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The Situation Room

Iraqi Officials Order Curfew; New Details on Port Deal

Aired February 23, 2006 - 19:00   ET

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

WOLF BLITZER, HOST: You're in THE SITUATION ROOM, where new pictures and information are arriving all the time.
Happening now, a curfew order for a nation in crisis. Iraqi officials are now desperate to try to end an explosion of violence. It's 3:00 a.m. Friday in Baghdad, a holy day. We'll keep you up to the minute on the threat of civil war and we'll speak with General Russel Honore who has gone from disaster relief from Katrina to training U.S. troops from Iraq.

Also this hour, is President Bush now backing down in the battle over port security? It's 7:00 p.m. here in Washington. We have new details on the port deal.

And a final insult to fallen American troops. Why would anyone protest at a soldier's funeral? It's 6:00 p.m. in Minnesota where a military family is in mourning and furious at the demonstrators who shouted them down. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We begin with a story that's developing across Iraq. A rash of violence between Shiites and Sunnis over the bombing of a sacred shrine. Calls for calm have not stopped the blow-ups and the bloodshed, so officials are imposing a curfew. No one -- no one will be allowed in the streets, not even for Muslim prayers. It's for Baghdad and three surrounding provinces. More than 120 people are dead today. Among them, 47 near Baqubah. Officials say they were apparently stopped by gunmen, forced from their cars and simply shot to death.

And in Samarra, gunmen kidnap and kill three Iraqi journalists including Atwar Barjat (ph) a 30-year-old Sunni Muslim who worked for al Arabiya. The stakes for 140,000 United States troops right now, enormous. That's why officials here in Washington are so nervously watching all of this unfold. Let's go straight to CNN national security correspondent David Ensor. David.

DAVID ENSOR, CNN CORRESPONDENT: Wolf, it would be difficult to overstate the level of concern tonight here in Washington, talking to administration officials and intelligence officers. They are deeply worried about the situation in Iraq. Watching closely what will happen tomorrow in Iraq, the Muslim holy day.

(BEGIN VIDEOTAPE)

ENSOR (voice-over): The massive attack in Iraq against Shiite Islam's third holiest shrine has U.S. intelligence analysts in and out of government more worried than ever.

REUEL GERECHT, FORMER CIA OFFICER: I mean, I think this is probably the most dangerous event that has occurred since the fall of Saddam Hussein. It risks, I think, the entire enterprise in Iraq.

ENSOR: Current U.S. officials say they are watching in particular for what happens Friday as Muslims gather for their holy day. What will Shiite and Sunni clerics tell their followers? The next few days, experts say, could be crucial.

JOHN MCLAUGHLIN, CNN NATIONAL SECURITY ANALYST: What we need to watch for in the next several days is whether some event occurs which could tip it in the direction of civil war, something like further attacks on other Shia sites, the assassination of a major Shia figure. Something like that could take this to another level.

ENSOR: Analysts say the attack may have seriously damaged post Iraq election efforts by U.S. ambassador Zalmay Khalilzad to convince Shiite political leaders to accept some key Sunni figures in top jobs at the ministries of defense and the interior.

GERECHT: I think if Americans continue to go down that will path it will be very counterproductive.

ENSOR: But U.S. officials from the president on down also point to a call for restraint from Grand Ayatollah Ali Sistani, the nation's top Shiite religious leader who took the rare step of allowing himself to be filmed to underscore the urgency.

GEORGE W. BUSH, U.S. PRESIDENT: The voices of reasons from all aspects of Iraqi life understand that this bombing is intended to create civil strife. That the -- that the act was an evil act.

(END VIDEOTAPE)

ENSOR (on camera): Some analysts, including the conservative Reuel Gerecht, argue that what happened at the shrine and violence since then only underscores what they say is true since the beginning, that there simply aren't enough American troops in Iraq. But no one expects an increase at this point, Wolf.

BLITZER: David Ensor, thanks very much.

What does the spiraling violence mean for Iraq's young democracy? CNN's Aneesh Raman is in Baghdad.

(BEGIN VIDEOTAPE)

BLITZER: Aneesh, clearly, this is a crisis that is unfolding in Iraq right now. You've been there for some time. How serious is this?

ANEESH RAMAN, CNN CORRESPONDENT: Very serious, Wolf. The situation is rapidly deteriorating. There are grave concerns on virtually every front in terms of the violence following the bombing on Wednesday of that Shia shrine. There have been reprisal attacks against the Sunnis. At least 50 Sunnis have been killed in the capital alone, 50 Sunni mosques have come under attack and all Sunni politicians say some 100 Sunni sites have been targeted.

And also on the political front the major Sunni bloc, the Iraqi Accordance Front, has suspended talks with the Shia and the Kurds on forming a unity government. They say the government has shown a double standard, viscerally condemning the attack on the Shia mosque and largely silent on the reprisal attacks. So tensions are incredibly high for the vast majority of Iraqis. There is great uncertainty for what comes next, Wolf.

