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White House Admits Some Mistakes On Ports Deal As Debate Continues; Attempts to Spark Civil War In Iraq; Ted Bilkey Interview; Mark Kimmitt Interview; White House To Release Its Own Report On Hurricane Katrina Response

Aired February 22, 2006 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: And it's 5:00 p.m. in Washington, and you're in THE SITUATION ROOM, where news and information from around the world arrive at one place at the same time.
Happening now, the political and public relations fight over the Dubai deal concerning major U.S. ports. In his first live interview in the United States, I'll talk with the chief operating officer of Dubai Ports World. And you may be surprised to learn there are other critical pieces of the U.S. infrastructure run by foreign companies.

In Iraq, chaos, carnage and fears of full-blown sectarian violence. Attackers bomb a sacred Shiite shrine. Then others respond by targeting Sunni mosques and killing Sunnis. Now officials urge unity against what some call attempts to spark a civil war.

And holding itself accountable. The Bush administration is ready to release its own report on how well it responded on Hurricane Katrina and to tell you how it hopes to avoid a similar disaster down the road.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

In our CNN "Security Watch," the brewing storm over the nation's ports. On that deal to hand over control of six U.S. ports to a Dubai-based company, there are new reactions from the White House and the Congress and new revelations of other foreign deals.

Jeanne Meserve standing by. Ed Henry on Capitol Hill.

Let's go to the White House first. Dana Bash with the latest -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, I have talked to some close allies of the White House today who are shaking their heads and wondering why the United States decided to throw down the gauntlet, the president himself throw down the gauntlet on this particular issue, because they say that he doesn't have a lot of political capital left to spare. But nevertheless, the White House obviously thought this was a critically important thing to do.

But today, White House officials did recognize and admit that there were some blunders that led to this point.

(BEGIN VIDEO CLIP) SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: Looking back in hindsight, we believe members of Congress should have been briefed on it sooner. But the president's confident in the process that has been put in place to review these matters. He's confident in those who are charged with looking at these issues and looking at the national security concerns in this.

(END VIDEO CLIP)

BASH: Now, what Scott McClellan was talking about there is basic communication, Wolf. You know that as CNN first reported on Monday, the president himself did not know that this deal was approved until it was in the press, that lawmakers were upset about it. We now are told of that top White House officials who may have been able to raise a flag, say, wait a minute, we might have a political problem here, they didn't know about it either.

Why? Apparently because of the way this process is set up, this 12 agency panel. It is done in secret and they don't, as we have heard in the last hour from somebody who is on that, don't get information out about what's going on until after it's done.

There is certainly talk now about whether or not that process has to change. And certainly talk from people on that particular committee about the fact that perhaps they should have been more politically attuned to this political issue.

BLITZER: Dana, thank you very much.

Let's go to Ed Henry on Capitol Hill.

Ed, I take it there's going be hearings on this as early as tomorrow.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right. In fact, they're clarifying that it's now a special briefing, that it's going to be before the Senate Armed Services Committee.

The chairman, John Warner, I can tell you we have a little bit of news this hour in that chairman John Warner, a Republican, is now the first Republican senator to come out, tell CNN he's predisposed to support this port deal.

Just spoke to him a couple of moments ago. He says he thinks that lawmakers up here should be showing more respect, more deference to the commander in chief. He thinks lawmakers should not be popping off and coming out against this deal without all of the facts.

Warner told me that's why he's having this special briefing before the Senate Armed Services Committee tomorrow. Various Bush administration officials, six top officials, coming up here to tell lawmakers about the deal. Warner stressed that he believes the United Arab Emirates are a critical ally on the war on terror and it's time for his colleagues to listen up.

Take a listen. (BEGIN VIDEO CLIP)

SEN. JOHN WARNER (R,-VA), ARMED SERVICES COMMITTEE CHAIRMAN: And I think the president and his subordinates followed the law, did a careful examination. And at this point in time, I do not see a basis to question it.

Could there have been better oversight by the Congress? Yes. Perhaps someone should have spotted the sensitivities of this case and brought it to attention of more officials in the administration and, indeed, those of us in Congress who have responsibilities. But that's behind us.

We've got to look to the future. We're engaged in a war on terrorism. The UAE is a vital -- I repeat, vital -- ally for purposes of our naval operations, for purposes of our air operations. And we've got to treat them fairly and objectively.

(END VIDEO CLIP)

HENRY: Now, Chairman -- Chairman Warner also added that he believes this could really backfire for the United States. If this deal goes down, if it looks like the United States is not showing respect to an Arab nation, he's very concerned about that.

He told me yesterday he went over to Defense Secretary Donald Rumsfeld's office for a briefing that lasted about an hour. He noted that, in fact, more of our U.S. ships are docked in UAE's ports than in any other part of that region.

