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Lou Dobbs Tonight

President Bush Seeks Support of European Allies; Commander of U.S. Troops in Iraq to be Replaced

Aired May 25, 2004 - 18:00   ET

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

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


ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, May 25. Here now for an hour of news, debate and opinion is Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.

President Bush today launched a major new initiative to win the support of his critics in old Europe. President Bush called French President Jacques Chirac to ask him to back U.S. plans for the transfer of power to the Iraqis in just five weeks. It was a significant change in tone in U.S. policy one day after the president delivered a speech outlining his vision for the future of Iraq.

White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the president, in his initiative that he launched last night in order to convince Americans and the world that he does have a plan in Iraq does rely heavily on getting international support for that plan, getting a U.N. blessing for that plan.

The security and political transitions all are part of a U.N. resolution. In order to get that passed, the president, the White House needs France, among other countries, that opposed the war in Iraq at the U.N. to begin with. As you mentioned, today, the president did reach out to French President Jacques Chirac to talk about the issue.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What President Chirac and others have said is they want to make sure that the transfer of sovereignty to the interim government is a real transfer. And that's what we want. We want there to be a complete and real transfer of sovereignty, so that the Iraqi citizens realize the fate of their country is now their responsibility.

(END VIDEO CLIP)

BASH: Now, you heard the president saying that President Jacques Chirac does want real sovereignty. The president and Mr. Chirac had about a 20-minute conversation, a conversation where a couple of White House officials said that they acknowledged that there would have to be some real adjustments in the resolution.

Essentially, there's a very, very flexible attitude coming from this White House today, Lou, in order to get this passed. A number of senior officials essentially are making it clear that they are going to do what it takes to get this through, that they don't see any real problems there. One senior official saying that in the conversations that White House officials are having with their counterparts, they don't see anything major in terms of roadblocks.

This, as you mentioned earlier, is a different kind of attitude, a different kind of way of looking at this than it was a year and a half ago. They really need the U.N. and they're working to make sure that they get it -- Lou.

DOBBS: Dana, the attitude there is, then, that the rather dogmatic, emphatic approach of foreign policy from the White House has given way to flexibility and the prospect of concessions on the issue of Iraq?

BASH: Well, what they're saying here is that they really don't see that many major differences in what they need to do on this U.N. resolution. The differences are how you define, for example, Iraqi sovereignty in the interim.

The French and others say they really want to make it much more clear that Iraqis have sovereignty, that Iraqis have some control, for example, over the multinational force. That is a big point of contention. But they say that this, perhaps, might be some specifics that they can work out either in the resolution or separate. But they definitely are having a much more conciliatory tone here at the White House today.

DOBBS: Dana, thank you very much -- Dana Bash from the White House.

The Democratic leader in the White House sharply criticized the president's speech last night. Minority Leader Nancy Pelosi said today quote -- "What was most clear from the president's words is that there is a dangerous and expensive road ahead for the United States before the mission in Iraq will be accomplished. He should have made that clear before we went to war, not more than a year later."

Independent presidential candidate Ralph Nader went further, calling for President Bush to be impeached. Nader called Bush -- quote -- "a messianic militarist who pushed the country into war under false pretenses."

One of the most critical issues now facing the United States and other members of the coalition is just exactly who will control military operations in Iraq after they handover of power. The United States says American forces will be under U.S. command. But America's closest ally, Britain, says the new Iraqi government will have veto power over military operations.

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: If there's a political decision as to whether you go into a place like Fallujah in a particular way, that has to be done with the consent of the Iraqi government. And the final political control remains with the Iraqi government. Now, that's what the transfer of sovereignty means.

(END VIDEO CLIP)

DOBBS: British diplomats say London wants an agreement on Iraq's veto power before a Security Council vote on the proposed U.N. resolution put forward by the United States.

American officials say Britain is part of new Europe, while France and Germany represent old Europe. Now the Bush administration says it wants to make a deal with old Europe to complete the political transition in Iraq.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): It's horse trading time on the East River. The goal is the transfer of sovereignty in Iraq. The French foreign minister suggested changes would be made and added -- quote -- "We hope that this time we will be listened to."

MICHEL BARNIER, FRENCH FOREIGN MINISTER (through translator): I do not want to say that we do not agree with this or that. I would rather say in a more constructive fashion that this resolution must be improved on certain points.

PILGRIM: The Russian foreign minister said they waiting until U.N. envoy Lakhdar Brahimi sketches out the caretaker government in Iraq.

SERGEI LAVROV, RUSSIAN FOREIGN MINISTER (through translator): Depending on the report, we'll be able to judge whether there is a consensus in Iraqi society on such a government and whether or not this government would look legitimate in the eyes of the Iraqis themselves and Iraq's neighbors. Afterwards, we'll consider the question of its recognition.

PILGRIM: German Foreign Minister Joschka Fischer said the U.S.- British was -- quote -- "a good basis in attempt to reach consensus."

Some U.N. watchers worry that the tendency to debate will result in a resolution without sufficient detail.

MICHAEL MCFAUL, HOOVER INSTITUTION: It will be a watered-down resolution. It will be a kind of statement of general principles. But it's not going to have financial support and, most certainly, not going to have boots on the ground.

PILGRIM: Secretary of State Colin Powell, meeting with the Belgium foreign minister, called on some more substantial contribution besides talk.

COLIN POWELL, SECRETARY OF STATE: I hope that all nations will review their contributions, whether it be a financial contributor, reconstruction aid, trainers, advisers, or perhaps military forces. (END VIDEOTAPE)

PILGRIM: The real issue shaping up to prove the most difficult is the control over security forces after the transfer of sovereignty. France, Germany and Russia may push for Iraq to have more say over both Iraqi- and U.S.-led forces -- Lou.

DOBBS: Kitty, thank you very much -- Kitty Pilgrim.

At the United Nations today, the United States and other Security Council members held a private meeting on the draft American and British resolution on Iraq. The diplomats also discussed the progress being made by U.N. envoy Lakhdar Brahimi on the formation of a new Iraqi government.

And tonight, more violence to report in Iraq. Insurgents fired rocket-propelled grenades at an Iraqi police station in Baghdad. An American soldier was wounded in the attack. And an explosion damaged one of the Iraq's holy holiest shrines in Najaf. The military said the coalition was not responsible for the damage. Najaf is where the radical cleric Muqtada al-Sadr is hiding.

My guest tonight says the Iraqi war is the most important expedition the United States has undertaken since Vietnam. Fouad Ajami says the United States needs to, as he says, reclaim this war. He is professor of Middle Eastern studies at Johns Hopkins University.

Good to have you with us.

FOUAD AJAMI, JOHNS HOPKINS UNIVERSITY: Thank you, Lou. Thank you very much.

DOBBS: The idea of reclaiming this war is counter to appears to be the posture of the Bush administration, which is to disavow it.

AJAMI: Well, you're absolutely right.

I think our president went out last night and he has reclaimed this war. He's spoken for this war. He's reminded us this is about. In the most intensely felt passage of the war, he took us back to the terrors of September 11, because it has been hard to remind the American people that there is a connection between the terrors of September 11, 2001, and the war in Iraq. So we have to reclaim this war. It is not Bush's war. It is America's war.

DOBBS: It is America's war. And the president's speech last night, there was, as I think many people have said, many analysts and critics, there was a different approach in saying what the president did, but nothing really new in it. Do you agree with that assessment?

AJAMI: Well, I don't think he really needed to do something in it.

We know what he's trying to do. He's trying to sell shares in this enterprise called Iraq. He's offering shares to the Germans, shares to the French, shares to the Russians, shares to the Arabs, to anyone who would come in. That's really what we have to do. And he had to sell the American people on this expedition.

If you don't mind, I was just reading your column in "U.S. News & World Report" about road map to nowhere. What he has to do is, he has to convince you and has to convince your readers and has to convince the American public, above all, that an expedition which has taken 800 of our soldiers, young people killed in action in the streets and alleyways of Iraq, and $200 billion, is for real and something worthwhile and that we can actually win this war. That's the burden of this expedition. And that's the burden, his assignment at this time.

DOBBS: Professor, over the course of the next five speeches the president will give, do you expect to hear greater clarity, more directness about the U.S. foreign policy in the Middle East, as well as the policy toward Iraq?

AJAMI: Well, we have begun to understand the Arabs in many ways. I think the president -- we're now going to head into a discussion of this greater Middle East. We had hopes for reforms of the Arab world. We talked about reforming

(CROSSTALK)

DOBBS: Democratization.

AJAMI: Well, democratization, ending the culture of violence, ending the culture of terror, striking at this jihadist infrastructure. And really the appeal is to the broad middle classes of the Arab world. That's the danger. He has to speak to this, but that's an Arab fight. That's not really an American fight.

DOBBS: Not an American fight, an Arab fight. But America has taken up, if you will, residence in the neighborhood.

AJAMI: Yes.

DOBBS: And President Bush and his envoys are seeking the help of the United Nations, old Europe, when before him and the United States are the Arab nations.

AJAMI: Right.

DOBBS: Who are the most likely partners in any enterprise to improve life for the Iraqis, to establish stability. Is it a mistake not to be drawing in the Arab states upon which we will and Europe will be dependent for years to come?

AJAMI: Well, Lou, you have asked the fundamental question. Where are the Arabs in this fight? And I think that's very interesting.

And other than Kuwait, from which we waged this war, and Qatar, where the Central Command is based, most Arabs wish us ill in this campaign. They don't really want us to fail, because we're the cop on the beat. We protect them. We protect the Saudis. We shore up the Egyptians. So they really don't want us to fail, but they also don't want to see a prosperous, democratic Iraq that would show them up.

So what do they want for us. They want for us more of the same. They want us to bleed in the alleyways of Baghdad and Basra and Kufa and Najaf. And that's the dilemma of our position. That's why we go everywhere else and we don't turn to the Arabs, because we get no help from the Arabs.

