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CNN Live Saturday

Carlos Watson Discusses Kerry's VP Shortlist; Colin Powell Talks At World Economic Forum To Hostile Reviews

Aired May 15, 2004 - 16:30   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.


BETTY NGUYEN, CNN ANCHOR: New poll numbers out today for President Bush. Are they numbers he's likely to be happy about?
And on the political trail, the veep stakes is on. Who will John Kerry choose. We don't know right now, but our Carlos Watson has his own short list.

Hello and welcome to CNN LIVE SATURDAY. I'm Betty Ngueyn. Also ahead, are you really prepared for higher interest rates? Should you buy a house, a car, change your 401(k) plan? Well, e-mail your questions to dollarsigns@CNN.com. Or you can call us at 1-800-807- 2620, but don't call now, we'll have to put you on hold for a half hour. Dollar Signs starts at 4:30 p.m. Eastern.

Three people died when a steel girder fell from a highway overpass under construction near Denver. The 40-ton beam landed on a van traveling east on Interstate 70, slicing it in half and killing everyone inside. The girder was put in place Tuesday. An investigation is under way.

Secretary of State Colin Powell is in Jordan where he attended a meeting of the World Economic Forum. His speech focused mainly on Iraq, and the prisoner abuse scandal, which he called deeply disturbing. Earlier he held what he called constructive talks with Palestinian prime minister Ahmed Qorei about the peace process in Israel.

Officials with the U.S.-led coalition in Afghanistan say they're now investigating a second case of alleged detainee abuse there. That follows allegations this week by an Afghan police colonel who says he was beaten and humiliated while in coalition custody. A U.S. military commander says new policies are being issued in response.

South Africans are celebrating a milestone for their continent. The country has been chosen to host the 2010 World Cup Soccer finals. And the first african nation to receive the honor. Officials say the games will create more than 150,000 new jobs and pump half a billion dollars into South Africa's economy.

We begin now with President Bush taking stock of another difficult week in Iraq. In his radio address today, the president saluted U.S. troops, and vowed to stay the course against insurgents. But new polls suggest Iraq is taking a heavy toll on his approval rating. It's hit an all-time low in the latest "Newsweek" poll. 42 percent approve the job the president is doing, but for the first time since he took office, a majority, 52 percent disapprove. Those numbers are even lower than in the latest CNN TIME poll. That survey found a 46 percent approval rating for President Bush. 49 percent say they disapprove of how he's handling his job.

CNN White House correspondent Suzanne Malveaux joins us with the latest. Hi, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hello, Betty. It's Armed Forces Day, and President Bush is spending some time to pay tribute to fallen police. But also, of course, the Bush administration fully engaged in trying to assess the political fallout of this past week, the prison abuse scandal as well as the beheading of an American civilian inside of Iraq.

There are many questions now. Some people asking whether or not it was worth it to go into Iraq in the first place. President Bush today using his weekly radio address to make the case.

(BEGIN AUDIO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There's only one way to deal with terror. We must confront president enemy and stay on the offensive until the killers are defeated. And this is precisely what our armed forces and the forces of our coalition are doing.

(END AUDIO CLIP)

MALVEAUX: The White House strategy now, of course, is to try to show that those who are accountable, who are guilty for this prison abuse scandal, will actually be held account yanl. We know that President Bush will be making that case here.

But also, National Security Adviser Condoleezza Rice in Russia making that case. Secretary Powell meeting with Arab leaders, world leaders in Jordan, also to make that case. Countering what Bush's opponent Senator Kerry said, he thinks is responsible and criticizes the Iraq policy.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: Our heads bow, our hearts ache over what a small number of them did at that prison.

(END VIDEO CLIP)

(BEGIN AUDIO CLIP)

SEN. JOHN KERRY, (D-MA) PRESIDENTIAL CANDIDATE: We have a duty to guarantee that when mistakes are made, those responsible are held accountable whether they are at the bottom of the chain of command or at the top.

(END AUDIO CLIP)

MALVEAUX: And Betty, of course, the question here is, just who is going to be held responsible when it's all said and done. The Bush administration looking at the long-term, certainly hoping this does not affect the president's reelection bid. But as the latest polls show, it certainly seems to have a short-term impact -- Betty.

NGUYEN: It sure has. Suzanne Malveaux at the White House, thank you.

Americans and Iraqis continue to die in Iraq. Five U.S. troops have lost their lives since Friday, three of them in combat. Meanwhile, more than 40 insurgents have been killed, 21 of them in the Baghdad area.

Also in the Iraqi capital, a mortar landed on a warehouse causing a huge blaze. The building stored fabrics and electrical goods. In Najaf, fighting continues despite efforts to reach a peace agreement. In one incident, 6 mortar grounds landed near the provincial governor's building. The city is the stronghold of radical Shi'ite cleric Muqtada al-Sadr. Coalition spokesman today repeated nonnegotiable demands for him and his militia.