Also, we use their airfields. Also terminals for supplies to get to U.S. troops fighting the war on terror.

Finally, to add on to what Dana Bash was saying, despite Chairman Warner coming out and saying this, a senior Republican aide up here telling CNN there is a lot of lingering frustration about not only how the White House handled the lack of briefings here on the Hill earlier in the process, but also the way the president came out swinging yesterday. A lot of frustration -- Wolf.

BLITZER: Ed Henry on Capitol Hill.

Thanks very much.

And although this deal is getting huge attention, it would not be the first time a foreign company controls pieces of the U.S. infrastructure that you rely on every single day.

More on that now from our homeland security correspondent, Jeanne Meserve -- Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, in this global economy, the U.S. invests overseas and interests overseas invests here, a lot of them. And sometimes in the most critical industries.

(BEGIN VIDEOTAPE)

MESERVE (voice over): Over 18 million Americans get their water from a single company aptly named American Water. But the name might fool you. The firm is German-owned.

Foreigners have invested more than $42 billion in U.S. utilities, more than $21 billion in transportation. They have a heavy presence in banking and finance. But security experts say the area of real concern is overseas ownership of telecommunications.

JAMES LEWIS, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: So there's always a concern about foreign espionage. The other concern is law enforcement. The FBI gets court orders and engages in wiretapping, but there's some fear that a foreign country or a foreign company might not be as cooperative, might not be as willing to either do the wiretap or keep it a secret.

MESERVE: The Transportation Department has proposed allowing more foreign investment in U.S. airlines. Some say that could jeopardize the movement of U.S. troops to a war zone.

CAPT. DUANE WOERTH, AIRLINE PILOTS ASSOC.: I just can't be imagine being a four-star general in charge of airlift and wondering if our Asian or European or Arab or South American, African partners are going to -- who might own our airlines, decide, no, we don't think we support this effort, I think you can't have your airplanes now.

MESERVE: A DOT spokesman says troop movement would not be affected. But the argument illustrates the concern that the U.S. may be selling things critical to its own survival.

The U.S., through the Committee on Foreign Investments in the United States, does review such deals and often imposes security conditions. But...

LEWIS: Nobody's checking to make sure that the foreign owner is living up to the agreement. And that's crucial. I think that's something they need to pay a little more attention to.

(END VIDEOTAPE)

MESERVE: Security experts point out there are many ways to subvert U.S. security that are a lot less expensive than buying a company. They also note that business owners want to make money. It is in their interest to keep commerce running smoothly, whether they are U.S. citizens or not -- Wolf.

BLITZER: Jeanne Meserve.

Thanks very much.

More on this story coming up momentarily. We'll speak with the chief operating officer of Dubai Ports World. He'll be live here in THE SITUATION ROOM.

And to our viewers, stay tuned to CNN day and night for the most reliable news about your security.

Now to a story we've been following out of Iraq and one that one Kurdish official calls an apparent attempt to spark a civil war. This is what a sacred Shiite shrine called the Golden Mosque looked before today. This is what it looks right now, after it was attacked.

Let's get details now from CNN's Aneesh Raman in Baghdad -- Aneesh.

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, Iraq tonight moving close to the brink of civil war after an attack this morning on one of Shia Islam's holiest shrines, the Askariya mosque in the city of Samarra.

Men dressed as Iraqi police commandos stormed the mosque earlier today. They bound the guards that were on duty, detonated a number of explosives, bringing down the golden dome that for almost a century has sat atop that mosque.

It unleashed fury on the Iraqi street by Shia protesters. Thousands upon thousands pouring out in Samarra, in the holy city of Najaf, in the capital.

In the Kadamiya (ph) area of Baghdad, up to 10,000 protesters took to the streets. That area borders Sadr City, where hundreds of Mehdi militia, those loyal to the Shia cleric Muqtada al-Sadr, armed, patrolled the streets as well.

Reprisal attacks also under way. At least 30 -- upwards of 30 Sunnis mosques came under fire in reaction to this morning's attack. Three Sunni imams were killed.

And in the southern city of Basra, amid massive protests there, Shia militia engaged in a gun battle with Sunni politicians.

All of this as Iraq's leaders caution calm in the days ahead as fear does grow that the sectarian strife could rise -- Wolf.

BLITZER: Aneesh Raman in Baghdad. What a day.

Let's get some more on a developing story in Basra right now. Zain Verjee once again joining us.

Zain, what's going on?

ZAIN VERJEE, CNN ANCHOR: Wolf, this just coming in to CNN. In a reprisal and revenge attack to the Shia shrine being attacked earlier this day in Samarra, Shia Iraqis have apparently killed Sunni prisoners in Basra in an apparent reprisal attack.