DOBBS: If Lakhdar Brahimi is successful in bringing together a representative government, or at least a government that represents enough factions within Iraq, is it your sense that the United States will be able to step back significantly from military commitments in Iraq?

(CROSSTALK)

AJAMI: Well, we have to step back. But we will have 135,000 of our young men and women there. And our president even said last night that if we need more, we will even send more. So we have to be real and we have to understand what we're turning over on June 30.

It is freedom at midnight, June 30. They will be sovereign, but we will be there. We will not be providing, if you will, the bulk of the security effort, but we'll be sustaining the security effort. We'll still be in possession of a fair amount of responsibility and burden in Iraq.

DOBBS: The next question is, how likely is it in your judgment, your expert judgment, that Brahimi can be successful?

(CROSSTALK)

AJAMI: Well, we have passed from Bremer to Brahimi, if you will. And in fact we now are hoping that Brahimi will bail us out.

Brahimi doesn't really fully understand Iraq itself. But, nevertheless, it is not really about Brahimi. It is about finding the Iraqis, the appropriate Iraqis, who will take responsibility for their own country. This is really where the problem of this mission has been. We never trusted the Iraqis. We looked everywhere, but we didn't look to the Iraqis.

DOBBS: Do you trust them?

AJAMI: Well, I think we have to trust them. We are there. Our kids are there. And we have undertaken this vast mission in their country. And we keep talking about liberating 25, 26 million Iraqis. It's too late for second thoughts that way. We are there.

DOBBS: Is it too late for better thoughts?

AJAMI: I think it's too late -- we can't be cavalier about this mission. We have been sobered up. These stats that you cite and these stats that we know, the billions of dollars, the 800 soldiers who are killed, we are wiser about Iraq. We are more subdued by Iraq.

That's why the tone of the president was interesting last night. Gone is the hubris. Gone is the hope that we can remake this country and turn it into something fundamentally different. We're just now -- our goals are much more realistic.

DOBBS: Fouad Ajami, good to have you with us.

AJAMI: Thank you.

DOBBS: That brings us to the subject of tonight's poll. The question, where do you think President Bush should be looking for international support for Iraq, the United Nations, Europe, Arab countries, or none of the above? Cast your vote at CNN.com/Lou. We'll have the results coming right up.

Next here, one of the top military commanders will soon be replaced. We'll have a live report from the Pentagon. Who is taking the fall?

And surprising signs of weakness in the president's once solid political base. We'll have that story as well.

And the battle over whether another free trade agreement will help or hurt American workers, their families, and American business. We'll have a special report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Despite the statements of British Prime Minister Tony Blair today, Secretary of State Colin Powell says the United States will maintain complete control of American soldiers in Iraq after the handover. But Secretary Powell said the United States will consider the views of Iraq's new government those troops carry out military operations.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: Ultimately, however, if it comes down to the United States armed forces protecting themselves or in some way accomplishing their mission in a way that might not be in total consonance with what the Iraqi interim government might want to do at a particular moment in time, U.S. forces remain under U.S. command and will do what is necessary to protect themselves.

(END VIDEO CLIP)

DOBBS: The Pentagon says the commander of U.S. troops in Iraq, Lie General Ricardo Sanchez, is to be replaced. Officials say the move has nothing to do with the prisoner abuse scandal. The Pentagon insists it has complete confidence in the general's abilities.

Senior Pentagon correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, Pentagon officials went out of their way today to praise Sanchez and the job he has done commanding U.S. forces in Iraq and also, specifically, the way he handled the allegations of abuse at the Abu Ghraib prison, immediately launching a criminal investigation and also asking for an administrative review.

Pentagon officials insist this his rotation out of the top job was in the cards all along, has nothing to do with his handling of the abuse of detainees at the prison. And that was a view that was also echoed by military spokesmen in Baghdad today.

(BEGIN VIDEO CLIP)

BRIG. GEN. MARK KIMMITT, U.S. DEPUTY CHIEF OF OPERATIONS: We have always expected General Sanchez to depart sometime after sovereignty, transfer of sovereignty. Our expectations, my personal expectation was, like me, he would be departing sometime in the July time period.

(END VIDEO CLIP)

MCINTYRE: Now, under a plan that was developed months ago, a four-star general will be put in place essentially to replace Sanchez. We're told, sources say, that it will be Army Vice Chief General George Casey is the name that is expected to be forwarded to the White House for nomination.

Casey, a four-star general, worked right alongside the U.S. ambassador. And then Sanchez's deputy, General Metz, will take over his job as the commander. Sanchez will retain his job as the 5th Corps commander, awaiting possibly a new assignment. One possible problem, though, is that with an investigation under way, it may be difficult for Sanchez to get another good job, even if the Pentagon wants to give him one, because at this point it would be difficult to get him confirmed.

Those jobs require Senate confirmation. And right now, not all the senators are happy with the answers that they've been getting from the U.S. military -- Lou.

DOBBS: Not happy with the answers they're getting. And, certainly, it is no surprise to the Pentagon in moving General Sanchez, if we can call it moving. Why would they put the general, if they have such high regard for him, in such a crosshairs of obvious pitfall?

MCINTYRE: Well, the Pentagon insists that it was always its intention to have General Sanchez serve about a year -- that's what most of the combatant commanders there are serving -- and then possibly move on to another assignment.

And this was part of a plan, as they say, they developed months ago, putting a four-star general in, restructuring because of the transfer of sovereignty. And they have every plan to make use of Sanchez in the future. I'm just saying that there is a recognition here that there's a political reality that sometimes even people that are in the favor of the Pentagon can't get congressional confirmation because a single, individual member of Congress can sometimes hold up those confirmations. DOBBS: Jamie McIntyre, our senior Pentagon correspondent -- thank you, Jamie.

The president's speech on Iraq last night came as one poll showed his approval rating at a new low. Tonight, surprising information about why the president appears to be losing at least some of his critical core support.

CNN political analyst Bill Schneider reports from Washington.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): On Monday night, President Bush spoke to the people. His message was stay the course.

BUSH: We must keep our focus. We must do our duty.

SCHNEIDER: The president's speech appeared to be aimed less at critics than at believers. Is the president having trouble with his base? Republicans in Congress have been feeling uneasy and ignored.

SEN. CHUCK HAGEL (R), NEBRASKA: For whatever reason, the experience and judgment and expertise of the Congress is just not being used.

SCHNEIDER: So last week the president went up to Capitol Hill and held a pep rally for his party. And what happened according to a reporter with good GOP sources?

UNIDENTIFIED FEMALE: What do they say about it?

ROBERT NOVAK, CO-HOST, "CROSSFIRE": It was a bust.

SCHNEIDER: Why?

NOVAK: The president went on for the better part of an hour and left without a single question being asked.

SCHNEIDER: There some are indications that President Bush may be seeing an erosion of support in his base out there in the country. The CBS News poll shows a nine-point drop in President Bush's job approval rating among Republicans. A sharper drop than among Independents or Democrats.

The ABC News/ Washington Post poll shows a six-point drop among Republicans, but little change among Democrats and Independents. In March, according to the CNN/ USA Today /Gallup poll, President Bush had a solid 16-point lead over Kerry among southern voters. Now the race is essentially tied in the south.

Polls show the biggest shock has been the prisoner abuse scandal. Early this month, according to the ABC/ Post poll, the public approved of the way President Bush was handling the scandal. 48 to 35 percent. Now that's completely reversed. A solid majority disapproves the way the president is handling the controversy, including nearly a third of Republicans. The military scandal has shaken the president's base which may be why the biggest piece of news in the president's speech Monday night was this.

BUSH: Then with the approval of the Iraqi government we will demolish the Abu Ghraib prison as a fitting symbol of Iraq's new beginning.

SCHNEIDER: And he hopes his new beginning.

(END VIDEOTAPE)

SCHNEIDER: Here is another shift. In the latest national Annenberg election survey, Americans say they now believe the soldiers who committed the abuse were not acting on their own; they were following orders. So the court-martials now carry a political risk. The public may see ordinary soldiers taking a fall for a policy that was set by higher-ups -- Lou.

DOBBS: Bill, thank you very much -- Bill Schneider.

The president's reelection campaign today released a new ad attacking Senator John Kerry. The ad accuses Senator Kerry of playing politics with national security. And it says Senator Kerry changed his position on the Patriot Act after he was pressured by liberals. Senator Kerry's campaign called the ad misleading. The campaign said Senator Kerry has called for a new improved Patriot Act.

Joining me now for more on the campaign, reaction to the president's speech last night, Michael Duffy. He's Washington bureau chief for "TIME" magazine.

Michael, good to have you here.

MICHAEL DUFFY, WASHINGTON BUREAU CHIEF, "TIME": Nice to be here, Lou.

DOBBS: First, your thoughts on the president's speech. Was he effective against the expectations that had been established by the White House leading up to it?

DUFFY: Well, they pretty much lowered the expectations through the weekend. Politically, he had to put a floor under the eroding support that was visible across the political spectrum. He had to overcome the conventional wisdom that he didn't have a plan. And I think that he started to do that.

He has to give the speech over and over, over the next month and he plans to keep explaining, here is my five-point plan, here is where this is going, and he has to signal that he gets that there is a problem here. That doesn't solve the problem. Then, will the plan work?

But it does stop the erosion, hopefully, on the idea that he doesn't have a plan. That's their goal.

DOBBS: Five more speeches. Surely it won't be simply five iterations of what he said last night?

DUFFY: Well, George W. Bush's hallmark method is to say it and keep saying it and say it again. And I think a lot of it will resemble this. I suspect, somewhere in the next couple weeks, there will be a speech that emphasizes international relations.

That's one of the big criticisms John Kerry makes of President Bush's approach. I think there will be a speech about the Middle East. They ought to probably say something about what they plan to do about the Middle East peace process. But whether they actually give it still up in the air. We didn't really know until the last few minutes going into this what was coming in this speech. So I think they make it up as they go along.