(BEGIN VIDEO CLIP)

DAN SENOR, COALITION SPOKESMAN: Our goal has been clear for some time, Muqtada al-Sadr must face justice. Muqtada al-Sadr must disband and disarm his militia. Period. End of issue.

We have been saying it from the day the situation unraveled a number of weeks ago. Muqtada al-Sadr must face justice and he disband and disarm his militia.

(END VIDEO CLIP)

NGUYEN: And in Mosul, a mortar or rocket-propelled grenade struck a group of Iraqi civilians. They were lined up outside an army recruitment center. Four people were killed, 15 were wounded.

Back in the U.S., several of the soldiers charged in connection with the prisoner abuse scandal in Iraq face court-martials next week. Now the military is changing some of its interrogation rules. CNN's Kathleen Koch joins us now from the Pentagon with all those details. Hi Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: Hi, Betty. Basically U.S. forces in Iraq have been put on notice that the rules of the interrogation game, as of now, have been changed. And this comes after a very intensive review of the accepted interrogation techniques by the commander of forces in Iraq, General Ricardo Sanchez.

And he announced that these tactics: hoodings, sleep deprivation, keeping prisoners in stressful positions for long periods of time, among some of them, they are now all barred.

Now, those types of interrogation procedures had been allowed previously, just as long as the commanding general had given prior approval.

Assurances came today in Baghdad that those abuse cases at Abu Ghraib prison are being dealt with swiftly. Top military spokesman in Iraq pointing to the courts-martial that begin next week as an example of how well the U.S. military system is meeting out justice.

(BEGIN VIDEO CLIP)

BRIG. GEN. MARK KIMMITT, U.S. ARMY: We conducted other investigations. And more investigations. So, I think when we look back in a couple of years, will we be proud of what happened at Abu Ghraib? Absolutely not. But will we be proud of the actions we took upon discovery of the abuse, how it was investigated, and how it was adjudicated through the legal system? I think we will be proud of that. Justice will be served.

(END VIDEO CLIP)

KOCH: First in court, in the alleged abuse cases next week, on Wednesday, will be Specialist Jeremy Sivits. He's a soldier who has pleaded guilty, offered to plead guilty, and then testify against the 6 others who are charged in the case.

Basically what he faces Wednesday is something called special court-martial. And that's similar to a misdemeanor civilian trial, where if he's found guilty he would face a penalty of not more than a year in prison -- Betty.

NGUYEN: Kathleen, they are a lot of questions around that, becuase they're saying, you know, he made a plea deal here, and that's why he's making the statements that he is making. All the other one who are accused are saying those are false statements.

KOCH: That is what we're hearing from the other defendants. Though obviously they have the options themselves of making a plea bargain, and then giving evidence, if they have evidence, against the other defendants.

But it's the same sort of situation that occurs in a civilian court, when there are a number of defendants in the same case. So something obviously that the military judges will have to sort out.

NGUYEN: It will definitely be interesting. OK, Kathleen Koch at the Pentagon, thank you.

In Gaza today, an Israeli helicopter targeted and apparently missed an Islamic Jihad leader. And just hours later, a gunship fired a missile into the home of another one of the militant group's leaders. He wasn't there, but three of his neighbors were wounded. The Israeli military says its troops destroyed an explosive lab used by militants.

A U.N. Spokesman says Israel has demolished 88 builds in Southern Gaza since Wednesday. He called the action, quote, disproportionate. But an Israeli spokeswoman said only buildings used by militants were destroyed.

Palestinian leader Yasser Arafat appeared on television today urging an end to Israeli occupation. He cited a verse from the Muslim holy book, the Koran, saying quote, "terrorize your enemy and if they want peace, let's have peace" end quote.

Arafat's speech comes as Palestinians throughout Gaza, the West Bank and the Middle East mark the nockva (ph) Arabic for catastrophe. That's the term Arabs use to describe Palestinian displacement and the founding of Israel 56 years ago. Those displaced from that war in 1948 now constitute more than 4 million Palestinian refugees.

Meanwhile, tens of thousands of Israelis have descended on Tel Aviv's main square. They're rallying in support of an Israeli pullout from Gaza. They're also hoping a strong showing will help them restart peace talks with the Palestinians.

Israel's Gaza pullout plan, proposed by Prime Minister Ariel Sharon was rejected by his right wing Likud Pary, but polls show a solid majority of Israelis favor the plan. This week's killing of 13 Israeli soldiers and 31 Palestinians in Gaza have deepened support for withdrawal.

In Jordan, a three-day world economic forum is focusing on Iraq. reform and efforts to restart Palestinian-Israeli peace talks. CNN senior international correspondent, Walter Rodgers is live at the Dead Sea Resort in Jordan with all the details. Hi, Walter.

WALTER RODGERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hello, Betty. This conference was supposed to focus on economic stimulation and growth in the Middle East, how to jump start stagnant economies where the growth rate is about zero. Still, as with everything else in the Middle East, politics got in the way, and eclipsed everything else.

