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CNN Newsnight Aaron Brown

Is Time Up for Iraq?

Aired January 27, 2003 - 22:00   ET

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


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


AARON BROWN, HOST: Good evening again, everyone. We don't blame President Bush if he had a certain thought kicking around his head today. The thought that dad sure had it easy. OK, not that easy, really.
Back on the night of January 28, 1991, the first President Bush was dotting the "I"s and crossing the "T"s of his own State of the Union address. The one he'd deliver the next day. And granted, he had a lot on his plate that day.

The economy was in trouble in the country. Crack cocaine was in full bloom, turning the nation's cities into combat zones of crimes and wasted lives. The world was still picking up the pieces after the collapse of the Soviet Union. All of that would come up in the speech, but Iraq and the coming war was the beginning, the middle and the end.

Here is some of what he said. He said, "We are engaged in a great struggle in the skies and on the seas and sands. We know why we're there. Saddam Hussein's ruthless, systematic rape of a peaceful neighbor violated everything that the international community holds dear. With few exceptions, the world now stands as one." That's what the first President Bush said back in 1991.

If it could only be that easy for this president. Mr. Bush doesn't have the luxury of a world United and an obvious case of aggression that existed back then. There's no easy to explain plot line, and we haven't yet seen the damning evidence to show what Iraq is doing, which is not to say that that evidence does not exist.

If the need for the last Gulf War was illustrated in black and white, this one is drawn more in shades of gray. Presidents tend to like black and white. They sometimes reduce the complex to the simple. But Mr. Bush doesn't have that luxury either. The country knows that.

Whatever is the right course, it is not so simple as the invasion of a neighbor. And not so nearly black and white. Not this time.

And so tonight we begin "The Whip" with the long-awaited report from the U.N. weapons inspectors. Chief U.N. correspondent Richard Roth gets us started. Richard, a headline from you, please.

RICHARD ROTH, CNN CHIEF U.N. CORRESPONDENT: The U.N. weapons inspectors say Iraq can't prove it has disarmed. Top inspectors say from missiles to nerve agents, Iraq is not complying. But of the 15 Security Council members, you may get 15 different opinions on what to do next.

BROWN: Richard, thank you. Back to you at the top tonight.

On to the U.S. reaction delivered today in strong words from the secretary of state. That's Andrea Koppel's beat. Andrea, a headline from you, please.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Aaron, Powell readily rattled off a number of examples which he said came from the inspectors' report and were further proof of what the U.S. claims, that Iraq has no intention of disarming and won't no matter how long U.N. weapons inspectors are there.

BROWN: Andrea, thank you. And the reaction from Iraq. Nic Robertson in Baghdad tonight. Nic, your headline.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Aaron, initial reaction appears to be negative. Commentators here calling Hans Blix's report unprofessional, unfair and biased -- Aaron.

BROWN: Nic, thank you. And it's safe to say it's a working night at the White House ahead of tomorrow's State of the Union address. Our senior White House correspondent John King has the duty. John, a headline from you.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Aaron, by this time tomorrow night the president hopes to have convinced the American people another big tax cut is the right prescription for a still struggling economy. And of course the much more urgent focus of the president, he must sell an increasingly skeptical American public on the prospect of war with Iraq within weeks -- Aaron.

BROWN: John, thank you. Back to you and the rest shortly.

We also spend time tonight talking with Sandy Berger and David Gergen about what they think the president needs to accomplish in his speech tomorrow night and how he might do it.

Also on the program, Jeffrey Toobin joins us. Jeffrey had lunch with Martha Stewart and got more than her recipe for Hunan chicken, though he actually did get that as well. Jeffrey got an exclusive interview, and he'll tell us what she said when he joins us later.

And it's about as close as you can get to peering into the mind of a genius, the drawings of da Vinci. And they are spellbinding. A new exhibit is our "Segment 7" tonight.

So we have a lot to do on this Monday night from Washington, D.C. We begin with the U.N. reports. Anyone expecting them to end the debate about what to do with Iraq is bound to be disappointed tonight. They contain something for all sides to latch on to, and today all sides did.

There were calls to give the inspectors more time. And there were warnings again that time is running out. But if the reports contained no smoking guns, they were hardly a diplomatic whitewash that some had expected even as recently as late last week. Both reports that came in today were skeptical. The report by Hans Blix on chemical and biological weapons especially so.

We have much on this tonight. And we begin with CNN's Richard Roth.

(BEGIN VIDEOTAPE)

ROTH (voice-over): It didn't take long for the U.N.'s chief weapons inspector to charge Iraq as not cooperating.

HANS BLIX, U.N. CHIEF WEAPONS INSPECTOR: Iraq appears not to have come to a genuine acceptance, not even today, of the disarmament which was demanded of it and which it needs to carry out to win the confidence of the world and to live in peace.

ROTH: Hans Blix says chemical and biological agents have not been accounted for.

BLIX: There are strong indications that Iraq produced more anthrax than it declared. And that at least some of this was retained after the declared destruction date. It might still exist.

ROTH: Blix also found disturbing an Iraqi scientist with 3,000 pages of nuclear data in his home. The Swedish diplomat noted Iraq is granting access to weapons inspectors, but still needs to provide hard evidence of disarmament.

BLIX: It is not enough to open doors. Inspection is not a game of catch us, catch can.

ROTH: Iraq says it has no weapons of mass destruction or important documents.

MOHAMMED ALDOURI, IRAQI AMBASSADOR TO U.N.: We have no hidden reports at all. We gave everything and we put it in our report with the 12,000 pages.

ROTH: The inspectors say Iraq failed to close gaps on that massive filing of weapons of mass destruction. But the top inspectors don't want to give up the search.

MOHAMED ELBARADEI, IAEA: We should be able within the next few months to provide credible assurance that Iraq has no nuclear weapons program. These few months in my view would be a valuable investment in peace because they could help us avoid a war.

ROTH: The Security Council remains divided over the Blix findings and how long his team should continue to work. The U.S. says time is running out.

JOHN NEGROPONTE, U.S. AMBASSADOR TO U.N.: It benefits no one to let Saddam think he can wear us down into business as usual as he has practiced it over the past 12 years. UNIDENTIFIED MALE: Since we have started this process and there is no clear reason to stop it, we should continue with the process.

(END VIDEOTAPE)

ROTH: Several other countries, including Germany and Russia, backed China there in saying the inspectors should be given, in effect, all the time they need -- Aaron.

BROWN: So what's the next move in this very serious chess game?

ROTH: Well, timeline-wise, Wednesday. A Security Council closed-door meeting. The Security Council begins to thrash out its differences. No one expects any type of agreement this week.

February 14, yet another update from Hans Blix. He has said if the U.S. troops move in, his work is done. February 14 brings us closer to that late February deadline people are talking about for fighting weather. And otherwise here, there's still going to be disagreement in the hallways. Nobody want to move to a second resolution in the council so far authorizing war.

BROWN: Richard, thank you. A busy day for you. Richard Roth outside the U.N. tonight.

Now the American reaction, which, as you might imagine, is split a bit down party lines. Top House and Senate Democrats today called on the administration to show more proof that Iraq has weapons of mass destruction. That it has them now. President Bush will have the opportunity tomorrow night in his State of the Union address, but it is uncertain at this point whether he'll use it for that.

He said nothing today, leaving the podium to his secretary of state. Here again, CNN's Andrea Koppel.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): Secretary Powell said the long-awaited reports by U.N. weapons inspectors confirm what the U.S. has said all along.

COLIN POWELL, SECRETARY OF STATE: This is the essence of the problem. Dr. Blix said Iraq appears not to have come to a genuine acceptance, not even today, of the disarmament that was demanded of it.

KOPPEL: As proof, Powell highlighted the inspectors' recent discovery of thousands of pages of top-secret documents related to uranium enrichment found in the home of an Iraqi scientist.

POWELL: You all saw the pictures of that information being brought out. Why, why, if Iraq was committed to disarmament as required under 1441 would we be finding this kind of information squirreled away in private homes for any other reason than to keep it away from the inspectors?

KOPPEL: As a result, Powell said the Bush administration believes Iraq's time to disarm peacefully is almost up.

POWELL: The issue is not how much more time the inspectors need to search in the dark. It is how much more time Iraq should be given to turn on the lights and to come clean. And the answer is not much more time.

KOPPEL: But privately, U.S. officials concede inspections could continue for a few more weeks. A potential compromise with anxious allies concerned the U.S. is rushing to judgment. That's roughly the same amount of time the U.S. military needs to build up its forces in the region.

As part of this push by the U.S. to build a broader coalition, Powell suggested the Bush administration was prepared to release more unclassified evidence on Iraq's weapons program and alleged links to terrorist groups like al Qaeda. But before that happens, Powell said, he and President Bush plan to discuss the inspectors' reports with Security Council members. And the prime ministers from Italy and Britain, countries certain to play a key role in any U.S. coalition, will meet with President Bush this week.

(END VIDEOTAPE)

KOPPEL: Don't expect any definitive announcements this week, but even with a brief extension of weapons inspections likely to happen, one exasperated U.S. official told me, Aaron, he said the next new deadline will be, in his words, "the last final, total, ultimately the end" -- Aaron.

