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Iraq in Charge of Its Own Affairs

Aired June 28, 2004 - 06:00   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.


(COMMERCIAL BREAK)
BETTY NGUYEN, CNN ANCHOR: Surprise, they jumped the proverbial gun by two whole days. This morning, Iraq is in charge of its own affairs. It is Monday, June 28, and this is DAYBREAK. Good morning from the CNN global headquarters in Atlanta, I'm Betty Nguyen in for Carol Costello.

Well it is a done deal and we want to go live now to Anderson Cooper in Baghdad with the latest on this surprise development. Anderson, much of the world was caught off guard by this one.

ANDERSON COOPER, CNN CORRESPONDENT: Betty, we were, as well, surprised, is to say the least of it. The handover was supposed to occur tomorrow, perhaps as late as June 30th. It did not, it occurred today, 10:26 a.m. Baghdad time U.S. administrator Paul Bremer, now ex- U.S. administrator Paul Bremer handing the documents to Iraq's foreign minister Allawi, who then handed them to the Iraqi supreme court, who then handed them to Iraq's new president, a ceremonial handover of power, of course, much of the ministries, the 26 ministries here in Iraq had already been handed over the last several days, there had been ceremonies there, but this was the big ceremony this morning.

Paul Bremer has already left the country, he flew by helicopter from what the call the Green Zone, that's the very highly protected area where the ceremony took place, he then boarded a plane at Baghdad Airport and has left the country. You can probably hear helicopters still flying over here, U.S. Kiowa and Apache helicopters flying over the city, security still very tight here, of course, we are anticipating a press conference from Iraq's prime minister Allawi describing what he intends to do to try to rein in some of the security problems here, try to crack down.

I'm joined now by CNN's Baghdad bureau chief Jane Arraf. Jane, security, number one issue for most Iraqis.

JANE ARRAF, CNN CORRESPONDENT: Absolutely. Because it's something that they really feel intrinsically every moment of the day. They wake up afraid, they go to bed afraid, and until that's handled, this issue of democracy is a really nice idea but it comes a far second in most people's minds.

COOPER: What does democracy mean to Iraqis? Prime Minister Allawi said the other day, look, our version of democracy is not going to look like the United States version, perhaps.

ARRAF: Well, I think if you look at the government now, that doesn't necessarily look like perhaps what the U.S. envisioned when it launched this all. We've got a tribal sheikh who is prime minister, we've got an ex-Baathist with close links to the CIA as a President and they may very well do a good job and people here seem to be giving them a chance. But we're talking about a country that is not a template, not anything like anything that's been tried before. It's very tribal, people have religious alliances, it's very ethnically diverse, as you know. It's going to take a lot of work and a lot of creativity to bring this all together.

COOPER: Let's talk a little bit about how much today is different from what the U.S. anticipated it was going to be a year or a year and a half ago, I mean, this handover, as it's happened, not just the logistics of it, but sort of the larger issues really was not the U.S. plan to begin with.

ARRAF: No, you are absolutely right. I would imagine when they sat down they would not have envisioned a hurried ceremony held under intense security which was thrown on people at the last moment. That wasn't quite the way it was supposed to be. But the fact that they've done it I think a lot of Iraqis, anyway, would acknowledge, is a victory, the fact that this country has completely fallen apart. It goes into the "It could be a whole lot worse" category. There is a lot of work to be done, people are really worried, really afraid, but they're certainly willing to give this a chance here.

COOPER: You do sense optimism here. I felt it in the last couple days just from Iraqis on the street. People say, look, there are huge, enormous problems, but there is-has something changed this morning? Did something change in the psyche of Iraqis?

ARRAF: I think maybe what changed is that essential elements that perhaps they have a little more control. There is nothing worse, as you know, than feeling you don't have control. There is nothing worse for Iraqis than to feel that they were occupied, to feel that someone else is determining their fate. And now it may very well be someone else determining their fate, but at least these people are Iraqi, at least they are people who are supposed to be answerable to the people. And as for the things that Prime Minister Allawi is going to announce, that is probably going to go over very well. We're talking about get tough policies, anything verging on martial law, people really seem to want some sort of order imposed and that idea of democracy and even human rights that we so cherish might take a back seat.

COOPER: And the question is, of course, what sort of order can be imposed at this point by Iraq's Prime Minister Allawi. The security services are very poorly trained, they are very poorly equipped, the U.S. is trying to rectify that. General Petraeus, whom you have spoken to at great length, really trying to flood new equipment, new money, RPGs, Kevlar vests to these police who are-they are literally on the front lines, I mean, they are the ones getting killed in massive numbers.

ARRAF: They are and it's been an amazing sort of transition and I've been absolutely stunned to see every time we go to a car bombing that has blown up a police station that has killed police officers and we go and see the grieving families. They continue to go to work, these are immensely brave people working under all sorts of odds and I think that's the thing maybe that we have to be optimistic about, that in the midst of all this chaos and destruction and danger, there are still so many Iraqis who are willing to show up to risk their lives to make it a better place because they do feel it's their country.