(BEGIN VIDEOTAPE)

RODGERS (voice-over): The U.S. Secretary of State got star billing at the World Economic Forum in Jordan, but Colin Powell's presentation and defense of the Bush administration's Middle East policies received poor reviews, some said it was a flop. It did not help having to begin by telling Arab officials of America's shame and contrition over the abuse of Iraqi prisoners.

POWELL: Our heads bow, our hearts ache over what a small number of them did at that prison. There's no excuse for that.

RODGERS: Privately, many here suggested it may be a decade before America can regain its lost moral authority. That did not stop Secretary Powell from urging Middle East governments to embrace genuine Democratic reform of their political systems. But even friends, like Jordan's King Abdullah told Powell the blueprint is not likely to fit the Arab world.

KING ABDULLAH, JORDAN: For reform to succeed, it must emerge from within our societies and not from external influence.

RODGERS: In an earlier meeting with Palestinian officials, the secretary vowed the Bush administration is now serious about restarting the Israeli-Palestinian peace process. That, too, fell flat. UNIDENTIFIED MALE: The Bush administration has made several attempts to create a peace process, and then abandoned each one of them.

RODGERS: This was a tough audience. Many were, according to State Department sources, angry. Knowing this, Secretary Powell substantially revised his prepared speech at the last minute, still he was castigated.

UNIDENTIFIED MALE: In its totality, when people look at it emotionally and politically, it will be insulting in this region. Insulted by an American official in here, giving us the same old lines that are not believed, that are not believed, that are not credible.

(END VIDEOTAPE)

RODGERS: Secretary Powell came to the region to placate the Arab world after recent American embarrassments. But privately, Arab officials say nothing short of bold initiatives: the White House restarting the Israeli-Palestinian peace process, is going to convince most Arabs that America's heart is in the right place -- Betty.

NGUYEN: Powell today called the meetings constructive. Are you seeing any real progress there? We just heard about the anger on some parts.

RODGERS: The anger is very real. And in terms of it being a constructive meeting, that's a diplomatic code word, meaning that both sides got to air their views reasonably well. When I spoke with one leading Palestinian official about this appearance by the American secretary of state, and what the Palestinians could expect, they said, look, this is an election year in the United States, and we know we're all always going to take it and be the villains when an American president is running for reelection.

NGUYEN: CNN senior international correspondent Walter Rodgers, thank you very much.

Some California students apparently got an unexpected lesson in a brutality of war. And now it's got some teachers in hot water. That story still to come

Plus up next, John Kerry's on the hunt for a running mate. Carlos Watson fills us in on those top contenders.

And coming up in less than half an hour, pundits say higher interest rates are on the way. Do you want to know how to prepare? Well just e-mail your questions to dollarsigns@CNN.com, or call us at 1-800-807-2620. We'll be right back.

(COMMERCIAL BREAK)

NGUYEN: The race for the White House is heating up and so is speculation about who John Kerry will choose as a running mate. Joining us to talk about the so-called "Veep Stakes" is CNN political analyst is Carlos Watson. Hi there Carlos. CARLOS WATSON, CNN POLITICAL ANALYST: Betty, how are you?

NGUYEN: I'm doing terrific. Let's get right down to it. Who has the inside track?

WATSON: You know, John Kerry's got a difficult decision. And right now no one's got the inside track. He's got at least four potential strategies he could use in order to choose a vice president.

One, he could decide to look at a particular state, and therefore make a regional choice. Maybe going after someone in the Midwest or the Southwest.

Two, he can decide to emphasize a theme, perhaps national security or even the economy. And that would offer a different set of choices.

Third, he could just choose somebody he's comfortable with. And that's similar to what President Bush did in 2000 when he chose Dick Cheney.

And last, but not least, is what I call the hail mary choice, where you're down by ten points and you choose someone who's going to help energize the base, even if they disagree with you on several key points.

NGUYEN: OK, with all of that said, who's in the running then?

WATSON: A couple of key people, I think John Edwards and Dick Gephardt, two of the vanquished opponents from early in the primary season have to be considered some of the leaders.

I think recently Bob Kerrey, the former Senator from Nebraska, who's been on the 9/11 commission. And is a Vietnam War hero himself. General Wesley Clark, you know, he and John Kerry just got together with a private meal and there's a lot of speculation there.

And last, but not least, you're hearing a lot about John McCain, including several big articles recently. And that would be a very different ticketed than we've seen before, where, obviously a Democrat at the top and Republican on the bottom.

NGUYEN: But Senator McCain said last week that he's not interested. Is that just a lot of talk?

WATSON: Well, unless you believe in Shakespeare and you say he doth protest too much. I think we won't know until people are asked. Frequently we've been surprised.

In fact, Betty, six of the last seven choices have been surprises. No one thought that Dick Cheney would have been chosen in 2000, because he was in charge of the process. No one thought that Joe Lieberman would have been chosen. He was a surprise. Jack Kemp, was a surprise. Dan Quayle, Geraldine Ferraro.

