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Anderson Cooper 360 Degrees

Crisis in Iraq; Severe Weather Hits Northern Nebraska; ISIS Posts Graphic Video; Obama Ordering Up to 275 U.S. Military Personnel To Iraq To Provide Security For Americans, U.S. Embassy; World's Richest Terrorist Group: Where Does ISIS Get Its Money?

Aired June 16, 2014 - 20:00   ET

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

ANDERSON COOPER, CNN ANCHOR: Good evening, welcome to AC 360, thanks very much for joining us. We are live tonight from Baghdad. It is 3:00 in the morning, Tuesday morning here in Baghdad.

Curfew is underway here, curfew started at midnight. The city is largely quiet at this hour. The streets empty except for checkpoints which are still up throughout the city manned by Iraqi government forces as well as militias, volunteers who've signed on to try to fight ISIS. The group ISIS still some 45-minute drive outside of the city of Baghdad. Defenses here have been strengthened.

We are also just getting word that hundreds of U.S. troops, U.S. forces are going to be deployed to this city, to Iraq. President Obama has notified Congress that up to 275 U.S. Armed Forces personnel will be sent here to provide support and security for the U.S. embassy in Baghdad and for Americans who are in Iraq in the event of an evacuation. The president says that force will be equipped for combat and will stay in place until the security situation improves.

It has been a day of dramatic developments to tell you about this evening. The United States is also considering everything from unarmed surveillance flights to airstrikes to help hold this country together and stop the violent offense of being carried out by militants from the Islamic State in Iraq and Syria.

A lot to talk about. And joining me now live are chief national security correspondent Jim Sciutto and senior White House correspondent Jim Acosta.

Jim Sciutto, let me start with you. What do we know about the U.S. forces that are going to be deployed here?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: This is what we know that over the weekend teams totaling a number about 170 began arriving in Baghdad. Their role, as you mentioned, to provide security for the U.S. embassy there, one of the largest in the world. Another 100 still outside of Baghdad but ready to go in if needed. Their specialty is an air field security. Why is that important? If a full evacuation is ordered, you need that air field secured to be able to fly those people out.

But remember, these are not combat troops. They're not there to fight the battles against ISIS. They're there to provide security for the many thousands of Americans who are in Baghdad.

COOPER: And Jim Acosta, I understand that President Obama is meeting with his National Security team at the White House tonight?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right, Anderson, and it's possible that that meeting has just wrapped up. In just the last several minutes, we have seen Secretary of State John Kerry, Secretary of Defense Chuck Hagel, the chairman of the Joint Chiefs Martin Dempsey, and the Attorney General Eric Holder, all leaving the West Wing, within the last several minutes.

From what I understand from talking to a White House official, the president is now down to what they're calling a fundamental set of options. Airstrikes are still on the table, but no combat troops on the ground -- Anderson.

COOPER: Do we know what those airstrikes would consist of? Are you talking about manned aircraft or drones? Or do we not know?

ACOSTA: At this point they're still debating whether to go with warplanes or drone strikes if they do decide to do a strike at all, Anderson. One thing we should point out, another option that they're looking at. They're also looking at expanding the existing security, training that is underway in Iraq right now by U.S. military forces for Iraqi Security Forces. That apparently may get ramped up. That's one of the options on the table.

COOPER: That would obviously be more of a long-term fix or attempt at a fix.

Jim Sciutto, what are you hearing in terms of possible U.S. options?

SCIUTTO: Well, one option we know of is the idea of bolstering the advisory force that is already in Iraq. We have about 200 people in the U.S. embassy compound there who advise and train the Iraqi military. An idea on the table would be to send more advisers in there, not to be in the field, say, with Iraqi combat units, fighting these ISIS militants, but to be at home base in effect in the embassy and helping them -- helping the Iraqis coordinate the military response.

That is -- that is one of many options on the table. It's the kind of decision the president has to make tonight.

COOPER: Jim, also -- Jim Sciutto, what are you hearing about -- I mean, there's been a lot of talk today about U.S. possibly working or consulting with Iran. What do you know about that?

