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Israel Calls On Reservists; Jerusalem Under Rocket Fire; Petraeus Testifies on Benghazi Attack; Fiscal Cliff Talks Begin; Egypt's Prime Minister in Gaza Amid Rocket Fire; Train Slams into "Heroes" Parade; Iran Not Cooperating with Nuclear Agency; New Video: Water Surge Fills Subway; Preventing Power Outages; Twinkies Maker Folding

Aired November 16, 2012 - 14:00   ET


DON LEMON, CNN ANCHOR: I'm Don Lemon. Brooke is off today.

Developing right now, a disturbing report on Iran and concerns about its nuclear program under ground. It is bound to set off alarm bells in the west.

Plus, two people are missing after an oil platform explodes in the Gulf of Mexico.

But first, the bloody fight we're going to get to between Israel and Gaza. Hamas aims rockets at Jerusalem and they miss. But the fact Hamas is going after what Israel considers its capital city shows how much pressure is building in the Middle East right now. I want you to listen to this.


LEMON: So an i-Reporter captured air raid sirens going off in Jerusalem. Rockets from Hamas, the group that controls Gaza, landed just south of Jerusalem. More rockets aimed for Tel Aviv ended up in the water. No reports of damage in either case, though.

But officials say 27 Palestinians have died since Wednesday from Israel's strike in Gaza. This is Israeli defense forces video showing what they say -- look at this -- they say this is munition sites. Israel points to the stockpiles as more proof Hamas is trying to escalate tension. Hamas says Israel is to blame. People on both sides now live in fear of just how close the attacks will come. I want you to listen to one man in Gaza just last night.


MOHAMMED SULAIMAN, LIVES IN GAZA: I fear that my life is at risk by merely being out in the streets. So yesterday when the escalation started by the assassination of al-Jabari, I went out and was (INAUDIBLE) and I literally felt that I could lose my life at any moment. And (INAUDIBLE) targeting -- (INAUDIBLE) targeting the -- (INAUDIBLE) targeting Israeli civilians, I might as well (INAUDIBLE) --

(END VIDEO CLIP) LEMON: I should probably tell you that he was able to reconnect with us moments later.

Other nations are scrambling to try to get Israel and Hamas to take a step back. Egypt's prime minister and president arrived in Gaza today. A planned cease-fire for the visit never materialized while President Mohamed Morsi made it clear whose side Egypt is on.


PRES. MOHAMED MORSI, EGYPT (though translator): We support the people of Gaza. We are with them in their trenches. What hurts them hurts us. And the blood that flows from their children is our blood too.


LEMON: So most of the west, including the United States, sides with Israel. A nation now on the brink of staging a ground assault. Israel's deputy foreign minister told CNN this morning that would trigger that move.


DANNY AYALON, ISRAELI DEPUTY FOREIGN MINISTER: If we will see in the next 24, 36 hours more rockets launched at us, I think that would be a trigger.


LEMON: Straight to the ground now. CNN's Ben Wedeman joins me now from Ashkelon, which is on the Israel/Gaza border.

Ben, what are you seeing and hearing there now?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's a bit surreal here in Ashkelon. We're in the city's marina right next to the Yoko (ph) sushi restaurant. And as you can see, there are people out having dinner, seemingly to be living a normal life. But the owner of this restaurant did tell us just an hour ago they heard the air raid sirens. And, in fact, just a moment ago we saw this screen with Israeli television that in Bere Sheva (ph), which is to the south of here, air raid sirens did go off.

Now, it does appear all signs indicate that Israel is indeed preparing for a ground incursion. Some of the roads around Gaza on the Israeli side have now been closed to civilian traffic. The Israeli security cabinet apparently has authorized the government to call up as many as 75,000 reservists, possibly to participate in this potential possible ground incursion into Gaza. There have been a lot of armor -- lots of armor, lots of tanks moved down to that area. It's very similar to what we saw, Don, just before Israel made a ground incursion into Gaza back in 2008-2009.