So, over the last 20 years, 6 of the 7 people who have been chosen have been surprises. And I wouldn't be surprised this year to see someone like Tom Vilsack, the Governor of Iwoa be yet another surprise choice.

NGUYEN: All right. You watched all of this. So, in your eyes, who do you think is the best candidate?

WATSON: Well, I think Betty Nguyen would be No. 1.

NGUYEN: My credentials are great, let me tell you.

WATSON: I think you're an extraordinarily interesting choice that's unlikely. So, I think, if you were to ask me and I had to bet today, I would say John Edwards from North Carolina, the Senator from North Carolina, or I would say Dick Gephardt, who would help you in Missouri.

And you've got to remember that Missouri is chosen correctly in 24 of the last 25 presidential elections. So if Dick Gephardt could help you in his home state, he would be a good belt.

But I think a surprise choice would be a woman named Blanche Lincoln, a Senator from Arkansas, relatively young. It's unlikely she would be chosen, but if there was an a shocker, if there was an upset, that's who I would put my money on.

NGUYEN: All right. You're a betting man, too, so we'll see how it goes. Carlos Watson, thank you.

WATSON: Hey, if it happens, you heard it here first.

NGUYEN: That's right. We are counting on that.

WATSON: Well, the beheading of American Nick Berg was not aired by the media in the U.S., but that didn't stop some California high school students from witnesses the brutal act. Up next, you may be surprised to who allegedly hem them view the shocking video.

And coming up at 4:30 Eastern, 1:30 Pacific, preparing for higher interest rates. E-mail your questions to dollarsigns@cnn.com, or you can call 1-800-807-2620. We'll be right back.

(COMMERCIAL BREAK)

NGUYEN: The grisly video of Nicholas Berg being decapitated in Iraq would be difficult for adults to watch. But in one California community, some high school students saw or heard all. And that's sparking more outrage. CNN's Miguel Marquez reports.

(BEGIN VIDEOTAPE)

MIGUEL MARQUEZ, CNN CORRESPONDENT, (voice over): It is the video and the act that shocks the nation. An American in Iraq beheaded in an at least two San Diego area high schools gory photos, video and audio of the beheading were heard and seen by scores of students. Parents were shocked just to hear about it. BOB, PARENT: When a child, a teacher e projects this and shows this horrific scene to a child, that's abuse. Put something in their mind. How do you get it out of the mind?

MARQUEZ: A spokeswoman for Grossmont Union High School District says video of the beheading was brought up on the Internet by a student at Elk Habaten (ph) High School. The problem says the school the teacher may have been aware that students were watching the video and allegedly allowed it to continue playing.

RICK ROBERTS, RADIO SHOW: Why did your daughter file the complaint?

UNIDENTIFIED FEMALE: She was distraught by a video that was in the classroom.

MARQUEZ: That prompted an angry protest by a parent. Not to the school district but to a local radio station.

RICK ROBERTS, TALK RADIO HOST: Most of us in the media have seen the video. I don't want to see ate second time. I don't think the classroom is a proper place do this.

MARQUEZ: As the school district began to look into the complaint investigators say that another teacher at another high school allegedly played the audio recording of Nicholas Berg's last moments and showed a photo of his severed head to four classes of 30 students each.

SUPT. PERRY RYAN, GROSSMONT SCHOOL DISTRICT: We certainly are going to explain to parents that that is not acceptable. That it is not the policy of the district.

MARQUEZ (on camera): CNN has tried to contact the teachers and the teachers union seeking their side of the story. The union will only say it is in discussions with the school district about the matter. A spokeswoman for the school district says that the district strives to keep as open an academic environment as possible. She also says an investigation is under way, statements from the students and teachers will be taken and the school board may discuss the matter when it meets on May 20.

Miguel Marquez, CNN, Los Angeles

(END VIDEOTAPE)

NGUYEN: More legal trouble for music mogul Phil Spector. That story tops our look at news across America. The legendary music producer already faces a murder charge in last year's shooting death of an actress at his Los Angeles area mansion. Police say Specter was arrested yesterday after a scuffle with his chauffeur. He was released and ordered to appear in court on June 14.

Evangelist Billy Graham is hospitalized in stable condition after falling at his North Carolina home. Yesterday's accident comes after the 85-year-old evangelist underwent hip surgery back in January. And some big baby news for Hollywood actors Gwyneth Paltrow and her singer husband Chris Martin. The couple's first child was born yesterday in London. The baby girl, weighing 9 pounds 11 ounces has been named Apple -- that's right Apple Blythe Allison Martin. I guess you could say she's the apple of their eye.

Well, it appear change is in the air when it comes to mortgage and credit card rates. Experts warn it's going to get more expensive to borrow money in the future. Next in our "Dollar Signs" segment, what do you need to do to prepare? Just send us your questions at dollarsigns@cnn.com, or you can call, 1-800-807-2620. We'll be right back.

