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Northwest Airlines Flight Turned Back to Amsterdam; State Department: Iran's Response 'Falls Short'; Kidnapped Journalists

Aired August 23, 2006 - 14:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: It's the top of the hour. We want to update you on that diverted plane and 12 arrests after passengers create security concerns.
Let's get straight to Homeland Security correspondent Jeanne Meserve, working this developing story.

What happened, Jeanne?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, Kyra, we now know more about exactly why that plane was turned around. It was a Northwest Airlines flight en route from Amsterdam to Mumbai, India, when it was turned around.

According to a U.S. government official, some of the passengers on that flight pulled out cell phones during takeoff. In addition, some passengers appeared to be trying to pass their cell phones around. And this U.S. government official says that some of the passengers on board took off their seat belts, unfastened them before the seat belt light had gone out.

All of that, according to the U.S. government official, enough to make the U.S. air marshals who were on board this flight break their cover and come out. The flight attendants, we're told, told the passengers to pay attention to the air marshals and the plane was turned around and taken back to Amsterdam.

According to a Dutch police spokesman, 12 people have been charged preliminary. We do not know what nation or nations they are from, and we do not yet know how serious a threat they might have posed -- Kyra.

PHILLIPS: Jeanne Meserve, thanks so much.

Well, time flies when you're investigating an airline terror plot. So Scotland Yard is reportedly asking a judge in London for a few more days to build cases against 11 suspects who have been held for two weeks but still not formally charged. Eleven suspects who have been charged were in court yesterday and a new British law allows terror suspects to be held without charge for 28 days pending judge's approval.

Ready to talk or trying to stall? Tehran is offering to negotiate just days before a U.N. deadline to mothball its nuclear program or face economic sanctions, but Washington, for one, is not impressed. The State Department says Iran's answer to a package of incentives falls far short of U.N. demands.

CNN's Aneesh Raman is the only U.S. television network reporter working in Tehran right now. He joins me live via broadband.

Aneesh, bring us up to date.

ANEESH RAMAN, CNN CORRESPONDENT: Well, Kyra, good afternoon.

Iran essentially will not lose any sleep over the U.S. reaction. Here's the situation.

Iran has been forced to contemplate whether it will suspend its nuclear program by the end of the month, as mandated by the U.N. Up to today, Iran has said no. In a likely response yesterday, it said, look, we can talk again, we can talk with everything on the table, let's have dialogue, let's not have this deadline.

That now seems to be falling far too short for a number of U.N. countries. But what Iran is doing is planning for the next stage.

When that U.N. deadline comes and passes, it doesn't automatically trigger sanctions. Instead, it says something should happen, and then the U.N. debates what that would be. We've already heard from Russia, who has been keen to try and open new negotiations with Iran, so Iran has given fodder now to countries like Russia, countries like China, that are very uneasy about putting sanctions onto Iran.

Iran has maintained from the start this is a peaceful civilian nuclear program. And now facing that deadline, facing its decision to not suspend that program, it is trying to mitigate whatever might come from the U.N. -- Kyra.

PHILLIPS: But can the Iranian government ever suspend its nuclear program?

RAMAN: Well, that's the other threat in all of this, is that Iran has, from the start, not only maintained it's a peaceful civilian nuclear program, but Iran's government, Kyra, has convinced the people that this is not only their essential right, but an essential need for Iran to survive, nuclear power. And that has been the drumbeat that has been going on at rallies across the country with Iran's president.

There are big domestic issues here. The economy is not in the greatest of shape, the youth who make up the majority are largely unemployed. Inflation keeps going up. The government hasn't delivered much on economic progress.

So, it has turned the focus of the country to this nuclear program. Because of that, it will be very difficult for Iran's leader to suspend the program because it will have to back away from its continued statements and rallied support here in Iran -- Kyra.

PHILLIPS: Aneesh Raman, live from Tehran.

Thanks, Aneesh. Hope and concern out of Gaza. Video released just hours ago shows two Fox journalists who were kidnapped last week. We also know for the first time who claims to be holding them and what the kidnappers want.

CNN's Chris Lawrence is following developments from Jerusalem -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Well, Kyra, we didn't actually see the kidnappers in this video, but they did release a statement written in Arabic, and translated if partly reads, "We will release our prisoners if you release Muslim prisoners from the jails of America."

Basically, this statement goes on to say that this applies to everyone, no exception. It gives 72 hours for apparently the United States to comply.