LEMON: Right. Ben, talk to me about the significance of this. Because we've been reporting that Hamas rockets nearly hit Jerusalem. The significance of that. And has Hamas ever aimed for Jerusalem before? WEDEMAN: No, this is -- that was the first time this evening that that happened. And that's why really in Jerusalem it came as so much of a shock. But I can tell you that people around here are much more accustomed to hearing air raid sirens, hearing reports of rockets falling nearby.

But in terms of significance, the fact that, as of yesterday, Tel Aviv became in -- within the range -- and that's Israel's largest city -- within range of the rockets from Gaza and now Jerusalem, really is a game changer. It's going to really put pressure on the government of Prime Minister Benjamin Netanyahu to take some sort of decisive action against Gaza. But what -- as we saw in the last Gaza war, after all the bloodshed, all the fighting that took place, it really didn't change things. And we heard the Israeli defense minister, Ehud Barak, saying that they've got to put an end to these rockets being fired out of Gaza once and for all. So they may indeed be preparing for an even bigger operation than what we saw four years ago.


LEMON: Certainly, Ben, I don't know if you've seen this, but I want to warn our viewers of this photograph. There it is right there. It's of a BBC staffer holding his baby son, killed in Gaza. And we know of 27 Palestinians who have died with reports of 270 injured. Ben, what are the casualties for Israel?

WEDEMAN: Well, so far, three Israelis were killed yesterday when a rocket hit an apartment building. And there have been other wounded, but certainly compared to what we've seen in Gaza, relatively small. But given the political dynamics of Israel, even a low fatality count does put a lot of pressure on the government to take more action.


LEMON: Ben Wedeman reporting. Ben, thank you very much for that.

Rockets are flying back and forth between Gaza and Israel and the death toll is rising. Hamas rockets reaching farther into Israel than they ever have before. You heard our Ben Wedeman report that today one landed near Jerusalem for the first time since 1970.

I want to bring in now James Zogby. He is the president of the Arab American Institute. And he's by phone and he is in Abu Dhabi.

Thank you for your time.

What can help right now, sir, for both sides to just stop the violence, or is that just wishful thinking?

JAMES ZOGBY, PRESIDENT, ARAB AMERICAN INSTITUTE: Well, it is wishful thinking, but one hopes and one wishes that the United States, for its part, and Turkey and Egypt and those who have some ability to restrain what's going on in Gaza, can, in fact, succeed in pulling this back.

Ben is absolutely right. I mean, we've heard this song before. People are singing off the same page. And at the end of the day, nothing happens other than hundreds, maybe a thousand or more will die, many more wounded, and fear and anger all around. And at the end of the day, we're left with a political issue that must be resolved.

And just people more entrenched in their pain and in their fear than they were before it started. It only complicates the effort to ultimately make peace.

LEMON: Yes. The Israeli ambassador we heard from -- to the U.N., we heard from him today. Ron Prosor. I want you to listen and then we'll talk about it.


RON PROSOR, ISRAELI AMBASSADOR TO THE U.N.: Hamas are the enemies of peace. Not just the enemies of Israel. The enemies of peace, regional stability in the region, and to peace, both internally on the Palestinian side and between Palestinians and Israel. So we are targeting that military infrastructure so we will be able to sit down with good people on the other side for real, constructive talks.


LEMON: That's his side. What needs to happen long-term here, Mr. Zogby?

ZOGBY: Well, look, I am no fan of Hamas. Never have been and never will be. Their tactics are deplorable and their politics, I don't agree with. But at the end of the day, people have to talk. And Hamas is going to have to be a party to this conversation, whether we like it or not. So the ambassador is just dead wrong. And those on the Hamas side, who take a hard line and an aggressive posture and those who are hurling missiles at Israel, those on the Israeli side who are planning an incursion and 600 aerial strikes that Israel launched in Gaza yesterday, are all enemies of peace. The fact that -- this is not going to be solved militarily. There's no victor vanquished scenario.

I've been tried -- look, I've been doing this work, Don, for almost four decades now, dealing with this issue. And I don't know how many times I've heard Israelis or Palestinians say this is going to put an end to it. There's no violence that's going to end the occupation, and there's no violence that's going to end the resistance to the occupation, which is why we really need to get the conversation going again. And it's going to take a tough hand on the part of the United States and on the part of the Egyptians and the Turks who, I think, have some leverage with Hamas, to make it clear. Make it clear to the Israelis and to the people in Gaza, this just can't go on because, at the end of the day, no one's going to win.

