were they instructed by ISIS instructors, if you will, to go out and do that?

LANKFORD: ISIS is a very different threat than Al Qaeda. Al Qaeda, they want to be simply controlled; they want to plan things and then pull off a big, large-scale coordinated attack. ISIS is very different. They want to inspire. They want to say,

this is how we hate all these different groups and these different freedoms. If you think the same way that we do, here's the logo. You can download it and use it. Here's our key phrase. You can say it when you actually commit the act. Go do it. And then we'll take credit and we'll connect it to us. So they're inspiring terrorism through small events rather than through large events.

BLITZER: How concerned should the American public be right now that there are others like these two guys out there?

LANKFORD: There's no questions there are others that have that same sympathy that are within the United States. What I try to make very clear, there's this jump to say that anyone who practices Islam thinks that way. That's absolutely false.

Many, many millions of individuals around our nation do not share that same thought that it may be practicing Islam. That there's this radicalized group and individuals within those mosques are very aware of this. It goes down to a school shooting. Often in a school shooting, it's headed off by someone in the school hearing about it and reporting it. And they actually go and would be able to respond to it.

Individuals within the mosques, individuals in those neighborhoods, when they hear those threats, they've got to respond. They have to report. It protects all of us.

BLITZER: So in other words, if somebody is simply saying, you know what? Bin Laden was not a bad guy, sort of admire him, you think they have to report that to federal or local law enforcement?

LANKFORD: I think if they have the sense that this is a dangerous individual that would not only hurt the reputation of those that practice Islam but could do harm to other Americans, they should report it and just be engaged. They can do their due diligence, report it and walk away and they've done the right thing. That allows the FBI to be able to filter. Do they have a criminal record. Have they purchased weapons recently? Are they trying to do something on social media to inspire others? That will be important to know at that point.

BLITZER: Because you've had your own issues, incidents in Oklahoma? Right?

LANKFORD: Sure. Go back to 20 years ago with the truck bomb that happened in Oklahoma City.

BLITZER: That would be domestic.

LANKFORD: And two years ago, we had an individual that was radicalized in prison, was in a workplace situation, came back to the workplace right after he was fired, took a knife and actually beheaded one of his other co-workers. And it has the appearance of he was inspired by the actions of ISIS. BLITZER: Let's talk about ISIS, the war against ISIS in Iraq and

Syria right now. They seem to be doing pretty well in Iraq right now. Maybe they're losing some ground in Syria. But in Iraq, it looks like they have 80 percent control of the large oil refinery of Baiji right now, which would be strategically very significant.

[17:35:09] LANKFORD: Yes. What's very significant is gathering an oil refinery and production, control of dams, control of key roads. They're trying to control their supply line. That's a relatively small group of individuals but extremely violent. And they're well- trained and well-prepared. And they're continuing to gather more -- gather more foreign fighters as they go.

BLITZER: One final question on the Iran vote. You guys voted today overwhelmingly -- what was it, 98-1, including you -- to support this legislation that would give you some sort of review process. Are you with the president basically to at least give it a shot, see what can he do between now and the end of June to see if there could be a real deal to stop Iran from building a nuclear bomb?

LANKFORD: Yes. No question. The best thing that we can do is diplomacy. We should engage in trying to find a way to be able to solve this diplomatically.

The problem is the deal now seems to have given away the process. You go back to just a few years ago, the U.N. said no nuclear capability for Iran. We're now saying 5,000 centrifuges. We're not dealing with the missiles and delivery systems. We are saying they have the right to enrich. A lot of things have moved just in the framework of this negotiation. I'm very concerned we're headed to a deal that actually puts them towards the pathway towards a bomb. It's been said several times, and that's the part that concerns me for the entire world.

This is the single largest state-sponsored terrorism that we have in the entire world. It's what will they do with that nuclear material?

BLITZER: We'll see what happens if there's a deal between now and the end of June. Senator Lankford, thanks very much for coming in.

LANKFORD: Thank you.

BLITZER: Coming up, a CNN exclusive. We're taking you inside communist North Korea, where capitalist factories employ thousands of workers. But will the regime's demands cost jobs? Stay with us.

(COMMERCIAL BREAK)

[17:41:10] BLITZER: ISIS seems to be on the verge of a stunning victory. A senior U.S. official now telling CNN the terror group controls 80 percent of Iraq's biggest oil refinery. And Iraqi security forces are virtually cut off right now.

Let's go to our Pentagon correspondent, Barbara Starr. She's been working the story for us, breaking the news.

Barbara, what are you learning?