BROWN: And a brief extension means what? A couple of weeks? A month?

KOPPEL: There's a rough time period that people are talking about. Richard Roth just alluded to it. We're talking three, maybe six weeks. Ideally enough time to get reluctant allies to build support among their publics, and also for the U.S. military to get all their troops over to the region.

BROWN: Andrea, thank you. Andrea Koppel at the State Department tonight.

To call Iraq's official reaction today a reaction is something less than accurate, coming as it did five hours before the reports were read to the Security Council. The timing does say a lot, however, about the growing belief among Iraqi leaders that war is a forgone conclusion. And today the words and the pictures reflected that view. From Baghdad tonight, here's CNN's Nic Robertson.

(BEGIN VIDEOTAPE)

ROBERTSON (voice-over): On Iraq's late-night news, president Saddam Hussein got a hero's welcome as he came to address his top commanders. In a morale-boosting speech, the Iraqi leader called for status reports on preparations on a possible war. And with unusual speed for Iraqi TV, the channel run by the president's son was quick with reaction to the U.N. weapons report. UNIDENTIFIED MALE (through translator): We were expecting Blix to be professional and objective. His report was not fair.

ROBERTSON: At the U.N., Iraq's ambassador also hit back at U.N. Weapons Chief Hans Blix's report.

UNIDENTIFIED MALE: The inspectors also proved that all the intelligence information provided later by the United States and Britain and satellite pictures were business (ph).

ROBERTSON: Speaking before Blix's address, Iraq's foreign minister Sabri accused the United States and Britain of an evil desire to dominate the region.

UNIDENTIFIED MALE: These two governments know very well that there are no weapons of mass destruction or related activities in Iraq.

ROBERTSON: Characterizing Iraq's relationship with the weapons inspectors as super cooperation, Sabri said on the contentious issues of private interviews with Iraqi scientists Iraq was abiding by U.N. Resolution 1441.

UNIDENTIFIED MALE: Our cooperation is in providing access to all these people and we are doing this.

ROBERTSON: Even as Iraqi TV has recently started broadcasting video of troops and tanks preparing for war and soldiers vowing to fight to the death, Sabri suggested war with the United States may not be inevitable.

UNIDENTIFIED MALE: All times are for diplomacy. The ones who say there are no time for diplomacy are warmongers.

(END VIDEOTAPE)

ROBERTSON: Now the warmongers, according to Sabri, are the United States and its ally, Great Britain. Nevertheless, though, Iraqi officials say they are willing to allow the U.N. inspectors to continue their work, if only, they say, to prove the United States is wrong -- Aaron.

BROWN: Nic, there's a report that we're just getting in that Tariq Aziz has told Canadian media that Iraq is prepared to be even more cooperative, which, number one, suggests that he agrees they haven't been totally cooperative. Any sense of that from Baghdad tonight?

ROBERTSON: The sense we've really had from here, Aaron, from a number of officials from the foreign minister, from president Saddam Hussein's top scientific adviser, is that they couldn't be anymore cooperative because they're doing everything they can. They have no more documents to hand over, and they've said it's up to everyone else to give them the evidence.

It's difficult to imagine what Aziz is talking about having heard this from officials already. What additionally are they going to do? They've already said they're up to the max -- Aaron.

BROWN: We'll wait and see, but that's what media in Canada is reporting tonight. Thank you, Nic. Nic Robertson.

One quick program note here. Tomorrow morning on "AMERICAN MORNING," Paula Zahn will interview Mohamed ElBaradei, the head of the International Atomic Energy Agency, about his report today on Iraq's atomic weapons program. That's his area of expertise. The interview at 9:00 Eastern Time on "AMERICAN MORNING" tomorrow.

We have much more to do from Washington. Tonight, we'll preview President Bush's State of the Union address tomorrow night. What will he say about Iraq and other issues?

And in our second half-hour tonight, Martha Stewart finally talks about questions of insider trading that have been plaguing her and her company. She talked with Jeffrey Toobin for a piece in "New Yorker" magazine. We'll talk to Jeffrey. This is NEWSNIGHT from Washington.

(COMMERCIAL BREAK)

BROWN: In normal times, State of the Union speeches are not nearly as important as either presidents or the press make them seem. They are often simply laundry lists of programs and goals the president has and wants Congress to act upon. In normal times. But these are not that.

We are less than a year and a half removed from September 11. We are perhaps on the eve of a war with Iraq. The economy is at best sluggish. And the surplus that might have helped pay for prescription drugs or better schools is long gone.

Tomorrow night the president's speech to the country, not just to argue the case against Iraq, but to argue that the administration has the right cure for all that currently ails us. So we go back to the White House now and our senior White House correspondent John King.

John, we heard during "LARRY KING" in the last hour Bob Woodward talking about the administration's plan to release more information about Iraq's efforts to hide its weapons of mass destruction. What do you know?

KING: Well, Aaron, senior officials tell us there is compelling information of that. They say there are satellite photographs of Iraq moving things. Weapons of mass destruction, evidence they believe just before the inspectors went in and even during the inspections over the past month or so inside Iraq. So U.S. officials say there also are intercepts, presumably recorded intercepted telephone conversations of Iraq moving to conceal information, urging scientists to conceal information.

The debate within the administration has been whether to make any of this public. We are told tonight the administration will make some public, perhaps as early as next week. There was a debate as to whether to include some in the State of the Union speech. We are told to not look for that to happen, although there is another 24 hours almost before that speech.

But early next week we are told the administration will make some of it public in an effort to convince France, Germany, Russia, others on the Security Council that the inspections regime in the view of this administration is a failure, not a success. A tough sell. Still a debate in the administration over just what to release. They are worried if they let this out they will compromise their sources.

BROWN: OK. Let's go then to other business the president needs to accomplish tomorrow. Clearly a lot of the speech will deal with Iraq. Will there be new arguments, new words? The president and the administration have been saying for a while very much the same thing.

KING: The president will not declare war, but he will tell the American people they need to prepare for war perhaps in the weeks ahead. The president will make the case that his argument is right, that just having inspectors in on the ground does not mean this policy, this new inspections regime is a success. He will make quite the counter argument, we are told.

He will say it is a failure, and that unless Iraq moves quickly to change its ways, that he is prepared to lead the nation to war. He will not declare it again, but he will try to prepare the American people. And as we see in our own polling and elsewhere, there's rising skepticism, especially if the United States work outside of the United Nations. So a tough sell for the president.

BROWN: And how do they view those polls? Those polls make them nervous?

KING: They insist the president will not be guided by the polls. And we've heard Prime Minister Blair, who has had the polls turn on him much earlier in this debate, say that leaders must lead public opinion, not follow it. But, yes, of course they see those polls and they understand this is a speech in which the president lays out his agenda for the year.

They're frustrated here, there's so much focus on Iraq. They're worried it overshadows the more important things to them politically, like the economy, like Medicare, things that could matter much more to the president a year from now when he's running for reelection. But they say the president simply will get out -- they believe the pictures of the inspectors getting access has turned public opinion. That people think this is working. The president's challenge tomorrow night is to say that's not what the inspections are supposed to be about.

BROWN: John, we'll watch the speech together tomorrow night and talk about it then. Thank you very much. Senior White House correspondent John King.

We're joined tonight by people who have seen this process from the inside. In Washington, Sandy Berger, former national security adviser in the Clinton administration. And in Boston, David Gergen, presidential speechwriter, spokesman, adviser. He's worn just about every hat you can. It's good to see both you. Mr. Berger, let me start with you. If you had the president's ear right now and you were looking at a country that is trying to decide what it believes on Iraq, what advice would you give him to close the deal?

SANDY BERGER, FMR. NATIONAL SECURITY ADVISER: Well, I think the American people tomorrow want to see the president move beyond assertion to persuasion. To make the case that these capabilities are real, that the threat is real. To answer their questions about whether we are going to have a broad coalition and what we're going to do to try to build that in the weeks ahead, or whether we're going to be doing this primarily by ourselves.

I think they want to know if this is going to divert us from the war on terrorism or compound it in this country. So there are -- I think this is a speech that has to appeal not just to the emotional heartstrings of America, but to the good judgment of the American people and to make a case.

BROWN: And just to finish that point, is it inevitable, in your view, given where both Americans seem to be and people around the world, that the administration is going to have to give up some of this intelligence and give it up in a way that makes it pretty clear what's going on in Iraq?

BERGER: I think that's true. The president is speaking to three audiences tomorrow night. Number one, Saddam Hussein. And he has to obviously maintain a sense of determination that he has.

Number two, he's speaking to an international audience where, in many parts of the world support for this enterprise has plummeted in the last six weeks. He's got to raise the water level so that Jacques Chirac and others are able to at least be in the realm of being able to say reasonable people can differ. That's not where they are today.

And he's speaking to the American people. And I think it will be easier in some ways. It's always easier to make the case against Saddam Hussein. But I think he has to explain not only what the capabilities are here, but what's the threat and why are we vulnerable.