COOPER: And you talk about risking your life, I mean, for Iraqis, it's risking their lives to go to work in the morning. A lot of these bombs, these IEDs, these improvised explosive devices which are planted here in Baghdad and really throughout Iraq, are timed to go off in the morning for maximum human suffering, and it is Iraqis who are getting blown apart.

ARRAF: You are absolutely right, and that's shifted. It's been a shift, as we know, from the coalition, from military targets, from targets perhaps that we can understand, affiliated with the coalition, to purely Iraqi targets right now. A lot of people getting caught in the crossfire, a lot of people killed by these suicide bombs, and the hope of officials certainly is that public opinion will shift and they will come forward and try to do something about it.

COOPER: Do you sense public opinion shifting? I mean, we have noticed here in Iraq over the last several days some calls from clerics, from-in the pulpit, in mosques, saying, "Do not take part in this, do not attack Iraqis, do not destroy the infrastructure of the country." Do you sense some sort of change? Perhaps, or am I clinging to a false sense of optimism?

ARRAF: I sense a growing anger certainly, and we see that every time we're at the scene of these horrible bombings, that people are furious. And a lot of times they're furious at us (ph) and one thing I think we have to remember is people will not stop blaming the Americans for this, even though the country is no longer under occupation, they will still blame the Americans for not securing this country.

COOPER: Alright, CNN's Baghdad bureau chief Jane Arraf. We'll check in with you shortly. A day of fast-moving events here on the ground in Baghdad. No one, when they woke up this morning, anticipated this happening as it has happened, the handover of power to the new sovereign Iraqi government at 10:26 a.m. this morning, a remarkable day indeed. The story, of course, not only taking place here in Baghdad and cities throughout Iraq, but it's also a story taking place in other parts of the world. In Turkey today, NATO leaders are meeting, a summit of NATO leaders, George W. Bush is there, of course, trying to get more international support for what is going on here in Iraq. Iraq's foreign minister is also there asking for a number of items, there are a number of items on his agenda, trying to get NATO leaders behind the events which are moving here on the ground. Let's check in with CNN's Robin Oakley, who is in Istanbul, Turkey, covering the NATO summit for us. Robin, this is probably not the day some NATO leaders had anticipated.

ROBIN OAKLEY, CNN CORRESPONDENT: Well, no, it's come as a surprise, Anderson, the news of the premature, or the earlier handover to the Iraqi government first emerged here at the NATO summit with Hoshyar Zebari, the foreign minister from Iraq here to meet a lot of the leaders, giving the first hints and then officials confirming that indeed there was to be an early handover. But it has given something of a phillip (ph) to this summit, it's certainly pushed Iraq, which was already a prominent item on the agenda, made it very much the entire focus of this summit, because there are a lot of these leaders here who have said in the past, those who have opposed the war in Iraq, particularly, that they weren't going to be getting involved so long as Iraq was being run essentially by the coalition and by Paul Bremer. But once there was an interim Iraqi government in charge, they said, then, the situation was going to change, they would listen to requests from that government.

Now, the new Iraqi government has begun to assert itself by taking power two days early. President Bush was told about it yesterday and obviously this was agreed and coordinated with coalition leaders, but it does mean that some of those leaders here at the NATO summit are now going to be held rather more to their promises, it's given Mr. Zebari and the Iraqi government a bit more clout in terms of there requests for assistance, and Mr. Zebari made clear that he's got three objectives with these NATO leaders here at the summit. He wants a political declaration of support for Iraq and its new government from them. He wants help with equipment, particularly equipment- technological equipment to help them maintain their borders more effectively, and crucially, the Iraqi government wants help in training its army and its security forces. And the leaders are probably going to come up with something of a compromise. They never were going to offer troops on the ground to help counter-insurgency, but they'll (ph) come up with a firm offer on the question of training, Anderson.

COOPER: CNN's Robin Oakley in Istanbul. Robin, thank you very much. We will come back to you shortly. Let's take a short break, our coverage continues of this historic day.

(COMMERCIAL BREAK)

NGUYEN: Welcome back. If you are just joining us, it is an historic day for Iraq, where the transfer of power has happened two days early. It happened this morning at 10:26 a.m. Iraq time, which ends 14 months of occupation. We want to go live now to Baghdad to CNN's Christiane Amanpour, who witnessed this transfer of power. Christiane.

CHRISTIANE AMANPOUR, CNN CORRESPONDENT: Well, Betty, it was very cloak and dagger. We didn't know what we were going to see and we were called early this morning to come from our office here to what's called the Green Zone, the protected Zone in which the occupation has had its headquarters for the last 14-15 months. Then we were taken off to another little building inside this area which in fact is the office of the new president and the new prime minister. And we weren't told until virtually we went into their office what was going to happen. When we went in we saw arrayed the dignitaries already there sitting down. There was the president of Iraq, there were the administrators of the coalition, Paul Bremer and his British deputy, the Iraqi prime minister, the head of the supreme court and the deputy prime minister. And they said a few words, they talked about what a historic day it was, and certainly the new prime minister talked about being ready to take this step now.