(COMMERCIAL BREAK)

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Aired May 15, 2004 - 16:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: New poll numbers out today for President Bush. Are they numbers he's likely to be happy about?
And on the political trail, the veep stakes is on. Who will John Kerry choose. We don't know right now, but our Carlos Watson has his own short list.

Hello and welcome to CNN LIVE SATURDAY. I'm Betty Ngueyn. Also ahead, are you really prepared for higher interest rates? Should you buy a house, a car, change your 401(k) plan? Well, e-mail your questions to dollarsigns@CNN.com. Or you can call us at 1-800-807- 2620, but don't call now, we'll have to put you on hold for a half hour. Dollar Signs starts at 4:30 p.m. Eastern.

Three people died when a steel girder fell from a highway overpass under construction near Denver. The 40-ton beam landed on a van traveling east on Interstate 70, slicing it in half and killing everyone inside. The girder was put in place Tuesday. An investigation is under way.

Secretary of State Colin Powell is in Jordan where he attended a meeting of the World Economic Forum. His speech focused mainly on Iraq, and the prisoner abuse scandal, which he called deeply disturbing. Earlier he held what he called constructive talks with Palestinian prime minister Ahmed Qorei about the peace process in Israel.

Officials with the U.S.-led coalition in Afghanistan say they're now investigating a second case of alleged detainee abuse there. That follows allegations this week by an Afghan police colonel who says he was beaten and humiliated while in coalition custody. A U.S. military commander says new policies are being issued in response.

South Africans are celebrating a milestone for their continent. The country has been chosen to host the 2010 World Cup Soccer finals. And the first african nation to receive the honor. Officials say the games will create more than 150,000 new jobs and pump half a billion dollars into South Africa's economy.

We begin now with President Bush taking stock of another difficult week in Iraq. In his radio address today, the president saluted U.S. troops, and vowed to stay the course against insurgents. But new polls suggest Iraq is taking a heavy toll on his approval rating. It's hit an all-time low in the latest "Newsweek" poll. 42 percent approve the job the president is doing, but for the first time since he took office, a majority, 52 percent disapprove. Those numbers are even lower than in the latest CNN TIME poll. That survey found a 46 percent approval rating for President Bush. 49 percent say they disapprove of how he's handling his job.

CNN White House correspondent Suzanne Malveaux joins us with the latest. Hi, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hello, Betty. It's Armed Forces Day, and President Bush is spending some time to pay tribute to fallen police. But also, of course, the Bush administration fully engaged in trying to assess the political fallout of this past week, the prison abuse scandal as well as the beheading of an American civilian inside of Iraq.

There are many questions now. Some people asking whether or not it was worth it to go into Iraq in the first place. President Bush today using his weekly radio address to make the case.

(BEGIN AUDIO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There's only one way to deal with terror. We must confront president enemy and stay on the offensive until the killers are defeated. And this is precisely what our armed forces and the forces of our coalition are doing.

(END AUDIO CLIP)

MALVEAUX: The White House strategy now, of course, is to try to show that those who are accountable, who are guilty for this prison abuse scandal, will actually be held account yanl. We know that President Bush will be making that case here.

But also, National Security Adviser Condoleezza Rice in Russia making that case. Secretary Powell meeting with Arab leaders, world leaders in Jordan, also to make that case. Countering what Bush's opponent Senator Kerry said, he thinks is responsible and criticizes the Iraq policy.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: Our heads bow, our hearts ache over what a small number of them did at that prison.

(END VIDEO CLIP)

(BEGIN AUDIO CLIP)

SEN. JOHN KERRY, (D-MA) PRESIDENTIAL CANDIDATE: We have a duty to guarantee that when mistakes are made, those responsible are held accountable whether they are at the bottom of the chain of command or at the top.

(END AUDIO CLIP)

MALVEAUX: And Betty, of course, the question here is, just who is going to be held responsible when it's all said and done. The Bush administration looking at the long-term, certainly hoping this does not affect the president's reelection bid. But as the latest polls show, it certainly seems to have a short-term impact -- Betty.

NGUYEN: It sure has. Suzanne Malveaux at the White House, thank you.

Americans and Iraqis continue to die in Iraq. Five U.S. troops have lost their lives since Friday, three of them in combat. Meanwhile, more than 40 insurgents have been killed, 21 of them in the Baghdad area.

Also in the Iraqi capital, a mortar landed on a warehouse causing a huge blaze. The building stored fabrics and electrical goods. In Najaf, fighting continues despite efforts to reach a peace agreement. In one incident, 6 mortar grounds landed near the provincial governor's building. The city is the stronghold of radical Shi'ite cleric Muqtada al-Sadr. Coalition spokesman today repeated nonnegotiable demands for him and his militia.