BROWN: Professor Gergen, let's go to you here. The president no doubt will talk about the economy tomorrow, he'll talk about Medicare reform, prescription drug coverage, lots of things. Will anyone hear any of that or will all of us in a sense hear what he says on Iraq?

DAVID GERGEN, FMR. WHITE HOUSE ADVISER: Well, the word is that he's going to speak about the economy and domestic issues first and then turn to Iraq. I think he would be far better served if he did it just the other way around so that he addressed the most important pressing issue on the table and then turned his attention. That's also the way he's going to handle it in terms of his own presidency.

I want to go back to what Sandy said. I think he's absolutely right about these three different audiences. And I think this international audience, it's the first time I can remember in a State of the Union where a president has to appeal to world opinion as much as he has to appeal to domestic opinion.

I just came back from the World Economic Forum. I think all of us who are Americans who were there were stunned at how angry and resentful Europeans are now, and the Arabs are. And the president has to bring those people over. He's lost control of this debate in the last few weeks.

And more than just evidence, I think he has to now talk us through why is he so personally -- why is he so personally committed to this? What is it that's moving him? People don't understand that.

And secondly, I think, Aaron, that he has to -- I think to echo something Sandy said, he has to convince us he's not hell bent on war. That he is a man who genuinely would like to resolve this short of war. And that means I think he has to give the inspectors at least six more weeks, give peace one more chance for the Iraqis to come clean, and he has to make a serious effort to bring the allies along. Not to dump on them, but to bring them along.

BROWN: David, it seems to me that's a tough -- I want to just take a look at that last question for a second. That's a tough little piece of business. You have an administration, where the vice president said long before the president went to the United Nations the inspections were a farce, they'll never work anyway. Secretary Powell said something similar, though not quite so harsh last week. How now does the administration argue that this process can still work?

GERGEN: Well, I think that the rhetoric about these inspections being a farce preceded them, coming from the vice president. It's now turned out to be most unfortunate. Because what the president wants to make the case is, is that as Hans Blix himself has said, the Iraqis haven't been fully compliant. And he's now going to give them four, six weeks to come clean.

And that he respects what's going on with the inspections and he respects that there are differences of opinion around the world. And he wants to work with the allies now to work this thing through. I think he has a far stronger position if he goes to war to convince people he really truly does not want war than to seem to be in this position that he doesn't care what the inspectors come up with, he doesn't care what the allies think. By god, he's going to do it. I think that's what's causing a lot of this skepticism and why he's losing control of the debate.

BROWN: I would love to talk more about the experience in Switzerland. I think it's a great and important subject. David, it's good to see you again. Mr. Berger, it's always nice to see you as well. Thanks for joining us.

And we'll watch the speech tomorrow. We hope that you'll watch it with us. CNN's complete coverage of the president's State of the Union speech begins tomorrow night at 8:45. Actually from 8:00 to 8:45, "CONNIE CHUNG TONIGHT" will take a look at some of the issues leading up to it as well; 8:45 I'll be joined by Judy Woodruff. And Judy and I will anchor, with contributions from Lou Dobbs and Candy Crowley and Wolf Blitzer and John King and Jeff Greenfield, and a cast of thousands. We hope you'll join us for what is a truly important night.

Coming up on NEWSNIGHT: the state of the states. Across the country, budget deficits are swallowing programs at a record pace. Around the world, this is NEWSNIGHT.

(COMMERCIAL BREAK)

BROWN: A lot of responsibility, being president and all, but you can imagine that sometimes Mr. Bush is glad that he is not a governor these days.

Governors across the country are dealing with a terrible budget mess and most of them cannot do what Washington routinely does. By law, they can't run up a deficit. So try telling your constituents that prisoners must be let out early or kids can only go to school four days a week, that some new homeland security measures will have to wait. It hasn't been easy or pretty. And the question remains, just how have we gotten into this mess?

Here's CNN's Beth Nissen.

(BEGIN VIDEOTAPE)

BETH NISSEN, CNN CORRESPONDENT (voice-over): What does the financial picture look like for at least 45 of the 50 states? A little like this.

RAYMOND SCHEPPACH, EXECUTIVE DIRECTOR, NATIONAL GOVERNORS ASSN.: It's almost like the perfect storm. States have deteriorating tax systems and then an explosion of health care costs. Well, it is clearly the worst situation we've seen since the Second World War. We have had some serious economic downturns both in the early 80's and every 90's, but this one is far worst.

NISSEN: State leaders from Sacramento to Austin to Albany are scrambling to make up shortfalls that total as much as 15 to 20 percent of their state budgets: California is short $36 billion; Texas, between $5 billion and $14 billion; Illinois, a $5 billion budget gap; Arizona, $1 billion short of a $6 billion budget. The poorer economic climate has hit state treasuries hard.

SCHEPPACH: People saw their purchases, saw sales tax get it. When you have got higher rates of unemployment, you have downturns in income taxes. We've obviously had a real reduction in corporate profits. And, therefore, corporate-profits revenues are down at the same time.

NISSEN: And, at the same time, states' Medicaid costs have surged. Medicaid already accounts for 20 percent to 30 percent of most states' budgets. But it's growing 13 percent to 14 percent a year. Some tapped-out states are eliminating Medicaid coverage of dental care and eyeglasses. Others are increasing co-payments. Most are sharply restricting eligibility.

SCHEPPACH: In fact, some of the estimates now are as many as a million women and children will be forced off the rolls of Medicaid over the next year.

NISSEN: Cutting costs is half the equation. Raising revenues is the other. Many states have raised or plan to raise sales taxes, personal income taxes and corporate taxes. Many have already raised taxes on cigarettes, some to $1 or $1.50 a pack. States are also raising fees for everything from driver's licenses to emergency services. And more than half the states have raised tuition at state colleges.

SCHEPPACH: We've had 25 or 30 states that have actually pushed tuition increases on to parents and students. They've tried to protect elementary and secondary education, although even that's being hit now.

NISSEN: States may have to lay off some stay employees and order salary freezes or even cuts for others.

(on camera): Twenty-four states have new governors who took office just days ago. In the next few weeks, they'll be making their budget plans. The forecast for most states in the next six months? Cuts in state programs and services, hikes in fees and taxes.

Beth Nissen, CNN, New York.

(END VIDEOTAPE)

BROWN: Still to come on NEWSNIGHT: what to make of the Iraq weapons report that was presented to the U.N. today. We'll talk with former weapons inspector David Albright to get his take on new developments.

And later in this half-hour: Is Martha Stewart ready to talk? Yes. She talked with Jeffrey Toobin for "New Yorker" magazine. And Jeffrey talks to us -- as NEWSNIGHT continues on CNN.

(COMMERCIAL BREAK)

BROWN: As NEWSNIGHT continues, we go back to the report from the weapons inspectors today. We'll talk about it with former inspector David Albright.

This is NEWSNIGHT on CNN.

(COMMERCIAL BREAK)

BROWN: When last we spoke with David Albright, U.N. inspectors had just discovered a dozen empty chemical warheads. Since then, there have been no major finds, just a lot of smaller, intriguing developments, which were Mr. Albright's stock and trade when he was an inspector. David Albright served as a nuclear analyst for the IAEA from 1992 to '97. Currently, he's the president of the Institute for Science and International Security in Washington. And it's nice to see you. Welcome.

DAVID ALBRIGHT, PRESIDENT, INSTITUTE FOR SCIENCE AND INTERNATIONAL SECURITY: Good to be here.

BROWN: Anything surprise you today, either in word or tone?

ALBRIGHT: Well, a couple of things.

One is, I think, particularly Hans Blix, laid out a lot of evidence that Iraq isn't complying and offered some tidbits on missiles and chemical weapons that may really be just the tip of the iceberg of a smoking gun.

BROWN: How do we get, then, beyond the tip of the iceberg to see whether in fact there's a gun there or not? Because an awful lot of people around the world seem to want to see the gun.

ALBRIGHT: Well, I think it -- certainly, the inspectors are going to need more time. It's not going to -- I don't think we're talking about months, but certainly weeks, and also more cooperation with intelligence agencies, and then a focus by the inspectors on investigations, to really go after whether there is a smoking gun or not.

BROWN: This is probably naive, but I have a feeling that I'm not the only person who has asked it or thinks it.

You're an inspector and you're there. And the United States government is saying, we know A and we know B. And aren't you begging to see that data?

ALBRIGHT: Well, you're begging, sure. And you're frustrated. It can even make you mad, I mean, if they're holding back.

And for the nuclear team, they're having a very different experience. They're having to check out information released by the intelligence agencies publicly that's not turning up anything. And so, they're frustrated with the whole situation.

BROWN: What do you make between the difference, both in word and tone, from the nuclear side and the chemical and biological side today?

ALBRIGHT: Well, I think Hans Blix gave an objective, factual report on what they've been finding and not finding.

I think ElBaradei spun it. The actual report by the agency to the Security Council I think is more evenhanded, but I think Mohamed ElBaradei decided to spin this thing toward a pitch for many months more of inspection.

BROWN: Why?