DOBBS: When you say making it up as they go along, more than a year after seizing Baghdad, a year of opportunity to improve dramatically the condition of Iraqis and to have a clear policy in Iraq, a clear process in place for the transfer of sovereignty, a five-point plan, the White House, Scott McClellan, yesterday, saying we would be hearing a clear strategy.

You said they lowered expectations. But with that statement, do you think they met that task of a clear strategy?

DUFFY: Well, I think there is a difference between a plan and an explanation of how he plans to achieve real handover of sovereignty. He said, for example, that a number of the Iraqi ministries are in the hands of Iraqis. That's true. But they don't yet have any budget or any money or any authority to spend it.

So it is not clear -- and if they're ever going to get it. But the president has been out of the game for the last three weeks doing this. He hasn't been seen, hasn't been talking about this as much. And so I think the most important thing that happened is, he has put himself back into the conversation and said, I'm going to try to explain to people where I'm going. And that's probably a good thing.

DOBBS: Is Senator Kerry in the game, in your judgment?

DUFFY: He's been doing a very shrewd thing, which is to say as little as possible. As long as the news has been running against President Bush, he's done the smart thing, which is to stay out of the way. The problem is that hasn't clarified his position on the war any better. And it is not terribly clear.

DOBBS: Former Senator Alan Simpson responding to Kerry's criticism of the president's speech said, got a new idea, chum?

DUFFY: Yes.

DOBBS: Do you think he has?

DUFFY: Well, it's a good question. Regardless of how we got here, what are you going to do to fix it and do you have another plan? That's Kerry's challenge going forward, too, because he can't just ignore this debate as he goes forward. He is going to have to explain his position, too.

DOBBS: As Bill Schneider reported, significant erosion in the president's support among Republicans and ostensibly among conservatives, his base. That fact alone, given all else that's happening, does that suggest to you that the president is in real trouble here?

DUFFY: Well, this is -- without a doubt, this is the most difficult moment of his presidency since 9/11. And that's one of the reasons he's launched this initiative.

But it is not just conservatives. He's also lost -- he's lost Westerners and he's had a huge drop among young people, among independents. Across the political spectrum, there has been a huge erosion over the last two months. All of this suggests that he has to now get on the offensive. And it looks to me like he's on the offensive. The question is how long will he stay there and whether he will do enough to actually win people back.

DOBBS: How chilling must it have been for the White House to receive no questions when he went to Capitol Hill to rally support amongst the Republicans, primarily the leadership?

DUFFY: This is a mystery. They set up microphones for the lawmakers, senators and House members to actually ask questions. But he talked for so long and sort of gave the speech that they all heard many times before that he didn't take any questions. And that upset a lot of the Republicans on Capitol Hill.

It is also Republicans who have been the most outspoken I think in Washington criticizing the policy. And I think they had to respond to that. And this is one of the ways they did.

DOBBS: "TIME" bureau chief Michael Duffy, we thank you for being with us.

DUFFY: Thank you.

DOBBS: Appreciate it.

Tonight's thought is on democracy: "Too many people expect wonders from democracy, when the most wonderful thing of it all is just having it" -- those the words of American journalist Walter Winchell.

A reminder to vote in our poll tonight. Where do you think President Bush should be looking for international support, the United Nations, Europe, Arab countries, none of the above? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

Some of this country's brightest high school students battled it out for top honors in, of all things, economics. The National Economics Challenge took place at the High School of Economics of Finance Monday in New York City. Moorhead Senior High in Minnesota took top prize after answering this questioning. Are you ready? Are you ready? If a good produces positive externalities, should its protection be taxed or subsidized to achieve the efficient production level? Are you ready for the answer?

Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Subsidized.

UNIDENTIFIED MALE: That is correct.

(APPLAUSE)

(END VIDEO CLIP)

DOBBS: We all knew that. An all-freshman team from Bloomfield Hills International Academy won the top prize in a separate division. Each student on the winning teams and their coaches receives a $3,000 savings bond. Congratulations to all.

Still ahead, a controversial new trade agreement tonight, closer to becoming reality. We'll report on who stands to gain and lose from CAFTA next. We'll have some of your thoughts on free trade and its high price and one of CAFTA'S biggest supporters, Congressman Kevin Brady joins us.

In "Exporting America," victory tonight for thousands of Americans who feared they would lose their jobs to cheap foreign labor markets.

And an interesting display of leadership by a large American corporation. And flood waters in the Midwest rise to the highest levels in years. More storms are now on the way.

(COMMERCIAL BREAK)

DOBBS: We are reporting all this week on the controversial Central American Free Trade Agreement. The United States is expected to sign CAFTA this Friday. But Congress must eventually approve it if it is to go into effect and lobby groups on both sides of the CAFTA debate are now pressing their cases. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): CAFTA will not be kind to sugar beet farmers in North Dakota. The trade agreement will send more than 100,000 metric tons of sugar into the United States the first year. North Carolina textile workers are bracing for more jobs to ship to central America. Large modern textile plants are already dotting the landscape like this one in Honduras. An American family farm hammered by NAFTA expects to take a similar hit under CAFTA.

KATHERINE OZER, NATIONAL FAMILY FARM COALITION: What we see is people thinking that it's been good in the U.S. and it's been bad in other countries. We really feel like for family farmers it's been bad all around. JIM SCHOLLAERT, AMERICAN MANUF. TRADE ACTION COALITION: This is not about purchasing American products, exporting American products. It's about exporting American jobs and American wealth.

SYLVESTER: Critics of NAFTA say you don't need a crystal ball to see what will happen. Just look to the effects of ten years under NAFTA. In 1994, the United States had a trade surplus of more than $1 billion with Mexico. Now, it's running a trade deficit of more than $40 billion. The United States lost nearly 900,000 jobs due to the trade deficit between the two countries during that time period, and the U.S. agricultural trade surplus fell 47 percent between 1994 and 2000. Those who benefited from NAFTA will also reap the rewards of CAFTA, multinational corporations, agri business, even countries like China that will be allowed to ship fiber and other fabric components to Central America for assembly. Supporters of CAFTA argue without the trade agreement, Central America will be left behind by globalization.

ERIK AUTOR, NATIONAL RETAIL FEDERATION: If Congress says we don't want you to do business in Central America, by opposing CAFTA, they're basically saying we want you to move to Asia.

SYLVESTER: But under NAFTA Mexicans were not necessarily better off. Wages fell, farmers were displaced.

(END VIDEOTAPE)

SYLVESTER: What has family farmers, small business owners and labor groups even more concerned than CAFTA is the Free Trade Area of the Americas, that's a free trade agreement that is being negotiated that would extend to almost all of Latin America -- Lou.

DOBBS: Lisa, thank you very much. Lisa Sylvester reporting from Washington.

My next guest is spearheading congressional support for the Central American Free Trade Agreement. Congressman Kevin Brady says CAFTA will bring new jobs to this country. Congressman Brady is a member House ways and means committee joining us tonight from his district in Houston, Texas. Congressman, good to have you with us.

REP. KEVIN BRADY (R), TEXAS: Good evening, Lou. Thanks for having me.

DOBBS: CAFTA is by most of our sources suggesting very clearly that it is not going to become law, said it will not be passed by Congress this election year. Do you think it will next?

BRADY: Well, yes, I do. In fact, I'm absolutely confident of it. Mainly because this is a three for one win for America. One, we open up an emerging new market about the size of Canada to American goods and services especially for American farmers. We trade a partnership that will allow us to compete better against the likes of China. Thirdly, we lock in some dramatic reforms in Central America and democracy and labor rights, environmental rights. To their credit they've come so far. We need to make sure we keep them on the road. DOBBS: Congressman, you just heard Lisa Sylvester's report. The statistics are straightforward. 900,000 American jobs lost as a result of NAFTA. For Mexico, a decline overall in their wages since the NAFTA treaty was enacted in 1993 to 2003. Manufacturing wages in Mexico in decline. A trade deficit that has exploded on the part of the United States, $40 billion with Mexico. How in the world can this kind of result of something called free trade be beneficial to the United States and why would we want to do any more of it?

BRADY: First, those facts are not straightforward. They are very slanted. I think they ignore the devaluation of the peso and the worldwide recession that hit most of Mexico and the world in the early 1990s. The fact is unemployment is lower than it was before NAFTA. Mexico is selling more to us. We're selling twice as much to Mexico. And our manufacturing wages grew at twice the rate it did in America during NAFTA than before.

Let me tell you this. Let's talk about the trade deficit. You've analyzed numbers. You know our problem with the trade deficit isn't that we're buying too many foreign goods. It's that we're selling too few American goods. It is not enough to just buy American. We have to sell American, our farm equipment, our computers, our accounting services. The trade agreements, basically tear down the "American need not apply" signs around the world and give us a chance to compete.

DOBBS: Congressman, I think that's a wonderful idea. I don't imagine there's a single person in this country who wouldn't agree with the statement we should be selling more. But here are the facts. We're not. We have a $40 billion trade deficit with Mexico. We have a half trillion dollar trade deficit worldwide. We haven't run a trade surplus in this country for 28 years. We continue to hear all of this talk about free trade, and the Bush administration and much of the Republican party keeps trying to suggest to the American people who are concerned about the impact on working families, upon this economy and the indebtedness for our children, that there are only two choices, something called free trade, which we all know, first of all, doesn't exist and something called economic isolationism which we all know no one is proposing. Is there not a more intelligent approach to this kind of trade initiative?