(BEGIN VIDEO TAPE)

IYAD ILLAWI, IRAQI PRIME MINISTER: This is something that I had asked the coalition to expedite the transfer of sovereignty and we are sure that the Iraqi authority now and the government of Iraq will be handling the situation, whether it's security or economy and this is a big day for us and the Iraqis for the first time now will deal with their own problems.

(END VIDEO TAPE)

AMANPOUR: And then Paul Bremer spoke, the ex, now, administrator, Ambassador Paul Bremer, who has now left the country, talked about how important it was, how it was his pleasure to hand over sovereignty and how this marked a very good day.

(BEGIN VIDEO TAPE)

PAUL BREMER, EX-ADMINISTRATOR, IRAQ CPA: Anybody who has seen those things as I have will know what I know, which is Iraq is a much better place, it was absolutely worth it. There is no doubt that there are challenges ahead, but I am delighted to have been able to play a role here in the stabilization part of Operation Iraqi Freedom.

(END VIDEO TAPE)

AMANPOUR: Now, the building blocks of the future Iraq have been laid by the Americans and the other members of this occupation administration. The building blocks of democracy, some of the economic building blocks, but a lot of work has to be done and this has ended, this transfer of sovereignty, has happened before all those elements of civil society have really taken route, so everything really is in play, now, we have to wait to see how all of this grows or whether it's derailed by the violence in this country. And, of course, violence and security were, again, present at this ceremony, both Iraqi and Americans talked about the challenges that would be ahead, the need to clamp down on this insurgency which seems to be gathering pace and certainly the prime minister is talking about imposing a strict emergency procedures to try to clamp down and we're hoping to hear more details from him later on exactly what that means, Betty.

NGUYEN: A lot of people are looking forward to the details, Christiane, because when this transfer happened, coalition administrator Paul Bremer said that he was confident that this new government was ready, but obviously security is a huge concern. What kind of difference is this going to make security-wise?

AMANPOUR: Well, they're hoping that it makes a psychological impact, now Iraqis have an Iraqi government with all the political power that's been transferred and the economic power that's been transferred. Obviously the big question is how they deal with the security. And, again, we're waiting to hear what measures are imposed, whether it be curfews, whether it be some kind of changes in the law to enable more detentions, whether it be a ban on any kind of public demonstrations, we're just not sure. We do not believe that it's going to be full martial law, which is military rule, it means suspending all the civilian, civil society, civil government organizations and making it military rule. We don't believe that that's going to happen but it is a challenge and the U.S. forces are going to be here. Anybody who expects that U.S. forces will not be on the streets of Iraq over the next weeks and months, many months, we're told, would be mistaken. They will be here and maintain their fairly high profile. Betty?

NGUYEN: So, essentially the U.S. role, security-wise, will not be changing any time soon.

AMANPOUR: Not really. When we pressed top officials here, top generals here, they liked to say that they'll be in a supporting role, but the fact of the matter is while they really want to get as many Iraqi forces out there on the front, if you like, on the streets, in the communities, at the checkpoints, they know that they, the Americans and the rest of the international forces here are going to have to take a supporting role but really a lead supporting role that if there is any time that the Iraqis turn around and say, "Help!" they're going to be there not far behind and they're going to come in. So they're going to be responsible still in great, great measure for the security here, and a lot needs to be done. They need to close the borders to stop these people coming in, they need to shut down the insurgency lines, they need to get the safe houses, it's a big, big project.

NGUYEN: And speaking of those insurgents, this transfer of power sends a huge message to those insurgents, but will it deter them or will it just make them more determined now that Iraq is in Iraqi control?

AMANPOUR: Well, the Iraqi government hopes that it can drive a wedge between those two extremes that you just laid out. They are trying to reach out to any of those people who might have been sort of nationalists, if you like, and now see that they have an Iraqi government. They've offered pardons in return for information, in return for coming in and joining with the new authorities, but on the other hand they know that there is a hard core out there who does not want to see this Iraqi government and this new Iraq succeed and who's already demonstrated by attacking police stations, military recruiting bases, ministries, ministers, even ordinary people in the streets, they have already demonstrated that they want to do everything they can to derail this. So that's going to be the new battle, really, between those who may want to come in from the cold and those who are determined to stay out there and keep up this terrorism, this insurgency against the new government.

NGUYEN: And speaking of battles, things have calmed down with Muqtada al-Sadr, but it appears now that this new Iraqi government in charge, that they're ready to allow al-Sadr to play possibly even a role in politics now.