ALBRIGHT: I can't -- I don't know. I think he probably truly believes that inspections can disarm Iraq. They also are under the gun to, in essence, based on what they've found so far, to prove that Iraq doesn't have nuclear weapons. And they may be able to make a case. And to make that case, they would need several more months.

BROWN: How aware are these inspection teams of this intense debate that's going on around the world and in the United States? And to the extent they're aware of it, how does that, if at all, affect them?

ALBRIGHT: I think they're very aware of it.

And I think it really -- it affects people differently. I'm sure some inspectors would like to go to war. Iraq is not complying and that's the end of it. Some probably want to have the process go on for years and continue

(CROSSTALK)

ALBRIGHT: ... inspections.

BROWN: Do they feel a desire to have the inspection process itself vindicated?

ALBRIGHT: Certainly.

And they also -- I think they're dying to talk. The security on these inspectors is remarkably -- an inspector talks to a journalist. If they quote that inspector, they're going to try to find that inspector by the way he talked. And so it's very tight security and a very tough situation for the inspectors, where they're trying to do an important job and they can't even talk about it to the public and their colleagues back home.

BROWN: It's a tough job.

David, thank you. Good to see you.

ALBRIGHT: OK. Thank you.

BROWN: David Albright, former weapons inspectors.

A few more stories from around the world tonight, before we go to break, starting in eastern Afghanistan near the town of Spin Boldak: Pentagon sources tell us American and coalition forces took part in a firefight with suspected al Qaeda and Taliban soldiers. The firefight lasted about seven hours and started when coalition forces either went or were lured into an area where they encountered about 70 to 100 enemy soldiers. No reports of casualties on either side yet, but this is believed to be the largest battle in Afghanistan since the fighting last year in Tora Bora.

The clean-up from a major Internet meltdown is under way tonight. So is the FBI investigation in to who may have unleashed the bug that did it all. The outbreak began on Saturday and spread to at least 160,000 computers around the world. ATMs died. Airline reservation systems were choked. The entire South Korean branch of the Internet went down.

Ahead on NEWSNIGHT: Martha's mess. We'll hear what she told Jeffrey Toobin about her life these days and how she sees it and her troubles with the SEC.

A short break and we're right back.

(COMMERCIAL BREAK)

BROWN: Well, last time we really heard anything from Martha Stewart, she was doing grievous bodily harm to a head of cabbage on the "CBS Early Show." With a clenched smile, she continued to chop away while batting away questions about the insider trading scandal that was just starting to get quite messy, an unfortunate thing for someone who makes a handsome living keeping things tidy.

Since then, Ms. Stewart has been about as chatty as Greta Garbo. But she has broken her silence in an exclusive interview with Jeffrey Toobin for "The New Yorker" magazine. Mr. Toobin, I think, has talked about this earlier today, but we're pleased to have him with us nevertheless.

Jeffrey, it's always good to see you.

Tell me how you got the interview. This is, as they say in our business, the get of the year.

JEFFREY TOOBIN, CNN LEGAL ANALYST: Oh, well, that's nice of you to say.

Basically, what happened was, I put in a request long ago, when the scandal broke. And I wish I could tell you that this was the result of sort of dogged asking, asking, asking. But, basically, what happened was, some of her advisers simply changed their minds about whether they thought she should be in public again. They thought they wanted it to be in a forum where the whole story could be laid out. And "The New Yorker" was one of those possibilities. So, they called me up and said: Do you want to talk?

BROWN: They felt like she was getting pummeled.

TOOBIN: I think everybody thinks she's getting pummeled. I don't think there's any doubt about that.

And it really has been pretty remarkable, this incredible festival of joy in Martha's suffering that has gone on in the press and in the talk shows and on the comedy shows for the past year. And they wanted another side told.

BROWN: Does she -- in reading the piece today, for me, some of the most interesting stuff is her view of that, her view of why people seem to be taking so much joy in her fall.

TOOBIN: It certainly is a struggle that's going on with her, because, on the one hand, she really believes that she has contributed a lot of good. She calls herself a fine editor. She's basically someone who's helped homemakers over the year. And, after all, this is a woman who's created a business out of nothing. She has millions of customers who buy her magazine every month or watch her on television.

At the same time, there's a recognition that her perfectionism, her exactitude, as she called it, really has gotten on people's nerves. And she can't quite acknowledge that that's true, but it obviously is, that she's just done something to get people irritated.

BROWN: Talk as much as she did or she can about the criminal investigation, about the transactions that lead us to this conversation and led you out to Connecticut.

TOOBIN: Well, I guess the bare facts have been known for a long time, that she sold stock one day. The bad news came out the following day and the stock plummeted.

The same day that she sold, her good friend Sam Waksal engaged in what must be called a classic insider trader crime to which he's since pleaded guilty. So, there is that really strong circumstantial evidence of her guilt. But, as I looked behind that, with the assistance of her people and also on my own, I found that there were a lot of holes in this case. And, in fact, the case, as a criminal case against Martha Stewart, based on what I could see, looked pretty darn weak.

BROWN: And we should point out that you say that not simply as a reporter, as a writer, but as a former prosecutor.

TOOBIN: Right. Absolutely.

These are -- I didn't do insider trading specifically, but I did a lot of white-collar crime. And these are tough cases in the best of times. They're based on paper. And when you learn, as I did, that Martha Stewart had been selling a lot of stock in November and December, not just ImClone, and that there are other people who corroborate her story that she did plan to sell at $60 a share, not simply because Sam Waksal had sold, that looks to me like the government would have a tough time winning this case.

BROWN: And do you have any sense -- in 20 seconds -- if the end game on that investigation is in motion?

TOOBIN: Yes.

Certainly, the U.S. attorney's office has given indications to the lawyers that they are going to decide whether they're going to bring a criminal case in the next month or so. The SEC has a separate possible civil proceeding. That decision will follow onto that afterwards. So, we're not at the end, but we're certainly at the beginning of the end.

BROWN: Jeffrey, thank you. I know you have at least three or four more interviews to give tonight. TOOBIN: Don't make fun of me, Aaron.

BROWN: I love you too much for that.

(LAUGHTER)

BROWN: Thank you. Thanks, Jeffrey.

The article has got some wonderful detail. It's in this week's "New Yorker" magazine. And Jeffrey, as he does, did a terrific job.

NEWSNIGHT continues with da Vinci. Talk about genius? Wait until you see.

We'll be right back.

(COMMERCIAL BREAK)

BROWN: We dredged up a quote from Pope Leo X made during the Renaissance. It was about an artist who sometimes had trouble finishing what he started. "This man will never do anything. He begins by thinking about the end before beginning of his work." The pope was right on the last part, but way off on the first.

He was talking about Leonardo da Vinci. And, yes, da Vinci took his own unique path to making his work. His genius can be found by tracing that path on drawings that have survived half a millennium. And now visitors to the Metropolitan Museum in New York can see them all.

(BEGIN VIDEOTAPE)

CARMEN BAMBACH, CURATOR, METROPOLITAN MUSEUM OF ART: It was an undertaking that was going to further a great deal our knowledge of Leonardo as an artist, scientist and theorist and inventor.

PHILIPPE DE MONTEBELLO, CURATOR, METROPOLITAN MUSEUM OF ART: And this is the one opportunity the public will have to be able to walk in this exhibition and, coming up to each drawing, an original work of art by the hand of Leonardo da Vinci, to stand over the shoulder of the artist while he creates.

BAMBACH: You can really see Leonardo thinking on the paper. You can see how he first uses a black chalk, then how he changes his ideas about a particular solution. And then he will go on to another thought, always on the same page.

He does diagonal hatching. So, the strokes are like that. And so, it's very important, because a right-handed artist go like that, in the opposite direction. And if you pay really attention, you can see where the strokes begin. You see a little point and then the stroke lifts as he takes the hand off the paper.

DE MONTEBELLO: His life's work is over 4,000 works of art, of which fewer than 15 are paintings. And so you get a really absolutely true retrospective of the artist through an exhibition of his drawing. There is in fact one painting, the St. Jerome from the Vatican.

BAMBACH: St. Jerome here is in the desert, probably at the time when he is about to die. We can see the different layers of preparation. The saint's head is among the parts that are very finished.

DE MONTEBELLO: But a great many of these drawings are first thoughts and often preparatory studies for the paintings. And one recognizes, ultimately, a number of the well-known paintings through the drawings.

BAMBACH: This is probably an very early study for the apostle St. Peter in The Last Supper. This particular drawing is about probably five years, 10 years after he began working on the Mona Lisa. So, we're looking at the hand of the very mature Leonardo.

Leonardo was deeply interested in this drawing to explain the vascular system and also the muscular system of the arm. At the very top, you see a little sketch of a sweet man. That's probably the man who got dissected.

DE MONTEBELLO: His vision is relevant to today because it is as alive as ever.

BAMBACH: It's just simply to succumb to a creative genius of the highest order. It's a very deeply moving experience.

(END VIDEOTAPE)

BROWN: Leonardo.

Good to have you with us tonight.

Important day tomorrow: State of the Union speech. We'll see you at 8:45 Eastern time. Judy Woodruff joins us for coverage.