SCIUTTO: This is what we learned. In fact, Marie Harf, the deputy spokesperson for the State Department, confirmed this on our air just a short time ago. These are talks taking place right now in Vienna. These are talks between the U.S. and Iran, and our European partners over Iran's nuclear program. And that those talks on the sidelines, U.S. officials met with Iranian officials to discuss the situation in Iraq. They said they were very belief, they did not discuss any military

coordination, so, you know, the idea of airstrikes to help defend Iranian forces on the ground. Not that. But the shared goal that neither Iran or the U.S. wants Iraq to descend into civil war. And we're also told that the U.S. made it clear that they don't want Iran taking sides in the sectarian conflict.

Of course, the government of al Malaki, Shiite, Iran, Shiite, those forces on the ground helping Shiite militias. What the U.S. does not want is Iran to get involved. But worsen those -- that ethnic divide. They want something that's more broader based and helps keep the country together.

COOPER: Although numerous reports saying that a top Iranian paramilitary commander has been in Baghdad with a number of his officers to try to help coordinate the Iraqi response.

And, Jim Acosta, the White House is going out of their way to say that there would not be any military cooperation between Iran and the United States. Correct?

ACOSTA: That's right. The incoming press secretary Josh Earnest has made that very clear on Air Force One with reporters earlier today. There will be no military coordination between the United States and Iran. They're having enough trouble just dealing with this nuclear issue. Yes, as Jim said, they're talking on the side lines but this is no sort of new military cooperative chapter between the United States and Iran. That's just not going to happen -- Anderson.

COOPER: Right.

All right. I want to bring in retired Major General James "Spider" Marks, former commanding general of the U.S. Intelligence Center.

General Marks, in terms of airstrikes, if that is an option the White House chooses, talk about the options between manned aircraft and drones and can you do that without having U.S. personnel on the ground in forward operating positions, citing targets, gathering intelligence?

MAJ. GEN. JAMES "SPIDER" MARKS, CNN MILITARY ANALYST: Anderson, you can. You can execute that type of a role without U.S. forces, Air Force personnel or Army ground or Marine ground personnel up close to where you expect the impact area to be. You can do that from a distance. Those would probably be either highly defined mobile targets or fixed targets.

Clearly the advantage of unmanned aerial vehicles is you don't have -- a pilot at risk, and you don't have to then have the additional capability of the search and rescue capability that has to be robust and has to be present in case there's either a maintenance or a downed aircraft problem, and you've got to go rescue that pilot.

So clearly it can be done, and it can be done without forces on the ground but it's not like close air support that we would see where forces are clearly in very close combat and you're trying to achieve some distance between those two through close air support.

COOPER: I mean, a couple of the problems a lot of people here have talked about is that in a number of these cities, particularly cities that they have already taken over, they're very enmeshed with the civilian population, so striking targets in those cities, in Mosul, in Tal Afar city that they took over today, that would be difficult. Are there -- are there clear, you know, training grounds, areas that they could target?

MARKS: Well, you clearly have what's called a collateral damage problem, when you're going after targets where military and civilian targets are interwoven, which we would see in places like Baiji, and Tikrit and Mosul.

Yes, there are isolated targets along those lines of communications. Now realize ISIS has displayed itself as a very conventional force. It has armored vehicles. It has self-propelled artillery. As a result of that, in order to support that, you have to have ammo stockpiles and things like that, Anderson.

So, yes, you can go after targets that won't have a CDE or collateral damage estimate that's high but would be very, very low. And you want to strike those targets. That would stop the momentum of ISIS.

COOPER: General Marks, I appreciate you being on tonight.

Jim Sciutto, Jim Acosta, again, no decisions yet made by the White House in terms of ratcheting up any kind of U.S. involvement other than those 275 U.S. forces we talked about.

I want to bring you up to date on the latest on the violence here in country, in Iraq, state television is reporting that the Iraqi Air Force killed more than 200 militants today in its own air raids, northwest of Fallujah. Impossible to independently verify that. Also, they said they destroyed a convoy of vehicles carrying ISIS fighters.

Meanwhile, new images are also coming to light from ISIS, purporting to show the executions of Iraqi Security Forces.

We're going to have more on that later in this hour, incredibly disturbing videos.

ISIS gained control of another city today, two more villages northeast of Baghdad over the weekend and has threatened to march on Baghdad in its bid to establish an Islamic state stretching from Iraq into northern Syria. Some said there's some 50 or so miles from Baghdad itself right now.