What appears to have happened was -- was that late tonight, around 11:00 Iraqi time, gunmen carrying government IDs and driving government cars stormed a prison and kidnapped at least 12 Sunnis. A number of them have been killed.

It's not clear exactly how many. But at least 10 have been killed. One is missing, and it appears that one of them have been wounded.

The nationalities appear too be Egyptian, Iraqi, Tunisian and Libyan. We are working to get more details on this story. But it seems as though there's another revenge attack, this time in Basra. There have been up to something likely 90 reprisal and revenge attacks on Sunni mosques all over Iraq this day -- Wolf.

BLITZER: What a devastating day. We're going to have much on this, Zain.

Thank you very much.

And coming up in a few moments, we'll get reaction from the U.S. military about today's violent events in Iraq. Brigadier General Mark Kimmitt, the deputy director for plans and strategy for the U.S. military Central Command, he'll be joining us live right here in THE SITUATION ROOM.

In the meantime, let's go back to New York and Jack Cafferty -- Jack.

JACK CAFFERTY, CNN ANCHOR: All right. Back to this port deal for a minute, Wolf.

A total of 12 different federal agencies signed off on this deal to turn over control of six major U.S. ports to a company owned by the United Arab Emirates. Yet, the White House says President Bush didn't know anything about it until a few days ago.

What? The president of the United States just found out that shipping operations at six major U.S. ports will be taken over by a country with ties to terrorists, including the 9/11 hijackers?

Meanwhile, the White House continues to try to defend this Trojan horse, saying it was cleared by all the necessary agencies and it will be just fine.

Here's the question: Should President Bush have known about this port deal before it happened? You think?

E-mail us at CaffertyFile@CNN.com.

You can't make this stuff up -- Wolf.

BLITZER: You're absolutely right. You can't make it up. Thanks very much, Jack, for that.

Up ahead, I'll speak with the chief operating officer of Dubai Ports World. It will be his first live interview here in the United States. I'll ask him his company's view on the storm over this entire port deal.

And it sparked fears and panic a few years ago. Now there's a new case of anthrax causing concern. We'll tell you how doctors think the man might have been exposed to the disease. And from blue collar to lots of green, we'll tell you who won that $365 million Powerball jackpot and what many of them say they plan on doing next.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Now a first live interview in the United States. Joining us here in THE SITUATION ROOM is Ted Bilkey. He's the chief operating officer of Dubai Ports World.

Mr. Bilkey, thanks very much for joining us.

TED BILKEY, COO, DUBAI PORTS WORLD: Good to be here.

BLITZER: How big of a deal is this, your purchase, Dubai Ports World, of this British firm that operated these ports in the United States?

BILKEY: Well, it putts together a portfolio that's going to encompass 50 terminals.

BLITZER: But it's -- but you spent how much, Dubai Ports World, to buy this British company, $6.5 billion?

BILKEY: $6.8 to be exact.

BLITZER: All right, $6.8 billion. And of that, how much money is at stake in operating these six ports in the United States?

BILKEY: Well, we put valuation on projects that we take on. And this is a huge project. And then we have a strategic view on things.

And if you put a map of 19, sometimes you call it 20, because we have new terminals coming on line, and their portfolio of 29 to 30 terminals, you have a strategic fit of 50 terminals that overlap. We had practically no overlap. The operations...

BLITZER: But the operations -- excuse me for interrupting -- in the United States is worth about $400 million to your company, is that right?

BILKEY: We could say it's more valuable.

BLITZER: More valuable. All right. So it's -- a lot of money is at stake.

Here's the basic criticism. Why...

BILKEY: But it's a strategic value. That's what's important.

BLITZER: Right. The criticism, as you well know -- and you've been hearing an earful over these past several days -- is that, why should American ports be operated by a company owned by the United Arab Emirates?

BILKEY: Well, I think we should clarify a couple of things. First of all, we're a commercial enterprise of the government of Dubai. The government of Dubai has nothing to do with us, basically.

BLITZER: But they own the company.

BILKEY: They own, yes.

(CROSSTALK)

BLITZER: They own the company.

BILKEY: That's correct.

BLITZER: You report to the emir, in effect.

BILKEY: Not really. We report to a board. I happen to be a member of the board.

BLITZER: But the emir controls the board.

BILKEY: Yes, he's the shareholder.

BLITZER: All right. So...

BILKEY: But, I mean, they're not involved in our daily operations. When we want to make investments, when we want to have a new project, we decide it on commercial terms. And we base it on financially-sound operations.