Until then, good night for all of us at NEWSNIGHT.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired January 27, 2003 - 22:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
AARON BROWN, HOST: Good evening again, everyone. We don't blame President Bush if he had a certain thought kicking around his head today. The thought that dad sure had it easy. OK, not that easy, really.
Back on the night of January 28, 1991, the first President Bush was dotting the "I"s and crossing the "T"s of his own State of the Union address. The one he'd deliver the next day. And granted, he had a lot on his plate that day.

The economy was in trouble in the country. Crack cocaine was in full bloom, turning the nation's cities into combat zones of crimes and wasted lives. The world was still picking up the pieces after the collapse of the Soviet Union. All of that would come up in the speech, but Iraq and the coming war was the beginning, the middle and the end.

Here is some of what he said. He said, "We are engaged in a great struggle in the skies and on the seas and sands. We know why we're there. Saddam Hussein's ruthless, systematic rape of a peaceful neighbor violated everything that the international community holds dear. With few exceptions, the world now stands as one." That's what the first President Bush said back in 1991.

If it could only be that easy for this president. Mr. Bush doesn't have the luxury of a world United and an obvious case of aggression that existed back then. There's no easy to explain plot line, and we haven't yet seen the damning evidence to show what Iraq is doing, which is not to say that that evidence does not exist.

If the need for the last Gulf War was illustrated in black and white, this one is drawn more in shades of gray. Presidents tend to like black and white. They sometimes reduce the complex to the simple. But Mr. Bush doesn't have that luxury either. The country knows that.

Whatever is the right course, it is not so simple as the invasion of a neighbor. And not so nearly black and white. Not this time.

And so tonight we begin "The Whip" with the long-awaited report from the U.N. weapons inspectors. Chief U.N. correspondent Richard Roth gets us started. Richard, a headline from you, please.

RICHARD ROTH, CNN CHIEF U.N. CORRESPONDENT: The U.N. weapons inspectors say Iraq can't prove it has disarmed. Top inspectors say from missiles to nerve agents, Iraq is not complying. But of the 15 Security Council members, you may get 15 different opinions on what to do next.

BROWN: Richard, thank you. Back to you at the top tonight.

On to the U.S. reaction delivered today in strong words from the secretary of state. That's Andrea Koppel's beat. Andrea, a headline from you, please.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Aaron, Powell readily rattled off a number of examples which he said came from the inspectors' report and were further proof of what the U.S. claims, that Iraq has no intention of disarming and won't no matter how long U.N. weapons inspectors are there.

BROWN: Andrea, thank you. And the reaction from Iraq. Nic Robertson in Baghdad tonight. Nic, your headline.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Aaron, initial reaction appears to be negative. Commentators here calling Hans Blix's report unprofessional, unfair and biased -- Aaron.

BROWN: Nic, thank you. And it's safe to say it's a working night at the White House ahead of tomorrow's State of the Union address. Our senior White House correspondent John King has the duty. John, a headline from you.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Aaron, by this time tomorrow night the president hopes to have convinced the American people another big tax cut is the right prescription for a still struggling economy. And of course the much more urgent focus of the president, he must sell an increasingly skeptical American public on the prospect of war with Iraq within weeks -- Aaron.

BROWN: John, thank you. Back to you and the rest shortly.

We also spend time tonight talking with Sandy Berger and David Gergen about what they think the president needs to accomplish in his speech tomorrow night and how he might do it.

Also on the program, Jeffrey Toobin joins us. Jeffrey had lunch with Martha Stewart and got more than her recipe for Hunan chicken, though he actually did get that as well. Jeffrey got an exclusive interview, and he'll tell us what she said when he joins us later.

And it's about as close as you can get to peering into the mind of a genius, the drawings of da Vinci. And they are spellbinding. A new exhibit is our "Segment 7" tonight.

So we have a lot to do on this Monday night from Washington, D.C. We begin with the U.N. reports. Anyone expecting them to end the debate about what to do with Iraq is bound to be disappointed tonight. They contain something for all sides to latch on to, and today all sides did.

There were calls to give the inspectors more time. And there were warnings again that time is running out. But if the reports contained no smoking guns, they were hardly a diplomatic whitewash that some had expected even as recently as late last week. Both reports that came in today were skeptical. The report by Hans Blix on chemical and biological weapons especially so.

We have much on this tonight. And we begin with CNN's Richard Roth.

(BEGIN VIDEOTAPE)

ROTH (voice-over): It didn't take long for the U.N.'s chief weapons inspector to charge Iraq as not cooperating.

HANS BLIX, U.N. CHIEF WEAPONS INSPECTOR: Iraq appears not to have come to a genuine acceptance, not even today, of the disarmament which was demanded of it and which it needs to carry out to win the confidence of the world and to live in peace.

ROTH: Hans Blix says chemical and biological agents have not been accounted for.

BLIX: There are strong indications that Iraq produced more anthrax than it declared. And that at least some of this was retained after the declared destruction date. It might still exist.

ROTH: Blix also found disturbing an Iraqi scientist with 3,000 pages of nuclear data in his home. The Swedish diplomat noted Iraq is granting access to weapons inspectors, but still needs to provide hard evidence of disarmament.

BLIX: It is not enough to open doors. Inspection is not a game of catch us, catch can.

ROTH: Iraq says it has no weapons of mass destruction or important documents.

MOHAMMED ALDOURI, IRAQI AMBASSADOR TO U.N.: We have no hidden reports at all. We gave everything and we put it in our report with the 12,000 pages.

ROTH: The inspectors say Iraq failed to close gaps on that massive filing of weapons of mass destruction. But the top inspectors don't want to give up the search.

MOHAMED ELBARADEI, IAEA: We should be able within the next few months to provide credible assurance that Iraq has no nuclear weapons program. These few months in my view would be a valuable investment in peace because they could help us avoid a war.

ROTH: The Security Council remains divided over the Blix findings and how long his team should continue to work. The U.S. says time is running out.

JOHN NEGROPONTE, U.S. AMBASSADOR TO U.N.: It benefits no one to let Saddam think he can wear us down into business as usual as he has practiced it over the past 12 years. UNIDENTIFIED MALE: Since we have started this process and there is no clear reason to stop it, we should continue with the process.

(END VIDEOTAPE)

ROTH: Several other countries, including Germany and Russia, backed China there in saying the inspectors should be given, in effect, all the time they need -- Aaron.

BROWN: So what's the next move in this very serious chess game?

ROTH: Well, timeline-wise, Wednesday. A Security Council closed-door meeting. The Security Council begins to thrash out its differences. No one expects any type of agreement this week.

February 14, yet another update from Hans Blix. He has said if the U.S. troops move in, his work is done. February 14 brings us closer to that late February deadline people are talking about for fighting weather. And otherwise here, there's still going to be disagreement in the hallways. Nobody want to move to a second resolution in the council so far authorizing war.

BROWN: Richard, thank you. A busy day for you. Richard Roth outside the U.N. tonight.

Now the American reaction, which, as you might imagine, is split a bit down party lines. Top House and Senate Democrats today called on the administration to show more proof that Iraq has weapons of mass destruction. That it has them now. President Bush will have the opportunity tomorrow night in his State of the Union address, but it is uncertain at this point whether he'll use it for that.

He said nothing today, leaving the podium to his secretary of state. Here again, CNN's Andrea Koppel.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): Secretary Powell said the long-awaited reports by U.N. weapons inspectors confirm what the U.S. has said all along.

COLIN POWELL, SECRETARY OF STATE: This is the essence of the problem. Dr. Blix said Iraq appears not to have come to a genuine acceptance, not even today, of the disarmament that was demanded of it.

KOPPEL: As proof, Powell highlighted the inspectors' recent discovery of thousands of pages of top-secret documents related to uranium enrichment found in the home of an Iraqi scientist.

POWELL: You all saw the pictures of that information being brought out. Why, why, if Iraq was committed to disarmament as required under 1441 would we be finding this kind of information squirreled away in private homes for any other reason than to keep it away from the inspectors?

KOPPEL: As a result, Powell said the Bush administration believes Iraq's time to disarm peacefully is almost up.

POWELL: The issue is not how much more time the inspectors need to search in the dark. It is how much more time Iraq should be given to turn on the lights and to come clean. And the answer is not much more time.

KOPPEL: But privately, U.S. officials concede inspections could continue for a few more weeks. A potential compromise with anxious allies concerned the U.S. is rushing to judgment. That's roughly the same amount of time the U.S. military needs to build up its forces in the region.

As part of this push by the U.S. to build a broader coalition, Powell suggested the Bush administration was prepared to release more unclassified evidence on Iraq's weapons program and alleged links to terrorist groups like al Qaeda. But before that happens, Powell said, he and President Bush plan to discuss the inspectors' reports with Security Council members. And the prime ministers from Italy and Britain, countries certain to play a key role in any U.S. coalition, will meet with President Bush this week.

(END VIDEOTAPE)

KOPPEL: Don't expect any definitive announcements this week, but even with a brief extension of weapons inspections likely to happen, one exasperated U.S. official told me, Aaron, he said the next new deadline will be, in his words, "the last final, total, ultimately the end" -- Aaron.