(BEGIN VIDEO CLIP)

DAN SENOR, COALITION SPOKESMAN: Our goal has been clear for some time, Muqtada al-Sadr must face justice. Muqtada al-Sadr must disband and disarm his militia. Period. End of issue.

We have been saying it from the day the situation unraveled a number of weeks ago. Muqtada al-Sadr must face justice and he disband and disarm his militia.

(END VIDEO CLIP)

NGUYEN: And in Mosul, a mortar or rocket-propelled grenade struck a group of Iraqi civilians. They were lined up outside an army recruitment center. Four people were killed, 15 were wounded.

Back in the U.S., several of the soldiers charged in connection with the prisoner abuse scandal in Iraq face court-martials next week. Now the military is changing some of its interrogation rules. CNN's Kathleen Koch joins us now from the Pentagon with all those details. Hi Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: Hi, Betty. Basically U.S. forces in Iraq have been put on notice that the rules of the interrogation game, as of now, have been changed. And this comes after a very intensive review of the accepted interrogation techniques by the commander of forces in Iraq, General Ricardo Sanchez.

And he announced that these tactics: hoodings, sleep deprivation, keeping prisoners in stressful positions for long periods of time, among some of them, they are now all barred.

Now, those types of interrogation procedures had been allowed previously, just as long as the commanding general had given prior approval.

Assurances came today in Baghdad that those abuse cases at Abu Ghraib prison are being dealt with swiftly. Top military spokesman in Iraq pointing to the courts-martial that begin next week as an example of how well the U.S. military system is meeting out justice.

(BEGIN VIDEO CLIP)

BRIG. GEN. MARK KIMMITT, U.S. ARMY: We conducted other investigations. And more investigations. So, I think when we look back in a couple of years, will we be proud of what happened at Abu Ghraib? Absolutely not. But will we be proud of the actions we took upon discovery of the abuse, how it was investigated, and how it was adjudicated through the legal system? I think we will be proud of that. Justice will be served.

(END VIDEO CLIP)

KOCH: First in court, in the alleged abuse cases next week, on Wednesday, will be Specialist Jeremy Sivits. He's a soldier who has pleaded guilty, offered to plead guilty, and then testify against the 6 others who are charged in the case.

Basically what he faces Wednesday is something called special court-martial. And that's similar to a misdemeanor civilian trial, where if he's found guilty he would face a penalty of not more than a year in prison -- Betty.

NGUYEN: Kathleen, they are a lot of questions around that, becuase they're saying, you know, he made a plea deal here, and that's why he's making the statements that he is making. All the other one who are accused are saying those are false statements.

KOCH: That is what we're hearing from the other defendants. Though obviously they have the options themselves of making a plea bargain, and then giving evidence, if they have evidence, against the other defendants.

But it's the same sort of situation that occurs in a civilian court, when there are a number of defendants in the same case. So something obviously that the military judges will have to sort out.

NGUYEN: It will definitely be interesting. OK, Kathleen Koch at the Pentagon, thank you.

In Gaza today, an Israeli helicopter targeted and apparently missed an Islamic Jihad leader. And just hours later, a gunship fired a missile into the home of another one of the militant group's leaders. He wasn't there, but three of his neighbors were wounded. The Israeli military says its troops destroyed an explosive lab used by militants.

A U.N. Spokesman says Israel has demolished 88 builds in Southern Gaza since Wednesday. He called the action, quote, disproportionate. But an Israeli spokeswoman said only buildings used by militants were destroyed.

Palestinian leader Yasser Arafat appeared on television today urging an end to Israeli occupation. He cited a verse from the Muslim holy book, the Koran, saying quote, "terrorize your enemy and if they want peace, let's have peace" end quote.

Arafat's speech comes as Palestinians throughout Gaza, the West Bank and the Middle East mark the nockva (ph) Arabic for catastrophe. That's the term Arabs use to describe Palestinian displacement and the founding of Israel 56 years ago. Those displaced from that war in 1948 now constitute more than 4 million Palestinian refugees.

Meanwhile, tens of thousands of Israelis have descended on Tel Aviv's main square. They're rallying in support of an Israeli pullout from Gaza. They're also hoping a strong showing will help them restart peace talks with the Palestinians.

Israel's Gaza pullout plan, proposed by Prime Minister Ariel Sharon was rejected by his right wing Likud Pary, but polls show a solid majority of Israelis favor the plan. This week's killing of 13 Israeli soldiers and 31 Palestinians in Gaza have deepened support for withdrawal.

In Jordan, a three-day world economic forum is focusing on Iraq. reform and efforts to restart Palestinian-Israeli peace talks. CNN senior international correspondent, Walter Rodgers is live at the Dead Sea Resort in Jordan with all the details. Hi, Walter.

WALTER RODGERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hello, Betty. This conference was supposed to focus on economic stimulation and growth in the Middle East, how to jump start stagnant economies where the growth rate is about zero. Still, as with everything else in the Middle East, politics got in the way, and eclipsed everything else.