BRADY: Actually, I think the Central America Free Trade Agreement is that balance. We are opening the market to an emerging area. They've been a proven trading partner over the years. They've bought -- for every dollar they sell into America, they've bought back $1.36. This is a great trade agreement for us. But again, going back to the trade deficit, yes, America is a huge consumer, and, yes, the rest of the world wants to invest in the country, a big part of our trade deficit. But the fact is when U.S. companies go out to compete, including SBC, who has been negotiating a strike, what they find is that Europe and Asia and other regions have beat us to the punch. That their sales and their products are covered by free trade agreements. We want a level playing field for American companies. We want our workers to compete around the world. And so without these trade agreements -- and I can just tell you, in Central America we're going to sell just almost immediately $900 million of Ag (ph) products to Central America. That means a lot to U.S. workers.

DOBBS: Congressman, we thank you very much for being here. I hope you'll come back as we continue to discuss CAFTA and its economic impact. Thank you. Congressman Kevin Brady of Texas.

Let's take a look now at some of your thoughts. David in Victorville, California wrote in to say, "Lou, I love how you speak up for Americans and the working class and look out for us, unlike our politicians who are taxing us to death, putting us in debt ...giving our country and jobs away to illegal aliens and other countries on a silver platter." Well, maybe not exactly a silver platter.

And M.W. Dies, "Lou, while we may need free trade, we don't need one-sided agreements which only expedite the transfer of American jobs. Many of the past free trade agreements have not really been about what's good for the consumer, but rather what's good for certain special interest groups."

And David Babcock of Hackensack, New Jersey. "Lou, your coverage of free trade agreements shows that they are anything but free."

And Roberta Sweet in Campbell, New York. "Lou, whatever happened to the government of the people, by the people, for the people?" We think that's a pretty good question here.

Send us your thoughts at loudobbs@CNN.com. We'll share more of your thoughts later in the broadcast.

Coming up next, a major victory for SBC employees and for SBC in their four-day long strike. A new contract is at hand. Also, deadly weather strikes in the Caribbean and the Midwest. We'll have the very latest for you, in "Water Wars," our week-long special report on the critical water shortage in Western states, a six-year drought in what could be the worst drought in, literally, centuries. Twenty-five million people are at risk. We'll have a special report next.

(COMMERCIAL BREAK)

DOBBS: In "Exporting America" tonight, a landmark settlement in the country's first strike that included the issue of overseas outsourcing. Early this morning, SBC Communications and union leaders agreed to work together to bring roughly 3,000 jobs back to the United States. Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): In the revolt against outsourcing, a victory for workers. From California to Connecticut, a new model. Union and management at SBC will work together to bring home jobs that were sent to cheap overseas labor markets.

PAUL HONGO, CWA LOCAL 1295: This is a victory for all working men and women. Not just CWA, not just its members. All working men and women in an effort to raise the standard of living. MARCUS COURTNEY, WASHTECH: This is the most significant victory for American workers in the fight to keep good-paying jobs here at home. It shows that when they stand up, join together, that they can keep jobs here at home, and it is not an inevitable race to the bottom.

VILES: Highlights -- a five-year no-layoff promise to 100,000 workers. New access to jobs in fast growing technologies such as wi- fi and voice-over Internet, and management agreed to work with the union to bring home roughly 3,000 tech support jobs that were sent overseas under an Accenture contract that runs through 2007.

GEORGE KOHL, CWA: Employees stood up; 100,000 employees stood up and made a demand. We need jobs in this country. We can provide quality service. We serve customers best; we deserve a future. They stood up and then SBC came to the table and finished that negotiation in a successful way.

VILES: There was give and take and the company did win some concessions. Wage increases are modest, and increased health care payments will save the company $2 billion.

UNIDENTIFIED MALE: This tentative agreement will continue to make our employees among the best paid, with the best benefits and the best job security in the business.

(END VIDEOTAPE)

VILES: This was not an especially nasty strike, but the union believes public opinion played a role and was definitely on the union side. It believes -- the union believes it helped force the phone company into a quick settlement -- Lou.

DOBBS: And I think it's fair at this point to give SBC, Ed Whitacre, its CEO, great credit here because they worked with the union, as collective bargaining is supposed to, to represent the interests of both the corporation, all of the other stakeholders, the investors as well, but certainly the employees.

VILES: They bargain in good faith. And in all our conversations with the SBC, they were very respectful of the union and the issues being raised here.

DOBBS: And the union was respectful, direct, and demonstrating great will, but respectful as well. If this is the sort of labor- business confrontation that would be the hallmark of the 21st century, I think everybody would sign up for it.

VILES: This was -- it's an overused expression, but it was a win-win.

DOBBS: OK. Pete, thanks. Peter Viles.

Still ahead here, firefighters battling to protect homes as wildfires rage in south-central New Mexico. Also, floods and tornadoes hitting the Midwest and hitting hard. There's more severe weather, unfortunately, to come.

We'll have the story next.

(COMMERCIAL BREAK)

DOBBS: Extreme weather over the United States for the past several days, but floods in the Caribbean have killed now more than 250 people. More than 300 other people are missing tonight. After weeks of heavy rains, a downpour pounded the Dominican and Haitian island of Hispaniola. That heavy rain caused the Solie River to flood, washing away three entire neighborhoods in the Jimani section of the island. Bodies were found as far away as six miles. U.S. Marines, already in the region, leading a task force to stabilize Haiti, are now on the way to assist in the search and rescue efforts.

In this country, residents of Gurnee, Illinois are bracing for what is forecast to be the worst flood in nearly two decades. The Des Plaines River is expected to crest at more than 12 feet tonight. That's more than five feet over flood stage. Farther south in the city of Des Plaines, the river is expected to crest Thursday, at more than 11 feet and 6 feet over flood stage. That will also be a record.

Severe storms and tornadoes pounded the Midwest last night. 55 tornadoes were reported in Nebraska, Kansas, Iowa and Missouri. Ten people were injured in Livingston County, Missouri. Among them, two girls were injured in a mobile home picked up and then dropped onto a car. One woman was killed in wind storm in Winchester, Illinois.

Tonight, we continue our special report on the drought that grips much of the western United States. It could be a record drought, centuries old the records that could be broken. Lake Powell on the border of Arizona and Utah, supplies water to cities throughout the southwest. But this drought is slowly draining the lake. And as the water level recedes, the economy is struggling.

Casey Wian reports from Lake Powell, Arizona.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): As it comes from the Rocky Mountains, the Colorado River runs through Utah widening until it reaches Lake Powell, a 185 mile long manmade reservoir formed in the 1960s by Glen Canyon Dam. Today, drought has left Powell more than half empty. Tourism is down. The locals are trying to stay positive.

KITTY ROBERTS, SUPT. GLEN CANYON NATL. REC. AREA: The lake level is where it was in the early 1970s or 1970. So, if someone was here in 1970, they may want to come back and see what the lake looks like. But the fishing is great.

WIAN: The National Park Service has spent $5 million moving boating facilities and chasing the receding shore line. As you can see behind me, it is 100 feet below the maximum level. In fact, it would take between 15 to 20 years of normal precipitation to refill the lake. Above the lakes north end you can see where one launch used to be. Others are operating in a new marina opens Memorial Day Weekend.

UNIDENTIFIED MALE: Down here is the first slips of Antelope Marina.

WIAN: A hotel and RV park are planned as part of a $75 million joint venture between the Navajo Nation, the U.S. Government, and private developers.

GARY SCARAMAZZO, GENERAL MANAGER ANTELOPE POINT MARINA: This area has 45 percent unemployment. So, that's one of the positive by product of this whole Marine, providing hundreds of jobs for people.

WIAN: However, if the lake continues to disappear, so will many of the jobs. For now, there is enough water for recreational use.

UNIDENTIFIED MALE: As long as there is a way out of the channel, you will always have people on the lake. It is too nice not to the to be out there.

WIAN: But as a water storage facility for millions of southwestern residents and as a power generating source, Lake Powell could be useless by 2007 if the drought continues.

BENNETT RALEY, ASST. SECRETARY OF THE INTERIOR: The only way to raise the lake level in the middle of a drought would be if you depopulated the west and the Colorado River Basin. That not going to happen. So, the reality is we manage the drought. It's serious but not a crisis.

WIAN: It least not yet.

Casey Wian, CNN, Lake Powell, Arizona.

(END VIDEOTAPE)

DOBBS: We continue our report tomorrow. We look at the devastating impact that this drought is having on farmers in the Southwest. Arizona farmers are being forced to sell because of the drought. Their arid, unusable crop land to, of all people, developers who will demand only more water. And they're doing so at a staggering rate.

In New Mexico, the wildfire in the Capitan Mountain is racing now across the Lincoln National Forest. That fire is 9,500 acres wide. No injuries have been reported. Today, the Federal Emergency Management Agency promised to cover up to 75 percent of the cost of fighting the fire.

Next, we'll share more of your thought itself, including e-mail on the president's plan for Iraq. We'll continue in just a moment.

(COMMERCIAL BREAK)

DOBBS: A rally on Wall Street, oil prices dropped from record highs. The Dow up 159 points. The Nasdaq up nearly 42. The S&P 500 up nearly 18 points. Taking a look at more of "Your Thoughts.

Leon in Dearfield Beach, Florida, "Are we really supposed to believe that Mr. Bush finally has a plan for Iraq? It must be heck of plan if he needs five more weeks to explain it."

And on broke been borders, Ann Thompson, of Prineville, Oregon, responding to reports that Accenture is among those companies eligible for Homeland Security Department contracts. "I positively can not understand why our government would outsource jobs designed to protect our borders. It's a real slap in the face to the public. It's just another case of giving the people the knife in the back."

Send us your thoughts at loudobbs@cnn.com. Still ahead, the results of our poll question.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight. Fifty-nine percent of you say President Bush should look to the United Nations for international support, 10 percent said Europe, 20 percent said Arab countries, 11 percent said non of the above.

Please join us tomorrow night. Author Tom Clancy and retired General Anthony Zinni, a critic of the presidents policies in Iraq, will be here on the new book they co-authored, "Battle Ready."

And in "Face Off" tomorrow, CAPTA, this countries next major free trade mistakes. We'll have two opposing views.