Our senior international correspondents have spent the past few days here in Iraq. Nic Robertson is here with me in Baghdad. Also joining us is Arwa Damon in the city of Erbil, about 50 miles east of Mosul.

Nic, coming to you. In terms of -- let's talk about, first of all, these videos that have been released by ISIS. Incredibly disturbing videos, purporting to show mass executions. It's impossible to verify numbers. They're saying some 1700 people that they've killed, lining them up, shooting them in ditches. But clearly that is designed to exacerbate the sectarian tensions in this country?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Absolutely. I mean, this is designed so that any Shia persons in this country that sees it, sees a Sunni man with a gun, killing a Shia man. That's going to enrage those sectarian tensions that already exist.

Baghdadi who commands ISIS wants this kind of thing. He wants to enrage the Shias because he wants them to attack the Sunnis because that will then further radicalize the Sunnis and all those sort of Sunnis out there in this country who are relatively moderate, sitting on the fence, that would drive them toward ISIS, towards Baghdadi, the commander.

And that's what he wants. He wants chaos here. He wants to grow his organization out of it. He doesn't want stability in the capital here. The tribesmen fighting with them do, but he doesn't. He wants those tribesmen to come holy over to him, not to any other group.

COOPER: He wants Sunni tribesmen who may be on the fence to feel that they're going to be attacked by Shia followers here, and that they have no other choice than joining ISIS?

ROBERTSON: Absolutely. The more that he can enrage the population here, the Shia population, with these videos, that some of these videos are so horrific and bad in detail, that really they're documenting war crimes here. The U.N. is calling these war crimes, potential war crimes. So you have -- you have -- for everyone to see. This is intentional.

Baghdadi has had a strategy all along, but quick move towards Baghdad. Everything they do is with a reason. This is with a reason. Enrage all those men we saw on the streets here at the weekend who are lining up to join the fight for the government, to go to the front lines, this will make them act more angry than they are already. They will potentially perpetrate atrocities themselves. Of course, everyone is calling for them not to, but to potentially do that themselves on the other population for Sunnis. It's just pours oil on fire.

COOPER: Which is why Grand Ayatollah Ali al-Sistani, who called up for volunteers to defend this country, and we've seen a huge numbers of volunteers. He actually then the next day through a spokesman came forward and said he wants everybody to exercise self-restraint. Clearly he's aware of what the strategy of ISIS is.

Arwa Damon, where you are, I'm wondering what the response you've been hearing because you've been talking to Kurdish Peshmerga fighters who have been able to take over the city of Kirkuk. And hold other areas, resisting ISIS. What did they say? And what do people you're talking to, what is their response to these videos?

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they're absolutely horrified, Anderson, understandably. Iraq has been through an incredible amount of violence over the last decade ever since Saddam Hussein was ousted from power by the U.S.-led invasion. But many will tell you that this level of brutality is something that is novel even for this country.

The Kurds, they have managed to hold ISIS at bay, especially critical is their ability to have kept ISIS fighters out of the oil rich city of Kirkuk. But that doesn't mean that ISIS is not continuously launching operations to try to test the Peshmerga, that's the Kurdish fighting forces resolve. But at the same time, you know, the Kurds are also urging a lot of caution moving forward because of those escalating sectarian tensions that you've been speaking about right there. Because it's not just ISIS that is in this battle at the end of the day.

They do have the support of the various Sunni tribes, they do have the support of various Sunni insurgent groups that are quite active under the U.S. occupation of this country. But those are at the end of the day groups that do not have the same ideology as ISIS. They do not want to see an Islamic caliphate established and they're all going to have to somehow at some point in time, whenever this country does reach that point, be brought back into the political fold -- Anderson.

COOPER: We're going to continue to check in with Arwa Damon and our Nic Robertson throughout the night. And also throughout the week that we're here.

A quick reminder, make sure to set your DVRs, so you can watch 360 whenever you want.

Coming up, how ISIS is getting its message out. Those videos that we've been talking about, it is a very planned, thought out effort by them. We're going to take you behind the scenes, and also show you where they're getting their money and how much money they have. They may be the richest, most wealthy terror organization in the world right now, talking about hundreds of millions of dollars.

Back in the United States, at least two tornadoes touching down in Nebraska. The latest on damage and the severe weather forecast for that part of the country. We'll be right back.