BARBARA STARR, CNN CORRESPONDENT: Wolf, tonight, just one of several gains ISIS is making. The Baiji oil refinery may not be operational, may not be part of the oil infrastructure at the moment, but it is crucial. It is on the road to Mosul, Iraq's second largest city, still in ISIS hands. And if the Iraqis want to get Mosul back, they have to go through Baiji, and right now they cannot do it. That refinery complex essentially in ISIS hands.

This is just the beginning of the problem. Over in Syria now, there is -- there are growing indications, actually, that Bashar al- Assad, the president of Syria, is losing some ground, losing some momentum. But that may not be good news, because there's growing concern about who will step into the breach.

Will it be the al Qaeda affiliate al Nusra? Will it be ISIS? This is something the U.S. now is watching around the clock. If Assad loses momentum and ISIS in Syria steps in, either -- even further, gains more control, more uncertainty, this just adds to the ISIS threat that the U.S. is facing -- Wolf.

BLITZER: Significant threat, indeed. All right. Thank you very much, Barbara, for that.

Let's dig deeper with CNN counterterrorism analyst Philip Mudd. He's a former CIA official. CIA law enforcement analyst Tom Fuentes. He's a former FBI assistant director. And our military analyst, retired Lieutenant General Mark Hertling.

General Hertling, you heard what Barbara just said. U.S. officials now saying 80 percent of those Baiji oil refinery fields now in the control of ISIS. This would be a huge setback if they take control of it. Wouldn't it?

LT. GEN. MARK HERTLING (RET.), CNN MILITARY ANALYST: Well, it would, Wolf, if they did. But here's what I'll tell you. Both Iraqi and U.S. military sources on the ground tell me that, in the last 24 hours, there have been horrendous attacks, DVIED (ph) attacks by ISIS against Iraqi forces. There has been a critical fight at the Baiji oil refinery in the last 24 hours.

I always have to smile a little bit, being a former commander in Iraq, when I hear a Pentagon official telling a reporter that some element controls ground when they're a far distance away.

This is an ongoing fight. It has been an ongoing fight since early March. And it's going to continue to be a fight, because that ground is critical to both sides on the attack that will eventually occur against Mosul.

BLITZER: Well, when they say, when this official says 80 percent of that Baiji oil field, oil refinery, is now in the control of ISIS, that sounds so ominous. HERTLING: It does. I'm not buying it. Because I don't know

what 80 percent of the oil field control means. I've been to that oil field. And there's not much there other than pipes and dirt and a lot of refinery.

So it is a critical piece, because it controls the road North to Mosul. But I think, as we have said over the last couple weeks, there's going to be heavy fighting there. There's going to be a lot of fighting there. And I think you're going to see Iraqi security forces continuing to fight, as they have been doing over the last 24 hours, to regain the ground.

BLITZER: Tom Fuentes, let's talk about what the FBI director, James Comey, said today. They actually issued an alert for this one gunman, Elton Simpson. They didn't know he was on his way to Texas. They didn't know where he was. But they issued an alert based on his social media tweets or whatever about this event, this controversial event, that was going on.

Should they have known more about it before he could even get there with weapons and a partner?

TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: It would have been nice if they would have known, Wolf, but they didn't. They issued a general alert to Garland, not just of Simpson but of many other people that online had expressed an interest in the event itself.

And they -- you know, they said in the alert that they didn't know his whereabouts. They didn't know if he was specifically on the way there, did not know that he had left Phoenix. So this was not a warning. This was a general alert.

BLITZER: But he was also in connection, tweeting with a well- known terrorist, a man by the name of Junaid Hussain, who was pretty active in these fields. You would think that someone would have been monitoring him?

PHILIP MUDD, CNN COUNTERTERRORISM ANALYST: That sounds simple. You would think NSA collects e-mail. They collect phone. Why don't they just collect Twitter? You've got to understand, Wolf -- I know this is hard to figure out -- the revolution that's going on with intelligence. And the intelligence community hasn't figured this out yet.

You grow up in the intelligence world, you look at a target in Pakistan, a foreigner on foreign territory up on foreign phones, 2015, you're saying I want to look at an American citizen going through an American company -- that is Twitter -- talking about travel on American soil.

I think we're -- this sounds like an exaggeration, believe me. I think we're in a pre-911 environment with the way we think about U.S. information and U.S. targets on U.S. soil. Because people in my business don't want to touch the stuff like Twitter. It's too sensitive.

BLITZER: When you say pre-9/11, what does that mean?