BLITZER: And there seems to be some statements from prominent Iraqis actually blaming the United States. The so-called occupiers, for this clearly horrible situation that's unfolding. How significant are those statements?

RAMAN: Very significant as well. When we saw the U.S. ambassador to Iraq, Zalmay Khalilzad last week say that the U.S. threatens to withhold funding if the new government is sectarian, just yesterday, Abdel Aziz Hakim, a leading Shia official, really the leader of the backbone of the Shia Alliance came out and said the ambassador gave a green light to terrorists, that he is partly to blame for the attack on Shia mosque.

Meanwhile, we saw one sign of hope. Massive protests with Sunnis and Shias together, banding, showing the Iraqi flag, calling for unity but they as well join together saying no to America. And we are also hearing more words from Shia leaders blaming the U.S. Now, essentially it could be they're collectively finding the same enemy but at the same time all tensions here are ratcheting up, in addition to U.S. tensions among Iraqis.

Wolf?

(END VIDEOTAPE)

BLITZER: Aneesh, thank you very much.

And to the fallout now from Hurricane Katrina. The White House released its report on the response to the disaster. And while we already knew much of what it contains, there are some surprising parallels to the report by the 9/11 commission. CNN's Brian Todd has been combing through both and he is joining us live. Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the subtitle of this report is "Lessons Learned."

But if you compare it to some of the recommendations from the 9/11 report you'll find some lessons on disaster response weren't learned at all.

(BEGIN VIDEOTAPE)

TODD (voice-over): Two calamities, two massive bureaucratic failures and now word that two major lessons from 9/11 were not followed in the response to Hurricane Katrina. Lesson one, the need for one agency or one leader to take charge during a disaster. The White House Katrina report says, quote, "The entire federal response structure should be reporting through one unified command, using the same terminology."

Rewind 19 months. This recommendation in the 9/11 commission report. "When multiple agencies or multiple jurisdictions are involved, they should adopt a unified command.

RICHARD FALKENRATH, CNN SECURITY ANALYST: There has not been universal adoption of this template. And in the heat of the moment during a crisis sometimes agencies come in and just do their own thing in the way that they're able to do most quickly.

TODD: Lesson two -- communications. From the Katrina report, quote, "Updated communications guidance must also emphasize the ability of emergency responders and private security officials to share information."

From the 9/11 report, "Compatible and adequate communications among public safety organizations at the local, state and federal levels remains an important problem."

Translation, on 9/11, many first responders were not on the same radio frequency and it slowed down rescue operations. During Katrina, some first responders still weren't on the same frequencies. Some had no communications at all.

FRANCES TOWNSEND, WHITE HOUSE HOMELAND SECURITY ADVISER: We will develop a more comprehensive national emergency communications system that ensures survivability, operability and interoperability.

TODD: Despite the assurances, a 9/11 commissioner outraged.

TIM ROEMER, 9/11 COMMISSIONER: When we send people to Iraq, we give them the equipment to communicate because we know they're going to be attacked. We don't give our same first responders the opportunity to communicate, whether they get hit by terrorists or a level four hurricane.

(END VIDEOTAPE)

TODD (on camera): Does it all mean the machinery of big government simply can't move fast enough in these disasters? Our experts say, no. We can and should expect a more streamlined response from our officials. Wolf?

BLITZER: Brian, thanks very much. Brian Todd reporting.

Let's go to CNN's Zain Verjee now for a closer look at some other news making headlines.

Zain?

ZAIN VERJEE, CNN ANCHOR: Wolf, in New York today a federal jury handed down a series of indictments against an alleged mafia boss and 31 other suspected mobsters. The lead prosecutor said the indictments had in his words had taken out of the top of the Genovese crime family, one of the country's most powerful organized crime groups, charges include murder, extortion and drug trafficking.

ABC News reports that cameraman Doug Vogt was released from a military hospital and that anchor Bob Woodward is making progress. The two were wounded by a roadside bomb while traveling with U.S. troops in Iraq last month. Doctors are reportedly slowly bringing Woodruff out of sedation and are said to be pleased with his progress.

And just take a look at these pictures, Wolf. A perilous aerial rescue over a Los Angeles construction site today. The operator of a 300 foot crane became stranded in the cab after experiencing chest pains. Rescuers climbed up to him, put him in a harness, as you see there, and used a helicopter hovering there to basically hoist him to safety. He was flown to the UCLA Medical Center for treatment and at last report he was in stable condition.

Wolf?

BLITZER: That's good to hear. Thanks very much, Zain.

Let's go up to New York now, Jack Cafferty standing by with the "Cafferty File." Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the epitaph may one day read, it just wasn't such a great idea after all. Things are getting a lot worse in Iraq tonight. Yesterday's bombing of a Shiite mosque has turned the country into more of a tinderbox than it already was and is described as teetering on the brink of civil war. Iraqi leaders are calling for calm but the latest violence puts a big question mark next to whether the Kurds, Sunnis and Shiites will ever form a unity government.