(COMMERCIAL BREAK)

COOPER: Large numbers of people here on the move in Iraq, fleeing the fighting, in many cases fleeing the rule of ISIS as we said. Earlier in the broadcast, a city of Tal Afar, a city of some 200,000 people in the northwest of Iraq, fell today to the forces of ISIS, raising even more questions about the capabilities of the Iraqi military to stand up and fight. Though they vastly outnumber the forces of ISIS, we have seen in Tal Afar today and Mosul and other -- and other towns and cities throughout Iraq, them running in the face of the well-organized forces of ISIS.

We are live from Baghdad tonight. We're going to have the latest from here, and more from here in just a moment. But first I want to get you updated on some severe weather back in the United States.

Wolf Blitzer has that -- Wolf.

WOLF BLITZER, CNN ANCHOR, THE SITUATION ROOM: Anderson, thanks very much.

At least one person is dead after at least two tornadoes touched down in Nebraska. Severe weather pounds the northern plains, a spokesman from Nebraska governor's says -- governor's office says there is damage in at least four towns.

Our meteorologist Chad Myers is live in the CNN Weather Center. He's got the latest. Also joining us on the phone, from Nebraska, storm chaser Ben McMillan.

Ben, you took some amazing live pictures, video, of what was going on. I don't remember ever seeing dual -- double tornados tearing through parts of the United States along these lines. Explain what you saw.

BEN MCMILLAN, STORM CHASER: Hi, Wolf. We started out today north of Columbus, and the storms just went very violent rather quickly. Almost the fastest I've ever seen storms go from a cloud to a tornado. And then what happened next is truly historic. We saw a violent tornado translate into two and even three tornadoes and one on the ground.

BLITZER: How -- what did it feel like to be that close to these double tornados.

MCMILLAN: Well, again, I do this professionally. And we are always placing ourselves in the safe part of the storm. If you watch them, the light turn, we're here on the western side of the tornadoes. And they were moving east-northeast. So it's, you know, almost impossible for a tornado to move backwards and a storm system that's moving, you know, east, but we are in a safe position. And yes, it was very close, but again, we've been trained how to do this so it wasn't that close for us.

BLITZER: The governor of Nebraska has issued a state of emergency for the entire state right now. Have you seen the devastation? Have you seen up close the destruction?

MCMILLAN: We're on our way to go there and we'll be there shortly. And we're going to assist with any kind of search and rescue we can. Assessing the damage and we'll go from there.

BLITZER: Let me bring Chad into this conversation.

Chad, two tornadoes, side by side. You've been a meteorologist for a while. Have you ever seen anything like this?

CHAD MYERS, AMS METEOROLOGIST: Not this size. I've seen two tornadoes on the ground but F-1s, 100 mile per hour storms. Not this. These were EF-3s. Maybe at the time. Not right there. That picture is an EF-4. That's almost a 200-mile-per-hour tornado. Probably 160, 175. Weather Service will go out there and look at that later on today and into tomorrow.

That's where the storm is right there, Wolf. Moving on up, and it's dying now, but there are more storms that could do the same type of thing in the overnight hours. This is what one of the schools looks like in Pilger right now. There should be another floor here. It's gone. We do know that the children were not in the school at the time -- Wolf.

BLITZER: Basically the forecast is for what, more of the same over the next several hours, 24 hours? What are you hearing?

MYERS: Absolutely. All the way to at least in 2:00 or 3:00. Typically as soon as the sun sets, storms are over, we just had a tornado. A large dangerous tornado on the ground near Burwell, Nebraska. Just a few minutes ago. The storm did miss that town by about a half a mile, but still it did, and now there will be more tornadoes on the ground tonight all the way through dark. Those ones after dark are very dangerous.

BLITZER: I want all of our viewers in that part of the country to be very, very careful and heed the warnings that you get, Chad. Thanks very much.

Ben McMillan, thanks for all that you do as well.

Let's go back to Anderson, he's live in Baghdad -- Anderson.

COOPER: Wolf, thanks very much. Remarkable pictures there.

Up next, we're going to have the latest from Iraq, disturbing, gruesome images coming from ISIS. Executions of Iraqi Security Forces. Exact number is hard to say. Many of the images are frankly too horrific to show.