You know, DP World, even before this acquisition, was a very large operation, highly respected. And we have wonderful relations with global customers.

And one of the reasons for this doing this good deal is that the shipping lines are coming together and merging. And you want to have a bigger asset base to be able to...

BLITZER: You hear the various criticisms. And I'll go through them and give you a chance to respond.

That two of the hijackers were from the United Arab Emirates and that a lot of the funds that financed 9/11 went through the United Arab Emirates, and that some of nuclear equipment sold to North Korea, Iran and Libya went through the United Arab Emirates.

You've heard that criticism, right?

BILKEY: Well, I would respond to that by saying that the UAE -- and I'm a businessman. I'm a terminal person. But on that subject, the UAE's been a very good, very good friend of the UAE for a long time -- of the U.S. This is a picture right here of a U.S. naval officer sitting in our control tower. They're there 24/7.

BLITZER: In Dubai.

BILKEY: In Dubai, right now, coordinating with our harbor masters (ph) the coming and going of vessels for the U.S. Navy.

We have performed for them in the first Gulf War. We were the base for supplying the Navy at sea. We have a mini base there. We have -- we were the first and I believe, still, one of the earliest port operators to join the Customs security initiative.

BLITZER: The other criticism is -- Dubai Ports World operates all over the world, is that right?

BILKEY: Yes.

BLITZER: The criticism leveled by several congressmen is that the United Arab Emirates is a country that refuses to deal with Israel. Does Dubai Ports World deal with Israel?

BILKEY: Well, it's rather interesting. One of our very sound customers is Zim line.

BLITZER: So you do deal with Israel. Zim is the Israeli shipping line.

BILKEY: Yes. It's the largest shipping company. And the president of that company, because we have good relations with all of our clients -- and it's interesting to me that he is very close to our company and supports us.

We handle their operations in a number of ports throughout the world. And -- because it's good commercial business for us. They wouldn't come to us unless we did a good job.

BLITZER: Does the emir know this?

BILKEY: Absolutely.

BLITZER: He doesn't care?

BILKEY: As I told you, we -- we operate -- as long as we're doing good business, correct business -- I think one of things that has happened here, there's a complete misconception of what ports do and what terminals do. P&O, which has this wonderful history...

BLITZER: That's the British firm that you're buying.

BILKEY: Correct. It has this wonderful 165-year history which we give great respect to.

We tend to -- intend to keep this portfolio together because it matches ours strategically. That they have to comply with all the present security operation, security (INAUDIBLE) across the board up and down the coast.

Now, people start to talk about controlling ports. The ports are controlled not by -- we have a terminal. We have a concession for a terminal. And there's a complete misconception about security.

Security comes under the purveyance of the Coast Guard, the Homeland Security, Customs, the local police forces. And we implement their instructions.

We follow those to the letter. And as I said today, that we have U.S. Customs people on the ground in Dubai ensuring that every box that comes to the U.S. they are aware of. It is not loaded unless it is cleared by U.S. Customs.

It's like extending the borders of the U.S. And we have agreed to it. And we signed that agreement.

BLITZER: And I want to pick up that thought because we have a lot more to talk about. But we want to take a quick commercial break.

More of our conversation with Ted Bilkey, the chief operating officer of Dubai Ports World. This is his first live interview here in the United States. He's based in Dubai, he's a U.S. citizen. We're going to have more questions for Mr. Bilkey right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

We're continuing our exclusive conversation with Ted Bilkey. He's the chief operating officer of Dubai Ports World.

You're about to take over control, operating control of six ports in the United States, including New York, New Jersey. We'll show our viewers a map -- Miami, Baltimore, New Orleans. These are the biggest, some of the biggest ports, if not the biggest ports in the United States. Certainly on the East Coast.

Scott McClellan, the White House press secretary, said you've made some additional commitments to reassure the United States of the security provisions.

Listen to what he said earlier today. Listen to this.

(BEGIN VIDEO CLIP)

MCCLELLAN: One thing that is key is that this company agreed to additional security measures that they would take beyond what some others do in transactions like this.

(END VIDEO CLIP)

BLITZER: What does he mean? What additional security measures have you agreed to take to reassure that the safety, the security of these American ports would remain intact? BILKEY: Well, that's in a letter of undertaking that, you know, frankly hasn't been released yet. But we took these, you know, readily, and they are well-implemented and within the scope of the type of things that we like to bring more than the code requires. And we made these undertakings, and we have no problem in implementing them.

I think the most important thing to know is that, when we actually formally take control of this company, which will come after a process that goes through the British court system on March 2, nothing is going to change. The people here are not going to change. The structure isn't going to change. And the people here who have been running a very good operation...

BLITZER: You're not going to bring your own people in? You're going to keep all those P&O people on the job?