It doesn't specify which jails, but, speculating, you could assume it means not only prisons in the United States, but American- controlled prisons outside, such as Guantanamo. It also says that if our -- "If your conditions are fulfilled, then our conditions will be fulfilled. But if you do not meet our demands, then you could wait and we could wait, too."

It does never get -- specifically say what would happen if those demands are not met.

We also heard from the two journalists, Steve Centanni and Olaf Wiig. This is the first time we have heard from them since they were captured 10 days ago.

They talked about being fairly treated, having showers, clean clothes, being able to eat, being able to get something fresh to drink. And they also sounded very disturbed about missing their families. And, in fact, they made a very direct plea to say -- Olaf Wiig made a very direct plea to say, "Don't worry, I will do all the worrying."

Steve Centanni said, you know, "Please do all you can to get us out of here." Olaf Wiig added to that, "Please, use what you can do to put pressure on the local government here in Gaza and in the West Bank," apparently referring to some of these demands, again, by the kidnappers to have some Muslim prisoners released from the jails of America -- Kyra.

PHILLIPS: Now, Chris, this has totally changed the way you operate, right? There are certain areas you just don't go into now and other journalists are pulling out, right?

LAWRENCE: Yes, Gaza was always -- it's always been a place where there have been kidnappings, 26 kidnappings in the last two years, nine of them journalists. But all of these ended within a day, maximum. Usually within hours.

It was usually just to exchange some prisoners, perhaps some money or a job. They were all released peacefully.

By the length of time, the fact that we never heard anything from these kidnappers, most of the news organizations pulled out of Gaza. I know for a fact that CNN, we stopped going into Gaza several days ago and, as of yet, have not changed the policy. Most especially not only because of this one kidnapping, but because we also got word that an unnamed group, which may be this group, this Holy Jihad Brigades, had put out word that it planned to kidnap any foreign journalist that was caught in Gaza.

PHILLIPS: Chris Lawrence, it's a tough time in Jerusalem right now. All throughout the Middle East. Appreciate it.

Well, in Lebanon the shelling has stopped, the rebuilding starts. It's a daunting task some Lebanese have been through once, twice, three times before.

CNN's Jim Clancy reports they're tired but determined.

(BEGIN VIDEOTAPE)

JIM CLANCY, CNN CORRESPONDENT (voice over): Another victim of war. A young woman weeps at the casket of her grandmother. The destruction and civilian casualties all across south Lebanon stir her anger at Israel.

UNIDENTIFIED FEMALE: You don't see the children and the families. And why? This is my country. You know? And if you have a country and you have Israel at the same time, you make what Hezbollah (INAUDIBLE).

CLANCY: It's another traffic jam at another bombed bridge on the Litani River. Madeline (ph) is forced to get out and walk.

The rain hardly matters, not to the children, of course, flashing victory signs from their windows, or the man finally driving his family home. A journey through the south takes you past billboards of martyrs.

Two villages pounded to rubble from the air. Cities that must finish the destruction before struggling to stand once again.

"It's the fourth time," says the dressmaker in Nabatiyah. "First, the Israeli invasion in 1982, twice during the occupation, and now this, the worst." His factory opposite the government offices is destroyed. As he throws away his inventory of women's clothes, he says everyone will rebuild and public sentiment, he warns, shifts to Hezbollah.

Down the street, a merchant sorts and cleans shoe boxes on the sidewalk in front of his store. Yellow flags of Hezbollah flutter from the lampposts.

In Qana, a new memorial is being built for civilians, not soldiers. Twenty-nine in all. More children than adults. Qana became a symbol. Its losses made the world take notice. Now all the world seems to come to stare. Journalists or tourists, it's hard to tell at times, but residents will keep vigil long after everyone else has gone.

High above the graves, an old man looks down on his a lifetime come to this. Salim Amr (ph) tells us this was the home he built for his children and grandchildren. "Thank god," he says, "they fled before the bombs." "Stones," he says, " can be restored, but not a life."

And what of peace? "If there are good intentions from Israel," he says, "then there can be peace." But Salim (ph) isn't counting on it.

Here and across south Lebanon, hope is another casualty of war.

(on camera): Literally just footsteps from this incredible devastation in Qana we're reminded, after all, that all of this area is the holy land. Historians say it's where Christ performed his first miracle turning water into wine. Turning conflict into peace in this area may take another miracle.