AMANPOUR: All of that is extremely confused. It sort of goes back and forth and al-Sadr sort of makes one decision one day and another one the next day. It's very confused. The militias have not been disarmed, they sort of melted away. Certainly in Najaf and the areas where they were very-there was very intense combat between American forces and those militias over the last couple of months, that seems to have died down, but lets say Fallujah, for instance, which is a different situation, but Fallujah is a completely no-go area for the Americans or for any other of the international forces. It's-we've been told by Americans in the hands of sort of a Taliban- like entity there who are determined to bring Islamic rule to this country, so it is a very serious situation in which an insurgency that appeared to have grown out of some kind of nationalistic fervor has now morphed more into a fundamentalist Islamic kind of insurgency whose stated goal, if you look at their Web sites, the Internet, the tapes that they put out, is to bring Islamic rule here and to basically destroy this new government. So this is where the real front line of this insurgency is and it's going to be very difficult to crack.

NGUYEN: A lot of situations still need some dealing. Christiane Amanpour in Baghdad, we thank you.

And right now we want to bring in Sam Kubba who is with the American-Iraqi Chamber of Commerce. Good morning to you. Thanks for joining us.

SAM KUBBA, AMERICAN-IRAQI CHAMBER OF COMMERCE: Good morning.

NGUYEN: Talk to us economically, how ready is Iraq for control of their own country.

KUBBA: I think Iraq is ready for controlling its country. A lot of the prime contractors have already started mobilizing and getting ready to start work in Iraq. I think the security situation-I was in Iraq a few days ago and the security situation has deteriorated slightly since I was last there in February but I must say that the potential is tremendous and I strongly encourage international firms to start working and start getting things on the ground in Baghdad, in Iraq.

NGUYEN: Now, you mentioned international firms, but are Iraqis themselves being employed, are they gaining jobs from this reconstruction?

KUBBA: Well, this is what it's all about, I think what we need to do now is to try and get the Iraqis working and I think what I would advise is to set up some sort of small business administration which would help professionals-there's a lot of Iraqi professionals that really want to start setting up their own companies, start employing Iraqis, and they've got the capability, so we need to help them somehow.

NGUYEN: Give us a sense of the scope of the jobless rate in Iraq so that we can understand how important this is to the structure of this new government.

KUBBA: In what respect?

NGUYEN: Well, what is the jobless rate, how many Iraqis are out of jobs and how many jobs are available to them through this reconstruction?

KUBBA: Well, up until now, unfortunately, we haven't really seen the full force of the reconstruction effort. And I think, unfortunately, the jobless rate is very high. We made a lot of very- we had a sort of one step forward, two steps back approach and dismantling of the army, dismantling of-the de-Baathification, that's created a lot of problems because we have a lot of unemployed, a lot of people that are armed to the teeth and they're all unemployed, they can't put food on the table. So what we need to do now, I think Iyad Allawi is a very good person to do this, we need to get these people back working so they can put food on the table and then we'll see the security situation improve dramatically.

NGUYEN: Food on the table, we're talking about basic necessities. What is the situation with that, with water, with the streets, with school and electricity, are they getting those basic necessities?

KUBBA: I think the water situation is not too bad, I think the electricity is very difficult because in Iraq, obviously, and in Baghdad and in Ramadi and other places the heat is tremendous and when the electricity goes off for three hours, unless you have a generator, you've got a big problem. And this creates, when you're driving it creates problems, and so I think this is a very important thing to get the electricity, the infrastructure working, then I think we'll see things improve dramatically.

NGUYEN: Another big question is where is the oil money going at this point, is that going back into the country and is that aiding the reconstruction?

KUBBA: Well, essentially it's supposed to be aiding the reconstruction and that's what we're hoping is happening. I think the coalition is probably using some of it to help in the reconstruction, but that's what we need to do is to try and get it back into the country, make sure the Iraqis are benefiting from it. And let me just also say that now the interim government has to prepare for the elections in January and I think it's very important for them to try and give the expatriates a vote, make sure they can vote in these elections, because if they don't vote we might find that the clerics will start to have a major role in the future.

NGUYEN: OK. Sam Kubba. We are almost out of time. We appreciate your insight this morning. Sam Kubba with the American- Iraqi Chamber of Commerce. Thanks for joining us. And we invite you to stay tuned for continued coverage of the transfer of sovereignty in Iraq.

(COMMERCIAL BREAK)

NGUYEN: Good morning and welcome back. Time now for a little business buzz. You might have noticed prices at the pump are falling. Gary Lee has the story and she's at the NASDAQ market site in Times Square. Good morning to you.

GARY LEE, CNN CORRESPONDENT: Hi, Betty, good morning to you. Gas prices continue to fall, they have fallen by 7 cents a gallon over the past two weeks to an average $1.94, this for a gallon of self- serve regular according to the Lundberg Survey. One reason for the declines, oil prices have been coming down, down about $1 per barrel since mid June, also, refineries have largely completed their maintenance projects and that's had taken some product offline. Now, going forward, we could see some more pricing pressure, that is because next month OPEC's production increases are slated to kick in, however, July also marks the peak driving month so demand could put a crimp in some further declines.

Turning to stocks this morning, Wall Street is expecting a solidly higher open. It looks like investors are reacting positively to the handover of power in Iraq. Of course, trading gets underway officially in about three hours time at 9:30 eastern. And that is the latest business news. DAYBREAK will continue.