Coming up, how these militants are so in fear with this type of propaganda, and where they're getting their money and how much money they now have. It's going to stun you.

Also ahead, as the fighting continues the question looms, is an advance on Baghdad possible? ISIS forces said to be some 50 miles outside this capital right now. How will the United States protect its embassy and its citizens? I'll speak with former U.S. ambassador to Iraq when we continue.

(COMMERCIAL BREAK)

COOPER: Welcome back, we're live in Baghdad.

The campaign that's being carried out by militants here in Iraq is being advertised online by this group ISIS on jihadi Internet forums, on Facebook, on Twitter. The images that are emerging are frankly horrifying. Some purporting to show the executions of Iraqi Security Forces and other mass executions.

In a moment I'm going to speak with Peter Bergen and former CIA and FBI official Philip Mudd about what ISIS is trying to accomplish with these videos. But we do want to warn you that the images that are coming out may be too graphic for some young viewers.

Arwa Damon reports.

(BEGIN VIDEOTAPE)

DAMON (voice-over): Two of the captives have Iraqi Border Guard patches on their sleeves. The bearded man demands his prisoners repeat, "Islamic State here to stay."

The first two comply, fear on their faces. The third struggles to formulate the words. Moments later, this. He appears to be dehydrated, barely reacting to what's happening. In the next video, he is dead. His jaw blown off. At the end of the clip, the ISIS gunman proudly declares, "We killed a Shia."

This Facebook page's profile picture matches the bearded man in the video. He goes by the name Abu Hamza al-Mohammadi from Tunisia. We accessed the Facebook account before it was taken down. Posted on it, these stills of the same execution. And another photograph that shows the other four men dead. They're accused of being Maliki's dogs. A reference to Iraq's Shia prime minister. Abu Hamza boasts about how he blew the infidels' heads to hell. Location Iraq.

In another post, Abu Hamza says, "Send these videos to the Shia." An effort to foment sectarian rage in what has become a ruthless battlefield. Many of the images posted online are too horrific to show a shallow.

Stills posted on an ISIS Twitter account show a shallow ditch filled with bodies. All accused of being members of the Iraqi Security Forces.

Often we don't know who the victims are, but in this case, we manage to identify the man who could not speak. His name Hafan Mosinski (ph). 36 years old. A father of two boys and a girl. Who adored his children and took the job as a border guard to build them a home.

Arwa Damon, CNN, Erbil, Iraq.

(END VIDEOTAPE)

COOPER: There's a look of fear in so many of these people's eyes. It's just -- it's horrific to see.

Joining me now live is former CIA and FBI senior official Philip Mudd and CNN national security analyst Peter Bergen.

Now, Peter, we talked about this a little bit at the beginning of the program, but it bears really kind of drilling down on focusing on. ISIS is releasing these videos in order to not only show fear among the military of Iraq, whose morale may be weakened, but also to try to increase the sectarian divide. How effective is that strategy?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: I think it's been incredibly effective. I mean, what you're seeing, Anderson, I think, you know, ISIS has in a way obviated the 1916 Sykes-Picot agreement, which basically created the border between Syria and Iraq. There is no border between Syria and Iraq now. ISIS has basically in control of both sides. Not in every part of the country but they have a state that runs 400 miles from Aleppo in the West. The largest amount of military in the Arab world. It's arguably the biggest achievement since 9/11.

COOPER: And yet, as you wrote about recently, this is a group, ISIS, which al Qaeda itself, al Qaeda central, has distanced itself from because of some of the most gruesome of their tactics.

BERGEN: Sure, I mean, yes, when al Qaeda is rejecting you because they're too violent clearly you're very violent. But at the end of the day, I mean, these -- yes, they -- al Qaeda has rejected this group, but I think it's a distinction without a difference, if you're a Shiite living in Iraq, whether it's the al Qaeda certified group or is which is not being certified by al Qaeda central, they operate in varying degrees of violence -- Anderson.

COOPER: Yes, Phillip, we were talking on Friday, on the program, and you said you were reserving judgment to see how effective is fighters were in taking some of these towns that they had taken. Three days later, I'm wondering how you see things now on the ground.