Jim Clancy, CNN, Qana.

(END VIDEOTAPE)

PHILLIPS: Well, a shaky truce in Lebanon, nuclear tensions with Iran. U.N. chief Kofi Annan has a lot to think about these days, and he won't be doing it at home. Annan plans a major Middle East trip this week. Ten different stops, including Lebanon, Israel, Syria and Iran.

A lot of things are different in the second trial of Saddam Hussein, especially the charges. But only three days in, one thing already seems familiar, delays.

CNN's Michael Holmes has the latest from Baghdad.

(BEGIN VIDEOTAPE)

MICHAEL HOLMES, CNN CORRESPONDENT: More dramatic testimony in the trial of Saddam Hussein and six others in Baghdad today. Also a little bit of a surprise, the fact that this trial has now been adjourned until September 11th.

There's been a lot of concern about how long this trial will go on for. The best estimate was at least until the end of the year. We did see delays like this during the Dujail trial, the first trial of Saddam Hussein, and it looks like there's already been another bit of a delay a couple weeks until we're going to see this court reconvene.

What we heard today was more chilling testimony, however. More witnesses getting up before the court and telling about how warplanes bombed their village, troops moving in, razing the communities to the ground and moving out anyone who survived. One of these witnesses, a woman, was giving really chilling testimony about how her and her children became sick, vomiting, their skin burning, how they ran to a cave to take shelter, and then how they were moved into detention centers. She said that at one point during her detention a bus with blacked-out windows arrived and took away 29 men. She said she never saw them again.

She says that she and her children to this day suffer long-term health effects, respiratory trouble and visible problems from chemical weapons that were dropped on her village. She describes her children as handicapped these days. At one point, pointing at Saddam Hussein and saying, "I lost everything."

The defense still saying that this was about bombing Kurdish peshmergas who were fighting against Iraq and Iranian troops who were helping them.

As I say, the trial has now been adjourned until September 11th.

Michael Holmes, CNN, Baghdad.

(END VIDEOTAPE)

PHILLIPS: Refugees in their own country. More than 200,000 Iraqis have fled to different parts of Iraq since the worst of the so- called sectarian fighting started six months ago. Those numbers from the Iraqi government counting from late February when a bomb leveled a major Shiite mosque in Samarra. The government says that most of the displaced people lived in and around Baghdad.

Straight ahead, John Karr's troubled past. Classmates and teachers talk about the man they knew straight ahead on CNN.

Our David Mattingly joins us live.

(COMMERCIAL BREAK)

PHILLIPS: According to the "Rocky Mountain News," police in the town of Hamilton wonder why no one's asked them to search this house. It belonged to John Mark Karr at the time of JonBenet Ramsey's death.

Now, neighbors say the house has stood vacant since 2001. Never put up for sale or rented during that time, though the lawn was reportedly mowed last week. County records show property taxes are paid up through October of this year by John Karr's father, Wexford Karr, who lives right here in Atlanta.

Now, if and when Karr is charged and tried in JonBenet Ramsey's murder, you can bet his own childhood will come up in heartrending details.

CNN's David Mattingly has spent a lot of time and a lot of shoe leather looking into that.

Quite an interesting background. DAVID MATTINGLY, CNN CORRESPONDENT: It is. And every time a new detail comes up, people who knew him growing up scratch their heads and they wonder if they ever really knew John Mark Karr at all.

We'll go to that story in a moment, but we went to Hamilton, Alabama. We really were turning over stones there, going to all the places where we knew he and his family used to live.

PHILLIPS: Did you actually go to that house, the one that we showed the picture of?

MATTINGLY: We saw the house.

PHILLIPS: OK.

MATTINGLY: But it was closed up.

PHILLIPS: Totally empty?

MATTINGLY: Totally empty, nothing -- nobody there.

PHILLIPS: OK.

MATTINGLY: And it doesn't look like anybody had been there for a long time, just as the reports have been saying. But we're finding out that people are calling him a very controlling person.

That's one of the main things we've seen running through all of the comments that we've had about him. He was someone who really wanted to get his way and he really wanted to make things happen in his own way.

And there are a lot of details now coming out in his life that are making people who knew him the best say that they -- this is something they've never, ever guessed about him.

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): According to a long-time family friend the troubles for John Mark Karr began at a very early age.

GEORGE MCCRARY, KNEW JOHN KARR'S FATHER: His mother, who was an evangelistic preacher, had become delusionary and felt that there were demons inside of her children, especially John.