(COMMERCIAL BREAK)

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Aired June 28, 2004 - 06:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
BETTY NGUYEN, CNN ANCHOR: Surprise, they jumped the proverbial gun by two whole days. This morning, Iraq is in charge of its own affairs. It is Monday, June 28, and this is DAYBREAK. Good morning from the CNN global headquarters in Atlanta, I'm Betty Nguyen in for Carol Costello.

Well it is a done deal and we want to go live now to Anderson Cooper in Baghdad with the latest on this surprise development. Anderson, much of the world was caught off guard by this one.

ANDERSON COOPER, CNN CORRESPONDENT: Betty, we were, as well, surprised, is to say the least of it. The handover was supposed to occur tomorrow, perhaps as late as June 30th. It did not, it occurred today, 10:26 a.m. Baghdad time U.S. administrator Paul Bremer, now ex- U.S. administrator Paul Bremer handing the documents to Iraq's foreign minister Allawi, who then handed them to the Iraqi supreme court, who then handed them to Iraq's new president, a ceremonial handover of power, of course, much of the ministries, the 26 ministries here in Iraq had already been handed over the last several days, there had been ceremonies there, but this was the big ceremony this morning.

Paul Bremer has already left the country, he flew by helicopter from what the call the Green Zone, that's the very highly protected area where the ceremony took place, he then boarded a plane at Baghdad Airport and has left the country. You can probably hear helicopters still flying over here, U.S. Kiowa and Apache helicopters flying over the city, security still very tight here, of course, we are anticipating a press conference from Iraq's prime minister Allawi describing what he intends to do to try to rein in some of the security problems here, try to crack down.

I'm joined now by CNN's Baghdad bureau chief Jane Arraf. Jane, security, number one issue for most Iraqis.

JANE ARRAF, CNN CORRESPONDENT: Absolutely. Because it's something that they really feel intrinsically every moment of the day. They wake up afraid, they go to bed afraid, and until that's handled, this issue of democracy is a really nice idea but it comes a far second in most people's minds.

COOPER: What does democracy mean to Iraqis? Prime Minister Allawi said the other day, look, our version of democracy is not going to look like the United States version, perhaps.

ARRAF: Well, I think if you look at the government now, that doesn't necessarily look like perhaps what the U.S. envisioned when it launched this all. We've got a tribal sheikh who is prime minister, we've got an ex-Baathist with close links to the CIA as a President and they may very well do a good job and people here seem to be giving them a chance. But we're talking about a country that is not a template, not anything like anything that's been tried before. It's very tribal, people have religious alliances, it's very ethnically diverse, as you know. It's going to take a lot of work and a lot of creativity to bring this all together.

COOPER: Let's talk a little bit about how much today is different from what the U.S. anticipated it was going to be a year or a year and a half ago, I mean, this handover, as it's happened, not just the logistics of it, but sort of the larger issues really was not the U.S. plan to begin with.

ARRAF: No, you are absolutely right. I would imagine when they sat down they would not have envisioned a hurried ceremony held under intense security which was thrown on people at the last moment. That wasn't quite the way it was supposed to be. But the fact that they've done it I think a lot of Iraqis, anyway, would acknowledge, is a victory, the fact that this country has completely fallen apart. It goes into the "It could be a whole lot worse" category. There is a lot of work to be done, people are really worried, really afraid, but they're certainly willing to give this a chance here.

COOPER: You do sense optimism here. I felt it in the last couple days just from Iraqis on the street. People say, look, there are huge, enormous problems, but there is-has something changed this morning? Did something change in the psyche of Iraqis?

ARRAF: I think maybe what changed is that essential elements that perhaps they have a little more control. There is nothing worse, as you know, than feeling you don't have control. There is nothing worse for Iraqis than to feel that they were occupied, to feel that someone else is determining their fate. And now it may very well be someone else determining their fate, but at least these people are Iraqi, at least they are people who are supposed to be answerable to the people. And as for the things that Prime Minister Allawi is going to announce, that is probably going to go over very well. We're talking about get tough policies, anything verging on martial law, people really seem to want some sort of order imposed and that idea of democracy and even human rights that we so cherish might take a back seat.

COOPER: And the question is, of course, what sort of order can be imposed at this point by Iraq's Prime Minister Allawi. The security services are very poorly trained, they are very poorly equipped, the U.S. is trying to rectify that. General Petraeus, whom you have spoken to at great length, really trying to flood new equipment, new money, RPGs, Kevlar vests to these police who are-they are literally on the front lines, I mean, they are the ones getting killed in massive numbers.

ARRAF: They are and it's been an amazing sort of transition and I've been absolutely stunned to see every time we go to a car bombing that has blown up a police station that has killed police officers and we go and see the grieving families. They continue to go to work, these are immensely brave people working under all sorts of odds and I think that's the thing maybe that we have to be optimistic about, that in the midst of all this chaos and destruction and danger, there are still so many Iraqis who are willing to show up to risk their lives to make it a better place because they do feel it's their country.