Please be with us. For all us here, good night from New York. "ANDERSON COOPER 360" is next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Aired May 25, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, May 25. Here now for an hour of news, debate and opinion is Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.

President Bush today launched a major new initiative to win the support of his critics in old Europe. President Bush called French President Jacques Chirac to ask him to back U.S. plans for the transfer of power to the Iraqis in just five weeks. It was a significant change in tone in U.S. policy one day after the president delivered a speech outlining his vision for the future of Iraq.

White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the president, in his initiative that he launched last night in order to convince Americans and the world that he does have a plan in Iraq does rely heavily on getting international support for that plan, getting a U.N. blessing for that plan.

The security and political transitions all are part of a U.N. resolution. In order to get that passed, the president, the White House needs France, among other countries, that opposed the war in Iraq at the U.N. to begin with. As you mentioned, today, the president did reach out to French President Jacques Chirac to talk about the issue.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What President Chirac and others have said is they want to make sure that the transfer of sovereignty to the interim government is a real transfer. And that's what we want. We want there to be a complete and real transfer of sovereignty, so that the Iraqi citizens realize the fate of their country is now their responsibility.

(END VIDEO CLIP)

BASH: Now, you heard the president saying that President Jacques Chirac does want real sovereignty. The president and Mr. Chirac had about a 20-minute conversation, a conversation where a couple of White House officials said that they acknowledged that there would have to be some real adjustments in the resolution.

Essentially, there's a very, very flexible attitude coming from this White House today, Lou, in order to get this passed. A number of senior officials essentially are making it clear that they are going to do what it takes to get this through, that they don't see any real problems there. One senior official saying that in the conversations that White House officials are having with their counterparts, they don't see anything major in terms of roadblocks.

This, as you mentioned earlier, is a different kind of attitude, a different kind of way of looking at this than it was a year and a half ago. They really need the U.N. and they're working to make sure that they get it -- Lou.

DOBBS: Dana, the attitude there is, then, that the rather dogmatic, emphatic approach of foreign policy from the White House has given way to flexibility and the prospect of concessions on the issue of Iraq?

BASH: Well, what they're saying here is that they really don't see that many major differences in what they need to do on this U.N. resolution. The differences are how you define, for example, Iraqi sovereignty in the interim.

The French and others say they really want to make it much more clear that Iraqis have sovereignty, that Iraqis have some control, for example, over the multinational force. That is a big point of contention. But they say that this, perhaps, might be some specifics that they can work out either in the resolution or separate. But they definitely are having a much more conciliatory tone here at the White House today.

DOBBS: Dana, thank you very much -- Dana Bash from the White House.

The Democratic leader in the White House sharply criticized the president's speech last night. Minority Leader Nancy Pelosi said today quote -- "What was most clear from the president's words is that there is a dangerous and expensive road ahead for the United States before the mission in Iraq will be accomplished. He should have made that clear before we went to war, not more than a year later."

Independent presidential candidate Ralph Nader went further, calling for President Bush to be impeached. Nader called Bush -- quote -- "a messianic militarist who pushed the country into war under false pretenses."

One of the most critical issues now facing the United States and other members of the coalition is just exactly who will control military operations in Iraq after they handover of power. The United States says American forces will be under U.S. command. But America's closest ally, Britain, says the new Iraqi government will have veto power over military operations.

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: If there's a political decision as to whether you go into a place like Fallujah in a particular way, that has to be done with the consent of the Iraqi government. And the final political control remains with the Iraqi government. Now, that's what the transfer of sovereignty means.

(END VIDEO CLIP)

DOBBS: British diplomats say London wants an agreement on Iraq's veto power before a Security Council vote on the proposed U.N. resolution put forward by the United States.

American officials say Britain is part of new Europe, while France and Germany represent old Europe. Now the Bush administration says it wants to make a deal with old Europe to complete the political transition in Iraq.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): It's horse trading time on the East River. The goal is the transfer of sovereignty in Iraq. The French foreign minister suggested changes would be made and added -- quote -- "We hope that this time we will be listened to."

MICHEL BARNIER, FRENCH FOREIGN MINISTER (through translator): I do not want to say that we do not agree with this or that. I would rather say in a more constructive fashion that this resolution must be improved on certain points.

PILGRIM: The Russian foreign minister said they waiting until U.N. envoy Lakhdar Brahimi sketches out the caretaker government in Iraq.

SERGEI LAVROV, RUSSIAN FOREIGN MINISTER (through translator): Depending on the report, we'll be able to judge whether there is a consensus in Iraqi society on such a government and whether or not this government would look legitimate in the eyes of the Iraqis themselves and Iraq's neighbors. Afterwards, we'll consider the question of its recognition.

PILGRIM: German Foreign Minister Joschka Fischer said the U.S.- British was -- quote -- "a good basis in attempt to reach consensus."

Some U.N. watchers worry that the tendency to debate will result in a resolution without sufficient detail.

MICHAEL MCFAUL, HOOVER INSTITUTION: It will be a watered-down resolution. It will be a kind of statement of general principles. But it's not going to have financial support and, most certainly, not going to have boots on the ground.

PILGRIM: Secretary of State Colin Powell, meeting with the Belgium foreign minister, called on some more substantial contribution besides talk.

COLIN POWELL, SECRETARY OF STATE: I hope that all nations will review their contributions, whether it be a financial contributor, reconstruction aid, trainers, advisers, or perhaps military forces. (END VIDEOTAPE)

PILGRIM: The real issue shaping up to prove the most difficult is the control over security forces after the transfer of sovereignty. France, Germany and Russia may push for Iraq to have more say over both Iraqi- and U.S.-led forces -- Lou.

DOBBS: Kitty, thank you very much -- Kitty Pilgrim.

At the United Nations today, the United States and other Security Council members held a private meeting on the draft American and British resolution on Iraq. The diplomats also discussed the progress being made by U.N. envoy Lakhdar Brahimi on the formation of a new Iraqi government.

And tonight, more violence to report in Iraq. Insurgents fired rocket-propelled grenades at an Iraqi police station in Baghdad. An American soldier was wounded in the attack. And an explosion damaged one of the Iraq's holy holiest shrines in Najaf. The military said the coalition was not responsible for the damage. Najaf is where the radical cleric Muqtada al-Sadr is hiding.

My guest tonight says the Iraqi war is the most important expedition the United States has undertaken since Vietnam. Fouad Ajami says the United States needs to, as he says, reclaim this war. He is professor of Middle Eastern studies at Johns Hopkins University.

Good to have you with us.

FOUAD AJAMI, JOHNS HOPKINS UNIVERSITY: Thank you, Lou. Thank you very much.

DOBBS: The idea of reclaiming this war is counter to appears to be the posture of the Bush administration, which is to disavow it.

AJAMI: Well, you're absolutely right.

I think our president went out last night and he has reclaimed this war. He's spoken for this war. He's reminded us this is about. In the most intensely felt passage of the war, he took us back to the terrors of September 11, because it has been hard to remind the American people that there is a connection between the terrors of September 11, 2001, and the war in Iraq. So we have to reclaim this war. It is not Bush's war. It is America's war.

DOBBS: It is America's war. And the president's speech last night, there was, as I think many people have said, many analysts and critics, there was a different approach in saying what the president did, but nothing really new in it. Do you agree with that assessment?

AJAMI: Well, I don't think he really needed to do something in it.

We know what he's trying to do. He's trying to sell shares in this enterprise called Iraq. He's offering shares to the Germans, shares to the French, shares to the Russians, shares to the Arabs, to anyone who would come in. That's really what we have to do. And he had to sell the American people on this expedition.

If you don't mind, I was just reading your column in "U.S. News & World Report" about road map to nowhere. What he has to do is, he has to convince you and has to convince your readers and has to convince the American public, above all, that an expedition which has taken 800 of our soldiers, young people killed in action in the streets and alleyways of Iraq, and $200 billion, is for real and something worthwhile and that we can actually win this war. That's the burden of this expedition. And that's the burden, his assignment at this time.

DOBBS: Professor, over the course of the next five speeches the president will give, do you expect to hear greater clarity, more directness about the U.S. foreign policy in the Middle East, as well as the policy toward Iraq?

AJAMI: Well, we have begun to understand the Arabs in many ways. I think the president -- we're now going to head into a discussion of this greater Middle East. We had hopes for reforms of the Arab world. We talked about reforming

(CROSSTALK)

DOBBS: Democratization.

AJAMI: Well, democratization, ending the culture of violence, ending the culture of terror, striking at this jihadist infrastructure. And really the appeal is to the broad middle classes of the Arab world. That's the danger. He has to speak to this, but that's an Arab fight. That's not really an American fight.

DOBBS: Not an American fight, an Arab fight. But America has taken up, if you will, residence in the neighborhood.

AJAMI: Yes.

DOBBS: And President Bush and his envoys are seeking the help of the United Nations, old Europe, when before him and the United States are the Arab nations.

AJAMI: Right.

DOBBS: Who are the most likely partners in any enterprise to improve life for the Iraqis, to establish stability. Is it a mistake not to be drawing in the Arab states upon which we will and Europe will be dependent for years to come?

AJAMI: Well, Lou, you have asked the fundamental question. Where are the Arabs in this fight? And I think that's very interesting.

And other than Kuwait, from which we waged this war, and Qatar, where the Central Command is based, most Arabs wish us ill in this campaign. They don't really want us to fail, because we're the cop on the beat. We protect them. We protect the Saudis. We shore up the Egyptians. So they really don't want us to fail, but they also don't want to see a prosperous, democratic Iraq that would show them up.

So what do they want for us. They want for us more of the same. They want us to bleed in the alleyways of Baghdad and Basra and Kufa and Najaf. And that's the dilemma of our position. That's why we go everywhere else and we don't turn to the Arabs, because we get no help from the Arabs.

