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In the Arena

IMF Chief Held without Bail; Trump Will Not Run for President

Aired May 16, 2011 - 20:00   ET

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

ELIOT SPITZER, CNN HOST: Good evening. Welcome to the program, I'm Eliot Spitzer.

Tonight, the legal peril of Dominique Strauss-Kahn is growing deeper. The head of the International Monetary Fund may be facing a new sexual assault charge. Lawyers for French journalist Tristane Banon said she will file a criminal complaint about an incident that allegedly occurred 10 years ago. Banon caused a sensation in France when she recounted the incident on television in 2007.

Meanwhile, Strauss-Kahn is spending the night at Rikers Island, the notorious New York City jail. It's a long way from the $3,000 a night hotel suite.

We'll have a lot more on this story in just a moment. But first, a look at the other stories we're drilling down on tonight.

(BEGIN VIDEO CLIP)

SPITZER: The Arabs spring. Good news? Maybe. But not for Israel. The CIA veteran says it wasn't democracy you saw in Tahrir Square. It was Islamic fundamentalism.

And Donald Trump has been fired.

DONALD TRUMP, ENTREPRENEUR: You're fired.

SPITZER: By Donald Trump.

TRUMP: It's my decision.

SPITZER: His latest stunt may boost his TV ratings.

TRUMP: Big business.

SPITZER: But what did it do to the Republican Party?

Then diplomatic immunity? It can fix a parking ticket and a felony. E.D. Hill asks if it applies to attempted rape.

(END OF VIDEO CLIP)

SPITZER: Now for the scandal on our headliner story tonight. The scandal sending shockwaves across the world.

Let's go to Richard Roth. He joins me live outside Manhattan Criminal Court -- Richard.

RICHARD ROTH, CNN CORRESPONDENT: Right, Eliot, as you mentioned, this man, Dominique Strauss-Kahn, used to the high life. First-class airplanes, luxury hotel suites, now described as settling in on Rikers Island off Manhattan.

He was transported there after a court hearing several hours ago. A hearing which featured arguments by the prosecutor and defense attorneys for Strauss-Kahn regarding bail and could he indeed obtain it after that purple luck we had over the weekend and hours spent in police custody.

In the court, the authorities alleging six criminal counts including abuse, sexual abuse, sexual acts of violence against a hotel maid, in the Times Square hotel, the Hotel Sofitel.

Now the authorities argue that he was a flight risk, similar to Roman Polanski, the film director, someone who wouldn't return once he got to Europe.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Getting straight to the case as it now stands and the potential for additional evidence to be generated, the defendant has additional motivation to flee. We also know that the defendant has personal, political and financial resources to in fact flee in the days (INAUDIBLE).

(END OF VIDEO CLIP)

ROTH: The defense countered by saying he could put up $1 million in bail, and that he is no flight risk. That he could have stayed in a Manhattan apartment where his daughter lives.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He is presumed innocent and indeed this is a very defensible case. There are significant issues that we have already found simply with preliminary investigation and in our judgment makes it quite likely that my client will be exonerated.

(END OF VIDEO CLIP)

ROTH: The judge said she's a fair woman but she's got to treat Strauss-Kahn like any other defendant. And she said she agreed with the prosecution, Strauss-Kahn, in her opinion, was indeed a flight risk. And so now he sits at Rikers Island -- Eliot.

SPITZER: All right. Thank you, Richard for that update.

Now I'm joined by Deborah Feyerick. She has some fascinating information from a true insider Linda Fairstein, the legendary former head of the Manhattan District Attorney's Sex Crimes Unit.

Deborah, what did you learn about the evidence? DEBORAH FEYERICK, CNN CORRESPONDENT: What we're learning about the evidence is investigators in the sex crime unit, they're looking at everything right now. They're looking at the key card used to access the door, go in and out, the times that the chambermaid entered.

The times that Strauss-Kahn may have left, may have gone in and gone out. They're looking at the mini bar to see if perhaps maybe alcohol was a factor in all of this. They're looking at even whether he rented any adult films, pornography. Whether that played a role.

All of this right now under investigation. Think about it, this is a man who polls show could have been president of France. Instead, he may have been taken down by a chambermaid.

(BEGIN VIDEOTAPE)

FEYERICK: Linda Fairstein, you were head of the Sex Crimes Unit for the Manhattan District Attorney's Office for 26 years. A very quick check of hotel records would have discovered who was in that room. Still, detectives, investigators, special units, they did not blink in going after him.

LINDA FAIRSTEIN, FORMER HEAD OF MANHATTAN D.A.'S SEX CRIMES UNIT: They're taught to take every victim -- to start by believing that everyone coming forward is telling the truth.

Are there exonerations? Are there cases that where the crime has not happened? Absolutely. And they would be able to work that out, I think as well. But here, the beauty is that this woman reported immediately, which is not always a factor with sexual assault victims.

The police were called in immediately. Uniform cops refer it to these very specialized and specially trained detectives. And it seems from the outside at this point that everything was done right, most especially crediting the victim.

FEYERICK: You have a hotel worker going up against one of the most powerful men, the head of the International Monetary Fund. What sort of evidence needed to be met for police to believe that something in fact did occur?

FAIRSTEIN: That's a great question. Obviously, body fluids and where it is. If it's on the bed of the alleged offender may not be terrifically significant. If it's on the clothing of the victim, and I don't know where it is, that's going to be awfully significant.