Look, the siege of Gaza has gone on too long. Gaza is a nightmare. It was a nightmare before the blockade and siege began. It's been living off of black, you know, a black market through tunnels. And the fact is, is that this is not going anywhere, other than creating more despair and anger. So, look, --

LEMON: Yes, and death. ZOGBY: Israel can do what it does. It has the ability to do it. But they cannot delude themselves into thinking that this time we're going to put an end to it and we'll be able to talk peace with the only people who want to talk peace. Because at the same time they're doing that, they're doing everything they possibly can to undercut the Palestinian authority on the West Bank and deprive them of winning any victories whatsoever. They won't let them go to the U.N. and declare statehood. They won't let them govern their own territory in the West Bank. The block -- the wall that's been constructed and the roadblocks and checkpoints that exist in the settlements that are expand having undercut the legitimacy of that moderate leadership. So what we've got is a situation that only gets worse and that's why the United States has to take a tougher stand. That's why we have to have those who can talk to the folks in Hamas and in Gaza --

LEMON: And that's going to --

ZOGBY: Take a tougher position --

LEMON: That's going to have to be --

ZOGBY: To ultimately bring an end to this.

LEMON: That's going to be the last word on that, Mr. Zogby.

ZOGBY: (INAUDIBLE) escalates further and we're going to go down that road, open the door to hell.


ZOGBY: We saw it play out before in 2008 and '06 and so many times before. And at the end of the day, Ben Wedeman is right, all that we get is a lot of dead people and we start right back where we were with no peace and people still needing to talk to each other.

LEMON: James Zogby is president of the Arab American Institute. Thank you for your time, sir.

Meantime, want to come back here to the United States. We have a story developing right now. Two people now -- two people are missing and two people are believed to be dead. That's after an oil platform exploded in the Gulf of Mexico. The platform was about 20 miles off the coast of Grand Isle, Louisiana. It is not a drilling facility, we should tell you. Eleven people sent to the hospital here as crews launch a search and rescue mission. Coast Guard says 28 gallons of fuel have spilled, creating an oil sheen about half a mile long. And we're told it's not considered a major environmental threat at this point. Updates as we get them here on CNN.

Up next, David Petraeus on the hot seat. The former CIA director telling Congress what he knew about the attack in Benghazi. We're going to talk about that with someone who was inside that hearing.

Plus, breaking today, a nuclear watchdog says it is very concerned about Iran and what the Islamic Republic is doing underground. The west isn't going to like this news. (COMMERCIAL BREAK)

LEMON: So let's try to get to the bottom of what happened. If anyone was learned today at those hearings. We're learning what former CIA Director David Petraeus knew about the deadly attack on the U.S. consulate in Benghazi, Libya. One week after resigning as CIA chief, Petraeus testified this morning before the House and Senate Intelligence Committees. Both hearings were closed to the public. And befitting a man who ran the nation's spy agency, Petraeus alluded reporters as he entered the Capitol. We didn't get any pictures of him. But cameras did catch Petraeus' motorcade leaving Capitol Hill this afternoon after he finished testifying.

So let's talk now with Republican Congressman Joe Heck of Nevada. He is a member of the House Intelligence Committee.

Representative Heck, thank you.

What did General Petraeus tell your committee this morning?

REP. JOE HECK (R), NEVADA: Well, he went over the points that he brought out in the hearing when he came before us September 14th. And then talked to us about how that intelligence had evolved over time and where they are today with the understanding of what happened in Benghazi. And really the only thing that significantly changed was the fact that we now know there was no spontaneous protest taking place outside of the embassy facility, the compound, prior to the attack on the embassy. And we also have a better understanding of what groups might have been involved in perpetrating that deadly attack.

LEMON: Do we know for sure that there was no spontaneous or are you just gathering that from looking at the video or from the testimony?

HECK: No, we have been told that the intelligence community has now assessed that there was no spontaneous attack outside of the embassy prior to the attack on the facility.