MATTINGLY: George McCrary claims to have known Karr's father for decades. He says Karr's mother needed psychiatric treatment after she tried to kill him with fire.

MCCRARY: She prepared a fire around him on the bed and was going to light it and burn the demons.

MATTINGLY: Neither the family, nor their attorney have been available to confirm or deny the story.

But Karr's parents divorced when he was just 8 years old. Court documents say the marriage was irretrievably broken. The father got custody of Karr and his older brother, as well as all the family belongings, a 1962 Chevy, and some furniture.

The mother was allowed visitation, alimony and money to buy a mobile home.

Karr went to live with his grandparents in Hamilton, Alabama, when he was 11 or 12. Former classmates who knew him for years say he kept details of his family life quiet.

CINDY SHAW, FORMER KARR CLASSMATE: It's scary to see him on TV today, you know, it's really scary, because I'm thinking, how did the John Karr that seemed so normal, you know, 20 years ago turn into this person on TV?

MATTINGLY: Former classmates and teachers say Karr was a teenager who loved attention. In high school, Karr drove a bright red DeLorean sports car. Former Girlfriend Glenda Edwards says Karr dreamed of becoming an '80s pop star.

GLENDA EDWARDS, KARR'S FORMER GIRLFRIEND: He was into music when I first met him, and that's when...

MATTINGLY: Edwards says Karr gave her a tape and picked out his stage name, Damon Karr.

Teachers remember Karr as intelligent, focused and persuasive, always very eager to get what he wanted.

Susan Cobb remembers how Karr lost his temper when she became drum major in the high school band and he didn't.

SUSAN COBB, FORMER KARR CLASSMATE: John got angry. He started shouting at me. And that was really about, I mean, he never had anything to do with me after that.

MATTINGLY: Karr seemed to spend his high school years on the go, twice, leaving his grandparents in Alabama to live with his father in Georgia. Close, long-term relationships seemed difficult for Karr, a problem punctuated by his marriage record.

In 1984 Karr was 19 when he married a 14-year-old Quintana Shotts, seen here in her Alabama class photo. She says she feared for her life and safety, accusing Karr of using intimidation and fear to make her marry him. Karr denied the allegations and the marriage was annulled in less than a year.

Five years later, Karr married again. He was 24, she was 16. The couple had three boys, after a miscarriage of twins, and divorced in 2001, after he was accused in California of child pornography charges. His wife, Lara, asked for and got a restraining order.

Karr had trouble keeping jobs as well. He lost substitute teaching jobs in Alabama, according to administrators, because of complaints from parents.

The child porn charges cost him his teaching job in California.

And by the time Karr got to Bangkok, on the run from prosecution, he had attempted to teach abroad, getting fired from one job in Honduras.

At the time of his arrest, he had just started teaching in Thailand, where a doctor tells CNN he was preparing for a sex change operation.

(on camera): Those who knew John Mark Karr say they now marvel at the man whose every movement is watched by millions, and they wonder if they ever knew him at all.

(END VIDEOTAPE)

PHILLIPS: You talked with another classmate as well, talking about his temper stood out.

MATTINGLY: One time in high school he was up for drum major and he was competing, and he wanted it very badly. And he didn't get to be drum major of his high school band, and so he had a temper tantrum, he cried, he got very angry and shouted at the young woman who did get it.

They say when he didn't get his way, his temper really ramped up very fast and he got very emotional.

PHILLIPS: All right. Now to all the talk about this relationship toward young children. He actually ran a daycare?

MATTINGLY: We don't know if he actually was successful in getting one started, but the state of Alabama -- we were able to check records. We checked with the state. They did actually grant him a license back in 1997.

This was a two-year license that he was able to run a daycare for up to six children in his home. But the state cannot confirm that he ever actually had any customers. They say during that time he never had any complaints. And when it came time to renew that license in 1999, he didn't renew it.

PHILLIPS: So he only did it one time.

David Mattingly, thanks.

Well, coming up, an exclusive interview with Dick Grasso, the former Stock Exchange chairman whose huge pay day caused a public uproar. Now he could lose everything.

Our Susan Lisovicz with the exclusive interview.

(COMMERCIAL BREAK)

PHILLIPS: Let's get straight to the newsroom. Carol Lin working a story for us. Actually, developing details about Iran.

