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Crisis in the Middle East

Aired July 14, 2006 - 13:30   ET

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

KYRA PHILLIPS, CNN ANCHOR: All right. Tony, let me know when you have something new. Appreciate it.
Israeli cabinet just a short time ago gave the go ahead for more attacks inside Lebanon. Let's get an update from Jerusalem now. CNN's Paula Hancocks is there. Paula, tell us about the strategy at this point.

PAULA NEWTON, CNN CORRESPONDENT: Sorry -- it's Paula Newton here, Kyra. The Israeli prime minister did come out and said that they would continue with their operations. At this point they are dealing with a very, very tense situation in Northern Israel.

Kyra, we now have confirmed from the Israeli defense forces that in fact a mother and child were killed in their home by one of those rockets landing in Northern Israel coming from Lebanon.

These will truly resonate with civilians on that end. Although we have had more than two dozen people injured in the last few hours, certainly they've been lightly injured and only one critically wounded. This is actually a death of a mother and child.

This is really starting to hit home. People have been heading for their safe house, for their safe rooms in their homes, they've been trying to get to family and friends further south. But people still here are quite vulnerable and are wondering what it's going to take.

As far as the Israeli government is concerned, Kyra, they really are not sounding like a government, at this point, that wants to compromise. And that seems to be where they are taking this end-game militarily.

PHILLIPS: Paula Newton, appreciate it. And Paula, as you know, Paula Hancocks was with me all day yesterday, so it rolled right off my tongue. Appreciate it, Paula. We'll check back in with you.

Well, the situation in the Middle East is having a big impact here in the United States and especially on Wall Street. Susan Lisovicz, live from the New York Stock Exchange with the latest on the oil prices -- Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Kyra. Well, you know, these rocket attacks, these casualties, the fiery rhetoric are coming from a part of the world that supplies 1/3 of the world's supply of oil. So, it is having a very dramatic effect. There's been described today as panic buying in a very tight market. Right now oil prices have actually retreated a bit from their earlier high of $78.40 a barrel. But they're still above yesterday's record close. Now trading right now $77.35. So, we're in record territory.

The oil market, more responsive than most to external influences like what we're seeing unfold, not only in the Middle East but in other hot spots. So in that sense, analysts say prices are likely to go even higher.

One oil trader told me earlier today, the risk to the market right now is the greatest he's seen since the oil embargo of the 1970s. The conflict between Israel and Lebanon puts more pressure on Iran which is the world's second biggest oil producer behind Saudi Arabia. If Iran gets drawn into the conflict directly and there are disruptions in its supplies or waterways, it would be a major problem, because supplies are already tight-- Kyra.

PHILLIPS: So how are stocks reacting to all the uncertainty in the oil market?

LISOVICZ: Well, you know, there's now buying on the dip. A lot of times you sew that, that investors start put little feelers out there. And it's not happening, because we're already at a very nervous time with the economy showing signs of slowing down, with corporate earnings season just starting, you are seeing another selloff.

The Dow has lost about 400 points over the last three days. And it's very close to giving up all its gains for the year.

Right now, the Dow industrial is off 106 points. The NASDAQ down 15, or three quarters of a percent -- Kyra.

PHILLIPS: All right. Thanks so much, Susan.

Well, exclusive insight into the conflict, I'm going to talk with a former Israeli special operations officer and international terror expert straight ahead.

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PHILLIPS: Well, an estimated 25,000 Americans live in Lebanon and have no safe way to get out. CNN's Pentagon correspondent Barbara Starr joins me with more on the latest efforts. What's going on, Barbara?

BARBARA STARR, CNN CORRESPONDENT: Well, Kyra, at the moment, today we are told the military continues to do contingency planning, looking at all the options on how it would get Americans out of Lebanon.

Let's kind of walk through for a second how all of this would unfold. Essentially it starts with the U.S. ambassador to Lebanon. He has to make a request to the Pentagon that he needs military assistance to get Americans out of there. He calculates how many Americans want to leave and what would be needed to get them out of Lebanon.

Already, of course, he has authorized the departure of nonessential embassy personnel. But they haven't left, because there's no safe way out.

So, that's what the military is waiting for, that all important formal request. They don't go in without it.

But what they do, do is all this contingency planning. And they tell me they're looking at all the available options right now as to what assets are in the region, what they would have to do to get Americans out.

One option on the table, Kyra, trying to find a usable airfield, a usable runway that has not been destroyed by the Israelis and put an aircraft in there and with that small number of Americans they would try and get out.

The more significant, perhaps radical option is to use a group of Marine Corps amphibious warships headed by the USS Iwo Jima that are now in the northern Red Sea on an exercise with the Jordanian. Turn those ships around, put them back up into the Met (ph), have them stand offshore and be ready with their helicopters and their marines to do an armed escort out of Beirut in some fashion.