LEMON: Does this change your mind about anything that you -- about any of this, that you didn't know before David Petraeus testified? Does it change your mind as to the White House's assessment, as to Susan Rice's assessment or even your own assessment?

HECK: Well, I think, from what we first learned in the few hours and days immediately after the attack to today, the intelligence has evolved. I mean certainly there was taking time to gather the information, to analyze it and put forward an assessment.

But what we do know is that when Director Petraeus came before us on the 14th, the information that he gave us was not the information that was put out by Ambassador Rice or by the administration. So it begs the question, why wasn't a more complete picture given to the American public more quickly than it was?

LEMON: OK. You said that the intelligence has evolved, which means, just from a layman's term, you would think that as they gathered information, they learned more, than things would change. And just from people sitting at home and not for partisans or for people who are on Capitol Hill, are you guys actually talking to each other about getting to the bottom of this, or is everyone just talking at each other, because I would imagine no administration wants anyone to die on their watch.

HECK: Well, certainly we are talking to each other and we're talking to those who are in the best position to provide the information necessary, to exercise the duty of the House Intelligence Committee, which is to provide oversight of the intelligence community and to hold the administration, regardless of who the sitting president is, accountable for their actions as a, you know, State Department facility was under attack and we lost four American public servants.

And so that is the process that we have undertaken. We, yesterday, met with a panel of intelligence experts. Today we had the opportunity to talk to former Director Petraeus about how his understanding changed over time. And we need to continue to look into the issue and get the answers for the American public, and, most importantly, for the families of the four who were lost.

LEMON: So this is satisfying to you in that you're talking and you're learning new information. But my question -- my -- the bigger question is, if Susan Rice is nominated to take Hillary Clinton's place, are you going to fight that?

HECK: Well, I'm a member of the House, not a member of the Senate. And so it's up to the Senate to hold confirmation hearings on cabinet level positions and I leave that to the --

LEMON: But certainly you have a voice.

HECK: Well, I leave that to the Senate to determine whether or not she is qualified to hold the position of secretary of state.

LEMON: Congressman Joe Heck, thank you very much. Appreciate your time, sir.

HECK: Thank you.

LEMON: Senior congressional correspondent Dana Bash now. She staked out both hearings this morning.

Dana, I saw your reporting this morning. We did not get any pictures of him. We did get his motorcade. But lots going on, on The Hill this morning. What are Democrats telling you about Petraeus' testimony?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, very interesting. Many of them came out to try to give an explanation for why there is a difference, or there was a discrepancy, between -- as Congressman Heck just said, what General Petraeus told members of Congress in the days after the attack. It was actually the briefing that he -- they got was on September 14th, and discrepancies between that and what Susan Rice said publicly two days later. And the answer that several Democratic lawmakers are giving us is because she was talking from unclassified talking points. And what they learned behind closed doors was classified. And one of the things that was said behind closed doors that she didn't talk about was the idea that there likely could be an extremist element involved in this, meaning a terrorist group involved in this.

The reason we are told also that that wasn't in the unclassified talking points that Susan Rice used, is because they're worried it was so early, they were worried about exposing the sources and methods of how they got that information about the terrorist or extremist group, which we now believe was Ansar al Sharia, which -- that's what intelligence officials believe. So that is how Democrats have explained it. And they've come out and explained it from the chairwoman of the Intelligence Committee, Dianne Feinstein, to many others, trying to really clarify that and aggressively come to Susan Rice's defense in a way that we haven't really heard from Democrats, at least those on the Intelligence Committee, until today.

LEMON: Dana Bash has been reporting on this all along. Dana, thank you very much. We appreciate it.

You know, we're just 46 days away from reaching that dreaded fiscal cliff that I'm sure Dana will be reporting on as well. But even if a deal is reached, will it take a recession to get our economy back on track? That's what one leading economist says. Alan Greenspan talks to our Ali Velshi. That's next.


LEMON: It is game on for fiscal cliff talks. President Obama and congressional leaders met today to kick start face to face negotiations. They have 46 days to cut a deal, otherwise massive tax hikes and spending cuts kick in January 1st.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think we're all aware that we have some urgent business to do. And we've got to make sure that taxes don't go up on middle class families, that our economy remains strong, that we're creating jobs, and that's an agenda that Democrats and Republicans and Independents, people all across the country, share. So our challenge is to make sure that, you know, we are able to cooperate together, work together, find some common ground, make some tough compromises, build some consensus, to do the people's business.