MUDD: I mean, pre-9/11 -- what I'm saying is, it takes a galvanizing event for people to say, "Do we really want to talk about American liberties and how we collect on people like a kid in Phoenix, Arizona, when he's using U.S. information on U.S. soil and he's a U.S. person?"

People in my business are still saying, be very careful about treading on this territory, because you're going to get in trouble as soon as you touch a U.S. person.

BLITZER: Even though he did have a criminal record, he was convicted, he didn't get sentenced to jail, he was on probation, a terror-related crime.

FUENTES: He wasn't convicted of the terror-related crime. He was convicted of lying to the FBI.

BLITZER: ... terrorism.

FUENTES: Doesn't matter. The charge was not terror. It was lying to the FBI. He got three years' probation. The judge threw out the terror-related charge. Three years' probably, which ended in 2014. And that's it. And he paid his debt to society. And nothing new had come up.

BLITZER: Didn't he lie about wanting to go serve and -- al Shabaab.

FUENTES: He did. That's what started the investigation.

BLITZER: About the terror organization.

FUENTES: Right. But that started the investigation, and that's what the charges were that were placed in 2011. But in this situation, once he paid his debt and he was -- that's it.

BLITZER: We're going to have more on this, guys. Don't go too far away.

Up next, we're also following another story. A new demand from Kim Jong-un's government in North Korea. An exclusive report. We're inside North Korea. We'll get you the latest when we come back.

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BLITZER: A new demand from North Korea is threatening to wreck one of the biggest success stories in the country. It's a joint industrial project where thousands of North Koreans work with South Korean managers. CNN correspondent Will Ripley has received a rare and exclusive access opportunity to the site. He's joining us now live from the North Korean capital of Pyongyang.

Will, how did it go?

WILL RIPLEY, CNN CORRESPONDENT: Wow, this is a very important project for the North Koreans because, as you said, Wolf, it's the only example of cooperation, business-wise, between the North and South. But when we made the rare three-hour journey south of Pyongyang, we found an escalating crisis on the ground there.

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RIPLEY (voice-over): Made in Korea -- sneakers rolling off assembly lines in a South Korean factory with North Korean workers.

"When we started doing business here we had 300 employees. Now we have 3,000," says manager Ting-Lee Wong (ph). She'd like to hire 2,000 more, but she can't. This factory and more than 100 others in the Kaesong Industrial Complex caught in the middle of a showdown between the North and the South just miles from their heavily armed border.

There was so much hope at this historic summit in 2000, a landmark deal between Pyongyang and Seoul, establishing two cooperative projects.

South Korean businesses on North Korean soil. One of them, the Nan Kundong (ph) tourist region, closed after a North Korean security guard shot and killed a wandering tourist in 2008.

Today the industrial complex remains open, but planned expansion has been frozen for five years.

In 2010 South Korea accused the North of torpedoing their navy ship, the Cheonan, killing 46 sailors. In response, South Korea stopped all new investment in Kaesong, leaving the industrial complex half empty and businesses like the shoe factory with no way to expand.

"Because of the restrictions, we can't fill huge orders and meet high demand," she says.

Every morning and every evening 270 buses help transport 52,000 North Koreans back and forth to work. Each bus is stopped for several months in 2013, he is escalating tensions led North Korea to pull all the workers out. The crisis triggered by North Korean anger over joint military exercises between South Korea and the United States.

Now a new dispute over worker pay is threatening business again. Wages are paid directly to Pyongyang. North Korean complex managers, including Pak Cho Soo, are demanding a wage increase of $4 a month.

"We believe the attitude of the South Korean government is hurting the lives of workers here, he says."

South Korea objects to a wage hike, saying the North it going around the rules by unilaterally declaring a new minimum wage without consulting with the South.

Assembly lines keep rolling as the crisis deepens. At risk, the last remaining symbol of inter-Korean cooperation and the livelihoods of tens of thousands of workers and their families.

(END VIDEOTAPE)

RIPLEY: That industrial complex brings in about $90 million in revenue to the North Korean government, but all of it is in jeopardy right now, Wolf. The problems there a symbol of the bigger problems, the great division and growing tension on the Korean Peninsula.

BLITZER: Will Ripley reporting exclusively for us from North Korea, the capital of Pyongyang. Will, we'll check back with you tomorrow.

Al Qaeda says one of its senior commanders has been killed in a U.S. Drone strike. How big of a setback is this for the terror group?

And the FBI says it gave local police a heads-up about one of the gunmen shortly before the attack and warns there are other potential attackers out there right now.

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