Also a third option, possibly, Cyprus, that's just about 100 miles offshore Lebanon in the Mediterranean. They could put some aircraft, put some helicopters in there.

But again, none of these options looking great. All of them come with some risk and some threat -- Kyra.

PHILLIPS: So, what do you think the biggest challenge is, Barbara, and is it possible that U.S. military forces would work with IDF forces if indeed evacuations had to happen?

STARR: Well, the biggest challenge is the very fact that nobody can say right now how many Americans. It is most likely if an evacuation is ordered, if the military goes in, and we don't for sure that will happen, it will begin with a small group of Americans. Those nonessential embassy personnel. But as you said at the top, 25,000 Americans.

If it comes down to that, how do they get those people out and assure their security in transit?

As to an agreement with the Israeli Defense Forces, some sort of safe passage, that might be able to be accommodated with the Israelis. But one could only speculate that the U.S. military would be a little reluctant to take any Hezbollah group at its word about some sort of temporary cease fire for an evacuation. So one can only speculate that it's a pretty safe bet that if the U.S. military goes in, Kyra, they will go in with all the support, all the defensive measures that they feel they need to protect the troops and protect the civilian Americans, they would try and get out of there. Kyra? PHILLIPS: All right, Barbara, thanks. Let's get to Tony Harris, continuing to monitor all the various networks that we're bringing into CNN from here all across the globe.

TONY HARRIS, CNN ANCHOR: OK Kyra, just wanted to give you the very latest. We had been wondering just a moment ago about the where abouts of Hezbollah's leader, Hassan Nasrallah. And we understand now, the international desk working behind me just informed me that he is actually speaking to Hezbollah and the nation right now.

Saad, is this a phoner? Saad, is this a phoner? That he is actually speaking now to Hezbollah and the nation of Lebanon right now through Hezbollah television. I don't believe we have a translation of that, we don't have a translation. But we are translating it for you. And we will come back to you, Kyra, with the latest as to what he is saying. We understand that this is the leader of Hezbollah, Hassan Nasrallah, he is speaking now through Hezbollah television. We will get a translation and let you know what he's saying in just a moment, Kyra.

PHILLIPS: And Tony, just to point out, Hezbollah television, not allowed to air in the United States.

HARRIS: Absolutely, banned in the United States.

PHILLIPS: Obviously, Octavia Nasr, our Arab affairs editor talking a lot about the propaganda. So I think we're going to have to work to confirm if indeed this is Hezbollah's leader, this voice that we're hearing via the network, right?

HARRIS: I think you're absolutely right about that. That is the reporting, again, we have to keep in mind, and you're right to point it out, Kyra, that this is Hezbollah television that is reporting this.

That it is the voice of Hassan Nasrallah. We will certainly confirm that on our end independently here at CNN and we will bring you the answer to that question. And then also what is being said irregardless of who is doing the speaking, we will get you that translation and at least pass along bits of that message for you.

PHILLIPS: All right Tony Harris, thanks so much. Straight ahead, all day, we've been talking about Hezbollah. Coming up, a closer look at the group and why it has such prominence in the Middle East.

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PHILLIPS: Tony Harris continuing to follow our breaking news coverage of what's taking place in the Middle East. Working a developing story for us right now, tied to that. Tony?

HARRIS: OK Kyra, as you know, Israel has targeted Hezbollah headquarters in Lebanon. And Al-Jazeera, Al-Arabiya and Hezbollah television are all reporting that the leader of Hezbollah is safe and that in fact he is addressing Hezbollah and the nation right now. We do have translation. Let's join that in process.

HASSAN NASRALLAH, HEZBOLLAH CHIEF (through translator): I want to say is to continue to steadfast and to assert these meanings. My word to the resistance, my brothers, my beloved ones, my dear ones, and those who support them, every Lebanese, every Palestinian, every Arab and every Muslim and every honorable man in this world and every oppressed and tortured person in this world and every person who love steadfastness and honor and values and courage that embodied in them -- who also embody the battle and the fighting of this enemy, fighting in carriage, and I tell them, you are after God, our support. You are our honor.

And with you, the honor will remain and with you, dignity will continue. The accomplishment in 2000, you were the ones after God. Today, you are meant before anyone else to keep this victory and to keep this liberation and to achieve dignity. And you are required as you were and as you have proven before, that you were and are as we expect you to be.

And we depend on God and victory and God's victory is dear and is near. And for the Zionists, for the people of the Zionists entity in this hour, I tell them, you will discover soon that you will find out how much your new leadership and new government, stupid and does not know how to evaluate the issues and has no experience at this level.

You, the Zionists and say in your polls that you believe me more than you believe your representatives. And this time, I tell you to listen to me and to believe me. Today, we endured this aggression yesterday on the southern district.

And despite every aggression in every village in every street in Lebanon, there's no difference between the southern district and Beirut and any house in south Lebanon or north of Lebanon or Mt. Lebanon or any core in Lebanon, this equation has ended.