COOPER: And you talk about risking your life, I mean, for Iraqis, it's risking their lives to go to work in the morning. A lot of these bombs, these IEDs, these improvised explosive devices which are planted here in Baghdad and really throughout Iraq, are timed to go off in the morning for maximum human suffering, and it is Iraqis who are getting blown apart.

ARRAF: You are absolutely right, and that's shifted. It's been a shift, as we know, from the coalition, from military targets, from targets perhaps that we can understand, affiliated with the coalition, to purely Iraqi targets right now. A lot of people getting caught in the crossfire, a lot of people killed by these suicide bombs, and the hope of officials certainly is that public opinion will shift and they will come forward and try to do something about it.

COOPER: Do you sense public opinion shifting? I mean, we have noticed here in Iraq over the last several days some calls from clerics, from-in the pulpit, in mosques, saying, "Do not take part in this, do not attack Iraqis, do not destroy the infrastructure of the country." Do you sense some sort of change? Perhaps, or am I clinging to a false sense of optimism?

ARRAF: I sense a growing anger certainly, and we see that every time we're at the scene of these horrible bombings, that people are furious. And a lot of times they're furious at us (ph) and one thing I think we have to remember is people will not stop blaming the Americans for this, even though the country is no longer under occupation, they will still blame the Americans for not securing this country.

COOPER: Alright, CNN's Baghdad bureau chief Jane Arraf. We'll check in with you shortly. A day of fast-moving events here on the ground in Baghdad. No one, when they woke up this morning, anticipated this happening as it has happened, the handover of power to the new sovereign Iraqi government at 10:26 a.m. this morning, a remarkable day indeed. The story, of course, not only taking place here in Baghdad and cities throughout Iraq, but it's also a story taking place in other parts of the world. In Turkey today, NATO leaders are meeting, a summit of NATO leaders, George W. Bush is there, of course, trying to get more international support for what is going on here in Iraq. Iraq's foreign minister is also there asking for a number of items, there are a number of items on his agenda, trying to get NATO leaders behind the events which are moving here on the ground. Let's check in with CNN's Robin Oakley, who is in Istanbul, Turkey, covering the NATO summit for us. Robin, this is probably not the day some NATO leaders had anticipated.

ROBIN OAKLEY, CNN CORRESPONDENT: Well, no, it's come as a surprise, Anderson, the news of the premature, or the earlier handover to the Iraqi government first emerged here at the NATO summit with Hoshyar Zebari, the foreign minister from Iraq here to meet a lot of the leaders, giving the first hints and then officials confirming that indeed there was to be an early handover. But it has given something of a phillip (ph) to this summit, it's certainly pushed Iraq, which was already a prominent item on the agenda, made it very much the entire focus of this summit, because there are a lot of these leaders here who have said in the past, those who have opposed the war in Iraq, particularly, that they weren't going to be getting involved so long as Iraq was being run essentially by the coalition and by Paul Bremer. But once there was an interim Iraqi government in charge, they said, then, the situation was going to change, they would listen to requests from that government.

Now, the new Iraqi government has begun to assert itself by taking power two days early. President Bush was told about it yesterday and obviously this was agreed and coordinated with coalition leaders, but it does mean that some of those leaders here at the NATO summit are now going to be held rather more to their promises, it's given Mr. Zebari and the Iraqi government a bit more clout in terms of there requests for assistance, and Mr. Zebari made clear that he's got three objectives with these NATO leaders here at the summit. He wants a political declaration of support for Iraq and its new government from them. He wants help with equipment, particularly equipment- technological equipment to help them maintain their borders more effectively, and crucially, the Iraqi government wants help in training its army and its security forces. And the leaders are probably going to come up with something of a compromise. They never were going to offer troops on the ground to help counter-insurgency, but they'll (ph) come up with a firm offer on the question of training, Anderson.

COOPER: CNN's Robin Oakley in Istanbul. Robin, thank you very much. We will come back to you shortly. Let's take a short break, our coverage continues of this historic day.

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NGUYEN: Welcome back. If you are just joining us, it is an historic day for Iraq, where the transfer of power has happened two days early. It happened this morning at 10:26 a.m. Iraq time, which ends 14 months of occupation. We want to go live now to Baghdad to CNN's Christiane Amanpour, who witnessed this transfer of power. Christiane.

CHRISTIANE AMANPOUR, CNN CORRESPONDENT: Well, Betty, it was very cloak and dagger. We didn't know what we were going to see and we were called early this morning to come from our office here to what's called the Green Zone, the protected Zone in which the occupation has had its headquarters for the last 14-15 months. Then we were taken off to another little building inside this area which in fact is the office of the new president and the new prime minister. And we weren't told until virtually we went into their office what was going to happen. When we went in we saw arrayed the dignitaries already there sitting down. There was the president of Iraq, there were the administrators of the coalition, Paul Bremer and his British deputy, the Iraqi prime minister, the head of the supreme court and the deputy prime minister. And they said a few words, they talked about what a historic day it was, and certainly the new prime minister talked about being ready to take this step now.