CAROL LIN, CNN ANCHOR: That's right, Kyra.

A short time ago you had actually told the audience about a State Department response to this offer that the U.N. Security Council, which includes the United States, is making to Iran to stop its nuclear enrichment program. Now, the State Department came out with this statement, saying that Iran, that we acknowledge that "Iran considers its response as a serious offer, and we will review it. The response, however, falls short of the conditions set by the Security Council."

Meaning that through Iranian press reports, Kyra, CNN is gathering that Iran is saying, great, offer this great package of incentives to get us to stop our nuclear program, and all we're saying back to you is, you know, we'll think about it. Let's have a new angle on our nuclear talks.

Well, if you want to get an idea of what the U.N. Security Council is willing to offer, it offered over the summer to improve Iran's access to the international economy, help in modernizing its telecommunications industry, and also the possibility of lifting a ban on restrictions of their export of civil aircraft.

So, Aneesh Raman reporting from -- from Iran that, look, they are saying that they need their nuclear program in order to help their economy. Now the world economy is saying, fine, we'll help with your economy, and Iran's response basically is, great, let's have a new angle on these nuclear talks. But no discussion of ending its nuclear program right now -- Kyra.

PHILLIPS: All right. Carol Lin, appreciate it.

Well, imagine a paycheck a thousand times higher than the average American worker's. Richard Grasso earned that for running the New York Stock Exchange. It was also his downfall.

In his first on-camera interview since his ouster, Grasso relives those hair-raising ups and downs with our Susan Lisovicz as she goes along for the ride.

(BEGIN VIDEOTAPE)

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: OK. You're in first. This is you.

(voice over): Few people have risen higher or fallen faster than Dick Grasso, which may be one reason why he finds Coney Island's famous stomach-churning Cyclone no big deal.

DICK GRASSO, FMR. NYSE CHAIRMAN & CEO: I had 35.5 great years of a career, one bad day.

LISOVICZ: Grasso's long climb began in this working class neighborhood in Jackson Heights, New York. Grasso dropped out of college, and after starting out as an $81-a-week clerk, became the first to work his way up to become chairman of the New York Stock Exchange. GRASSO: This is the American dream. Someone in this community will someday do what I did. No doubt in my mind, because when you start here, you work hard.

Welcome back to the greatest market on the face of the earth.

LISOVICZ: Dick Grasso led the exchange during the great bull market of the 1990s. He was a crusader, working with New York State Attorney General Eliot Spitzer to clean up Wall Street corruption, and hailed as a national hero for working around the clock to reopen the NYSE after 9/11.

UNIDENTIFIED FEMALE (SINGING): ... to the oceans white with foam

LISOVICZ: Grasso became such a celebrity that he played himself in a cameo in "Sex And the City."

GRASSO: And here to open trading...

LISOVICZ: Turning the market's opening bell into a daily parade of VIPs, hoping for a piece of the action.

Grasso himself made money, a lot of it. Paid $30 million in one year alone and accumulated about $200 million in deferred compensation.

When word of all that money became public, the outrage led to an ugly firing. Adding insult to injury, his former ally, Eliot Spitzer, went to court to get money back for the New York Stock Exchange.

ELIOT SPITZER, NEW YORK STATE ATTORNEY GENERAL: It's simply too much. It's not reasonable. It's not right. It violates the law.

LISOVICZ: It isn't just the $200 million. A lawyer knowledgeable with the case gave CNN a copy of Grasso's last contract which measured his life expectancy as 50 percent male and 50 percent female. Since women live longer, that meant even more money in his pension.

Now to some Dick Grasso is among those on the list of executives under the general heading of "retched excess."

(on camera): In some circles you are lumped in with Dennis Kozlowski, Bernie Ebbers, Jeffrey Skilling.

What do you say to that?

GRASSO: It's just flat wrong to do that. Those are people who committed crimes according to the courts and according to their own admissions. That's not me.

If you can say to me, "Dick, the crime you committed was cashing the check," then let's stop the whole American capitalist system, because when the smartest, most admired, most successful people in the world who are your bosses say we think you're worth X, then you have to take that as fact. LISOVICZ: Some of the people on the Stock Exchange Board who signed off on Grasso's pay included Hank Paulson before he became treasury secretary, and former Secretary of State Madeleine Albright.

(on camera): You're going to court. The judge has asked you to settle.

GRASSO: Settle means I've done something wrong. And I've done nothing wrong.