(BEGIN VIDEOTAPE)

RODGERS (voice-over): The U.S. Secretary of State got star billing at the World Economic Forum in Jordan, but Colin Powell's presentation and defense of the Bush administration's Middle East policies received poor reviews, some said it was a flop. It did not help having to begin by telling Arab officials of America's shame and contrition over the abuse of Iraqi prisoners.

POWELL: Our heads bow, our hearts ache over what a small number of them did at that prison. There's no excuse for that.

RODGERS: Privately, many here suggested it may be a decade before America can regain its lost moral authority. That did not stop Secretary Powell from urging Middle East governments to embrace genuine Democratic reform of their political systems. But even friends, like Jordan's King Abdullah told Powell the blueprint is not likely to fit the Arab world.

KING ABDULLAH, JORDAN: For reform to succeed, it must emerge from within our societies and not from external influence.

RODGERS: In an earlier meeting with Palestinian officials, the secretary vowed the Bush administration is now serious about restarting the Israeli-Palestinian peace process. That, too, fell flat. UNIDENTIFIED MALE: The Bush administration has made several attempts to create a peace process, and then abandoned each one of them.

RODGERS: This was a tough audience. Many were, according to State Department sources, angry. Knowing this, Secretary Powell substantially revised his prepared speech at the last minute, still he was castigated.

UNIDENTIFIED MALE: In its totality, when people look at it emotionally and politically, it will be insulting in this region. Insulted by an American official in here, giving us the same old lines that are not believed, that are not believed, that are not credible.

(END VIDEOTAPE)

RODGERS: Secretary Powell came to the region to placate the Arab world after recent American embarrassments. But privately, Arab officials say nothing short of bold initiatives: the White House restarting the Israeli-Palestinian peace process, is going to convince most Arabs that America's heart is in the right place -- Betty.

NGUYEN: Powell today called the meetings constructive. Are you seeing any real progress there? We just heard about the anger on some parts.

RODGERS: The anger is very real. And in terms of it being a constructive meeting, that's a diplomatic code word, meaning that both sides got to air their views reasonably well. When I spoke with one leading Palestinian official about this appearance by the American secretary of state, and what the Palestinians could expect, they said, look, this is an election year in the United States, and we know we're all always going to take it and be the villains when an American president is running for reelection.

NGUYEN: CNN senior international correspondent Walter Rodgers, thank you very much.

Some California students apparently got an unexpected lesson in a brutality of war. And now it's got some teachers in hot water. That story still to come

Plus up next, John Kerry's on the hunt for a running mate. Carlos Watson fills us in on those top contenders.

And coming up in less than half an hour, pundits say higher interest rates are on the way. Do you want to know how to prepare? Well just e-mail your questions to dollarsigns@CNN.com, or call us at 1-800-807-2620. We'll be right back.

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NGUYEN: The race for the White House is heating up and so is speculation about who John Kerry will choose as a running mate. Joining us to talk about the so-called "Veep Stakes" is CNN political analyst is Carlos Watson. Hi there Carlos. CARLOS WATSON, CNN POLITICAL ANALYST: Betty, how are you?

NGUYEN: I'm doing terrific. Let's get right down to it. Who has the inside track?

WATSON: You know, John Kerry's got a difficult decision. And right now no one's got the inside track. He's got at least four potential strategies he could use in order to choose a vice president.

One, he could decide to look at a particular state, and therefore make a regional choice. Maybe going after someone in the Midwest or the Southwest.

Two, he can decide to emphasize a theme, perhaps national security or even the economy. And that would offer a different set of choices.

Third, he could just choose somebody he's comfortable with. And that's similar to what President Bush did in 2000 when he chose Dick Cheney.

And last, but not least, is what I call the hail mary choice, where you're down by ten points and you choose someone who's going to help energize the base, even if they disagree with you on several key points.

NGUYEN: OK, with all of that said, who's in the running then?

WATSON: A couple of key people, I think John Edwards and Dick Gephardt, two of the vanquished opponents from early in the primary season have to be considered some of the leaders.

I think recently Bob Kerrey, the former Senator from Nebraska, who's been on the 9/11 commission. And is a Vietnam War hero himself. General Wesley Clark, you know, he and John Kerry just got together with a private meal and there's a lot of speculation there.

And last, but not least, you're hearing a lot about John McCain, including several big articles recently. And that would be a very different ticketed than we've seen before, where, obviously a Democrat at the top and Republican on the bottom.

NGUYEN: But Senator McCain said last week that he's not interested. Is that just a lot of talk?

WATSON: Well, unless you believe in Shakespeare and you say he doth protest too much. I think we won't know until people are asked. Frequently we've been surprised.

In fact, Betty, six of the last seven choices have been surprises. No one thought that Dick Cheney would have been chosen in 2000, because he was in charge of the process. No one thought that Joe Lieberman would have been chosen. He was a surprise. Jack Kemp, was a surprise. Dan Quayle, Geraldine Ferraro.