BROWN: And a brief extension means what? A couple of weeks? A month?

KOPPEL: There's a rough time period that people are talking about. Richard Roth just alluded to it. We're talking three, maybe six weeks. Ideally enough time to get reluctant allies to build support among their publics, and also for the U.S. military to get all their troops over to the region.

BROWN: Andrea, thank you. Andrea Koppel at the State Department tonight.

To call Iraq's official reaction today a reaction is something less than accurate, coming as it did five hours before the reports were read to the Security Council. The timing does say a lot, however, about the growing belief among Iraqi leaders that war is a forgone conclusion. And today the words and the pictures reflected that view. From Baghdad tonight, here's CNN's Nic Robertson.

(BEGIN VIDEOTAPE)

ROBERTSON (voice-over): On Iraq's late-night news, president Saddam Hussein got a hero's welcome as he came to address his top commanders. In a morale-boosting speech, the Iraqi leader called for status reports on preparations on a possible war. And with unusual speed for Iraqi TV, the channel run by the president's son was quick with reaction to the U.N. weapons report. UNIDENTIFIED MALE (through translator): We were expecting Blix to be professional and objective. His report was not fair.

ROBERTSON: At the U.N., Iraq's ambassador also hit back at U.N. Weapons Chief Hans Blix's report.

UNIDENTIFIED MALE: The inspectors also proved that all the intelligence information provided later by the United States and Britain and satellite pictures were business (ph).

ROBERTSON: Speaking before Blix's address, Iraq's foreign minister Sabri accused the United States and Britain of an evil desire to dominate the region.

UNIDENTIFIED MALE: These two governments know very well that there are no weapons of mass destruction or related activities in Iraq.

ROBERTSON: Characterizing Iraq's relationship with the weapons inspectors as super cooperation, Sabri said on the contentious issues of private interviews with Iraqi scientists Iraq was abiding by U.N. Resolution 1441.

UNIDENTIFIED MALE: Our cooperation is in providing access to all these people and we are doing this.

ROBERTSON: Even as Iraqi TV has recently started broadcasting video of troops and tanks preparing for war and soldiers vowing to fight to the death, Sabri suggested war with the United States may not be inevitable.

UNIDENTIFIED MALE: All times are for diplomacy. The ones who say there are no time for diplomacy are warmongers.

(END VIDEOTAPE)

ROBERTSON: Now the warmongers, according to Sabri, are the United States and its ally, Great Britain. Nevertheless, though, Iraqi officials say they are willing to allow the U.N. inspectors to continue their work, if only, they say, to prove the United States is wrong -- Aaron.

BROWN: Nic, there's a report that we're just getting in that Tariq Aziz has told Canadian media that Iraq is prepared to be even more cooperative, which, number one, suggests that he agrees they haven't been totally cooperative. Any sense of that from Baghdad tonight?

ROBERTSON: The sense we've really had from here, Aaron, from a number of officials from the foreign minister, from president Saddam Hussein's top scientific adviser, is that they couldn't be anymore cooperative because they're doing everything they can. They have no more documents to hand over, and they've said it's up to everyone else to give them the evidence.

It's difficult to imagine what Aziz is talking about having heard this from officials already. What additionally are they going to do? They've already said they're up to the max -- Aaron.

BROWN: We'll wait and see, but that's what media in Canada is reporting tonight. Thank you, Nic. Nic Robertson.

One quick program note here. Tomorrow morning on "AMERICAN MORNING," Paula Zahn will interview Mohamed ElBaradei, the head of the International Atomic Energy Agency, about his report today on Iraq's atomic weapons program. That's his area of expertise. The interview at 9:00 Eastern Time on "AMERICAN MORNING" tomorrow.

We have much more to do from Washington. Tonight, we'll preview President Bush's State of the Union address tomorrow night. What will he say about Iraq and other issues?

And in our second half-hour tonight, Martha Stewart finally talks about questions of insider trading that have been plaguing her and her company. She talked with Jeffrey Toobin for a piece in "New Yorker" magazine. We'll talk to Jeffrey. This is NEWSNIGHT from Washington.

(COMMERCIAL BREAK)

BROWN: In normal times, State of the Union speeches are not nearly as important as either presidents or the press make them seem. They are often simply laundry lists of programs and goals the president has and wants Congress to act upon. In normal times. But these are not that.

We are less than a year and a half removed from September 11. We are perhaps on the eve of a war with Iraq. The economy is at best sluggish. And the surplus that might have helped pay for prescription drugs or better schools is long gone.

Tomorrow night the president's speech to the country, not just to argue the case against Iraq, but to argue that the administration has the right cure for all that currently ails us. So we go back to the White House now and our senior White House correspondent John King.

John, we heard during "LARRY KING" in the last hour Bob Woodward talking about the administration's plan to release more information about Iraq's efforts to hide its weapons of mass destruction. What do you know?

KING: Well, Aaron, senior officials tell us there is compelling information of that. They say there are satellite photographs of Iraq moving things. Weapons of mass destruction, evidence they believe just before the inspectors went in and even during the inspections over the past month or so inside Iraq. So U.S. officials say there also are intercepts, presumably recorded intercepted telephone conversations of Iraq moving to conceal information, urging scientists to conceal information.

The debate within the administration has been whether to make any of this public. We are told tonight the administration will make some public, perhaps as early as next week. There was a debate as to whether to include some in the State of the Union speech. We are told to not look for that to happen, although there is another 24 hours almost before that speech.

But early next week we are told the administration will make some of it public in an effort to convince France, Germany, Russia, others on the Security Council that the inspections regime in the view of this administration is a failure, not a success. A tough sell. Still a debate in the administration over just what to release. They are worried if they let this out they will compromise their sources.

BROWN: OK. Let's go then to other business the president needs to accomplish tomorrow. Clearly a lot of the speech will deal with Iraq. Will there be new arguments, new words? The president and the administration have been saying for a while very much the same thing.

KING: The president will not declare war, but he will tell the American people they need to prepare for war perhaps in the weeks ahead. The president will make the case that his argument is right, that just having inspectors in on the ground does not mean this policy, this new inspections regime is a success. He will make quite the counter argument, we are told.

He will say it is a failure, and that unless Iraq moves quickly to change its ways, that he is prepared to lead the nation to war. He will not declare it again, but he will try to prepare the American people. And as we see in our own polling and elsewhere, there's rising skepticism, especially if the United States work outside of the United Nations. So a tough sell for the president.

BROWN: And how do they view those polls? Those polls make them nervous?

KING: They insist the president will not be guided by the polls. And we've heard Prime Minister Blair, who has had the polls turn on him much earlier in this debate, say that leaders must lead public opinion, not follow it. But, yes, of course they see those polls and they understand this is a speech in which the president lays out his agenda for the year.

They're frustrated here, there's so much focus on Iraq. They're worried it overshadows the more important things to them politically, like the economy, like Medicare, things that could matter much more to the president a year from now when he's running for reelection. But they say the president simply will get out -- they believe the pictures of the inspectors getting access has turned public opinion. That people think this is working. The president's challenge tomorrow night is to say that's not what the inspections are supposed to be about.

BROWN: John, we'll watch the speech together tomorrow night and talk about it then. Thank you very much. Senior White House correspondent John King.

We're joined tonight by people who have seen this process from the inside. In Washington, Sandy Berger, former national security adviser in the Clinton administration. And in Boston, David Gergen, presidential speechwriter, spokesman, adviser. He's worn just about every hat you can. It's good to see both you. Mr. Berger, let me start with you. If you had the president's ear right now and you were looking at a country that is trying to decide what it believes on Iraq, what advice would you give him to close the deal?

SANDY BERGER, FMR. NATIONAL SECURITY ADVISER: Well, I think the American people tomorrow want to see the president move beyond assertion to persuasion. To make the case that these capabilities are real, that the threat is real. To answer their questions about whether we are going to have a broad coalition and what we're going to do to try to build that in the weeks ahead, or whether we're going to be doing this primarily by ourselves.

I think they want to know if this is going to divert us from the war on terrorism or compound it in this country. So there are -- I think this is a speech that has to appeal not just to the emotional heartstrings of America, but to the good judgment of the American people and to make a case.

BROWN: And just to finish that point, is it inevitable, in your view, given where both Americans seem to be and people around the world, that the administration is going to have to give up some of this intelligence and give it up in a way that makes it pretty clear what's going on in Iraq?

BERGER: I think that's true. The president is speaking to three audiences tomorrow night. Number one, Saddam Hussein. And he has to obviously maintain a sense of determination that he has.

Number two, he's speaking to an international audience where, in many parts of the world support for this enterprise has plummeted in the last six weeks. He's got to raise the water level so that Jacques Chirac and others are able to at least be in the realm of being able to say reasonable people can differ. That's not where they are today.

And he's speaking to the American people. And I think it will be easier in some ways. It's always easier to make the case against Saddam Hussein. But I think he has to explain not only what the capabilities are here, but what's the threat and why are we vulnerable.