Most hotels in this day and age have cameras in corridors. Is there tape of this woman leaving the room? What condition was she in, both in clothing disarray and emotional distress? What condition was he in when he left the room if these things are filmed?

FEYERICK: Will this lady have to testify?

FAIRSTEIN: Oh, yes, this case is entirely based on the testimony of the young lady who made the complaint. This case could not proceed without her.

FEYERICK: Investigators and police went immediately to the airport to get him off the plane. Is that an extraordinary measure?

FAIRSTEIN: If the Special Victims Unit detectives had probable cause, meaning a witness who they believe, who told the truth, made an immediate outcry, found evidence to support it which is not needed but icing on the cake, then they did the only thing that they could do which was stop this man before he left the country.

FEYERICK: This young lady has to be terrified.

FAIRSTEIN: This is what they're so good at. The detectives whose pictures I saw in the paper today, one of them I've worked with for more than 20 years. He's not only a great detective, they're just the nicest guys in this business. They are chosen not only for skilled detective work but because they have a manner to handhold scared witnesses through this process.

(END VIDEOTAPE)

FEYERICK: Now Strauss-Kahn's lawyer says that he plans to plead not guilty.

Keep in mind, Eliot, that Fairstein says that in fact probably a new bail package will be presented so that he will be able to get out, just not right now because of the evidence that was presented just today.

SPITZER: You know, it's kind of remarkable that somebody of this stature is now sitting in Rikers Island. Folks should know that's what happens to defendants when the judge says remand. They go to Rikers and they can sit there for weeks and that is what's going to happen to Dominique Strauss-Kahn unless somehow they overturn this judge's determination, that he's not a flight risk.

FEYERICK: Also --

SPITZER: Flight to run.

FEYERICK: This is really just the beginning of the process as you know. Right now, she had to make an immediate decision. What do we know and what judgment can we make? She said, because he was on a plane, he was planning on leaving that she really had no choice but to make sure that he stayed.

What's going to happen now is they're going to present a totally different bail package. The amount of money, who's going to vouch for him, whether he can get an electronic bracelet, all those kinds of factors. And then she'll make sort of another determination. Still has to go to a grand jury. They still have to find whether in fact this can be brought to trial, whether there's enough evidence.

So --and this is a guy right now who is in jail, whose reputation is not only on the line, but now he's basically got to reclaim it -- his reputation. SPITZER: Well, as a prosecutor for many years, I can tell you the pressure is now on the prosecution to come forth with an indictment based upon grand jury admissible evidence. But the defense, in their argument in front of the judge, we're talking about an alibi. What do we know about the alibi, how strong is it, and because obviously an alibi in a case like this could shoot a hole right through the whole case.

FEYERICK: Well, that's right. That's what we didn't hear in court today. His lawyer does say that, you know, that the forensic evidence will not be consistent with the kind of attack that's being alleged in this initial criminal complaint.

What does that mean? Well, that's what Brafman is going to have to prove. But we -- what we're learning now is that apparently he had lunch with somebody in the nearby area. That the reason he was rushing was because he had to get to the airport.

We're also told that in fact this was an itinerary he had planned for weeks. That it wasn't that he just ran to the airport to get out the country. That in fact he was hurrying because he had to check out of the hotel, go for lunch and then go to the airport. He also forgot his cell phone.

And so, in a way, he's the one who led investigators to him because he called the hotel, called security, and he said, I think I left my phone. Can you bring it to the airport? So he even told a stewardess that in fact, you know, by the way, I'm probably going to get paged because they're bringing my phone to him. Well, when they came, they were certainly not bringing his phone to him.

SPITZER: Yes, I think that -- actually that was a setup. I think the hotel arranged for the person he called to set him up.

You know what? Ben Brafman, his lawyer, is a powerhouse lawyer. I can tell you, this is going to be a battle royale if it goes to trial.

FEYERICK: Absolutely.

SPITZER: Fun viewing, not fun for anybody else.

FEYERICK: Absolutely.

SPITZER: A tragedy from every perspective.

All right, fascinating stuff. Thank you, Debra.

FEYERICK: Of course.

SPITZER: Now to the question of who exactly Dominique Strauss- Kahn is. A short while ago, I spoke with two prominent journalists who'd covered him for years.

SPITZER: For more on this, I'm joined by Reuters global editor at large, Krista Freeland who's in London and Chris Dickey, Paris bureau chief and Mideast editor of "Newsweek" magazine and the "Daily Beast." He's in Paris tonight.

Thank you both for joining me.

KRISTA FREELAND, REUTERS GLOBAL EDITOR-AT-LARGE: Great to be here.

CHRISTOPHER DICKEY, NEWSWEEK PARIS BUREAU CHIEF AND MIDEAST EDITOR: Pleasure.

SPITZER: Chris Dickey, let me go to you, does the behavior he's been charged with surprise you or anybody else who has followed his career?

DICKEY: It doesn't surprise anybody who's followed him in his career that he's interested in women, very interested, and thinks that he's the great seducer.

It certainly surprises people that any kind of incident involving him would take this kind of apparently violent turn. And of course, all these allegations have yet to be proven. But there's one thing to be a skirt chaser, and everybody thought that he was one of those. It's another thing to be accused of criminal sexual assault and attempted rape.

That's a whole different ball game. And I think everybody is just stunned by that.

SPITZER: I mean not to put too fine a point on it, there have been not only rumors but admissions of infidelity in his marriage in the -- marriages in the past. But none of it, am I correct, had bordered on the violent enforceable?