LISOVICZ (voice-over): Grasso says he's confident of vindication.

(on camera): Could you see your life as a metaphor with the roller coaster? Big highs, some lows...

GRASSO: And more mountains to climb.

LISOVICZ (voice-over): Dick Grasso knows firsthand how long the climb to the top can be, and he's painfully familiar with the speed of the descent.

(END VIDEOTAPE)

PHILLIPS: Susan Lisovicz, hopefully still with her stomach intact, joins me now live from the New York Stock Exchange.

LISOVICZ: After riding it five times.

PHILLIPS: Oh, my gosh. Well, you got to get it all down, right? Well, where does Grasso's case stand now?

LISOVICZ: Well, Dick Grasso says -- and has been saying for the last three years, Kyra -- that he won't pay back one cent. He refuses to settle, which means this is going to court, the court date October 16th. Just coincidentally, a couple weeks from election day. Eliot Spitzer, the attorney general running for governor of New York state. The judge will decide, was $200 million unreasonable for a not-for- profit institution, which the New York Stock Exchange was at the time?

PHILLIPS: I'm just curious, you know, you spent a lot of time with him. You really hammered him with the tough questions. You also got to know him well. Does anything stand out? Did you find anything unusual, unique, I don't know, something that didn't get out into the media when all this was going down?

LISOVICZ: You know, I was surprised on a couple different levels, Kyra. First of all, he's going to trial in a couple months. And a lot of times you will not see people talk right before then. Their lawyers simply won't let them. Dick Grasso arrived for this interview by himself. There was no publicist, there was no manager, there was no lawyer. And he answered every question.

Now, the viewers are free to decide whether they agree with Dick Grasso's opinion, his decisions here, to take that money, that it was reasonable. No one disagrees with the fact that Dick Grasso was a very effective leader at the New York Stock Exchange. The case is who deserves $200 million, and whether the board really has some sort of culpability here.

So I was surprised he did the interview, that he answered all the questions. And he was passionate and articulate. Again, the audience is free to disagree with what he had to say. But he has decided that this was is the time for him to give his side of the story, because he has been mired in negative headlines over the last few years.

PHILLIPS: Well, I'm not surprised you got that interview. They all have so much respect for you, Susan.

(MARKET REPORT)

LISOVICZ: Stay with us. LIVE FROM will be right back.

(COMMERCIAL BREAK)

PHILLIPS: Well, a U-turn over Europe, arrests on the ground. A pair of Dutch F-16s escorted Northwest Airlines Flight 42 back to Amsterdam today, soon after it took off from Mumbai. The flight crew reported some of the 149 passengers were acting suspiciously. Dutch police now tell CNN 12 are under arrest. A U.S. government source tells CNN passengers pulled out cell phones during the flight and unbuckled their seatbelts when they weren't supposed to.

Well, time flies when you're investigating an airline terror plot, so Scotland Yard is reportedly asking a judge in London for a few more days to build cases against 11 suspects who have been held for two weeks, but still not formally charged. Eleven suspects who have been charged were in court yesterday. A new British law allows terror suspects to be held without charge for 28 days, pending judge's approval.

Politics and war. A volatile mix, but in times like these, they're inseparable. The experts would tell us the war on terror has worked in the president's favor for much of his time in office, but Iraq has changed the opinion. There's a big election in November.

Our Bill Schneider is here with some new polls. Tell us about them, Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Kyra, in politics, you have to frame the debate. That's what both parties are trying to do right now.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Republicans want to frame the debate around the war on terror. Why? Look at the latest CNN poll, conducted by the Opinion Research Corporation. Americans believe the Republicans in Congress would do a better job dealing with terrorism than the Democrats, by a fairly narrow margin.

Democrats want to frame the debate around the war in Iraq. Why? Americans believe Democrats would do a better job dealing with Iraq, again by a narrow margin, indicating most Americans don't see either party with a decisive advantage on terrorism or on Iraq.

Most Americans have made up their minds about one thing: they're fed up with Iraq. Only 35 percent support it, the lowest level of support ever.

Things have gotten so bad in Iraq it may have soured the public's view of the war on terror.

DAVID DRUCKER, "ROLL CALL" MAGAZINE: As long as the war in Iraq is difficult, I think voters are going to feel more insecure about the terrorist threat.

SCHNEIDER: Just over one-third of Americans believe the U.S. and its allies are winning the war on terror. The prevailing view -- no one side is winning.