BROWN: Professor Gergen, let's go to you here. The president no doubt will talk about the economy tomorrow, he'll talk about Medicare reform, prescription drug coverage, lots of things. Will anyone hear any of that or will all of us in a sense hear what he says on Iraq?

DAVID GERGEN, FMR. WHITE HOUSE ADVISER: Well, the word is that he's going to speak about the economy and domestic issues first and then turn to Iraq. I think he would be far better served if he did it just the other way around so that he addressed the most important pressing issue on the table and then turned his attention. That's also the way he's going to handle it in terms of his own presidency.

I want to go back to what Sandy said. I think he's absolutely right about these three different audiences. And I think this international audience, it's the first time I can remember in a State of the Union where a president has to appeal to world opinion as much as he has to appeal to domestic opinion.

I just came back from the World Economic Forum. I think all of us who are Americans who were there were stunned at how angry and resentful Europeans are now, and the Arabs are. And the president has to bring those people over. He's lost control of this debate in the last few weeks.

And more than just evidence, I think he has to now talk us through why is he so personally -- why is he so personally committed to this? What is it that's moving him? People don't understand that.

And secondly, I think, Aaron, that he has to -- I think to echo something Sandy said, he has to convince us he's not hell bent on war. That he is a man who genuinely would like to resolve this short of war. And that means I think he has to give the inspectors at least six more weeks, give peace one more chance for the Iraqis to come clean, and he has to make a serious effort to bring the allies along. Not to dump on them, but to bring them along.

BROWN: David, it seems to me that's a tough -- I want to just take a look at that last question for a second. That's a tough little piece of business. You have an administration, where the vice president said long before the president went to the United Nations the inspections were a farce, they'll never work anyway. Secretary Powell said something similar, though not quite so harsh last week. How now does the administration argue that this process can still work?

GERGEN: Well, I think that the rhetoric about these inspections being a farce preceded them, coming from the vice president. It's now turned out to be most unfortunate. Because what the president wants to make the case is, is that as Hans Blix himself has said, the Iraqis haven't been fully compliant. And he's now going to give them four, six weeks to come clean.

And that he respects what's going on with the inspections and he respects that there are differences of opinion around the world. And he wants to work with the allies now to work this thing through. I think he has a far stronger position if he goes to war to convince people he really truly does not want war than to seem to be in this position that he doesn't care what the inspectors come up with, he doesn't care what the allies think. By god, he's going to do it. I think that's what's causing a lot of this skepticism and why he's losing control of the debate.

BROWN: I would love to talk more about the experience in Switzerland. I think it's a great and important subject. David, it's good to see you again. Mr. Berger, it's always nice to see you as well. Thanks for joining us.

And we'll watch the speech tomorrow. We hope that you'll watch it with us. CNN's complete coverage of the president's State of the Union speech begins tomorrow night at 8:45. Actually from 8:00 to 8:45, "CONNIE CHUNG TONIGHT" will take a look at some of the issues leading up to it as well; 8:45 I'll be joined by Judy Woodruff. And Judy and I will anchor, with contributions from Lou Dobbs and Candy Crowley and Wolf Blitzer and John King and Jeff Greenfield, and a cast of thousands. We hope you'll join us for what is a truly important night.

Coming up on NEWSNIGHT: the state of the states. Across the country, budget deficits are swallowing programs at a record pace. Around the world, this is NEWSNIGHT.

(COMMERCIAL BREAK)

BROWN: A lot of responsibility, being president and all, but you can imagine that sometimes Mr. Bush is glad that he is not a governor these days.

Governors across the country are dealing with a terrible budget mess and most of them cannot do what Washington routinely does. By law, they can't run up a deficit. So try telling your constituents that prisoners must be let out early or kids can only go to school four days a week, that some new homeland security measures will have to wait. It hasn't been easy or pretty. And the question remains, just how have we gotten into this mess?

Here's CNN's Beth Nissen.

(BEGIN VIDEOTAPE)

BETH NISSEN, CNN CORRESPONDENT (voice-over): What does the financial picture look like for at least 45 of the 50 states? A little like this.

RAYMOND SCHEPPACH, EXECUTIVE DIRECTOR, NATIONAL GOVERNORS ASSN.: It's almost like the perfect storm. States have deteriorating tax systems and then an explosion of health care costs. Well, it is clearly the worst situation we've seen since the Second World War. We have had some serious economic downturns both in the early 80's and every 90's, but this one is far worst.

NISSEN: State leaders from Sacramento to Austin to Albany are scrambling to make up shortfalls that total as much as 15 to 20 percent of their state budgets: California is short $36 billion; Texas, between $5 billion and $14 billion; Illinois, a $5 billion budget gap; Arizona, $1 billion short of a $6 billion budget. The poorer economic climate has hit state treasuries hard.

SCHEPPACH: People saw their purchases, saw sales tax get it. When you have got higher rates of unemployment, you have downturns in income taxes. We've obviously had a real reduction in corporate profits. And, therefore, corporate-profits revenues are down at the same time.

NISSEN: And, at the same time, states' Medicaid costs have surged. Medicaid already accounts for 20 percent to 30 percent of most states' budgets. But it's growing 13 percent to 14 percent a year. Some tapped-out states are eliminating Medicaid coverage of dental care and eyeglasses. Others are increasing co-payments. Most are sharply restricting eligibility.

SCHEPPACH: In fact, some of the estimates now are as many as a million women and children will be forced off the rolls of Medicaid over the next year.

NISSEN: Cutting costs is half the equation. Raising revenues is the other. Many states have raised or plan to raise sales taxes, personal income taxes and corporate taxes. Many have already raised taxes on cigarettes, some to $1 or $1.50 a pack. States are also raising fees for everything from driver's licenses to emergency services. And more than half the states have raised tuition at state colleges.

SCHEPPACH: We've had 25 or 30 states that have actually pushed tuition increases on to parents and students. They've tried to protect elementary and secondary education, although even that's being hit now.

NISSEN: States may have to lay off some stay employees and order salary freezes or even cuts for others.

(on camera): Twenty-four states have new governors who took office just days ago. In the next few weeks, they'll be making their budget plans. The forecast for most states in the next six months? Cuts in state programs and services, hikes in fees and taxes.

Beth Nissen, CNN, New York.

(END VIDEOTAPE)

BROWN: Still to come on NEWSNIGHT: what to make of the Iraq weapons report that was presented to the U.N. today. We'll talk with former weapons inspector David Albright to get his take on new developments.

And later in this half-hour: Is Martha Stewart ready to talk? Yes. She talked with Jeffrey Toobin for "New Yorker" magazine. And Jeffrey talks to us -- as NEWSNIGHT continues on CNN.

(COMMERCIAL BREAK)

BROWN: As NEWSNIGHT continues, we go back to the report from the weapons inspectors today. We'll talk about it with former inspector David Albright.

This is NEWSNIGHT on CNN.

(COMMERCIAL BREAK)

BROWN: When last we spoke with David Albright, U.N. inspectors had just discovered a dozen empty chemical warheads. Since then, there have been no major finds, just a lot of smaller, intriguing developments, which were Mr. Albright's stock and trade when he was an inspector. David Albright served as a nuclear analyst for the IAEA from 1992 to '97. Currently, he's the president of the Institute for Science and International Security in Washington. And it's nice to see you. Welcome.

DAVID ALBRIGHT, PRESIDENT, INSTITUTE FOR SCIENCE AND INTERNATIONAL SECURITY: Good to be here.

BROWN: Anything surprise you today, either in word or tone?

ALBRIGHT: Well, a couple of things.

One is, I think, particularly Hans Blix, laid out a lot of evidence that Iraq isn't complying and offered some tidbits on missiles and chemical weapons that may really be just the tip of the iceberg of a smoking gun.

BROWN: How do we get, then, beyond the tip of the iceberg to see whether in fact there's a gun there or not? Because an awful lot of people around the world seem to want to see the gun.

ALBRIGHT: Well, I think it -- certainly, the inspectors are going to need more time. It's not going to -- I don't think we're talking about months, but certainly weeks, and also more cooperation with intelligence agencies, and then a focus by the inspectors on investigations, to really go after whether there is a smoking gun or not.

BROWN: This is probably naive, but I have a feeling that I'm not the only person who has asked it or thinks it.

You're an inspector and you're there. And the United States government is saying, we know A and we know B. And aren't you begging to see that data?

ALBRIGHT: Well, you're begging, sure. And you're frustrated. It can even make you mad, I mean, if they're holding back.

And for the nuclear team, they're having a very different experience. They're having to check out information released by the intelligence agencies publicly that's not turning up anything. And so, they're frustrated with the whole situation.

BROWN: What do you make between the difference, both in word and tone, from the nuclear side and the chemical and biological side today?

ALBRIGHT: Well, I think Hans Blix gave an objective, factual report on what they've been finding and not finding.

I think ElBaradei spun it. The actual report by the agency to the Security Council I think is more evenhanded, but I think Mohamed ElBaradei decided to spin this thing toward a pitch for many months more of inspection.

BROWN: Why?