DICKEY: Well, there was one allegation that a friend of the family who was 22 at the time found herself in a position where she had to fight him off in a very ugly scene. She -- that supposedly happened in 2002. She talked about it on television with his name bleeped out in 2007. All that has come back now.

But everybody has tried to turn that into a great pattern of behavior. It isn't clear that that's the case. What is clear is that, yes, he had an affair with somebody at the IMF only months after he got there. He's thought to have any number of mistresses and lovers over the years.

In French politics, that's not such an unusual thing. But certainly, these allegations of violent aggression against a maid in a hotel, that's something else.

SPITZER: You know, as it stands right now he has been -- Krista, hold on one second. As it stands right now, he is being held without bail in New York City.

Krista, what does this do to the political scene in France?

FREELAND: Well, I think it makes it very, very complicated. I did really just want to sort of reinforce what Chris has said, which is I think we need to be incredibly careful to make a sharp distinction between someone having -- you know an official acknowledged history of having affairs and saying that person is rapist.

You know these are two very different things. And I think it's really important not to say, well, you know, because he has a history of sleeping around that means that -- you know, it's not hard to believe he's a rapist.

And there was actually a report on French radio today saying that his lawyers are now claiming he actually has an alibi, that he was at lunch with his daughter at the time that this alleged assault happened.

So, you know, we have to be careful to prejudge. I think if he emerges from this with some kind of a shadow then he's out of the picture as far as French politician goes. But, you know, there's still a possibility that he didn't do it. And if that can be proven, then, you know, maybe he can go back to France a hero.

SPITZER: Chris, let me ask you point blank. There are rumors out there of conspiracies. What do you make of all that?

DICKEY: Well, look, people in France don't like President Sarkozy. His approval rating is below 30 percent. And he's seen as a kind of a Machiavellian character. So all of a sudden, the man who is expected to defeat him -- I mean, all the polls showed Strauss-Kahn to defeating Sarkozy in next year's election, all of a sudden, that man's career is wiped off the slate. He's just no longer a factor in next year's election.

Krista is right, he may make a comeback as a politician. He may be in some cabinet some day as a minister. But he's not going to be able to come back to France any time to run for the presidency.

So he's not going to be president in 2012 which is what most people thought. Naturally, they say, uh-huh, Sarkozy must have done this somehow. But there's absolutely nothing to support that kind of conspiratorial thinking.

SPITZER: Krista --

FREELAND: Chris, do you think -- what if he is proven completely innocent? What if it turns out that, you know, he really didn't do it?

DICKEY: Well, Krista, how long is it going to take to prove that? Right now, he can't even get out of jail on bail. If you look at the case of somebody completely unrelated, but Kobe Bryant, an American basketball star, was accused of attacking a woman in a hotel in Colorado in 2003, in the summer. It wasn't until the fall of the following year that those charges finally were dropped.

So I think we're looking at months of legal proceedings involving Strauss-Kahn. He's not going to get back and run for the presidency anytime soon. SPITZER: You know, I think just as somebody who was a prosecutor in the state system here, Chris and Krista, it is clear that this will take several months barring some unforeseen reversal. The witness recants her testimony. It would take months at least to clarify this.

As of now, he's being held without bail. So he will -- he may even be held for some period of time, presumably not forever.

All right, Chris and Krista, thank you so much for joining us.

FREELAND: Pleasure.

DICKEY: My pleasure.

SPITZER: Coming up next, Trump is out, so is Huckabee. Gingrich is in. Romney is thinking about it. The Republicans are playing musical chairs. More on that in a moment.

And E.D. Hill is here. She has been looking in an interesting angle on the Dominique Strauss-Kahn situation.

E.D., what do you have for us?

E.D. HILL, CNN CONTRIBUTOR: Well, you know, he's a powerful man. The IMF is an agency of the U.N. And we know that there are numerous understandings and agreements about immunity deals between the U.S., the U.N. and other international organizations.

So can he potentially claim immunity? The IMF says he wasn't on official business but because he was on a trip from the IMF headquarters in D.C. over to meet with the German chancellor, stops in New York, could he, if he needs to, claim that and get away scot-free, if he's guilty? We'll find out.

SPITZER: All right. Interesting question. Thank you.

Don't go away. We'll right back in a moment.

(COMMERCIAL BREAK)

SPITZER: Now for a segment we like to call "The Clash." The Donald is out. Donald Trump announced today that he will not run for president in 2012, ending weeks of speculation and self-promotion.

This after former Arkansas Governor Mike Huckabee said he will not run. Tonight in "The Clash," who is the Republican frontrunner?

Joining me now is Republican strategist and former Romney campaign spokesman Kevin Madden. Also David Gergen, CNN senior political analyst.

Welcome, gentlemen.

KEVIN MADDEN, EXECUTIVE VICE PRESIDENT/PUBLIC AFFAIRS, JDA FRONTLINE: Great to be with you.

SPITZER: All right, Kevin, let me start with you.

Thank you.

SPITZER: Donald ducked, as we say. So is there just a huge breath and sigh of relief from the rest of the Republican candidates?

MADDEN: Well, I think from the establishment, I think that's -- that is true. I think a lot of people were worried that, you know, a campaign that people want to be about issue, a campaign that people want to be about substance was -- you know, quickly becoming a distraction with issues like the birther issue being front and center.

So I think most candidates, they really want to run on the economy, they want to run on health care, they want to run on national security, it comes as a great sigh of relief that this is now a campaign that essentially will be a contrast on the issues.

SPITZER: You know, David, let me ask you this question because Kevin mentioned it. Health care, which the Republican Party had thought was going to be a slam dunk winner.