BILKEY: Yes. Well, most of them, you know, are Americans. And the CEO of the Americas, Michael Seymour (ph), is a very seasoned shipping and terminal person. And he has as his right hand Steven Edwards (ph).

BLITZER: So they're all going to stay.

Let me read you to you some criticism...

BILKEY: Absolutely. And, you know, if it's not -- if it's not broke, why fix it?

BLITZER: Here's a criticism from Warren LeBack. He was the maritime administration head under the first President Bush.

He's quoted as saying, "The security in the ports is very lax, as we all know. In an ordinary container, you could put a dirty bomb with a GPS or a cell phone and set it off in the middle of a city. If the United Arab Emirates decides they are clandestinely supporting terrorists, they could put pressure on personnel to look the other way on the containers."

What do you say about that?

BILKEY: Nonsense.

BLITZER: Why is that nonsense?

BILKEY: Well, first of all, as I just explained to you, that we don't control all of the boxes that come here. They're loaded on ships and ports from all over the world. And, you know, in the realm of today, as we well know, anything is possible.

But as far as something from Dubai happening, U.S. Customs is there. They have the right. We have given them the sovereign right to inspect any container they wish to before it's loaded on a vessel.

And the CSI initiative now operates in 35 ports around the world. In our portfolio, nine of our ports are CSI-oriented. And it's -- actually, the U.S. government is trying to do this in other areas.

We are in the forefront of trying to have it happen in the Dominican Republic. We are working with the government of the Dominican Republic. We operate a brand-new modern, highly-secure facility in Casado (ph), near the Dominican capital, Santo Domingo, and another CSI operation.

Interesting thing, Wolf, you might be interested in: Security now, in our business, is a marketing tool. The shipping companies want to know that you run a secure operation. And all the other countries that we did, including the U.S., all said: "We know your type of company. We know what you do. We know the way you operate."

BLITZER: But...

BILKEY: "We welcome you."

BLITZER: ... you know there's a huge firestorm now, a political uproar.

I assume, given the value, how important this is to Dubai Ports World, this -- this deal -- we have already reported that Bob Dole, the former senator, is now going to be helping you. He has been retained.

Who else have you retained here in Washington to try to sell this deal to very skeptical lawmakers on Capitol Hill?

BILKEY: The -- well, I think we're going do anything possible to be sure that this deal goes through.

We're very much committed to that. We think it's great strategic fit. And we think it will be good for our customers. We think it will be good for our employees. And we think it will be good for the people involved in the ports.

We're strong investors. When people come to us and say, you need to invest more, because we think we can bring more business to the port, we're listeners. We have done this all over the world. We're very active that way.

BLITZER: So, you're going to aggressive lobby here on Capitol Hill to get this approved?

BILKEY: We will do anything that is necessary to try to get this...

BLITZER: And do you want to mention any other names of people you have retained?

BILKEY: No, I don't think I would like to do that.

But I think the important thing is, this misconception is really something that is so major, that -- as far as the security angle of it, that -- the security is running today. If another company had brought this, would this have been a problem? No. Why it is a problem? It shouldn't be a problem. And I think we believe that we have message as a company, and, as a -- and the clients that we have will speak for us. I think our track record is pretty good.

I mean...

BLITZER: All right.

Ted Bilkey, you have got a tough sell here in Washington. But I see you're going to try to make that sell. Appreciate your coming into THE SITUATION ROOM.

BILKEY: Well, always glad to come back to Washington. My mother grew up here -- father was a senator.

BLITZER: Your father was a senator?

BILKEY: Yes. And I have pictures of her sitting on the White House steps with President Harding.

BLITZER: Excellent.

BILKEY: And she's still alive.

BLITZER: Good for her.

(LAUGHTER)

BLITZER: Excellent.

(LAUGHTER)

BLITZER: Good work.

Mr. Bilkey, thanks very much for coming in. We will hope you -- we hope you will be back.

BILKEY: Glad to. Thanks.

BLITZER: Tell -- Ted Bilkey is the chief operating officer of Dubai Ports World.

Coming up, a devastating bombing at a shrine for Shiite Muslims, and bloody reprisals against Sunni Muslims -- is Iraq on the verge of civil war right now?

I will ask Brigadier General Mark Kimmitt of the U.S. military's Central Command. He's standing by, live here in THE SITUATION ROOM.

Also, with just 100 days until the next storm season, is New Orleans ready to handle another hurricane?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Welcome back.

The controversy over an Arab company running U.S. ports, and new violence between Shia and Sunnis Muslims in Iraq -- we want to talk about that with Brigadier General Mark Kimmitt. He's the deputy director for plans and strategy for the U.S. military's Central Command, former deputy director for operations for the U.S. Army in Iraq.