DOBBS: If Lakhdar Brahimi is successful in bringing together a representative government, or at least a government that represents enough factions within Iraq, is it your sense that the United States will be able to step back significantly from military commitments in Iraq?

(CROSSTALK)

AJAMI: Well, we have to step back. But we will have 135,000 of our young men and women there. And our president even said last night that if we need more, we will even send more. So we have to be real and we have to understand what we're turning over on June 30.

It is freedom at midnight, June 30. They will be sovereign, but we will be there. We will not be providing, if you will, the bulk of the security effort, but we'll be sustaining the security effort. We'll still be in possession of a fair amount of responsibility and burden in Iraq.

DOBBS: The next question is, how likely is it in your judgment, your expert judgment, that Brahimi can be successful?

(CROSSTALK)

AJAMI: Well, we have passed from Bremer to Brahimi, if you will. And in fact we now are hoping that Brahimi will bail us out.

Brahimi doesn't really fully understand Iraq itself. But, nevertheless, it is not really about Brahimi. It is about finding the Iraqis, the appropriate Iraqis, who will take responsibility for their own country. This is really where the problem of this mission has been. We never trusted the Iraqis. We looked everywhere, but we didn't look to the Iraqis.

DOBBS: Do you trust them?

AJAMI: Well, I think we have to trust them. We are there. Our kids are there. And we have undertaken this vast mission in their country. And we keep talking about liberating 25, 26 million Iraqis. It's too late for second thoughts that way. We are there.

DOBBS: Is it too late for better thoughts?

AJAMI: I think it's too late -- we can't be cavalier about this mission. We have been sobered up. These stats that you cite and these stats that we know, the billions of dollars, the 800 soldiers who are killed, we are wiser about Iraq. We are more subdued by Iraq.

That's why the tone of the president was interesting last night. Gone is the hubris. Gone is the hope that we can remake this country and turn it into something fundamentally different. We're just now -- our goals are much more realistic.

DOBBS: Fouad Ajami, good to have you with us.

AJAMI: Thank you.

DOBBS: That brings us to the subject of tonight's poll. The question, where do you think President Bush should be looking for international support for Iraq, the United Nations, Europe, Arab countries, or none of the above? Cast your vote at CNN.com/Lou. We'll have the results coming right up.

Next here, one of the top military commanders will soon be replaced. We'll have a live report from the Pentagon. Who is taking the fall?

And surprising signs of weakness in the president's once solid political base. We'll have that story as well.

And the battle over whether another free trade agreement will help or hurt American workers, their families, and American business. We'll have a special report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Despite the statements of British Prime Minister Tony Blair today, Secretary of State Colin Powell says the United States will maintain complete control of American soldiers in Iraq after the handover. But Secretary Powell said the United States will consider the views of Iraq's new government those troops carry out military operations.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: Ultimately, however, if it comes down to the United States armed forces protecting themselves or in some way accomplishing their mission in a way that might not be in total consonance with what the Iraqi interim government might want to do at a particular moment in time, U.S. forces remain under U.S. command and will do what is necessary to protect themselves.

(END VIDEO CLIP)

DOBBS: The Pentagon says the commander of U.S. troops in Iraq, Lie General Ricardo Sanchez, is to be replaced. Officials say the move has nothing to do with the prisoner abuse scandal. The Pentagon insists it has complete confidence in the general's abilities.

Senior Pentagon correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, Pentagon officials went out of their way today to praise Sanchez and the job he has done commanding U.S. forces in Iraq and also, specifically, the way he handled the allegations of abuse at the Abu Ghraib prison, immediately launching a criminal investigation and also asking for an administrative review.

Pentagon officials insist this his rotation out of the top job was in the cards all along, has nothing to do with his handling of the abuse of detainees at the prison. And that was a view that was also echoed by military spokesmen in Baghdad today.

(BEGIN VIDEO CLIP)

BRIG. GEN. MARK KIMMITT, U.S. DEPUTY CHIEF OF OPERATIONS: We have always expected General Sanchez to depart sometime after sovereignty, transfer of sovereignty. Our expectations, my personal expectation was, like me, he would be departing sometime in the July time period.

(END VIDEO CLIP)

MCINTYRE: Now, under a plan that was developed months ago, a four-star general will be put in place essentially to replace Sanchez. We're told, sources say, that it will be Army Vice Chief General George Casey is the name that is expected to be forwarded to the White House for nomination.

Casey, a four-star general, worked right alongside the U.S. ambassador. And then Sanchez's deputy, General Metz, will take over his job as the commander. Sanchez will retain his job as the 5th Corps commander, awaiting possibly a new assignment. One possible problem, though, is that with an investigation under way, it may be difficult for Sanchez to get another good job, even if the Pentagon wants to give him one, because at this point it would be difficult to get him confirmed.

Those jobs require Senate confirmation. And right now, not all the senators are happy with the answers that they've been getting from the U.S. military -- Lou.

DOBBS: Not happy with the answers they're getting. And, certainly, it is no surprise to the Pentagon in moving General Sanchez, if we can call it moving. Why would they put the general, if they have such high regard for him, in such a crosshairs of obvious pitfall?

MCINTYRE: Well, the Pentagon insists that it was always its intention to have General Sanchez serve about a year -- that's what most of the combatant commanders there are serving -- and then possibly move on to another assignment.

And this was part of a plan, as they say, they developed months ago, putting a four-star general in, restructuring because of the transfer of sovereignty. And they have every plan to make use of Sanchez in the future. I'm just saying that there is a recognition here that there's a political reality that sometimes even people that are in the favor of the Pentagon can't get congressional confirmation because a single, individual member of Congress can sometimes hold up those confirmations. DOBBS: Jamie McIntyre, our senior Pentagon correspondent -- thank you, Jamie.

The president's speech on Iraq last night came as one poll showed his approval rating at a new low. Tonight, surprising information about why the president appears to be losing at least some of his critical core support.

CNN political analyst Bill Schneider reports from Washington.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): On Monday night, President Bush spoke to the people. His message was stay the course.

BUSH: We must keep our focus. We must do our duty.

SCHNEIDER: The president's speech appeared to be aimed less at critics than at believers. Is the president having trouble with his base? Republicans in Congress have been feeling uneasy and ignored.

SEN. CHUCK HAGEL (R), NEBRASKA: For whatever reason, the experience and judgment and expertise of the Congress is just not being used.

SCHNEIDER: So last week the president went up to Capitol Hill and held a pep rally for his party. And what happened according to a reporter with good GOP sources?

UNIDENTIFIED FEMALE: What do they say about it?

ROBERT NOVAK, CO-HOST, "CROSSFIRE": It was a bust.

SCHNEIDER: Why?

NOVAK: The president went on for the better part of an hour and left without a single question being asked.

SCHNEIDER: There some are indications that President Bush may be seeing an erosion of support in his base out there in the country. The CBS News poll shows a nine-point drop in President Bush's job approval rating among Republicans. A sharper drop than among Independents or Democrats.

The ABC News/ Washington Post poll shows a six-point drop among Republicans, but little change among Democrats and Independents. In March, according to the CNN/ USA Today /Gallup poll, President Bush had a solid 16-point lead over Kerry among southern voters. Now the race is essentially tied in the south.

Polls show the biggest shock has been the prisoner abuse scandal. Early this month, according to the ABC/ Post poll, the public approved of the way President Bush was handling the scandal. 48 to 35 percent. Now that's completely reversed. A solid majority disapproves the way the president is handling the controversy, including nearly a third of Republicans. The military scandal has shaken the president's base which may be why the biggest piece of news in the president's speech Monday night was this.

BUSH: Then with the approval of the Iraqi government we will demolish the Abu Ghraib prison as a fitting symbol of Iraq's new beginning.

SCHNEIDER: And he hopes his new beginning.

(END VIDEOTAPE)

SCHNEIDER: Here is another shift. In the latest national Annenberg election survey, Americans say they now believe the soldiers who committed the abuse were not acting on their own; they were following orders. So the court-martials now carry a political risk. The public may see ordinary soldiers taking a fall for a policy that was set by higher-ups -- Lou.

DOBBS: Bill, thank you very much -- Bill Schneider.

The president's reelection campaign today released a new ad attacking Senator John Kerry. The ad accuses Senator Kerry of playing politics with national security. And it says Senator Kerry changed his position on the Patriot Act after he was pressured by liberals. Senator Kerry's campaign called the ad misleading. The campaign said Senator Kerry has called for a new improved Patriot Act.

Joining me now for more on the campaign, reaction to the president's speech last night, Michael Duffy. He's Washington bureau chief for "TIME" magazine.

Michael, good to have you here.

MICHAEL DUFFY, WASHINGTON BUREAU CHIEF, "TIME": Nice to be here, Lou.

DOBBS: First, your thoughts on the president's speech. Was he effective against the expectations that had been established by the White House leading up to it?

DUFFY: Well, they pretty much lowered the expectations through the weekend. Politically, he had to put a floor under the eroding support that was visible across the political spectrum. He had to overcome the conventional wisdom that he didn't have a plan. And I think that he started to do that.

He has to give the speech over and over, over the next month and he plans to keep explaining, here is my five-point plan, here is where this is going, and he has to signal that he gets that there is a problem here. That doesn't solve the problem. Then, will the plan work?

But it does stop the erosion, hopefully, on the idea that he doesn't have a plan. That's their goal.

DOBBS: Five more speeches. Surely it won't be simply five iterations of what he said last night?

DUFFY: Well, George W. Bush's hallmark method is to say it and keep saying it and say it again. And I think a lot of it will resemble this. I suspect, somewhere in the next couple weeks, there will be a speech that emphasizes international relations.

That's one of the big criticisms John Kerry makes of President Bush's approach. I think there will be a speech about the Middle East. They ought to probably say something about what they plan to do about the Middle East peace process. But whether they actually give it still up in the air. We didn't really know until the last few minutes going into this what was coming in this speech. So I think they make it up as they go along.