It seems in the past couple of weeks, first Paul Ryan's Medicare plan is intensely unpopular, and now in the last couple of days, both Gingrich and Romney have said such conflicting things about Obamacare, Romneycare, the individual mandate. It's getting very murky there.

Is the Republican Party flubbing on an issue that they thought would be their path to victory?

GERGEN: I think it's too early to say that. I -- there's no question that Newt Gingrich, you know, started a lot of resentment among House Republicans by attacking the Ryan plan on Medicare and has called it right-wing engineering -- social engineering. There was a lot of resentment today in the House.

At the same time, Mitt Romney, it looked like health care would be a real albatross. But you know that was last week. This week, Romney is the one who I think gets the greatest benefit from both Huckabee and Donald Trump pulling back.

He does now emerge, I think, as a clear frontrunner, and today of course he had a fundraiser out in Nevada. A national fundraiser. He raised $10 million in one day (INAUDIBLE).

And that's a substantial amount of money, compared to four years ago when he ran when he raised $6 million in a similar effort. This time, he raised $10. So you have to say right now that he's the big -- I think he's the big winner of Huckabee and -- Huckabee and Trump pulling back.

SPITZER: You know, David, that certainly makes sense, but, Kevin, let me ask you this. I'm still grappling with the speech that former Governor Romney gave last week in which he defended the individual mandate which is at the centerpiece of Obamacare as did Newt Gingrich over the past weekend.

It seems that both of them have embraced the point and the piece of Obamacare that the Republican Party is most upset about.

How does that play through the primaries and then theoretically into a general election?

MADDEN: Well, I think it's certainly a challenge. And I think that the -- there are many folks in the conservative circles that watched that speech and they weren't satisfied with the answers that they got from Governor Romney. But I think that this is not really a debate or an issue that's going to be decided in just -- you know just on editorial pages or just amongst the political class.

I think, ultimately, health care is a value issue that candidates have to argue out in some of these early primary states. It's very much about what it is that you want to see done with health care.

I think we see a calcified level of opinion right now about Obamacare. Many voters believe that it's not the right approach. And I think it's up for Governor Romney and all the other candidates to describe what they would do differently going forward.

I think the argument you saw that Governor Romney made was about what he did with the unique health care population of seven million people in Massachusetts and why he thought it was right. But ultimately, the argument has to be about what it is that you're going to do in the future. What is the future of health care look like in this country? How do we get down costs? How do we increase access? Past what this federal standard that Obama said.

SPITZER: You know, David, it seems to me there's going to be an interesting dance going on between the candidates -- Republican candidates for president and Speaker Boehner on the other side.

Speaker Boehner has to govern. He has to be part of the process of compromise. And yet, the Republican candidates want to distance themselves. How will that dance play out? And how will they be able to work together to craft a coherent message for the Republican Party over the next year or so before there's a clear candidate for the Republicans?

GERGEN: That's a very good question, Eliot. And it's going to be -- require I think some greater discipline the Republicans have shown so far. Especially as we work our way through now in the next few weeks on the debt limit because you know we hit the national debt limit today, and we've got 11 weeks essentially to get a resolution as Speaker Boehner is essential to that.

I would think Speaker Boehner should be able to expect a certain degree of support from the Republican presidential candidates and how he crafts this. It's going to -- it's going to really hurt the party if there are divisions over that.

But let me just add, Eliot. I -- you know, it's very early on the national health care debate. A lot of opinions haven't formed on some of these issues yet. Issues come and go pretty quickly. You know already, one feels that politically as important as the seizing and the killing of bin Laden was, that it's not driving the race the way we thought it might two weeks ago. And I think we may have two more candidates who come in to this race before it's over.

If Mitch Daniels gets in from Indiana and Governor Huntsman from Utah gets in, that could really begin to build a serious national conversation around jobs and around government spending that we haven't yet had among the candidates. I actually think it would -- it might strengthen the whole Republican sense of some -- some gravitas on their side. They've had a very weak feel so far.

SPITZER: You know, David, I could not agree more. In fact, I'm going to go out on a limb here and predict that the four leading Republican candidates at the end of the day are going to be Romney, Pawlenty, Daniels and Huntsman. The interesting common factor, they're all governors.

And so Kevin, let me ask you.

GERGEN: Right.

SPITZER: Are those four, all governors, going to be able to craft, as David said -- he's exactly right as always -- economics is going to drive this, not the bin Laden bump. Will there be a coherent Republican message about jobs and how to bring back this economy?

MADDEN: Well, sure. I think right now what you're seeing right now is that everybody in the fields and many of the political observers watching the race are all focused on where the differences are. And ultimately, I think what's going to drive the fundamentals of the Republican race where we pick a nominee is going to be what we agree on.

And I think we all agree that we need to stop taxing. We need to stop federal spending. We need to get the deficit down. And I think the candidate that comes out with the most credible plan on those three issues and how it ladders up to a larger economic argument about creating jobs and creating more prosperity, that's going to -- that's where the Republican electorate is going to produce the best nominee.

SPITZER: Yes, but Kevin and David, that's what's going to make it so interesting because if John Boehner needs to compromise on those very principles with the White House that Republican message may get somewhat muddled. And so the purity of the Republican candidate may be lost.

Anyways, guys, this conversation will be continued for weeks and months ahead, obviously.

Kevin Madden and David Gergen, thanks so much for joining us.

MADDEN: Great to be with us.

GERGEN: Thanks, Eliot.