General Kimmitt, welcome to THE SITUATION ROOM.

BRIGADIER GENERAL MARK KIMMITT, U.S. CENTRAL COMMAND DEPUTY DIRECTOR FOR PLANS AND STRATEGY: Thanks for having me.

BLITZER: Let's talk, first of all, about this horrible series of events today in Iraq.

Zalmay Khalilzad, the U.S. ambassador in Baghdad, he said this earlier today. Take a listen.

(BEGIN VIDEO CLIP)

ZALMAY KHALILZAD, UNITED STATES AMBASSADOR TO IRAQ: The terrorists led by Zarqawi wish to see Iraq descend into sectarian conflict. This a critical moment for Iraq.

(END VIDEO CLIP)

BLITZER: I have been saying all day that I don't think we could overemphasize how critical this moment, today, right now, is for Iraq. But maybe you have a different assessment.

KIMMITT: Well, this -- this clearly has been part of Zarqawi's plan for quite some time.

As you remember, when we captured the letter that Zarqawi was sending to bin Laden back in February 2004, he specifically outlined this notion of attacking the infrastructure, attacking the -- the key sites inside of Iraq, for the specific purpose of trying to incite sectarian violence. So, this looks like it's another manifestation of his grand strategy.

BLITZER: So, this shrine, the Shia shrine, in Samarra is attacked today. There is an explosion there.

And, since then, there have been retaliatory strikes, if you will, by Shia against Sunni mosques. I know there are all sorts of numbers floating, how many Sunni mosques have been defaced, how many have been blown up, how many have been attacked.

What's the latest information you're getting?

KIMMITT: Well, we're seeing that there have been a few more attacks today, probably about 20 more attacks today than there were yesterday. Unfortunately, those additional attacks all seem to be against some Sunni mosques, some Sunni personnel. It is a tough situation right there. But -- but the important thing is, clearly, the Iraqi government, of all stripes, of all faiths, have come out and said, let's calm down.

We hope that that shock-absorber effect will cause the situation to calm down, that this will be a one-day incident -- people get out, scream, yell, and, then, things settle down tomorrow.

BLITZER: The president of Iraq, Jalal Talabani, said today: "We're facing a major conspiracy that is targeting Iraq's unity. We should all stand hand in hand to prevent the danger of a civil war."

That's the great fear right now...

KIMMITT: Yes.

BLITZER: ... that there's going to be a Lebanon-like civil war...

(CROSSTALK)

BLITZER: ... between ethnic Shia and religious -- various sects within Iraq.

How worried are you -- because you have to look down the road, as a -- a military planner. How worried are you about a civil war?

KIMMITT: Well, I -- the encouraging part of that is that you do have the leaders coming out and saying, let's calm out. We even heard that the Mahdi army that is -- that Sadr's troops were going from house to house, trying to calm people down.

When the Iraqi leadership themselves are standing up and saying, look, let's fully be understanding of what's going on here -- this is Zarqawi. These are terrorists trying to incite the very violence that we're trying to prevent. Let's stand up to this. Let's understand it. Let's get beyond this.

BLITZER: Donald Rumsfeld, the secretary of defense, made a very intriguing statement the other day, speaking about this long war, as it has been described...

KIMMITT: Yes.

BLITZER: ... in the region.

Listen to what he said. Listen to this.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Our enemies have skillfully adapted to fighting wars in today's media age. But, for the most part, we, our country, our government, has not.

(END VIDEO CLIP)

BLITZER: Which is a pretty amazing thing, that these guys, who are, you know, basically very, you know, elementary, in terms of their communications capabilities, are doing a better job communicating their message, he says, than we are, with the greatest satellite, the greatest technological...

KIMMITT: Yes.

BLITZER: ... capabilities in the world.

How is that possible?

KIMMITT: Well, first of all, it is remarkable that this is movement that wants to take the region back 15 centuries, to the days of the 7th century caliphate -- they -- this Luddite reaction movement.

But what's very striking is the way that they're able to use the most modern means of communication, the way that they're able to use the Internet and media to proselytize, to advertise, to show gruesome videos, to recruit, and to do funds financing.

It is remarkable how they use that. But being clever doesn't mean they're particularly strong. This enemy is not 10 feet tall. But it is quite clever, the way they are using the mass media against us and -- and filling the Internet and filling the airwaves with lies.

BLITZER: We could be doing a much better job on that front.

KIMMITT: Well, I think that they are not bounded by rules, regulations, laws.

They're not out to protect individual freedoms. They're not out to protect individual speech and privacy laws. We are bounded by the laws of our nations. They're not bound by any regulation, by any laws. They're not moderate. And they will use whatever -- whatever means necessary to get their point across.