PHILIP MUDD, FORMER SENIOR OFFICIAL FBI AND CIA: I think we're looking at a limited set of characteristics, modest geographic gains by is. The key questions I have, are going back to the U.S. surge. What are the tribal councils doing, the awakening groups doing? What do people think? I think ISIS could continue to take territory. I would be looking a month or two or three down the road saying, if they can't govern, if they treat people poorly, if they behead people, can they hold it? And that's not an answer I can give you in three days.

COOPER: The tribal council that you're talking about are Sunni groups. They really helped turn the tide here in 2006 to 2007. As you well know, the prime minister, Nuri Al-Malaki, who's a Shiite has alienated a lot of those groups, stopped paying those tribal councils. Even if some of those Sunni groups, don't like the methods, the kind of videos we're seeing from is. Do they, unless Nuri Al-Maliki reaches out to these groups, are they really going to come around and turn against is? Do you think?

MUDD: I think they may do that. We've seen that in other situations, in places like Somalia, for example, I think you've put your finger on the critical problem that's not understood in the United States. This is not in some sense a fight against extremists, a fight against ISIS. This is Shiite against Sunni. Saddam was a Sunni who oppressed the Shiite.

This is them saying, we own the turf now, and we're going to crush the Sunnis, if we choose to intervene in the United States, it won't necessarily be perceived as intervention against extremists, it will be perceived as intervention in favor of a Shiite dictator.

COOPER: In fact some people will say, well, you guys didn't intervene in Syria in support of Sunni insurgents fighting against Assad, and here now is intervening against other Sunnis again in Iraq to kind of bolster the argument you made. Philip Mudd, I appreciate you being on. Peter Bergen as well.

Just ahead, ISIS is not only known as ruthless, it may be the richest terrorist group on the planet right now. Where it gets its money, digging deeper on that tonight. Some fascinating, when you charged to trace the money trail.

Plus with ISIS pushing closing to Baghdad, some 50 miles, about a 45- minute drive away. Threatening to seize the city, a daunting question, what would it take to evacuate the enormous U.S. Embassy here in Baghdad? Thousands in U.S. personnel, a virtual city within a city. I'll show you what we mean.

(COMMERCIAL BREAK)

COOPER: As we reported earlier, President Obama's notified Congress that as many as 275 armed personnel will be sent here for the U.S. Embassy and Americans who are in Iraq. It's the largest diplomatic post in the world, more than 5,000 people work and live at the compound. Tom Foreman takes a look -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Anderson, if you look at a map of Iraq, you can see that Baghdad is more or less in the middle of the country. And if you move into a map of Baghdad, you look at the very heavily fortified green zone in the middle there, that's where you will find the U.S. Embassy. Protected on all sides by the green zone and on the southern edge by the Tigris River.

This was built in 2009 at a cost of about $750 million and it's about the size of an amusement park or 60 football fields all put together and all the way around, there are these various check points to keep track of anybody trying to get any sort of access to it.

Plus, this giant blast wall, so that even if someone got close, any bomb would be deflected or thwarted. Steven Beecroft lives within the compound. Scores of offices handling everything from visas to trade, to security to agriculture. They work in buildings that are hardened against attack. There are troops there to protect the 5,600 workers inside this compound.

Many of these people can't leave often without a heavily armed escort. So inside they have cafeterias, workout rooms, swimming pool, they have tennis courts. They even have a movie theatre and the ability to generate their own electricity and water, all part of the cost -- Anderson.

COOPER: It is a city within a city. Tom, thanks very much. I want to bring in James Jeffrey, former U.S. ambassador to Iraq, currently visiting fellow of the Washington Institute. He joins me from London. Also with us, Peter Beinart, CNN political commentator and contributing editor at "The Atlantic" and "National Journal."

Ambassador, let me start out with you, you worked with Nuri Al Maliki up close for a long time. Do you think he really is capable in this hour of need, in reaching out to Sunni groups who many people in the United States say that he must reach out to, in order to try to bolster his government?

JAMES JEFFREY, FORMER U.S. AMBASSADOR TO IRAQ: I would have to say I'm quite skeptical.

COOPER: So what does that tell you about the potential for real change here, positive change here?

JEFFREY: He's never faced the situation like this before, he's not the only stubborn sectarian person in Iraq. A high percent of those we had to deal with had views similar to his. Nonetheless, we have to move quickly, the scenario about Baghdad being surrounded by these ISIS people is going to materialize.