SPITZER: Up next, diplomatic immunity. E.D. Hill investigates its uses and abuses and how it affects the legal status of Dominique Strauss-Kahn. When we come back.

(COMMERCIAL BREAK)

HILL: Attempted first-degree rape, first-degree criminal sex act, those are among the seven crimes Dominique Strauss-Kahn faces. His attorney says he's innocent. A hotel maid says he's guilty. But what he says and she says may be moot because of diplomatic immunity.

Now diplomatic immunity was first used as kind of shield during the Cold War when diplomats had to work in hostile countries. In this case, could it be applied to rape?

To explain, I'm joined by Duncan Hollis, assistant dean and associate professor of law at Temple University. He was also a legal adviser on treaties at the State Department here in the U.S.

Thanks for being with us.

DUNCAN HOLLIS, ASSOCIATE PROFESSOR OF LAW, TEMPLE UNIVERSITY: Thank you, E.D., for having me.

HILL: Let's look at the two treaties. First, the IMF is a specialized agency of the U.N.

HOLLIS: Yes.

HILL: And the U.S. and the U.N. have a headquarters agreement. What does that do? Could this be in play here?

HOLLIS: So the headquarters agreement was set up actually right after the Second World War. It establishes the privileges and immunities of the United Nations and its officials in New York.

And basically, the idea was it would allow it to function. Right? The idea that if every diplomat was subject to U.S. laws it might hamper the conduct of diplomatic business particularly when nations not necessarily friendly to U.S. interests have their people in New York City.

And so the United States and the U.N. did an agreement where the U.S. promised that it would give diplomatic immunity or what we sometimes call official acts of immunity to the various U.N. officials. And so for example, the secretary-general of the United Nations cannot be --

HILL: So if he were involved in this --

HOLLIS: Totally different case. He would --

HILL: Clean sweep?

HOLLIS: He would be subject to absolute immunity from criminal prosecution and near absolute immunity from any civil trial.

HILL: What about the 1947 IMF treaty?

HOLLIS: So the IMF agreement, the articles of the agreement by which the IMF was constituted provides for a structure for this organization. As part of that structure, the IMF parties agree that its officials would have immunity in their official acts. So the idea is that as long as they're performing the functions of the job they can't be subject to criminal or civil prosecution but if they're acting in a private or personal capacity, no such immunity would apply.

HILL: But is that where this case could get squishy? Because the IMF is headquartered in Washington, D.C. and that is where Strauss-Kahn is listening. He is in route, in transit to a meeting with Angela Merkel, the German chancellor. He stops in New York City.

Now from what we can tell at this point and according to the IMF, there was no official business here. But if you're a business person and you head off on a trip and you have to stop some place, you're still on that business trip. Could he claim to be in transit or anything else or would he have to be, you know, really involved in a business meeting here?

HOLLIS: I certainly think he could argue it. I ultimately think he's not going to prevail on those grounds. It would be different, for example, if he was in New York City driving to a meeting and were in an accident or negligent and ended up killing someone on route to a meeting in the car. They are the nature of the act performing the function of going from one meeting to another might immunize him from any such criminal or civil prosecution.

There's actually a case last year involving the United Nations where several female employees of the United Nations alleged groping by senior U.N. officials. They brought the suit civilly to the United States.

HILL: So while they're at the U.N. --

HOLLIS: They're at the U.N.

HILL: They claim -- U.N. employees, they claim other senior U.N. employees --

HOLLIS: A senior U.N. official groped them. They brought suit. The U.S. court looked at it and said this is an employer/employee relationship that occurred at the United Nations. We think this is within the conduct of the official business of the U.N.

HILL: But even though they're claiming groping, it's within the conduct of the officials --

HOLLIS: The idea was because it was part -- it occurred at a meeting involving the U.N. So it could be broad. It could be broad and beyond were you actually doing the job for which you're getting paid. That said, I don't see this -- it's stretching so far as to cover an afternoon in New York City when he has a meeting the next day in Germany. And it's not -- I think we have to wait and see if there are more facts.

HILL: Right.

HOLLIS: But it doesn't necessarily seem like he was actually in the movement to Germany when the alleged acts occurred.

HILL: So, and we also -- we won't necessarily see this right away when he is arrested, even when he's charged, his lawyers don't have to immediately claim diplomatic immunity. Right now, he's at Rikers. Rikers is pretty hard core, but that's where you go. He's at Rikers. When would he have to, if he were going to claim diplomatic immunity, when would he have to do that?

HOLLIS: I think we'll look maybe later this week if he's going to be making a diplomatic immunity argument. This is important to flag that there's diplomatic immunity which would apply to the U.S. ambassador to France. It would apply to the secretary general of the U.N. It doesn't necessarily apply to DSK in this context.

HILL: Even though he's the IMF head and it's a U.N. agency?

HOLLIS: Right. You know, he clearly has some immunity but it's not clear that he has diplomatic immunity. So it's not clear that he'd be able to make those arguments, you know, but I do think we'd see it. If they're going to make the argument, I'd expect to see it in the next several days. That said, the State Department is not commenting, as far as I can tell on his status.

HILL: What does that tell you?

HOLLIS: What's that?

HILL: What does that tell you?

HOLLIS: It tells me that they're hoping that this gets resolved in other ways. And here's the critical point to remember.

It's not his immunity. The immunity belongs to the IMF. He receives the benefit of that immunity because the IMF wishes him to be able to function as the head of this organization engaged in delicate negotiations over currency and other financial matters, but ultimately it's the IMF's decision whether they want to maintain it or not.