(BEGIN VIDEO TAPE)

IYAD ILLAWI, IRAQI PRIME MINISTER: This is something that I had asked the coalition to expedite the transfer of sovereignty and we are sure that the Iraqi authority now and the government of Iraq will be handling the situation, whether it's security or economy and this is a big day for us and the Iraqis for the first time now will deal with their own problems.

(END VIDEO TAPE)

AMANPOUR: And then Paul Bremer spoke, the ex, now, administrator, Ambassador Paul Bremer, who has now left the country, talked about how important it was, how it was his pleasure to hand over sovereignty and how this marked a very good day.

(BEGIN VIDEO TAPE)

PAUL BREMER, EX-ADMINISTRATOR, IRAQ CPA: Anybody who has seen those things as I have will know what I know, which is Iraq is a much better place, it was absolutely worth it. There is no doubt that there are challenges ahead, but I am delighted to have been able to play a role here in the stabilization part of Operation Iraqi Freedom.

(END VIDEO TAPE)

AMANPOUR: Now, the building blocks of the future Iraq have been laid by the Americans and the other members of this occupation administration. The building blocks of democracy, some of the economic building blocks, but a lot of work has to be done and this has ended, this transfer of sovereignty, has happened before all those elements of civil society have really taken route, so everything really is in play, now, we have to wait to see how all of this grows or whether it's derailed by the violence in this country. And, of course, violence and security were, again, present at this ceremony, both Iraqi and Americans talked about the challenges that would be ahead, the need to clamp down on this insurgency which seems to be gathering pace and certainly the prime minister is talking about imposing a strict emergency procedures to try to clamp down and we're hoping to hear more details from him later on exactly what that means, Betty.

NGUYEN: A lot of people are looking forward to the details, Christiane, because when this transfer happened, coalition administrator Paul Bremer said that he was confident that this new government was ready, but obviously security is a huge concern. What kind of difference is this going to make security-wise?

AMANPOUR: Well, they're hoping that it makes a psychological impact, now Iraqis have an Iraqi government with all the political power that's been transferred and the economic power that's been transferred. Obviously the big question is how they deal with the security. And, again, we're waiting to hear what measures are imposed, whether it be curfews, whether it be some kind of changes in the law to enable more detentions, whether it be a ban on any kind of public demonstrations, we're just not sure. We do not believe that it's going to be full martial law, which is military rule, it means suspending all the civilian, civil society, civil government organizations and making it military rule. We don't believe that that's going to happen but it is a challenge and the U.S. forces are going to be here. Anybody who expects that U.S. forces will not be on the streets of Iraq over the next weeks and months, many months, we're told, would be mistaken. They will be here and maintain their fairly high profile. Betty?

NGUYEN: So, essentially the U.S. role, security-wise, will not be changing any time soon.

AMANPOUR: Not really. When we pressed top officials here, top generals here, they liked to say that they'll be in a supporting role, but the fact of the matter is while they really want to get as many Iraqi forces out there on the front, if you like, on the streets, in the communities, at the checkpoints, they know that they, the Americans and the rest of the international forces here are going to have to take a supporting role but really a lead supporting role that if there is any time that the Iraqis turn around and say, "Help!" they're going to be there not far behind and they're going to come in. So they're going to be responsible still in great, great measure for the security here, and a lot needs to be done. They need to close the borders to stop these people coming in, they need to shut down the insurgency lines, they need to get the safe houses, it's a big, big project.

NGUYEN: And speaking of those insurgents, this transfer of power sends a huge message to those insurgents, but will it deter them or will it just make them more determined now that Iraq is in Iraqi control?

AMANPOUR: Well, the Iraqi government hopes that it can drive a wedge between those two extremes that you just laid out. They are trying to reach out to any of those people who might have been sort of nationalists, if you like, and now see that they have an Iraqi government. They've offered pardons in return for information, in return for coming in and joining with the new authorities, but on the other hand they know that there is a hard core out there who does not want to see this Iraqi government and this new Iraq succeed and who's already demonstrated by attacking police stations, military recruiting bases, ministries, ministers, even ordinary people in the streets, they have already demonstrated that they want to do everything they can to derail this. So that's going to be the new battle, really, between those who may want to come in from the cold and those who are determined to stay out there and keep up this terrorism, this insurgency against the new government.

NGUYEN: And speaking of battles, things have calmed down with Muqtada al-Sadr, but it appears now that this new Iraqi government in charge, that they're ready to allow al-Sadr to play possibly even a role in politics now.