BLITZER: We have spent a lot of time talking about this Dubai deal, this port deal, here in the United States.

KIMMITT: Yes.

BLITZER: You know that part of the world. You lived there. You know the United Arab Emirates. What do you think of this deal?

KIMMITT: Well, what I -- what I want know is that the United Arab Emirates and the great leaders they have, the crown princes, Mohammed bin Zayed, Mohammad bin Rashid, are some of our closest partners in the war on terrorism.

They have been enormously helpful in our basing. They have been enormously helpful in being some of those voices of moderation that are standing up and saying no to this type of extremism, and been very helpful in the GWAT overall. BLITZER: Bahrain is the home of the 5th Fleet.

KIMMITT: Yes.

BLITZER: But Dubai has complete access. They give the U.S. military, the Navy, whatever you want? Is that what you're saying?

KIMMITT: We also have an Air Force base operating out of Al Dhafra, near Abu Dhabi -- very, very close relationships, great working relationships, not only at the political level, but at the military level as well.

BLITZER: General Kimmitt, good to -- good of you to come into THE SITUATION ROOM.

Thanks very much for joining us.

KIMMITT: Thank you.

BLITZER: Good luck to you and everyone else in the U.S. military's Central Command.

KIMMITT: Thanks.

BLITZER: And, still to come, America's newest multimillionaires -- it's safe to say their days in a meat-packing plant are behind them, after winning a record Powerball jackpot.

And, in our 7:00 p.m. Eastern hour, can New Orleans take another hit from a hurricane? The next hurricane season -- get this -- only 100 days away.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Lou Dobbs getting ready for his show. That begins right at the top of the hour.

Lou, I know what you're working on, but tell our viewers.

LOU DOBBS, CNN ANCHOR Wolf, thank you very much.

Coming up at 6:00 here on CNN, we will have all the day's important news, as well new questions tonight about the president's refusal to review the Dubai port deal, and the longstanding business relationships and connections between the Bush family and the United Arab Emirates. We will have a special report.

And I will be joined by the governor of New Jersey, Jon Corzine. He will be here to talk about his plan to outright stop the sale.

And I will be talking with one member of the Bush administration who admits, our trade policy with China is troubled. U.S. Trade Representative Rob Portman will be my guest.

And I will also be responding to the president's challenge to those critics of this deal.

I hope he will be listening to our response, Wolf.

And we hope you will join us -- back to you, Wolf.

BLITZER: We certainly will, Lou. Thanks very much.

Lou has been on top of this story long before most of the mainstream media.

Both the House and the Senate, by the way, are now investigating something else. That would be the White House poised to release its own internal report on the response to Hurricane Katrina.

CNN White House correspondent Suzanne Malveaux is joining us now live with details -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, after reviewing thousands of documents, interviewing nine -- six -- six governors, nine mayors, and, of course, all Cabinet members, the White House says it's ready to unveil its report. The big question here is, how tough is it going to be?

Here's our preview.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): More than 1,300 dead, 1.5 million immediately displaced, more than $100 billion worth of damage -- the likes of Hurricane Katrina is something the administration hopes it will never confront again.

But, now, with only three months until the next hurricane season, President Bush is unveiling his much-anticipated report about the administration's failures to respond and the lessons learned.

MCCLELLAN: This lessons-learned review has identified 125 recommendations in 17 general categories where we can improve the federal government's capability to respond to a catastrophic event, like Hurricane Katrina, or a future terrorist attack.

MALVEAUX: Those lessons learned include having the military take on a more robust role during a national catastrophic event, when state and local first-responders become overwhelmed, a restructuring of how the federal government deals with national emergencies, to have each department become proactive in its response.

The president's homeland security adviser, Fran Townsend, who spearheaded the internal review, will lay out the details after Mr. Bush meets with his Cabinet. White House aides say, there will be no bombshells.

FRANCES TOWNSEND, WHITE HOUSE HOMELAND SECURITY ADVISER: This wasn't an investigation to assign blame. It was a charge to identify lessons learned, systematic problems, and the best solutions to address them. MALVEAUX: No calls for FEMA to be moved out of the Department of Homeland Security, no calls for its secretary, Michael Chertoff, or any other senior official to resign over their performance in dealing with Katrina.

TOWNSEND: Secretary Chertoff has had a busy first year. But his commitment to the department and to its mission has never faltered. He has led his department's lessons-learned effort.

(END VIDEOTAPE)

MALVEAUX: And there are some who question just how critical the president's report is going to be, considering it's an internal investigation.

It was just last week, the Republican-led House said that the president didn't do enough sooner. And, next month, the Senate comes out with its own findings -- Wolf.