HILL: Or waive it?

HOLLIS: Or waive it.

HILL: So in that case, it's what you may not hear from the State Department that could be just as loud as what you do hear? So they perhaps are waiting for the IMF to even before this happens, come out and make a flat statement, we've investigated it, we've looked at it. There is no way there is diplomatic immunity here?

HOLLIS: There's certainly precedent when you have these sort of salacious allegations or heinous crimes.

HILL: Like that one in Washington.

HOLLIS: Where in one Washington about over a decade ago, you had a Georgian diplomat driving intoxicated through Dupont Circle --

HILL: At 80 miles an hour.

HOLLIS: At 80 miles an hour and he ends up killing a young -- I think a foreign exchange student. He receives diplomatic immunity initially. He's immunized from prosecution, but ultimately delicate negotiations occurred between the U.S. and Georgian officials. And Georgia agrees that this wasn't what diplomatic immunity was for. They waived the immunity. He is prosecuted and convicted for the crime.

HILL: But there are times that, of course, and the reason why we are part of it, the diplomatic immunity works in our favor and the most recent case in Pakistan with the CIA contractor who, while being pursued, we understand it, shot and killed two people there.

HOLLIS: Right.

HILL: The U.S. came in and eventually claimed diplomatic immunity and he was released to U.S. custody.

HOLLIS: Raymond Davis was actually -- it's unclear exactly what status he had with the United States but clearly the U.S. government --

HILL: Enough.

HOLLIS: The U.S. government claimed him as their own. The Pakistanis weren't so sure. They ended up being payment of blood money. He returned home but there the U.S. was pretty clear that, you know, even though he had shot and killed two people that we were going to assert his right to be exempt from Pakistani prosecution.

HILL: All right. Duncan Hollis, thank you very much. Quite interesting.

HOLLIS: Thanks for having me.

HILL: Coming up, the Middle East, the demands for democracy may look like good news but maybe not if you live in Israel. Don't go away. That's next.

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ELIOT SPITZER, HOST: Now, to violence in Israel. Thousands of Palestinians surged across Israel's borders this weekend in an eruption of violence that left more than a dozen people dead. The Arab spring has come to Israel's borders. And someday soon, we may look back at the region's 50 years of conflict as the good old days. That's what our next guest believes. Michael Scheuer launched the bin Laden unit within the CIA and is an expert in Islamic terror movements.

Michael, welcome.

MICHAEL SCHEUER, FORMER HEAD, CIA'S BIN LADEN UNIT: Thank you, sir. SPITZER: Michael, you see this past weekend and the violence along Israel's borders as a premonition of what's going to be coming in the weeks and months ahead. Explain that to us.

SCHEUER: Well, the United States had a strategic policy in the Middle East that for 35 years was based on the maintenance of tyranny. That tyranny allowed us access to oil. It helped to protect Israel and it allowed the tyrants to persecute, prosecute and incarcerate Islamic militancy. We have been -- oddly enough, Mr. Obama has been with Mrs. Clinton been cheerleading the destruction of that strategic policy which I believe was wrong from the start. But nonetheless, it was our policy, and they've gotten off one horse without another horse to get on to. And so access to oil becomes chancy. Certainly, Israel's security has been shattered in the last decade in terms of its external shields. And, of course, all of the revolutions we've seen so far have released thousands of Islamist militants from prisons in Egypt and Tunisia and elsewhere.

SPITZER: Michael, look, there's absolutely no question the contract as it were between the United States and the tyrants, and I think most of us would agree with that word who had dominated Egypt or even Tunisia or certainly Libya and Syria, that contract has broken down. It has run its course. Where I want to challenge you, though, is your harsh criticism of President Obama and Secretary Clinton, because I would ask you, what was the alternative they had maintaining that relationship with Mubarak, with Gadhafi, with Assad certainly is no longer possible. So is it not better to try to join forces with the movement in favor of democracy and freedom that is sweeping North Africa than to be a firewall in support of tyranny.

SCHEUER: I don't think you should support tyranny. I didn't say that at all. I'm glad that they're gone. I think it's a benefit in the long run for America. But we could have kept our mouth shut.

We tend to think that Muslims are stupid people. That they're going to forget that the United States supported tyranny for 35 years. We also have become, at least in our political elite, almost Marxist Leninists in our belief that democracy is the answer to everything and that it's going to take hold everywhere. And what we've created since (INAUDIBLE) here in North America and England is going to be recreated in the Muslim world in 18 days. I just don't think it's becoming a president or Secretary of State or the war boys, Senator McCain and Senator Graham to be arguing somehow that democracy is afoot when clearly it's not.

SPITZER: Look, Michael, first, I have to disagree with your premise in terms of the overarching view of the Islamic world. And I think there is much greater nuance in the relationship that the president and the secretary of state and the United States senators whom you mentioned are trying to craft with the new leadership. Everybody understands, do they not, that this is a moment of transition? This is a moment where the old ideologies, the old governing structures throughout North Africa and the Middle East are being pushed aside by what is a genuine uprising from the grassroots of the populous. Nobody knows with any certainty where it will go. And I think if you listen to the Fareed Zakarias, the Fouad Ajamis, the real experts in the region, they all say there is enormous uncertainty. But certainly, it is better to begin to forge the relationship in terms of the common notions of tolerance, freedom, secular democracy that we believe in, not believing it will take root overnight but certainly to articulate those views and to be a hands off and let tyranny reestablish itself. Wouldn't you agree with that?

