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White House Reacts Favorably to Pakistan's Ban on Militancy

Aired January 12, 2002 - 16:06   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.
CATHERINE CALLAWAY, CNN ANCHOR: Pakistan is banning four militant Islamic groups, including two blamed for the deadly December attack on India's Parliament. Pakistan's president, General Pervez Musharraf, announced the action today, saying that his country would not tolerate extremism and terrorism. But the general warned Pakistan would not budge from its support of independence for Kashmir, the disputed region, which is of course split by a line of control between India and Pakistan.

India hasn't responded officially to the speech. Indian sources, however, tell CNN that Musharraf's announcement would not ease the tensions between those two countries.

And for the Bush administration's take on his speech and the day's other pressing matters, let's go right to CNN White House correspondent Kelly Wallace. Kelly, any reaction yet from the president?

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Yes, Catherine. In fact, we got reaction just about a half hour ago. The reaction coming from Secretary of State Colin Powell, in a written statement. The secretary welcoming the speech by the Pakistani leader, and the statement going onto to say, quote: "He has taken a bold and principled stand to set Pakistan squarely against terrorism and extremism, both in and outside of Pakistan."

The secretary's statement goes on to praise President Musharraf for saying he is willing to engage in dialogue with Indian Prime Minister Vajpayee. The secretary saying in light of the speech and in light of recent steps taken by the Pakistani leader, that the United States believes, quote, "the basis exists for the resolution of tensions between India and Pakistan through diplomatic and peaceful means."

So certainly this administration hoping the two countries can resolve their differences through diplomacy and obviously not through conflict. The secretary will be leaving on Tuesday, in fact, for a visit to the region, to Southeast Asia, to meet with Indian and Pakistani officials, again to try and move these two countries away from the brink of war.

Now, Catherine, in another matter a bit closer to home, another development regarding the controversy surrounding Enron, that is a large energy company which became the largest company to file for bankruptcy in U.S. history back in December. CNN has learned that Democratic Congressman Henry Waxman has written a letter today to Enron's CEO and Chairman Kenneth Lay. In fact, we have obtained a copy of that letter.

And in this letter, Waxman is raising some questions about Lay's e-mails, e-mails that Lay apparently sent out to Enron employees back in August. In one of those employees, Mr. Lay talks about how the stock price has suffered substantially, but he goes on to say: Our performance has never been stronger, our business model never been more robust. And Waxman is saying that these e-mailings, if, in fact, they are true, they went out just about two months before Mr. Lay was on the phone with two Bush cabinet secretaries saying the company was in dire financial straights.

So Waxman is pressing Lay for answers about exactly what he knew back in August when he sent these e-mails out. Waxman is also pressing the administration for more answers about its contacts with Enron executives, what the administration knew and when it knew it.

But Catherine, the word from the White House continues to be that no one in the Bush administration acted inappropriately, that the two cabinet secretaries who had been contacted and a top Treasury Department official who also had been contacted, that they all acted appropriately, that they did not step in and intervene in any way to help bail out Enron. And that was the message coming from the president's top economic adviser on this day, Lawrence Lindsey, who himself served as an adviser to Enron before joining the Bush White House.

(BEGIN VIDEO CLIP)

LAWRENCE LINDSEY, BUSH ECONOMIC ADVISER: It is not crony capitalism. In America, when a company makes a mistake, even when it is a big company, even when it is well politically connected, that that company bears a responsibility for its decision.

(END VIDEO CLIP)

WALLACE: And one other thing that the Bush administration revealed on Friday: It said that a Democrat, a former Clinton administration official, former Treasury Secretary Robert Rubin telephoned a top Treasury Department official late last fall as well, to inquire if the Bush administration planned to intervene, and that that official said no, the United States government would not step in, and that Rubin apparently said that was a reasonable position.

Again, Catherine, U.S. officials wanting to say that Enron executives and others lobbied the Bush administration to step in, but that this White House chose not to do that -- Catherine.

CALLAWAY: And the Democrats aren't wasting any time, are they? But isn't it a little early in the game here to make political hay out of this Enron situation?

WALLACE: Well, it is early. Of course it's January, the elections are not until November, and the Democrats facing a delicate balancing act, because Democrats also received contributions from the Enron corporation, Democrats in the House and Democrats in the Senate.

Also, Democrats strategists I talked to -- Democrats don't want to appear too partisan, especially taking on a very popular president at a time when the country is engaged in a campaign against terrorism. So Democrats have a balancing act here. The Democrats I talked to say they are going to let congressional investigators take over, but they are going to raise this issue as an example of how Democrats say this White House is much tied more closely to big business and corporations, much more a champion of special interest than the little guy -- Catherine.

CALLAWAY: All right, CNN's Kelly Wallace. Thank you, Kelly.

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