DOBBS: When you say making it up as they go along, more than a year after seizing Baghdad, a year of opportunity to improve dramatically the condition of Iraqis and to have a clear policy in Iraq, a clear process in place for the transfer of sovereignty, a five-point plan, the White House, Scott McClellan, yesterday, saying we would be hearing a clear strategy.

You said they lowered expectations. But with that statement, do you think they met that task of a clear strategy?

DUFFY: Well, I think there is a difference between a plan and an explanation of how he plans to achieve real handover of sovereignty. He said, for example, that a number of the Iraqi ministries are in the hands of Iraqis. That's true. But they don't yet have any budget or any money or any authority to spend it.

So it is not clear -- and if they're ever going to get it. But the president has been out of the game for the last three weeks doing this. He hasn't been seen, hasn't been talking about this as much. And so I think the most important thing that happened is, he has put himself back into the conversation and said, I'm going to try to explain to people where I'm going. And that's probably a good thing.

DOBBS: Is Senator Kerry in the game, in your judgment?

DUFFY: He's been doing a very shrewd thing, which is to say as little as possible. As long as the news has been running against President Bush, he's done the smart thing, which is to stay out of the way. The problem is that hasn't clarified his position on the war any better. And it is not terribly clear.

DOBBS: Former Senator Alan Simpson responding to Kerry's criticism of the president's speech said, got a new idea, chum?

DUFFY: Yes.

DOBBS: Do you think he has?

DUFFY: Well, it's a good question. Regardless of how we got here, what are you going to do to fix it and do you have another plan? That's Kerry's challenge going forward, too, because he can't just ignore this debate as he goes forward. He is going to have to explain his position, too.

DOBBS: As Bill Schneider reported, significant erosion in the president's support among Republicans and ostensibly among conservatives, his base. That fact alone, given all else that's happening, does that suggest to you that the president is in real trouble here?

DUFFY: Well, this is -- without a doubt, this is the most difficult moment of his presidency since 9/11. And that's one of the reasons he's launched this initiative.

But it is not just conservatives. He's also lost -- he's lost Westerners and he's had a huge drop among young people, among independents. Across the political spectrum, there has been a huge erosion over the last two months. All of this suggests that he has to now get on the offensive. And it looks to me like he's on the offensive. The question is how long will he stay there and whether he will do enough to actually win people back.

DOBBS: How chilling must it have been for the White House to receive no questions when he went to Capitol Hill to rally support amongst the Republicans, primarily the leadership?

DUFFY: This is a mystery. They set up microphones for the lawmakers, senators and House members to actually ask questions. But he talked for so long and sort of gave the speech that they all heard many times before that he didn't take any questions. And that upset a lot of the Republicans on Capitol Hill.

It is also Republicans who have been the most outspoken I think in Washington criticizing the policy. And I think they had to respond to that. And this is one of the ways they did.

DOBBS: "TIME" bureau chief Michael Duffy, we thank you for being with us.

DUFFY: Thank you.

DOBBS: Appreciate it.

Tonight's thought is on democracy: "Too many people expect wonders from democracy, when the most wonderful thing of it all is just having it" -- those the words of American journalist Walter Winchell.

A reminder to vote in our poll tonight. Where do you think President Bush should be looking for international support, the United Nations, Europe, Arab countries, none of the above? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

Some of this country's brightest high school students battled it out for top honors in, of all things, economics. The National Economics Challenge took place at the High School of Economics of Finance Monday in New York City. Moorhead Senior High in Minnesota took top prize after answering this questioning. Are you ready? Are you ready? If a good produces positive externalities, should its protection be taxed or subsidized to achieve the efficient production level? Are you ready for the answer?

Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Subsidized.

UNIDENTIFIED MALE: That is correct.

(APPLAUSE)

(END VIDEO CLIP)

DOBBS: We all knew that. An all-freshman team from Bloomfield Hills International Academy won the top prize in a separate division. Each student on the winning teams and their coaches receives a $3,000 savings bond. Congratulations to all.

Still ahead, a controversial new trade agreement tonight, closer to becoming reality. We'll report on who stands to gain and lose from CAFTA next. We'll have some of your thoughts on free trade and its high price and one of CAFTA'S biggest supporters, Congressman Kevin Brady joins us.

In "Exporting America," victory tonight for thousands of Americans who feared they would lose their jobs to cheap foreign labor markets.

And an interesting display of leadership by a large American corporation. And flood waters in the Midwest rise to the highest levels in years. More storms are now on the way.

(COMMERCIAL BREAK)

DOBBS: We are reporting all this week on the controversial Central American Free Trade Agreement. The United States is expected to sign CAFTA this Friday. But Congress must eventually approve it if it is to go into effect and lobby groups on both sides of the CAFTA debate are now pressing their cases. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): CAFTA will not be kind to sugar beet farmers in North Dakota. The trade agreement will send more than 100,000 metric tons of sugar into the United States the first year. North Carolina textile workers are bracing for more jobs to ship to central America. Large modern textile plants are already dotting the landscape like this one in Honduras. An American family farm hammered by NAFTA expects to take a similar hit under CAFTA.

KATHERINE OZER, NATIONAL FAMILY FARM COALITION: What we see is people thinking that it's been good in the U.S. and it's been bad in other countries. We really feel like for family farmers it's been bad all around. JIM SCHOLLAERT, AMERICAN MANUF. TRADE ACTION COALITION: This is not about purchasing American products, exporting American products. It's about exporting American jobs and American wealth.

SYLVESTER: Critics of NAFTA say you don't need a crystal ball to see what will happen. Just look to the effects of ten years under NAFTA. In 1994, the United States had a trade surplus of more than $1 billion with Mexico. Now, it's running a trade deficit of more than $40 billion. The United States lost nearly 900,000 jobs due to the trade deficit between the two countries during that time period, and the U.S. agricultural trade surplus fell 47 percent between 1994 and 2000. Those who benefited from NAFTA will also reap the rewards of CAFTA, multinational corporations, agri business, even countries like China that will be allowed to ship fiber and other fabric components to Central America for assembly. Supporters of CAFTA argue without the trade agreement, Central America will be left behind by globalization.

ERIK AUTOR, NATIONAL RETAIL FEDERATION: If Congress says we don't want you to do business in Central America, by opposing CAFTA, they're basically saying we want you to move to Asia.

SYLVESTER: But under NAFTA Mexicans were not necessarily better off. Wages fell, farmers were displaced.

(END VIDEOTAPE)

SYLVESTER: What has family farmers, small business owners and labor groups even more concerned than CAFTA is the Free Trade Area of the Americas, that's a free trade agreement that is being negotiated that would extend to almost all of Latin America -- Lou.

DOBBS: Lisa, thank you very much. Lisa Sylvester reporting from Washington.

My next guest is spearheading congressional support for the Central American Free Trade Agreement. Congressman Kevin Brady says CAFTA will bring new jobs to this country. Congressman Brady is a member House ways and means committee joining us tonight from his district in Houston, Texas. Congressman, good to have you with us.

REP. KEVIN BRADY (R), TEXAS: Good evening, Lou. Thanks for having me.

DOBBS: CAFTA is by most of our sources suggesting very clearly that it is not going to become law, said it will not be passed by Congress this election year. Do you think it will next?

BRADY: Well, yes, I do. In fact, I'm absolutely confident of it. Mainly because this is a three for one win for America. One, we open up an emerging new market about the size of Canada to American goods and services especially for American farmers. We trade a partnership that will allow us to compete better against the likes of China. Thirdly, we lock in some dramatic reforms in Central America and democracy and labor rights, environmental rights. To their credit they've come so far. We need to make sure we keep them on the road. DOBBS: Congressman, you just heard Lisa Sylvester's report. The statistics are straightforward. 900,000 American jobs lost as a result of NAFTA. For Mexico, a decline overall in their wages since the NAFTA treaty was enacted in 1993 to 2003. Manufacturing wages in Mexico in decline. A trade deficit that has exploded on the part of the United States, $40 billion with Mexico. How in the world can this kind of result of something called free trade be beneficial to the United States and why would we want to do any more of it?

BRADY: First, those facts are not straightforward. They are very slanted. I think they ignore the devaluation of the peso and the worldwide recession that hit most of Mexico and the world in the early 1990s. The fact is unemployment is lower than it was before NAFTA. Mexico is selling more to us. We're selling twice as much to Mexico. And our manufacturing wages grew at twice the rate it did in America during NAFTA than before.

Let me tell you this. Let's talk about the trade deficit. You've analyzed numbers. You know our problem with the trade deficit isn't that we're buying too many foreign goods. It's that we're selling too few American goods. It is not enough to just buy American. We have to sell American, our farm equipment, our computers, our accounting services. The trade agreements, basically tear down the "American need not apply" signs around the world and give us a chance to compete.

DOBBS: Congressman, I think that's a wonderful idea. I don't imagine there's a single person in this country who wouldn't agree with the statement we should be selling more. But here are the facts. We're not. We have a $40 billion trade deficit with Mexico. We have a half trillion dollar trade deficit worldwide. We haven't run a trade surplus in this country for 28 years. We continue to hear all of this talk about free trade, and the Bush administration and much of the Republican party keeps trying to suggest to the American people who are concerned about the impact on working families, upon this economy and the indebtedness for our children, that there are only two choices, something called free trade, which we all know, first of all, doesn't exist and something called economic isolationism which we all know no one is proposing. Is there not a more intelligent approach to this kind of trade initiative?

BRADY: Actually, I think the Central America Free Trade Agreement is that balance. We are opening the market to an emerging area. They've been a proven trading partner over the years. They've bought -- for every dollar they sell into America, they've bought back $1.36. This is a great trade agreement for us. But again, going back to the trade deficit, yes, America is a huge consumer, and, yes, the rest of the world wants to invest in the country, a big part of our trade deficit. But the fact is when U.S. companies go out to compete, including SBC, who has been negotiating a strike, what they find is that Europe and Asia and other regions have beat us to the punch. That their sales and their products are covered by free trade agreements. We want a level playing field for American companies. We want our workers to compete around the world. And so without these trade agreements -- and I can just tell you, in Central America we're going to sell just almost immediately $900 million of Ag (ph) products to Central America. That means a lot to U.S. workers.