LEMON: Chief business correspondent Ali Velshi joins me now live from New York.

Every time I hear fiscal cliff, I think about Thelma and Louise and I imagine Congress in the front seat driving -- driving us off.


LEMON: You had a chance to interview an economic powerhouse, the former Federal Reserve Chairman Alan Greenspan.


LEMON: What does he say about how to get ready for this huge economic pain? Did he mention the r word, recession?

VELSHI: Well, he did. And this is interesting because a lot of people think -- think back to your Thelma and Louise example, right, you go over the cliff and it's all downhill from there. What a lot of people think is that if the fiscal cliff comes to pass, you'll increase taxes on people, you'll cut spending and, as a result, no one will have money to spend and it will cause a recession. A double dip. The second recession. And I asked Alan Greenspan about it and he said actually -- and you've got to listen very carefully because Alan Greenspan doesn't talk like you and I do, he talks in a complicated fashion. But listen to what he told me. He said, it could -- it could cause a recession, but it may not be as bad as you think. Listen.


ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: IMF studies show definitively that if you cut spending in a situation like this, it does lower the GDP, but nowhere near the amount that an increase in taxes lowers the rate of an increase in GDP. So that I think if we have to have a moderate recession to solve this huge fiscal problem that's in front of us, I think that is a very small price to pay because we're not going to get out of this thing without paying. There's a presumption here that we have a whole schedule of economic policies which can just basically solve the problems as through compare it to a normal situation. It is not.


VELSHI: So that's the point. He says don't be so worried about doing the right thing, as he sees it, because of a recession. We might have to have a recession. But in the end, the long run, things will be OK. This is not a widely held view or widely shared view, Don, but it is --


VELSHI: It is Alan Greenspan who knows a lot. He was the Fed chair for 18 years under three presidents.

LEMON: Yes. He knows a lot about a lot about a lot.


LEMON: Is he hopeful at least about plans for -- to avoid this fiscal cliff?

VELSHI: I think he's looking at it very carefully. He understands that things are, you know, things are very divided in Washington. He hopes they can -- again, I'll let you hear in your own words. This is what he told me.

(BEGIN VIDEO CLIP) VELSHI: There is a budget compromise out there for raising revenue and, at the same time, curbing spending. Simpson-Bowles. You say it's a good starting point but that it's not enough. In fact, most elected officials won't even go as far as Simpson-Bowles would because, as you said, it would hurt. There would be pain. So what do you suggest that America can do to get that strong economic growth and those high levels of employment? What sort of pain should our politicians be saying we have to be ready to take? Do we eliminate the mortgage interest deduction? Do we eliminate things that people are really used to but might need to give up?

GREENSPAN: All of the above. All of the above. I think they're very -- I mean, look, the genius of Simpson-Bowles is a political issue, namely that you can take this trillion dollars of so-called tax expenditures, and the Republicans can look at cutting them as a reduction in subsidies, which in large part they are. The Democrats can look at them as a way to increase taxes on upper income groups.

Now, it strikes me that's the same piece of legislation, so we can get very large chunks of -- we can get very lank chunks of effective spending out of the system without any material change in marginal tax rates. But is it going to be easy? No. All of those tax subsidies or all of those tax benefits are there for reasons. There are constituencies beneath all of them and the general presumption that this is going to be done without any real disruption to the economy is nonsense.


VELSHI: So that's it, Don. Alan Greenspan saying it's going to be painful one way or the other, but we should engage in it and get it over with now and in a few years we can feel better about the whole thing. I think it's important to understand, again it's not a widely held view, but we need everybody's views right now because sometime in the next 45 days the decision's going to have to be made.

LEMON: Yes, one on Saturday, Eastern p.m., 3:00 p.m. Eastern on Sunday, "YOUR MONEY," more of that interview. Thank you, Ali. Appreciate it.

VELSHI: Good to see you, Don.