SCHEUER: No, I wouldn't. I think Mr. Zakaria and Mr. Ajami know about as much about what's going on there as my chair does. They don't like the idea of Islamist governments. And so naturally, their analysis is going to be that they're not happening just like Mrs. Clinton, just like Senator Graham, just like the president.

CNN and BBC interviewed a few score Muslims in Tahrir Square, all of whom were English speaking, most were clean-cut, most were professionals and they talked the talk of democracy. Then they read a few Facebooks and a few Twitters and they extrapolated that sample to 85 million Muslims, half of whom or more are illiterate. So the west has really got a skewed idea of what's happening in that country, and across the region, sir. It's just -- it's madness.

SPITZER: Mike, with all due deference to your deep expertise in the region --

SCHEUER: I don't claim I have deep deference, sir. What I'm claiming is that 85 million Muslims are not going to go in the direction of a democracy they consider irreligious, or perhaps even pagan rather than towards 1,400 years of tradition.

SPITZER: Michael, let's agree on something. First of all, I think Fareed and Fouad, Fareed Zakaria and Fouad Ajami are enormously experts, knowledgeable individuals about the region in particular. And the one thing I would say is that nobody thinks Jeffersonian democracy is going to spring up overnight that somehow the bill of rights that is enshrined in our constitution will be embraced by 85 million Egyptians. Nobody obviously believes that.

SCHEUER: You weren't listening to CNN then, sir, during the Tahrir Square business.

SPITZER: Well, again, Michael, with all deference, I think I was listening to it. I was often here. But I think here's the larger point. What we are saying is that there is an arc of history and that there is movement in a particular direction. And while we don't have any illusions about where we'll end up, and we all understand Iran and what has happened in Afghanistan time and time again, what we are saying is that positioning our foreign policy no longer behind the tyrants but in front of the popular movement in favor of those ideals that George W. Bush articulated in terms of democracy. That seems to make sense.

I'll give you the last couple seconds. You obviously thing I'm wrong. Tell me why. SCHEUER: I think Bush was s wrong. I think Clinton was wrong. I think this guy is wrong. It's just not going to happen in the way you think it's going to happen, sir. And even if it did, if we had democracy from Mauritania to Jordan, what those governments would have to reflect popular opinion. And what you would have is the greatest anti-Israeli movement than you've ever seen in your life because Israel is hated more than anything in the Islamic world. In many ways --

SPITZER: Look, Michael --

SCHEUER: Yes, sir.

SPITZER: -- time runs short. You're going in a different direction, the conversation about Israel. A whole different set of issues. I look forward to having that conversation with you in a couple days. Clearly, it's a paramount issue we've got to deal with.

Michael Scheuer, thanks for joining us. We will have that conversation down the road.

Up next, with Dominique Strauss-Kahn in jail, what's the future of the organization he ran and the impact on French politics? I'll ask Fareed Zakaria to dissect the scandal's fallout when we come back.

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SPITZER: Now, more on our top story, the news that Dominique Strauss-Kahn, head of the IMF, allegedly tried to rape a woman in New York City in a hotel room. It sent shock waves across the financial and political world in a large part because Strauss-Kahn plays a key role as the keeper of the global purse. So what does this arrest mean for the future of the world economy and France? For more on that, I'm joined by Fareed Zakaria, host of CNN's "FAREED ZAKARIA GPS."

Fareed, as always, thank you for being here. Look, this disturbing and unfortunate news about Dominique Strauss-Kahn. You've known him for many years. Obvious question, are you surprised?

FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": No. I mean, I'm surprised in the sense that I had no idea. He was a very, very good finance minister in France. He actually had to resign for reasons of a kind of scandal, but it was a corruption scandal which he was then cleared of. There were always rumors about this kind of thing in his life. But all one can say in his professional life he was an extremely competent finance minister of France. The economy grew. The deficit shrank. He was a very good IMF chief. So it's very sad.

SPITZER: And his international reputation as one who was one of the supreme technocrats of the international financial system was superb at this point.

ZAKARIA: It was superb. He was also more than a technocrat. Because he was a French politician, he had a very good sense of politics. So in all these European bailouts, he understood the economics but he also understood the politics. SPITZER: And in fact, he had been a voice for a more slightly more liberal approach to bailing out Greece and Ireland and Portugal, than perhaps Angela Merkel of Germany who is demanding much more severe cuts in the budgets of those foreign nations. Of course, German taxpayers were paying for it and Dominique Strauss-Kahn, a more socialist in his world view, said let's not be so tough on those who depend upon the government spending.

ZAKARIA: Yes. But as you said, the Germans were paying the bill.

SPITZER: Right.

ZAKARIA: So understandably, they were taking that position.

SPITZER: Right.

ZAKARIA: Strauss-Kahn was being generous with Germany's money.

SPITZER: Right.

ZAKARIA: But within the French socialist establishment, he is on the right. So one of the things that's going to change in France is that I think that this is going to cause a real reshuffling of the deck in the socialist party because he was the -- in our terms would be the conservative Democrat. Everybody else in the socialist party in France is effectively to the left of him, often quite substantially to the left of him.

SPITZER: So if you were to handicap it now, and, of course, you're handicapping the French election which is over a year away, does this make President Sarkozy that much more likely to be re- elected? Somebody who right now he's approval rating is down in the 30s but nonetheless, his most dominant opponent has now been taken off the map?