COOPER: Do you think that's very possible? Do you think it is possible Baghdad could fall?

JEFFREY: No, it can't fall, but it can be cut off. We almost faced that in 2004 with 100,000 U.S. troops. It could create chaos and place all of our interests in jeopardy. It's going to require a government that can do reconciliation. And Maliki is an object like no other.

COOPER: Peter Beinart, for you, you believe that the focus has to be on diplomatic efforts to try to get Nuri Al-Maliki to reach out, don't you?

PETER BEINART, CNN POLITICAL COMMENTATOR: It's probably the biggest mistake I've ever made in my journalistic career. I think before we go, blowing a lot of things up, we need to figure out whether in fact there's an Iraqi government that is capable of creating a government that can win back some Sunni allegiance. ISIS is in the lead, the reality that they have the support right now, in a lot of other Sunni groups as well.

This is not only a fight against an extremist group. Most Sunnis have been deeply alienated from this government unless we can find a way. Pushing this government toward being much more inclusive, I'm not sure military action will do much good.

COOPER: Ambassador Jeffrey, do you believe that some form of U.S. military action is necessary at least in the short term just try to buy some time?

JEFFREY: Exactly. That's why I disagree with Peter. He's trying to do stabilization. We shouldn't be bombing Sunni areas, what we have is these columns of ISIS fighters, heavily equipped, moving around to the north and south of Baghdad. That's a military move, it's in Shiite areas in many cases and we have to stop that, before we can stabilize a situation. Keep the Iranians out, and ensure that Baghdad is not cut off.

BEINART: How are we going to keep the Iranians out, Maliki is much closer to the Iranians than he is to us. I'm not against military action in any circumstance, it seems to me, we have a certain leverage right now with Maliki wanting us to take military action. We use that to get him to make political decisions.

JEFFREY: That's all well and good, but for the moment, we -- for the moment -- that's all well and good, and it actually is a good idea, but for the moment, we have a military problem. The Iranians have advisers and such, what we don't want is hundreds of -- large columns of Iranian troops streaming in, because Baghdad is cut off. That's the horror scenario that's going to turn the whole region into a Shiite Sunni civil war.

COOPER: Ambassador Jeffrey, I appreciate your time tonight. Peter Beinart as well.

Just ahead tonight, how did ISIS gain so much power so quickly, where did the money come from? You're going to be amazed how much money this group has. They're meeting with private, pictures speak volumes. Two grieving fathers sharing their pain. The father of the Santa Barbara shooter face to face with the father of one of his victims.

(COMMERCIAL BREAK)

COOPER: When ISIS took over the second largest city in Iraq, Mosul, they took an awful lot of money. That's one of the ways they've been funding themselves. Randi Kaye follows the money trail.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN INVESTIGATIVE CORRESPONDENT (voice-over): In Mosul, Iraq's second largest city, ISIS struck gold, literally. They robbed that city's central bank taking a large amount of gold and an estimated $430 million. A smash and grab like that could make them the richest terror organization in the world. The Council on Foreign Relations reports most of ISIS' financing comes from smuggling, extortion and other crimes.

ISIS is even cashing in on oil, selling crude from oilfields they took control of in Northern Syria, right back to the Syrian government. "The New York Times" reports ISIS is also selling electricity from captured power plants back to the government too.

JOSH ROGIN, SENIOR CORRESPONDENT, "THE DAILY BEAST": They also do a lot of the typical terrorist activities. They have money laundering schemes.

KAYE: In "The Daily Beast," Josh Rogin reports that ISIS has also been funded for years by wealthy private donors living in countries the U.S. considers allies, countries like Kuwait, Qatar and Saudi Arabia. And those governments, says Rogin, know it's happening but choose to look away.

ROGIN: The governments would have some plausible deniability and fund them directly. At the least, they were looking the other way.

KAYE (on camera): Now back to the numbers, if you do the math, ISIS may be worth at least $500 million, after that last attack on that bank in Mosul. In 2011, the Taliban was said to be worth an estimated $70 million to $400 million. Even al Qaeda can't compete. Al Qaeda had an operating budget of $30 million a year, before the 9/11 attacks.

(voice-over): And all of this cash on hand only allows ISIS to attract more extremist fighters who are drawn to higher salaries, big money helps is finance large scale prison raids, liberating hundreds of fighters who join their ranks.