LEMON: Good to see you as well. Air raid sirens, rocket attacks and an attempted cease-fire, the situation in the Middle East seems to be deteriorating by the hour. And the prime minister of Egypt may be the last hope for a truce between Israel and Hamas militants.


LEMON: Countries across the Middle East are closely watching Egypt for its leadership on this escalation of violence between Israelis and Palestinians. Egypt's Prime Minister Hisham Qandil arrived in Gaza today as dozens of Israeli rockets rained down on Gaza City.

Qandil toured a hospital as a ceasefire schedule for his visit failed. Soon after the prime minister touched down in Gaza, Egypt's President Mohamed Morsy appeared on state TV.


PRESIDENT MOHAMED MORSY, EGYPT (through translator): We support the people of Gaza. We are with them in their trenches. What hurts them hurts us and the blood that flows from their children is our blood too.


LEMON: Let's go now to Cairo and Reza Sayah, he joins me now. Reza, Egypt condemns the Israeli attacks, but so far says it will not break a longstanding agreement with Israel. So what kind of bind is Egyptian President Morsy in over this conflict?

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Well, he certainly has to walk a tight rope and Mohamed Morsy, the Egyptian president is learning very quickly how difficult it is to be the president of Egypt.

Here is why the situation is packed with so much drama and intrigue. For more than 30 years, Mohamed Morsy, a member of the Muslim Brotherhood and the Muslim Brotherhood movement were on the outside looking in when it came to this Israeli/Palestinian conflict. They didn't have much of a role under the Mubarak regime.

But then came the revolution, in came the Muslim Brotherhood, very influential in this current government, with the promise that they're going to change things, that they're no longer going to tolerate and put up with Israeli aggression and oppression of the Palestinians.

And this is the promise that they have made so far. They have delivered a lot of rhetoric, condemnation, but it seems like that's all they're doing at this point. They haven't taken any steps that could be viewed as aggressive and extreme.

That comes as a relief to the U.S. and Israel, but certainly a lot of people are going to be watching Egypt to see what they do in the coming days and weeks.

LEMON: Would their involvement escalate the situation?

SAYAH: At this point, it doesn't look like it is escalating the situation. It looks like they're making a number of diplomatic moves, to make an effort to show the world they want to be an effective peacemaker.

But this example, the diplomatic move to Gaza today, the delegation, that failed. The escalation or the violence continued, so at this point it looks like they want to play the role of the peacemaker.

They haven't escalated matters and, again, it is a relief to the Israeli government and the U.S. government.

LEMON: Reza Sayah reporting. Thank you, Reza. Coming up here on CNN, a train slammed into a parade float full of wounded war veterans in Texas. Now federal investigators are on the case.


LEMON: In Midland, Texas, an investigation is under way after a train slammed into a parade truck carrying military veterans. Four veterans were killed, 17 injured yesterday when the train crashed into the flatbed truck.

It was filled with wounded veterans who were being honored for their service. Jenny Anderson from our affiliate KMID talked with witnesses about the horrifying scene.


ESERVANDO WISLER, WITNESS: I just saw people under the train. There was blood all over there.

JENNY ANDERSON, KMID REPORTER (voice-over): Eservando Wisler and his two siblings say they saw the terrible train accident unfold right before their very eyes.

WISLER: I heard a big car crash, whatever and I came over here to see, and there was a car accident.

DEARL TRUEX, WITNESS: I heard the noise. I said it sounds like somebody got hit.

ANDERSON: Dearl Truex and Brenda Nichols were four homes down from the train intersection and tell us they were watching the veterans drive by in the hunt for heroes parade.

UNIDENTIFIED FEMALE: We saw them go by.

TRUEX: We waved at them.

ANDERSON: The two say they could hear the horn of the approaching train, but didn't see the guardrail come down to block the intersection.

TRUEX: I didn't see the guardrail down.

ANDERSON: As emergency groups rushed to help the victims, several witnesses ran to the wreckage and tried to help any way they could.

TRUEX: It's Pretty sad.

BRENDA NICHOLS, WITNESS: It is very sad. I've said prayers for several people.


LEMON: You heard one witness say he didn't see the guardrail come down before the crash, but a spokesman for the railroad company said the gate and the lights were working. Officials are working to confirm that.