ALBRIGHT: I can't -- I don't know. I think he probably truly believes that inspections can disarm Iraq. They also are under the gun to, in essence, based on what they've found so far, to prove that Iraq doesn't have nuclear weapons. And they may be able to make a case. And to make that case, they would need several more months.

BROWN: How aware are these inspection teams of this intense debate that's going on around the world and in the United States? And to the extent they're aware of it, how does that, if at all, affect them?

ALBRIGHT: I think they're very aware of it.

And I think it really -- it affects people differently. I'm sure some inspectors would like to go to war. Iraq is not complying and that's the end of it. Some probably want to have the process go on for years and continue

(CROSSTALK)

ALBRIGHT: ... inspections.

BROWN: Do they feel a desire to have the inspection process itself vindicated?

ALBRIGHT: Certainly.

And they also -- I think they're dying to talk. The security on these inspectors is remarkably -- an inspector talks to a journalist. If they quote that inspector, they're going to try to find that inspector by the way he talked. And so it's very tight security and a very tough situation for the inspectors, where they're trying to do an important job and they can't even talk about it to the public and their colleagues back home.

BROWN: It's a tough job.

David, thank you. Good to see you.

ALBRIGHT: OK. Thank you.

BROWN: David Albright, former weapons inspectors.

A few more stories from around the world tonight, before we go to break, starting in eastern Afghanistan near the town of Spin Boldak: Pentagon sources tell us American and coalition forces took part in a firefight with suspected al Qaeda and Taliban soldiers. The firefight lasted about seven hours and started when coalition forces either went or were lured into an area where they encountered about 70 to 100 enemy soldiers. No reports of casualties on either side yet, but this is believed to be the largest battle in Afghanistan since the fighting last year in Tora Bora.

The clean-up from a major Internet meltdown is under way tonight. So is the FBI investigation in to who may have unleashed the bug that did it all. The outbreak began on Saturday and spread to at least 160,000 computers around the world. ATMs died. Airline reservation systems were choked. The entire South Korean branch of the Internet went down.

Ahead on NEWSNIGHT: Martha's mess. We'll hear what she told Jeffrey Toobin about her life these days and how she sees it and her troubles with the SEC.

A short break and we're right back.

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BROWN: Well, last time we really heard anything from Martha Stewart, she was doing grievous bodily harm to a head of cabbage on the "CBS Early Show." With a clenched smile, she continued to chop away while batting away questions about the insider trading scandal that was just starting to get quite messy, an unfortunate thing for someone who makes a handsome living keeping things tidy.

Since then, Ms. Stewart has been about as chatty as Greta Garbo. But she has broken her silence in an exclusive interview with Jeffrey Toobin for "The New Yorker" magazine. Mr. Toobin, I think, has talked about this earlier today, but we're pleased to have him with us nevertheless.

Jeffrey, it's always good to see you.

Tell me how you got the interview. This is, as they say in our business, the get of the year.

JEFFREY TOOBIN, CNN LEGAL ANALYST: Oh, well, that's nice of you to say.

Basically, what happened was, I put in a request long ago, when the scandal broke. And I wish I could tell you that this was the result of sort of dogged asking, asking, asking. But, basically, what happened was, some of her advisers simply changed their minds about whether they thought she should be in public again. They thought they wanted it to be in a forum where the whole story could be laid out. And "The New Yorker" was one of those possibilities. So, they called me up and said: Do you want to talk?

BROWN: They felt like she was getting pummeled.

TOOBIN: I think everybody thinks she's getting pummeled. I don't think there's any doubt about that.

And it really has been pretty remarkable, this incredible festival of joy in Martha's suffering that has gone on in the press and in the talk shows and on the comedy shows for the past year. And they wanted another side told.

BROWN: Does she -- in reading the piece today, for me, some of the most interesting stuff is her view of that, her view of why people seem to be taking so much joy in her fall.

TOOBIN: It certainly is a struggle that's going on with her, because, on the one hand, she really believes that she has contributed a lot of good. She calls herself a fine editor. She's basically someone who's helped homemakers over the year. And, after all, this is a woman who's created a business out of nothing. She has millions of customers who buy her magazine every month or watch her on television.

At the same time, there's a recognition that her perfectionism, her exactitude, as she called it, really has gotten on people's nerves. And she can't quite acknowledge that that's true, but it obviously is, that she's just done something to get people irritated.

BROWN: Talk as much as she did or she can about the criminal investigation, about the transactions that lead us to this conversation and led you out to Connecticut.

TOOBIN: Well, I guess the bare facts have been known for a long time, that she sold stock one day. The bad news came out the following day and the stock plummeted.

The same day that she sold, her good friend Sam Waksal engaged in what must be called a classic insider trader crime to which he's since pleaded guilty. So, there is that really strong circumstantial evidence of her guilt. But, as I looked behind that, with the assistance of her people and also on my own, I found that there were a lot of holes in this case. And, in fact, the case, as a criminal case against Martha Stewart, based on what I could see, looked pretty darn weak.

BROWN: And we should point out that you say that not simply as a reporter, as a writer, but as a former prosecutor.

TOOBIN: Right. Absolutely.

These are -- I didn't do insider trading specifically, but I did a lot of white-collar crime. And these are tough cases in the best of times. They're based on paper. And when you learn, as I did, that Martha Stewart had been selling a lot of stock in November and December, not just ImClone, and that there are other people who corroborate her story that she did plan to sell at $60 a share, not simply because Sam Waksal had sold, that looks to me like the government would have a tough time winning this case.

BROWN: And do you have any sense -- in 20 seconds -- if the end game on that investigation is in motion?

TOOBIN: Yes.

Certainly, the U.S. attorney's office has given indications to the lawyers that they are going to decide whether they're going to bring a criminal case in the next month or so. The SEC has a separate possible civil proceeding. That decision will follow onto that afterwards. So, we're not at the end, but we're certainly at the beginning of the end.

BROWN: Jeffrey, thank you. I know you have at least three or four more interviews to give tonight. TOOBIN: Don't make fun of me, Aaron.

BROWN: I love you too much for that.

(LAUGHTER)

BROWN: Thank you. Thanks, Jeffrey.

The article has got some wonderful detail. It's in this week's "New Yorker" magazine. And Jeffrey, as he does, did a terrific job.

NEWSNIGHT continues with da Vinci. Talk about genius? Wait until you see.

We'll be right back.

(COMMERCIAL BREAK)

BROWN: We dredged up a quote from Pope Leo X made during the Renaissance. It was about an artist who sometimes had trouble finishing what he started. "This man will never do anything. He begins by thinking about the end before beginning of his work." The pope was right on the last part, but way off on the first.

He was talking about Leonardo da Vinci. And, yes, da Vinci took his own unique path to making his work. His genius can be found by tracing that path on drawings that have survived half a millennium. And now visitors to the Metropolitan Museum in New York can see them all.

(BEGIN VIDEOTAPE)

CARMEN BAMBACH, CURATOR, METROPOLITAN MUSEUM OF ART: It was an undertaking that was going to further a great deal our knowledge of Leonardo as an artist, scientist and theorist and inventor.

PHILIPPE DE MONTEBELLO, CURATOR, METROPOLITAN MUSEUM OF ART: And this is the one opportunity the public will have to be able to walk in this exhibition and, coming up to each drawing, an original work of art by the hand of Leonardo da Vinci, to stand over the shoulder of the artist while he creates.

BAMBACH: You can really see Leonardo thinking on the paper. You can see how he first uses a black chalk, then how he changes his ideas about a particular solution. And then he will go on to another thought, always on the same page.

He does diagonal hatching. So, the strokes are like that. And so, it's very important, because a right-handed artist go like that, in the opposite direction. And if you pay really attention, you can see where the strokes begin. You see a little point and then the stroke lifts as he takes the hand off the paper.

DE MONTEBELLO: His life's work is over 4,000 works of art, of which fewer than 15 are paintings. And so you get a really absolutely true retrospective of the artist through an exhibition of his drawing. There is in fact one painting, the St. Jerome from the Vatican.

BAMBACH: St. Jerome here is in the desert, probably at the time when he is about to die. We can see the different layers of preparation. The saint's head is among the parts that are very finished.

DE MONTEBELLO: But a great many of these drawings are first thoughts and often preparatory studies for the paintings. And one recognizes, ultimately, a number of the well-known paintings through the drawings.

BAMBACH: This is probably an very early study for the apostle St. Peter in The Last Supper. This particular drawing is about probably five years, 10 years after he began working on the Mona Lisa. So, we're looking at the hand of the very mature Leonardo.

Leonardo was deeply interested in this drawing to explain the vascular system and also the muscular system of the arm. At the very top, you see a little sketch of a sweet man. That's probably the man who got dissected.

DE MONTEBELLO: His vision is relevant to today because it is as alive as ever.

BAMBACH: It's just simply to succumb to a creative genius of the highest order. It's a very deeply moving experience.

(END VIDEOTAPE)

BROWN: Leonardo.

Good to have you with us tonight.

Important day tomorrow: State of the Union speech. We'll see you at 8:45 Eastern time. Judy Woodruff joins us for coverage.

Until then, good night for all of us at NEWSNIGHT.

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