ROGIN: They're a group that can't be negotiated with. The more resources they have, more aggressive and more violent they'll be.

KAYE: Elevating the risk in the Middle East and potentially around the globe. Randi Kaye, CNN, New York.

(END VIDEOTAPE)

COOPER: Dexter Filkins has done an extraordinary job covering this story from the beginning. He joins me tonight.

Dexter, you wrote recently that more bad news is yet to come, can you explain that? What do you mean?

DEXTER FILKINS, "THE NEW YORKER": It's hard to forecast the future, but you have the makings there for a wider -- a much wider war, I mean, already you have ISIS, which is not just an Iraqi organization, but a Syrian one, they're fighting in both places. ISIS already done bombings in Lebanon, against Hezbollah. You have the Iranians, who are the head of the revolutionary guards force is apparently in Baghdad preparing to mobilize the Iraqi Shiite militias, possibly.

There's been reports there's revolutionary guard already in Iraq. The Saudis are already in, the Turks are already in, I mean, you've really got the possibility for a much wider conflict here.

COOPER: There's a lot of talk, especially when U.S. politicians that the U.S. has got to somehow get the prime minister here, to reach out to Sunni groups or Kurdish groups, but particularly, to Sunni groups. Do you -- I mean, given his actions since the U.S. has left here, do you see any sign he's willing to do that?

FILKINS: Well, no, I don't. I mean, I think -- look, the hard part now is that, you know, sort of now is the wrong time to ask him to do that because now, you know, there's -- he's got guerrilla fighters on the outskirts of Sunni, fighters on the outskirts of Baghdad, now it's difficult to talk and to try to make deals and to reach out.

It was easy to do that, two and a half years ago, when the American -- when the last American troops left, but what he did, in fact, was totally the opposite. Maliki has basically driven us to -- or driven Iraq to the place where it is. He has been utterly sectarian for the past two and a half years.

And one of the crucial roles that the Americans played when they were there, was essentially in restraining him. And in sort of brokering deals between all the various factions. Without them there there's no break on him.

COOPER: There have been some who have suggested that the government that was created here largely at the instigation of the United States really required the United States as sort of a central part of its DNA, do you agree with that?

FILKINS: I do, actually. That's the evidence. You know, Ryan Crocker, ambassador for several years. American ambassador said to me, that the irony is, that we built ourselves into the hard drive, and I think that's right. You've basically got these three groups, the Shiites, the Sunnis and the Kurds, they've never really learned how to live with each other. They don't trust each other. The United States, we came in in 2003, we destroyed the Iraqi state, spent eight and a half years trying to build another one. But we built a system that doesn't work very well, it worked OK, as long as we were there.

COOPER: Can you explain why a military force, the Iraqi defense force would have some 250,000 troops out numbering ISIS forces, I don't know, 50-1, 100-1, perhaps. How they're not able to stand up to them and defeat them on the field of battle.

FILKINS: It's incredible. Look, it comes down to moral, I think it's four divisions of the Iraqi army disappeared up there, when confronted by, you know, a bunch of guys in pickup trucks. It's pretty pathetic.

COOPER: It is. Don't even think about it. Thanks very much.

The U.S. army announces a crucial step as it seeks answers to the capture of Bowe Bergdahl, we'll be right back.

(COMMERCIAL BREAK)

COOPER: Thanks for joining us. Susan Hendricks joins us with the 360 News and Business Bulletin -- Susan.

SUSAN HENDRICKS, CNN CORRESPONDENT: Anderson, an army general is leading the investigation into the capture of Bowe Bergdahl by the Taliban. However, the investigator won't interview Sgt. Bergdahl until he gets approval from his reintegration teams.

A 360 follow now, newly released photo show an emotional meeting two weeks ago, between the fathers of the University of California Santa Barbara gunman and victim, Christopher Martinez. The 20-year-old Martinez was shot to death at a deli. His father said they plan to work together so this never happens again.

The U.S. soccer team and its fans are celebrating at the World Cup and here at home in a stunning finish, the U.S. defeated Ghana 2-1 -- Anderson.

COOPER: All right, Susan, thanks very much. Thanks for joining us. We'll be back in Baghdad tomorrow. CNN's special report "O.J. WILD RIDE" starts now.