AMANPOUR: All of that is extremely confused. It sort of goes back and forth and al-Sadr sort of makes one decision one day and another one the next day. It's very confused. The militias have not been disarmed, they sort of melted away. Certainly in Najaf and the areas where they were very-there was very intense combat between American forces and those militias over the last couple of months, that seems to have died down, but lets say Fallujah, for instance, which is a different situation, but Fallujah is a completely no-go area for the Americans or for any other of the international forces. It's-we've been told by Americans in the hands of sort of a Taliban- like entity there who are determined to bring Islamic rule to this country, so it is a very serious situation in which an insurgency that appeared to have grown out of some kind of nationalistic fervor has now morphed more into a fundamentalist Islamic kind of insurgency whose stated goal, if you look at their Web sites, the Internet, the tapes that they put out, is to bring Islamic rule here and to basically destroy this new government. So this is where the real front line of this insurgency is and it's going to be very difficult to crack.

NGUYEN: A lot of situations still need some dealing. Christiane Amanpour in Baghdad, we thank you.

And right now we want to bring in Sam Kubba who is with the American-Iraqi Chamber of Commerce. Good morning to you. Thanks for joining us.

SAM KUBBA, AMERICAN-IRAQI CHAMBER OF COMMERCE: Good morning.

NGUYEN: Talk to us economically, how ready is Iraq for control of their own country.

KUBBA: I think Iraq is ready for controlling its country. A lot of the prime contractors have already started mobilizing and getting ready to start work in Iraq. I think the security situation-I was in Iraq a few days ago and the security situation has deteriorated slightly since I was last there in February but I must say that the potential is tremendous and I strongly encourage international firms to start working and start getting things on the ground in Baghdad, in Iraq.

NGUYEN: Now, you mentioned international firms, but are Iraqis themselves being employed, are they gaining jobs from this reconstruction?

KUBBA: Well, this is what it's all about, I think what we need to do now is to try and get the Iraqis working and I think what I would advise is to set up some sort of small business administration which would help professionals-there's a lot of Iraqi professionals that really want to start setting up their own companies, start employing Iraqis, and they've got the capability, so we need to help them somehow.

NGUYEN: Give us a sense of the scope of the jobless rate in Iraq so that we can understand how important this is to the structure of this new government.

KUBBA: In what respect?

NGUYEN: Well, what is the jobless rate, how many Iraqis are out of jobs and how many jobs are available to them through this reconstruction?

KUBBA: Well, up until now, unfortunately, we haven't really seen the full force of the reconstruction effort. And I think, unfortunately, the jobless rate is very high. We made a lot of very- we had a sort of one step forward, two steps back approach and dismantling of the army, dismantling of-the de-Baathification, that's created a lot of problems because we have a lot of unemployed, a lot of people that are armed to the teeth and they're all unemployed, they can't put food on the table. So what we need to do now, I think Iyad Allawi is a very good person to do this, we need to get these people back working so they can put food on the table and then we'll see the security situation improve dramatically.

NGUYEN: Food on the table, we're talking about basic necessities. What is the situation with that, with water, with the streets, with school and electricity, are they getting those basic necessities?

KUBBA: I think the water situation is not too bad, I think the electricity is very difficult because in Iraq, obviously, and in Baghdad and in Ramadi and other places the heat is tremendous and when the electricity goes off for three hours, unless you have a generator, you've got a big problem. And this creates, when you're driving it creates problems, and so I think this is a very important thing to get the electricity, the infrastructure working, then I think we'll see things improve dramatically.

NGUYEN: Another big question is where is the oil money going at this point, is that going back into the country and is that aiding the reconstruction?

KUBBA: Well, essentially it's supposed to be aiding the reconstruction and that's what we're hoping is happening. I think the coalition is probably using some of it to help in the reconstruction, but that's what we need to do is to try and get it back into the country, make sure the Iraqis are benefiting from it. And let me just also say that now the interim government has to prepare for the elections in January and I think it's very important for them to try and give the expatriates a vote, make sure they can vote in these elections, because if they don't vote we might find that the clerics will start to have a major role in the future.

NGUYEN: OK. Sam Kubba. We are almost out of time. We appreciate your insight this morning. Sam Kubba with the American- Iraqi Chamber of Commerce. Thanks for joining us. And we invite you to stay tuned for continued coverage of the transfer of sovereignty in Iraq.

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NGUYEN: Good morning and welcome back. Time now for a little business buzz. You might have noticed prices at the pump are falling. Gary Lee has the story and she's at the NASDAQ market site in Times Square. Good morning to you.

GARY LEE, CNN CORRESPONDENT: Hi, Betty, good morning to you. Gas prices continue to fall, they have fallen by 7 cents a gallon over the past two weeks to an average $1.94, this for a gallon of self- serve regular according to the Lundberg Survey. One reason for the declines, oil prices have been coming down, down about $1 per barrel since mid June, also, refineries have largely completed their maintenance projects and that's had taken some product offline. Now, going forward, we could see some more pricing pressure, that is because next month OPEC's production increases are slated to kick in, however, July also marks the peak driving month so demand could put a crimp in some further declines.

Turning to stocks this morning, Wall Street is expecting a solidly higher open. It looks like investors are reacting positively to the handover of power in Iraq. Of course, trading gets underway officially in about three hours time at 9:30 eastern. And that is the latest business news. DAYBREAK will continue.

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