I will not say if you hit Beirut, we will hit Haifa. I will not say if you hit the southern district, he will hit Haifa. This equation you wanted to fall, it will fall. We together -- you want to open war? We will go to the open war. And we are ready for it. And we are ready for it. War, war on every level, to Haifa, and believe me, to after Haifa and to after and beyond and beyond Haifa. Who will pay the price? Not just us. Not -- our houses will not be destroyed by itself. Not us alone who will be destroyed.

This has ended. This has been before 1982 and before the year 2000. This time has ended, and I promise you it has ended and, therefore, you have to bear responsibility of what your government has done. This is this government from now and on.

You wanted war, an open war. It will be an open war. You want your government to do -- to change the rule of the game? This game will change. Now you know who you're fighting with. You are fighting the sons of Muhammad and Ali and the Hassah (ph) and Hussein (ph) and the prophets' household. You are fighting people who have faith.

Nobody has it on the face of this earth. And you've chosen open war with people that -- who are honored and proud of their culture and of their history and has the material and experience and the mind and the endurance and the courage in the coming days between us and you.

And for the Arab governments, I will not ask you for your history, just a brief word. We are adventurers. We in Hezbollah are adventurers, yes, but have been adventurers since 1982. And we did not bring to our country but victory, freedom, liberation, and honor and dignity and the high heads.

This is our history. This is our experience. These are our adventures. In 1982, you said about us that we were crazy and we have proven that we were the sane ones and you were the -- I will not enter into an argument with anybody. And until you have bets on your minds, and we will have our bets on ourselves, and we were not dependent on you. We have depended on our God and our people and our hearts.

HARRIS: OK. Kyra, we want to recap this just briefly and then we will continue to monitor it here at the international desk and bring you the latest as the speech continues. That's Hassan Nasrallah. His title is secretary-general of Hezbollah.

He is the leader of Hezbollah, and in that speech, you heard him claiming victory, evoking God to claim a victory, promising that victory is near, essentially threatening the new Israeli government that is being led now by Ehud Olmert, promising that Haifa will be hit again, saying on a couple of occasions that "if you want an open war, we are ready. You want an open war, it will be an open war." That is the leader of Hezbollah.

We are still working to confirm that, but that is certainly the speech that was delivered on Hezbollah TV to Lebanon and members of Hezbollah. We will continue to monitor that speech and bring you more from it in the minutes to come, Kyra.

PHILLIPS: Harsh words. All right. We'll monitor it. Let us know when you get some more. Tony, we sure appreciate it.

HARRIS: Sure thing.

PHILLIPS: If you want to listen to the rest of this speech by the secretary-general of Hezbollah speaking right now on Hezbollah Television, Hassan Nasrallah, go to CNN.com/pipeline and you can continue to listen to that live interview.

Meanwhile, Tony Harris, our international desk monitoring it. They'll bring us more.

But let's talk more about Hezbollah, the Israeli Defense Force, the ongoing war right now, and the military strategy.

I'm joined by Steve Hartov. He's served in the Israeli Defense Forces airborne brigades and in a special operations branch of military intelligence. He's currently editor-in-chief of "Special Operations Report." Steve joins me from New York.

And, Steve, I know we got you looped in listening to Hassan Nasrallah. What's your first reaction when you hear what he's saying?

STEVEN HARTOV, "SPECIAL OPERATIONS REPORT": Well, Kyra, that's quite a rant -- honor, valor, dignity -- but it does seem to sort of go on and ramble on about -- in a threatening manner. I suppose he's trying more to have an impact on his own constituents than, certainly, on the new Israeli government because I don't think that the new Israeli government is really militarily afraid of Hezbollah.

PHILLIPS: And let's talk about that. You served in the IDF. You were involved in a number of things, a number of things we can't talk about. But when you saw the formation of Hezbollah, it was because of what happened in Iran. Why don't we give a little context to how this group even came into power?

HARTOV: Well, Kyra, Hezbollah is actually the creation of the Iranians and the Iranian Revolutionary Guard. Most of that happened -- began to happen in 1982, even as you heard Nasrallah say himself.

Now what has developed through the Hezbollah and the Party of God is a very strong terrorist organization built on sort of a similar structure as Hamas. There's a lot of contribution to "worthy," quote, unquote, causes of the citizenry, while there's also the accumulation of arms and extreme terror activities.

So they get support from underneath, and then they're able to get support as well from the Iranians, who are putting about $100 million a year into Hezbollah's fighting program.

PHILLIPS: All right, Steve, stay with us. We're going to take a quick break. Of course, that breaking news, hearing from the head of Hezbollah pushed us forward a little bit. I want you to stay with us. Just got to get a little commercial time in. We'll be right back. The news keeps coming. We'll keep bringing it to you. More LIVE FROM coming up next.

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