President Bush wants to flip that around. He's trying to rebuild support for the war in Iraq by persuading people that it's part of the war on terror.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'll repeat what our major general said -- leading general said in the region. He said if we withdraw before the job is done, the enemy will follow us here. I strongly agree with that.

SCHNEIDER: Does the American public agree with that? No. Fifty-two percent believe the war in Iraq is a distraction from the war on terror. Forty-four percent agree with President Bush that Iraq is an essential part of the war on terror.

So far, Iraq is framing the debate and for most Americans, President Bush has failed to connect Iraq with the war on terror. That gives Democrats an opening, but Democrats still need to convince most Americans that they have a better plan for Iraq.

(END VIDEOTAPE)

SCHNEIDER: A new CBS News/"New York Times" poll, released today, finds the same thing. Most Americans no longer believe the war in Iraq is linked to the war on terror -- Kyra.

PHILLIPS: What do you think, any evidence of growing anti- incumbent sentiment out there, Republican and Democrat?

SCHNEIDER: Oh, absolutely.

PHILLIPS: No? Big yes or big no?

SCHNEIDER: Yes. Yes, there is. Definitely because yesterday an amazing thing happened. The governor of Alaska, Frank Murkowski, who used to be a United States senator from Alaska, was defeated for renomination in his own party primary. In fact, he came in third.

This follows the defeat of Senator Joe Lieberman, a Democrat, Congresswoman Cynthia McKinney, a Democrat, a Republican incumbent congressman in Michigan. Incumbents aren't supposed to lose their own primaries.

What it indicates is a growing wave of angry voters out there, something like what happened in the early 1990s when the angry voters ended up promoting the candidacy of Ross Perot. Then they were angry about the economy; now they're angry about Iraq -- Kyra.

PHILLIPS: Bill Schneider from L.A., thanks.

SCHNEIDER: Sure.

PHILLIPS: Well, join us for a special "CNN PRESENTS: IN THE FOOTSTEPS OF BIN LADEN." Our team traveled to four continents, 10 countries to discover the real Osama bin Laden. That's going to air tonight, 9:00 Eastern, only on CNN.

Let's get straight to the newsroom. Carol Lin working details on a developing story. Carol, what do you have for us?

LIN: Regarding the kidnapped journalists being held in Gaza, we've now just heard from the State Department which, quote, "strongly condemns the kidnapping of two Fox journalists, and is calling for their immediate and unconditional release."

Curtis Cooper, who is a spokesperson for the State Department, acknowledged that they have seen the reports about this group claiming responsibility, the Holy Jihad Brigades, but he said he didn't want -- the United States didn't want to speculate on their reasons for kidnapping these journalists.

In giving an update on what the United States is trying to do for Steve Centanni and Olaf Wiig -- you see in the video there -- it says here that the U.S. is actively pursuing all avenues to ensure their safe release.

He said that the U.S. was working with the Palestinian security services and that the U.S. consulate in Jerusalem is in daily contact with leading Palestinians and that the U.S. consulate general had met with President Abbas on Monday and expressed the U.S. concern that the two journalists are being -- continued to be held.

The consulate has set up a working group that meets on a daily basis to coordinate information and plan the next steps, though they're not specific about what those next steps may be. But, Kyra, if it could offer any comfort to the families who are clearly so worried about the fate of these two men, the United States is saying that it's doing everything it can.

Also, shortly, we're going to be hearing from Dubai Television. The president of Syria conducted an interview with Dubai TV and though the wire services are reporting some of the quotes, Syria's president saying that international troops on the Lebanese border would be considered a hostile act.

He said we are -- you know, Israel's foreign minister is saying that the situation in -- on the Israeli-Lebanese border is now the most sensitive and explosive position, but the Syrian President Bashar Assad is quoted as saying that only this would be considered a hostile move towards his country. He said, first, this means creating a hostile condition between Syria and Lebanon; and, second, it is a hostile move towards Syria and naturally it will create problems.

Kyra, we're going to be monitoring this interview, but obviously, Syria a big player in the Middle East accused by Israel of arming Hezbollah in south Lebanon. So we'll see more of what he has to say.

PHILLIPS: Sounds good, Carol, thanks.

Firing off a Cruise missive. A showbiz mogul sends Tom a letter saying future movie missions are just impossible. Go call your agent. Meet us back here for more.