DOBBS: Congressman, we thank you very much for being here. I hope you'll come back as we continue to discuss CAFTA and its economic impact. Thank you. Congressman Kevin Brady of Texas.

Let's take a look now at some of your thoughts. David in Victorville, California wrote in to say, "Lou, I love how you speak up for Americans and the working class and look out for us, unlike our politicians who are taxing us to death, putting us in debt ...giving our country and jobs away to illegal aliens and other countries on a silver platter." Well, maybe not exactly a silver platter.

And M.W. Dies, "Lou, while we may need free trade, we don't need one-sided agreements which only expedite the transfer of American jobs. Many of the past free trade agreements have not really been about what's good for the consumer, but rather what's good for certain special interest groups."

And David Babcock of Hackensack, New Jersey. "Lou, your coverage of free trade agreements shows that they are anything but free."

And Roberta Sweet in Campbell, New York. "Lou, whatever happened to the government of the people, by the people, for the people?" We think that's a pretty good question here.

Send us your thoughts at loudobbs@CNN.com. We'll share more of your thoughts later in the broadcast.

Coming up next, a major victory for SBC employees and for SBC in their four-day long strike. A new contract is at hand. Also, deadly weather strikes in the Caribbean and the Midwest. We'll have the very latest for you, in "Water Wars," our week-long special report on the critical water shortage in Western states, a six-year drought in what could be the worst drought in, literally, centuries. Twenty-five million people are at risk. We'll have a special report next.

(COMMERCIAL BREAK)

DOBBS: In "Exporting America" tonight, a landmark settlement in the country's first strike that included the issue of overseas outsourcing. Early this morning, SBC Communications and union leaders agreed to work together to bring roughly 3,000 jobs back to the United States. Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): In the revolt against outsourcing, a victory for workers. From California to Connecticut, a new model. Union and management at SBC will work together to bring home jobs that were sent to cheap overseas labor markets.

PAUL HONGO, CWA LOCAL 1295: This is a victory for all working men and women. Not just CWA, not just its members. All working men and women in an effort to raise the standard of living. MARCUS COURTNEY, WASHTECH: This is the most significant victory for American workers in the fight to keep good-paying jobs here at home. It shows that when they stand up, join together, that they can keep jobs here at home, and it is not an inevitable race to the bottom.

VILES: Highlights -- a five-year no-layoff promise to 100,000 workers. New access to jobs in fast growing technologies such as wi- fi and voice-over Internet, and management agreed to work with the union to bring home roughly 3,000 tech support jobs that were sent overseas under an Accenture contract that runs through 2007.

GEORGE KOHL, CWA: Employees stood up; 100,000 employees stood up and made a demand. We need jobs in this country. We can provide quality service. We serve customers best; we deserve a future. They stood up and then SBC came to the table and finished that negotiation in a successful way.

VILES: There was give and take and the company did win some concessions. Wage increases are modest, and increased health care payments will save the company $2 billion.

UNIDENTIFIED MALE: This tentative agreement will continue to make our employees among the best paid, with the best benefits and the best job security in the business.

(END VIDEOTAPE)

VILES: This was not an especially nasty strike, but the union believes public opinion played a role and was definitely on the union side. It believes -- the union believes it helped force the phone company into a quick settlement -- Lou.

DOBBS: And I think it's fair at this point to give SBC, Ed Whitacre, its CEO, great credit here because they worked with the union, as collective bargaining is supposed to, to represent the interests of both the corporation, all of the other stakeholders, the investors as well, but certainly the employees.

VILES: They bargain in good faith. And in all our conversations with the SBC, they were very respectful of the union and the issues being raised here.

DOBBS: And the union was respectful, direct, and demonstrating great will, but respectful as well. If this is the sort of labor- business confrontation that would be the hallmark of the 21st century, I think everybody would sign up for it.

VILES: This was -- it's an overused expression, but it was a win-win.

DOBBS: OK. Pete, thanks. Peter Viles.

Still ahead here, firefighters battling to protect homes as wildfires rage in south-central New Mexico. Also, floods and tornadoes hitting the Midwest and hitting hard. There's more severe weather, unfortunately, to come.

We'll have the story next.

(COMMERCIAL BREAK)

DOBBS: Extreme weather over the United States for the past several days, but floods in the Caribbean have killed now more than 250 people. More than 300 other people are missing tonight. After weeks of heavy rains, a downpour pounded the Dominican and Haitian island of Hispaniola. That heavy rain caused the Solie River to flood, washing away three entire neighborhoods in the Jimani section of the island. Bodies were found as far away as six miles. U.S. Marines, already in the region, leading a task force to stabilize Haiti, are now on the way to assist in the search and rescue efforts.

In this country, residents of Gurnee, Illinois are bracing for what is forecast to be the worst flood in nearly two decades. The Des Plaines River is expected to crest at more than 12 feet tonight. That's more than five feet over flood stage. Farther south in the city of Des Plaines, the river is expected to crest Thursday, at more than 11 feet and 6 feet over flood stage. That will also be a record.

Severe storms and tornadoes pounded the Midwest last night. 55 tornadoes were reported in Nebraska, Kansas, Iowa and Missouri. Ten people were injured in Livingston County, Missouri. Among them, two girls were injured in a mobile home picked up and then dropped onto a car. One woman was killed in wind storm in Winchester, Illinois.

Tonight, we continue our special report on the drought that grips much of the western United States. It could be a record drought, centuries old the records that could be broken. Lake Powell on the border of Arizona and Utah, supplies water to cities throughout the southwest. But this drought is slowly draining the lake. And as the water level recedes, the economy is struggling.

Casey Wian reports from Lake Powell, Arizona.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): As it comes from the Rocky Mountains, the Colorado River runs through Utah widening until it reaches Lake Powell, a 185 mile long manmade reservoir formed in the 1960s by Glen Canyon Dam. Today, drought has left Powell more than half empty. Tourism is down. The locals are trying to stay positive.

KITTY ROBERTS, SUPT. GLEN CANYON NATL. REC. AREA: The lake level is where it was in the early 1970s or 1970. So, if someone was here in 1970, they may want to come back and see what the lake looks like. But the fishing is great.

WIAN: The National Park Service has spent $5 million moving boating facilities and chasing the receding shore line. As you can see behind me, it is 100 feet below the maximum level. In fact, it would take between 15 to 20 years of normal precipitation to refill the lake. Above the lakes north end you can see where one launch used to be. Others are operating in a new marina opens Memorial Day Weekend.

UNIDENTIFIED MALE: Down here is the first slips of Antelope Marina.

WIAN: A hotel and RV park are planned as part of a $75 million joint venture between the Navajo Nation, the U.S. Government, and private developers.

GARY SCARAMAZZO, GENERAL MANAGER ANTELOPE POINT MARINA: This area has 45 percent unemployment. So, that's one of the positive by product of this whole Marine, providing hundreds of jobs for people.

WIAN: However, if the lake continues to disappear, so will many of the jobs. For now, there is enough water for recreational use.

UNIDENTIFIED MALE: As long as there is a way out of the channel, you will always have people on the lake. It is too nice not to the to be out there.

WIAN: But as a water storage facility for millions of southwestern residents and as a power generating source, Lake Powell could be useless by 2007 if the drought continues.

BENNETT RALEY, ASST. SECRETARY OF THE INTERIOR: The only way to raise the lake level in the middle of a drought would be if you depopulated the west and the Colorado River Basin. That not going to happen. So, the reality is we manage the drought. It's serious but not a crisis.

WIAN: It least not yet.

Casey Wian, CNN, Lake Powell, Arizona.

(END VIDEOTAPE)

DOBBS: We continue our report tomorrow. We look at the devastating impact that this drought is having on farmers in the Southwest. Arizona farmers are being forced to sell because of the drought. Their arid, unusable crop land to, of all people, developers who will demand only more water. And they're doing so at a staggering rate.

In New Mexico, the wildfire in the Capitan Mountain is racing now across the Lincoln National Forest. That fire is 9,500 acres wide. No injuries have been reported. Today, the Federal Emergency Management Agency promised to cover up to 75 percent of the cost of fighting the fire.

Next, we'll share more of your thought itself, including e-mail on the president's plan for Iraq. We'll continue in just a moment.

(COMMERCIAL BREAK)

DOBBS: A rally on Wall Street, oil prices dropped from record highs. The Dow up 159 points. The Nasdaq up nearly 42. The S&P 500 up nearly 18 points. Taking a look at more of "Your Thoughts.

Leon in Dearfield Beach, Florida, "Are we really supposed to believe that Mr. Bush finally has a plan for Iraq? It must be heck of plan if he needs five more weeks to explain it."

And on broke been borders, Ann Thompson, of Prineville, Oregon, responding to reports that Accenture is among those companies eligible for Homeland Security Department contracts. "I positively can not understand why our government would outsource jobs designed to protect our borders. It's a real slap in the face to the public. It's just another case of giving the people the knife in the back."

Send us your thoughts at loudobbs@cnn.com. Still ahead, the results of our poll question.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight. Fifty-nine percent of you say President Bush should look to the United Nations for international support, 10 percent said Europe, 20 percent said Arab countries, 11 percent said non of the above.

Please join us tomorrow night. Author Tom Clancy and retired General Anthony Zinni, a critic of the presidents policies in Iraq, will be here on the new book they co-authored, "Battle Ready."

And in "Face Off" tomorrow, CAPTA, this countries next major free trade mistakes. We'll have two opposing views.

Please be with us. For all us here, good night from New York. "ANDERSON COOPER 360" is next.

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