Diplomats say Iran may be just months away from having everything it needs to develop a nuclear weapon. In a report reveals major concerns about what the Iranians are doing underground in a bunker. That's next.


LEMON: Let's go Globe Trekking, shall we? A U.N. nuclear watchdog agency says Iran is not cooperating enough on its nuclear program. In a 13-page report the agency says therefore it can't conclude that Iran's nuclear program is for peaceful purposes.

Matthew Chance now live in London. Matthew, how exactly is Iran defying the nuclear inspectors?

MATTHEW CHANCE, CNN CORRESPONDENT: Well, a couple of ways it's been defying them over the last several years. This is just the latest report, the last one this year, in fact, by the U.N.'s nuclear watchdog agency, the IAEA into Iran's nuclear activities.

They continue to criticize Iran for its failure to answer questions about the alleged military dimensions of Iran's nuclear program. They continue to criticize Iran for failing to give it access to nuclear scientists, and to some particular sites that the U.N. inspectors want to take a look at, to see what took place there.

I think the issue that is of most concern, though, in this latest report according to U.S. and western diplomats that I've spoken to is the fact that over the past three months or so, Iran appears to have increased its capacity to enrich uranium.

Nuclear material needed to build a nuclear bomb to the point where it effectively doubled its capacity in a secure underground bunker, which is built inside a mountain to prevent it from being hit by air strikes.

And that's something very worrying for diplomats and observers of the situation, of course, it means if it chose to, Iran could build enough material to build a bomb much quicker than it could previously -- Don.

LEMON: Absolutely, Matthew Chance, thank you for that report. We appreciate it.

Just how bad was superstorm Sandy? We have new video to show you from the moment the floodwaters spilled into a subway station.

Plus, it is the end of a snack food era. As I cry in my soup right now, ahead, the Hostess brand shutting down its doors for good. The company officials say it could have been avoided.


LEMON: I want you to take a look at this because it's some incredible new video that I want to show you. It's the moment Sandy's floodwaters surged through a subway station. Here it is. This is Hoboken, New Jersey. That's a Hoboken, New Jersey station. We can see now just how quickly waters gushed through. Ticket machines, garbage cans almost fully submerged in corrosive saltwater.

That station and others are still out of action as pumping continues in subway tunnels in New York City and, of course, New Jersey.

You know, it has been 18 days since that storm battered the east coast and thousands of homes are still without electricity. Why did so many people lose power and what might be done to prevent that problem from happening again?

CNN's Tom Foreman tells us in this week's "Building Up America."


TOM FOREMAN, CNN CORRESPONDENT (voice-over): For all the angry people still without power after Sandy, there may be few more frustrated than a man who lives hundreds of miles away.

He's with the American Society of Civil Engineers, his name is Otto Lynch and he is certain the storm's impact did not have to be so bad.

OTTO LYNCH, AMERICAN SOCIETY OF CIVIL ENGINEERS: No, the damage did not have to be this bad at all. With a little better planning, we could have certainly eliminated much of the damage.

FOREMAN: What he's talking about is the subject of some highly advanced research at Georgia Tech, a lowly but critical part of the electrical grid, the power pole.

REGINALD DESROCHES, GEORGIA TECH PROFESSOR: It is focused on trying to get a better understanding of the vulnerability of some of these wood poles as they're exposed to in this case extreme wind loads.

FOREMAN: Specifically researchers are studying what makes a power pole break, its age, the stress from wind, water, ice or flying debris. Combine all that with weather patterns and they are creating a comprehensive map of tens of millions of poles so utility companies can replace vulnerable ones before big storms hit.

MIROSLAV BEGOVIC, GEORGIA TECH INSTITUTE: It is important to identify which ones are the most compromised and how to direct those funds without wasting huge sums on unnecessary treatments and unnecessary replacements.

FOREMAN: Others believe the National Electrical Safety Code should be rewritten to require more robust poles, especially where powerful storms are likely.

(on camera): Lynch insists that would cost less than $100 per pole, and he says if such measures had been put into place years before Sandy came calling, he estimates power losses might have been half as bad.

LYNCH: Even if it is just 25 percent, that's 25 percent less people that didn't lose power.