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PHILLIPS: Well, the winds are up and the red flags are out as fire danger spreads in the Northwest. And in Washington State, military firefighters are helping battle weary civilian crews. Their main focus? A group of fires threatening homes near the town of Dayton. Hundreds of people are on standby to evacuate. The order has already gone out to a subdivision east of Billings, Montana. A wildfire there has burned two homes so far and 3,300 acres.

More on the fires in just a moment, but first, a look at what's brewing in the eastern Atlantic and it's heading our way. Jacqui Jeras standing watch in the CNN Weather Center. Hey, Jacqui.

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PHILLIPS: Well, no more Cruises in the Redstone arsenal, and I don't mean missiles. It's Tom Cruise and Sumner Redstone's star at Paramount Pictures, but just who fired whom? Well launch into that topic when LIVE FROM returns.

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PHILLIPS: Where is the love? A painful public breakup, and it doesn't involve Denise Richards. "SHOWBIZ TONIGHT"'s Brooke Anderson has the story that has Tinseltown a-twitter.

Hey, Brooke.

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BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT (voice-over): It's a Hollywood breakup of monumental proportion. Tom Cruise and his long-time producing partner, Paramount Pictures, are splitting up. Their 14-year relationship produced mega hits like "Top Gun"...

TOM CRUISE, ACTOR, "TOP GUN": I'm losing control! I'm losing control! I can't. I can't control it.

ANDERSON: ... "Days of Thunder"...

CRUISE, "DAYS OF THUNDER": We can fix it right here. Now what's it going to be?

ANDERSON: ... the "Mission Impossible" franchise...

UNIDENTIFIED MALE, "MISSION IMPOSSIBLE": I can understand you're very upset.

CRUISE, "MISSION IMPOSSIBLE": You've never seen me very upset.

ANDERSON: ... and "War of the Worlds".

CRUISE, "WAR OF THE WORLDS": Get down!

ANDERSON: ... movies that made more than a billion dollars in domestic ticket sales alone. But the once happy union is coming to an end in a classic he said-he said scenario.

In an interview with the "Wall Street Journal," Sumner Redstone, the chairman of Viacom, which owns Paramount Pictures, said, "As much as we like him personally, we thought it was wrong to renew his deal. His recent conduct has not been acceptable to Paramount."

That conduct Redstone is apparently referring to includes a public relations blitz for Scientology, a bizarre stint on Oprah's couch where he professed his love for Katie Holmes...

OPRAH WINFREY, TALK SHOW HOST: The boy is gone!

ANDERSON: ... and a confrontational interview with the "Today" show's Matt Lauer in which he spoke out against taking certain prescription drugs.

CRUISE: Just knowing people who are on Ritalin isn't enough. You should be a little bit more responsible.

ANDERSON: The Cruise camp disagrees with Redstone's version of the breakup. A representative for Cruise-Wagner Productions tells CNN it was their decision to part and they're setting up another operation financed independently.

Cruise's business partner, Paula Wagner, tells "The Wall Street Journal" that Cruise's behavior has not cost Paramount box office receipts, but his last movie, "Mission Impossible 3," grossed $133 million domestically, a disappointment considering "Mission Impossible 2" earned $215 million, proving the old Hollywood adage, you're only as good as your last picture.

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ANDERSON: And we've made several calls to Viacom that have not been returned. We're also awaiting response from the Church of Scientology on Redstone's comments about Tom Cruise's behavior.

And coming up on "SHOWBIZ TONIGHT" tonight, we will be taking another look at how all of this is going to play out, "Mission Implosion." What really happened? Was it Cruise's bad behavior or his bad box office, or did Cruise walk away first? "SHOWBIZ TONIGHT" cuts through the P.R. of this Hollywood shocker, and gets the real answers. That's TV's most provocative news program -- is "SHOWBIZ TONIGHT." Join us at 11:00 p.m. Eastern, 8:00 p.m. Pacific.

Kyra, people are not playing nice in the sandbox here.

PHILLIPS: I know. And we're going to be talking about it more about it with Harvey Levin, coming up in the hour. Thanks, Brooke.

Well, who says the little guy can't reach the big guy? Today is Rockey's day in the nation's capital. No, not Rocky Balboa of "Yo, Adrian!" fame. This Rocky wanted a one-on-one with George W. Bush and guess what? He got it. And he didn't even have to throw any punches. That's ahead when LIVE FROM continues.

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