BLITZER: Suzanne Malveaux, thanks very much.

Up ahead, a French court fines three paparazzi for photographing the late Princess Diana on the night of her fatal car crash. The amount may shock you.

And, with all the concern about port security, what's actually inside those millions of shipping containers that enter America each year? That's coming up, 7:00 p.m. Eastern time, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Zain Verjee joining us once again from the CNN Center in Atlanta with a closer look at other stories making news.

Hi, Zain.

VERJEE: Hi, Wolf.

A story we're following, a day of violent protests across Iraq ends in a prison kidnapping. Officials say gunmen entered the main prison in Basra tonight, and kidnapped 12 inmates. About an hour later, 10 bodies were found. Officials are now trying to determine if they're the same prisoners who were abducted. Another inmate was found injured.

The kidnappings follow an intense day of violence across Iraq. Attackers bombed the sacred Shia Golden Mosque in Samarra early this morning. And that sparked retaliatory attacks on at least two dozen Sunni mosques in and around Baghdad. At least six people, including three Sunni clerics, have been killed in the unrest.

Isolated and accidental -- that is how New York Mayor Michael Bloomberg describes the case of a New York man infected with anthrax. The 44-year-old drummer has been hospitalized in Pennsylvania, in stable condition, after becoming ill last week. Officials think that he was exposed to anthrax through handling untreated animal hides that he bought in anthrax. No other anthrax illnesses are reported. Three other people are being treated with antibiotics. That's just as a precaution.

One euro in damages -- one -- that's how much a French court is ordering three paparazzi photographers to pay for breaching privacy laws when they took pictures of Princess Diana on the night of her fatal car crash in 1997. The single euro will go to Mohamed Al Fayed. He is the father of the princess' companion, Dodi Al Fayed, who also died in the crash in Paris.

And how does it feel to be one of America's newest multimillionaires? Well, pretty good, to say the least, I'm sure. The winners of Saturday's record $365 million Powerball jackpot came forward today to accept their prize, amid a lot of applause. The eight meat processing workers in Lincoln, Nebraska, chose to split a lump sum of $120 million -- $124.1 million.

And that comes down to $15.5 million apiece, after taxes are taken out -- a great story, Wolf -- very, very lucky.

And I don't know. If you won that kind of money, would you be back in THE SITUATION ROOM the next day?

BLITZER: Of course. Love...

VERJEE: Yes?

BLITZER: ... THE SITUATION ROOM.

VERJEE: Really?

BLITZER: Certainly.

VERJEE: Really, Wolf?

(LAUGHTER)

BLITZER: Thanks, Zain.

Up next, should President Bush have known about the port deal before it happened? -- Jack Cafferty standing by with your e-mail.

(COMMERCIAL BREAK)

BLITZER: Let's go right to Jack in New York -- Jack.

CAFFERTY: Thanks, Wolf.

Should President Bush have known about this port deal before it happened? The White House says he just found about it a few days ago.

Carl in Coldwater, Kansas: "Cafferty, you are as worked up about the port controversy as you were last Friday. Why don't you try to find out some more about what is going on, and then try to temper your thinking?"

Tina writes: "Well, let's see. Bush was about the last to know about the grisly details of Katrina's aftermath, that his vice president had shot a man in the face, and that six of major ports will be put under control of a UAE state-owned company. Maybe he has been busy reading 'My Pet Goat.'"

Dave in Baltimore, Maryland.

These are tough.

"It's -- it's called plausible deniability. Of course he knew about it. He is briefed every morning on the matters of national security. And, with all the educated people who work for him, one of them would have brought it up."

Ryan in Lindsborg, Kansas: "I find it ironic, the president knows how to illegally spy on Americans, but doesn't have a clue when Arabs with ties to terrorists are going to control major American ports."

Frank writes: "No. He has got bigger fish to fry. Furthermore, al Qaeda's primary objective has always been to take down the current governments in the Middle East. As such, the Dubai Ports company has more to fear from al Qaeda than we do. Helping out such companies is another way of sticking it to al Qaeda. We should support such a move."

And, finally, Bob in Fort Wayne, Indiana: "Bush has lost it. Everyone who thinks he didn't know 'all' about this, please come to the front of the class and stand on your head" -- Wolf.

BLITZER: Jack Cafferty, see you in one hour, when we are back here in THE SITUATION ROOM -- lots more coming up on this story.

Among other things, we will speak to a representative of the UAE, the United Arab Emirates, here in Washington.

Until then, thanks very much for joining us. I'm Wolf Blitzer in THE SITUATION ROOM.

"LOU DOBBS TONIGHT" starts right now.

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