FOREMAN (voice-over): And in a tough economy, building up America begins with keeping the lights on. Tom Foreman, CNN, Washington.


LEMON: Speaking of America, an American classic, there it is. Bad news for the lovers of the Twinkie and other Hostess goodies, the company is shutting down. Find out what this means for the iconic brand and thousands of jobs as well.


LEMON: Boy, nothing sweet about this one. Hostess brands shutting down for good, after striking bakers refused to return to work. Hostess makes a slew of treats that we all grew up with.


UNIDENTIFIED MALE: Hostess snack cakes, now fortified with body building vitamins and iron, like Hostess Hohos.


LEMON: Body building vitamin and iron and sugar, Hohos, Snowballs, Ding Dongs, those chocolate cupcakes with the white squiggle on top and the what the heck is in it icon of junk food, the Twinkie, of course.


UNIDENTIFIED MALE: Are you all right?

UNIDENTIFIED MALE: What do they put in these things anyway?

UNIDENTIFIED MALE: Sugar enriched flour, partially hydrogenate d vegetable oil.

UNIDENTIFIED MALE: Just everything a growing boy needs.


LEMON: You don't want to know what's in them. Just eat them. Don't look at the label. A little Twinkie history now from CNN's Alison Kosik.


ALISON KOSIK, CNN BUSINESS CORRESPONDENT (voice-over): Following a nasty labor dispute and almost a year in bankruptcy, Hostess brands is closing its 33 bakeries, more than 500 distribution centers and selling off its assets putting the future of the 82-year-old Twinkie in question. It has been a long road for the cream-filled pastry, now part of the American lexicon.

The Twinkie was born in 1930 in Illinois, and inventor James Duer was looking for a way to use the continental baking company's pans year round.

He came up with a yellow sponge cake filled with banana cream. But during World War II, banana rationing forced the company to change to vanilla cream filling. The replacement was so popular, it never changed back.

Over the years, the Twinkie became part of the American popular culture. In the 1950s, the "Howdy Dooty" show host, Buffalo Bob gave it an endorsement.

UNIDENTIFIED MALE: What do we have? Hostess Twinkies.

KOSIK: In the 1980s, the "Ghostbusters" movie used the Twinkie to describe the level of ghostly activity in the New York area.

In the 1990s, there was a presidential endorsement as President Bill Clinton included a Twinkie in the millennium time capsule.

In the YouTube age, we have seen the Twinkie put to the test, for shelf life, toughness and microwavability. But now the Twinkie needs someone to come to its rescue or we'll have to say goodbye to the Twinkie for good.


KOSIK: So sad. I need a tissue.

LEMON: I know. I know. I know. So, Alison, nice job on that, I like the look back and the music. So walk us through what is happening. A lot of people are out of work, we're lamenting about the Twinkie being gone, but a lot of people are losing jobs.

KOSIK: Yes, there is a serious side, 18,500 people, that's a lot of people. They're losing their jobs. Hostess, you go on the web site, it says, look, we're closing our doors.

At this point, what they're doing, Don, they're asking for access to $75 million to go toward winding down the biz and that includes money to pay its employees it needs to liquidate.

It is going to be keeping its doors open and a few employees on long enough to get the last remaining product out the door to the stores and, you know, though the fate of one of America's favorite snack foods is at risk, the brands.

Believe it or not, they could survive, meaning the Twinkie could come back, because you have to believe that some big food maker is going to swoop down and sort of be the white knight and save the Twinkie. It could happen.

LEMON: Of course, a Twinkie, it's like Tang, Coca-Cola and CNN, iconic American brands. What about the Dawnets? That was one of my favorites, for the name.

KOSIK: Sorry, which one?

LEMON: The Dawnets, part of the brand.

KOSIK: God, you know what --

LEMON: Send me some. Google it.

KOSIK: There was -- which one, I have somebody in my ear.

LEMON: Dawnets. It is called the Dawnets, no worries.

KOSIK: I don't know that one. I know the Hohos and the Ding-Dongs.

LEMON: Alison, always a pleasure. Have a great weekend, my dear. Thank you very much. Appreciate it.

KOSIK: Sure.