ZAKARIA: I tend to think. It's a minority view. He's, as you say, very unpopular right now. But my reasoning is that this has completely fractured the opposition. And it seems very unlikely that any one candidate will be able to get the kind of momentum and stature that will make it possible. But at the end of the day, it means Sarkozy is the only large man standing. He's the only guy with real stature.

SPITZER: And what does this mean for the IMF? What does this mean for an institution that has been central to the rehabilitation of the European economy, holding the E.U. together as a coherent bloc? Can the IMF survive? Or can an institution continue forward without individuals?

ZAKARIA: I think the IMF will do fine. It's French politics that has been appended. The IMF, remember, at the end of the day, it's all the governments that are making the major decisions.

SPITZER: Right. ZAKARIA: As you said, Angela Merkel in Germany who is being tough and who is saying we're not going to accept this deal. No matter who's the head of the IMF, if the Germans don't want to sign the check, nothing happens. To the extent that somebody can persuade the Germans, it's going to be the French or it's going to be a couple of other countries in Europe.

The IMF really runs as a collective body with governments making decision making. So he had an important role but it's a very competent organization. They'll be able to get on just fine without him.

SPITZER: All right. Fareed, thank you so much.

ZAKARIA: A pleasure.

SPITZER: Up next, New Orleans under water. It happened six years ago with Katrina. It could happen again. The way to save the city, flood someplace else. We'll explain after the break.

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SPITZER: The raging Mississippi River continues to flood many southern towns. So for the first time in almost 40 years, the Army Corps of Engineers opened these floodgates in Morganza, Louisiana, hoping to spare Baton Rouge and New Orleans and redirect the water. The consequence is risking nearby low-lying towns and forcing thousands to evacuate.

CNN's John King visited the affected area with Governor Bobby Jindal earlier today. He's in Morgan City, Louisiana.

John, you saw the devastation from the helicopter today. Describe it for us. How ugly was it?

JOHN KING, HOST, "JOHN KING USA": Eliot, it is just remarkable. And extraordinary what the state of Louisiana, in conjunction with the federal government are trying to do. Yes, some homes will be sacrificed but what they're trying to do is to protect other communities like where I am in Morgan City.

You see behind me here, that's supposed to be a wharf. You should be able to walk down there. Instead, four feet of water and the water is continuing to rise.

What they're doing and what we saw from that aerial tour, an exclusive aerial tour with Governor Bobby Jindal, we've flew right over the Morganza Spillway. Americans have heard that term since the weekend. They have opened that spillway, essentially trying to redirect the floodwaters, sending them into low lying areas. As many as 15,000 homes could be buried, washed away, as they flood those communities to try to protect more populated communities.

We flew over the Morganza Spillway, Eliot. You could see the floodwater going into the farmlands, rising very slowly. You can still see the homes there. Some of the communities that will be flooded are still dry, or have inches, maybe a foot of water. But within the next several days, we flew over trees 18, 20 feet high. The head of the Louisiana National Guard says they will be under water within a few days.

One other extraordinary thing we saw closer to this city, they have taken a 30-foot high barge, put it in the middle of the river and sunk it and they're putting rocks and steel pilings and especially creating a makeshift dam to keep back water flooding from coming back up in the town. Same idea to protect towns with tens of thousands of people in them, sending those floodwaters in to lower lying communities, much of it marshlands. Some homes will be damaged. Essentially, though, Eliot, it is a simple rule. In some cases, sacrifice a few to protect the many. What this state is doing is right now is remarkable.

SPITZER: You know, John, that is just an unbelievable decision that's got to be made. Who actually makes that decision to open these floodgates and sacrifice those 10,000 to 15,000 homes in order to save Baton Rouge and New Orleans? Who is empowered to make that very tough decision?

KING: It is ultimately the Army Corps of Engineers. The flood plans are in the control of the federal government, but they've been in close touch with Bobby Jindal. And, Eliot, you know this, if you go back to Katrina, if you talk about the BP oil spill, there was so much tension, so much mistrust between the state of Louisiana local officials here and whether it will be the federal government in Washington or the Army Corps of Engineers. In this case, Governor Jindal told me that the cooperation has been remarkable. The communication has been remarkable. In fact, when I was on a boat tour with Governor Jindal, we got a phone call, had to stop our conversation. It was the president of the United States calling Governor Jindal to check in on just how things are going here, Eliot.

SPITZER: And how about the folks, the 15,000 whose homes are being lost? What is their view of this? Are they saying, my goodness, why are we the losers in this transaction? Are they protesting or do they understand in the grand scale of things this is the right decision for government to make?

KING: No question, they are heartbroken. I spoke to Colonel Fleming who is the Army Corps official going town to town in these little communities and essentially saying you lose so that others can win. Governor Jindal said he had talked to some of them.

Of course, it's heartbreaking. He says the one advantage they do have, if you can call it that, is that these people are giving -- have had plenty of time. They've had days to get their belongings out of their homes. And he says a few of the communities that they have told might be buried. He said they are hoping, hoping they might get lucky. The waters are not rising as quickly as they thought. A few of those communities could be spared. For the most part, he says people are heartbroken. People protest a bit at first, then they get their belongings out and they understand, they understand that their communities are being sacrificed so that others where more people live, some of them their own family members can be safe. SPITZER: All right, John. Thank you for that amazing but devastating and heartbreaking story. Thanks so much.

Tragedies just don't stop for the city of New Orleans. Thanks for joining us IN THE ARENA tonight. Please join us tomorrow.

Good night from New York. "PIERS MORGAN TONIGHT" starts right now.