So, over the last 20 years, 6 of the 7 people who have been chosen have been surprises. And I wouldn't be surprised this year to see someone like Tom Vilsack, the Governor of Iwoa be yet another surprise choice.

NGUYEN: All right. You watched all of this. So, in your eyes, who do you think is the best candidate?

WATSON: Well, I think Betty Nguyen would be No. 1.

NGUYEN: My credentials are great, let me tell you.

WATSON: I think you're an extraordinarily interesting choice that's unlikely. So, I think, if you were to ask me and I had to bet today, I would say John Edwards from North Carolina, the Senator from North Carolina, or I would say Dick Gephardt, who would help you in Missouri.

And you've got to remember that Missouri is chosen correctly in 24 of the last 25 presidential elections. So if Dick Gephardt could help you in his home state, he would be a good belt.

But I think a surprise choice would be a woman named Blanche Lincoln, a Senator from Arkansas, relatively young. It's unlikely she would be chosen, but if there was an a shocker, if there was an upset, that's who I would put my money on.

NGUYEN: All right. You're a betting man, too, so we'll see how it goes. Carlos Watson, thank you.

WATSON: Hey, if it happens, you heard it here first.

NGUYEN: That's right. We are counting on that.

WATSON: Well, the beheading of American Nick Berg was not aired by the media in the U.S., but that didn't stop some California high school students from witnesses the brutal act. Up next, you may be surprised to who allegedly hem them view the shocking video.

And coming up at 4:30 Eastern, 1:30 Pacific, preparing for higher interest rates. E-mail your questions to dollarsigns@cnn.com, or you can call 1-800-807-2620. We'll be right back.

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NGUYEN: The grisly video of Nicholas Berg being decapitated in Iraq would be difficult for adults to watch. But in one California community, some high school students saw or heard all. And that's sparking more outrage. CNN's Miguel Marquez reports.

(BEGIN VIDEOTAPE)

MIGUEL MARQUEZ, CNN CORRESPONDENT, (voice over): It is the video and the act that shocks the nation. An American in Iraq beheaded in an at least two San Diego area high schools gory photos, video and audio of the beheading were heard and seen by scores of students. Parents were shocked just to hear about it. BOB, PARENT: When a child, a teacher e projects this and shows this horrific scene to a child, that's abuse. Put something in their mind. How do you get it out of the mind?

MARQUEZ: A spokeswoman for Grossmont Union High School District says video of the beheading was brought up on the Internet by a student at Elk Habaten (ph) High School. The problem says the school the teacher may have been aware that students were watching the video and allegedly allowed it to continue playing.

RICK ROBERTS, RADIO SHOW: Why did your daughter file the complaint?

UNIDENTIFIED FEMALE: She was distraught by a video that was in the classroom.

MARQUEZ: That prompted an angry protest by a parent. Not to the school district but to a local radio station.

RICK ROBERTS, TALK RADIO HOST: Most of us in the media have seen the video. I don't want to see ate second time. I don't think the classroom is a proper place do this.

MARQUEZ: As the school district began to look into the complaint investigators say that another teacher at another high school allegedly played the audio recording of Nicholas Berg's last moments and showed a photo of his severed head to four classes of 30 students each.

SUPT. PERRY RYAN, GROSSMONT SCHOOL DISTRICT: We certainly are going to explain to parents that that is not acceptable. That it is not the policy of the district.

MARQUEZ (on camera): CNN has tried to contact the teachers and the teachers union seeking their side of the story. The union will only say it is in discussions with the school district about the matter. A spokeswoman for the school district says that the district strives to keep as open an academic environment as possible. She also says an investigation is under way, statements from the students and teachers will be taken and the school board may discuss the matter when it meets on May 20.

Miguel Marquez, CNN, Los Angeles

(END VIDEOTAPE)

NGUYEN: More legal trouble for music mogul Phil Spector. That story tops our look at news across America. The legendary music producer already faces a murder charge in last year's shooting death of an actress at his Los Angeles area mansion. Police say Specter was arrested yesterday after a scuffle with his chauffeur. He was released and ordered to appear in court on June 14.

Evangelist Billy Graham is hospitalized in stable condition after falling at his North Carolina home. Yesterday's accident comes after the 85-year-old evangelist underwent hip surgery back in January. And some big baby news for Hollywood actors Gwyneth Paltrow and her singer husband Chris Martin. The couple's first child was born yesterday in London. The baby girl, weighing 9 pounds 11 ounces has been named Apple -- that's right Apple Blythe Allison Martin. I guess you could say she's the apple of their eye.

Well, it appear change is in the air when it comes to mortgage and credit card rates. Experts warn it's going to get more expensive to borrow money in the future. Next in our "Dollar Signs" segment, what do you need to do to prepare? Just send us your questions at dollarsigns@cnn.com, or you can call, 1-800-807-2620. We'll be right back.

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