Meanwhile, 2,286 U.S. troops have died in Iraq and nearly half a trillion dollars of our money has gone in pursuit of something that perhaps was never meant to be. If civil war erupts there, the coalition has nowhere near enough troops to handle it. But you can bet that more of our soldiers will die. Here's the question, then. Is it time for the United States to get out of Iraq? E-mail us your thoughts at caffertyfile@cnn.com or you can go to cnn.com/caffertyfile.

BLITZER: Jack, thank you very much.

Coming up here in THE SITUATION ROOM, we're tracking another developing story, port insecurity. Is there a chance the deal involving major U.S. seaports will be delayed?

Also, he led the joint Katrina task force in the wake of the hurricane. We'll talk about today's White House report with Lieutenant General Russel Honore here in THE SITUATION ROOM.

Plus, God, gays and the funerals of U.S. soldiers. Why a church group is protesting what some people are doing now to stifle them. We're going to tell you what's going on. You're in the situation room. (COMMERCIAL BREAK)

BLITZER: Now in the CNN "Security Watch" and the showdown over port security here in the United States. Tonight we learn the State of New Jersey has filed suit to block the controversial port deal until a federal investigation is conducted. And the president's top political adviser now says Mr. Bush might accept a delay of sorts in the deal. Karl Rove's comments came amid tough new criticism from Democrats and Republicans on Capitol Hill. CNN's Andrea Koppel is joining us now. She has the story.

Andrea?

ANDREA KOPPEL, CNN CORRESPONDENT: Wolf, now for the first time since the storm began to swirl around this town last week, the administration has decided to lift the curtain just a bit on the highly secretive approval process on this $6.8 billion deal.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): Even as President Bush was continuing to defend his administration's decision and reassure the American people ...

BUSH: Well, this deal wouldn't go forward if we were concerned about the security for the United States of America.

KOPPEL: On Capitol Hill, Senate Democrats set some of the administration's key decision makers in the port deal squarely in their crosshairs.

SEN. HILLARY CLINTON, (D) NY: If 9/11 was a failure of imagination and Katrina was a failure of initiative, this process is a failure of judgment.

KOPPEL: This hastily arranged briefing before the Senate's Armed Services Committee was convened by Chairman John Warner, one of the few Republicans to openly support President Bush in the hopes of stemming the flood of congressional criticism. In attendance, senior officials from the Department of Defense, Homeland Security, the State Department and Treasury, four of the 12 government agencies involved in green lighting the controversial deal.

SEN. EDWARD KENNEDY, (D) MA: Did anyone on the panel raise any national security concerns at all?

UNIDENTIFIED MALE: By consensus, they said that there was not a national security concern.

KOPPEL: Of the five senators who attended, four were Democrats. Among them, senators Hillary Clinton and Carl Levin, wanted to know why the administration signed off on the deal with the United Arab Emirates, a country that was home to two of the 9/11 hijackers, without a mandatory 45 day investigation.

(END VIDEOTAPE) KOPPEL: But even after two and a half hours of back and forth, it doesn't appear that the Bush administration will be able to head off legislation to block the deal which was supposed to be finalized next week, Wolf. Senator Clinton saying she still intends to push her own legislation that would effectively prevent all foreign ownership of U.S. port facilities. Wolf?

BLITZER: Andrea, thanks very much. Andrea Koppel reporting.

We have some new information coming in tonight about the port deal and where the Bush administration stands on it. Let's bring in our senior national correspondent, John Roberts. He has more.

John?

JOHN ROBERTS, CNN CORRESPONDENT: Wolf, the White House may have found a way out of the political mess surrounding the ports deal that was approved by CFIUS, the Committee on Foreign Investment in the United States.

Today White House officials said if the companies wanted to voluntarily delay the acquisition past next week's deadline, they'd be fine with that. That would satisfy some members of Congress who have been calling for a delay and give the White House more time to explain the deal to lawmakers.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): President Bush led off that campaign at his cabinet making, insisting the port acquisition is right for America.

BUSH: The more people learn about the transaction that has been scrutinized and approved by my government, the more they'll be comforted that our ports will be secure.

ROBERTS: And as homeland security officials appeared on Capitol Hill, the department took an unprecedented step of releasing details of a confidential security agreement it made with Dubai Ports World. Among other things, it demands mandatory participation in a cargo screening program at foreign ports before containers get anywhere near the United States. DPW must also surrender on demand operations records, including employee information. And to the extent possible, retain current U.S. management.

Security expert James Lewis (ph) believes there is nothing about this deal to be worried about.

UNIDENTIFIED MALE: My opinion is that with the arrangements that the CFIUS committee and the agencies involved came up with, our security concerns are fully met.

ROBERTS: In fact, says Lewis, if there's any cause for concern it's the issue of isolationism that the backlash against the port deal creates. Dubai Ports World, he says is a well respected company with a good reputation and nothing threatening about it. UNIDENTIFIED MALE: The Republicans who are running for reelection are gauging just how much mileage they can get out that will help them. But it's not a security issue. It's a political issue.

(END VIDEOTAPE)

ROBERTS: The White House fully recognizes how badly this would play in the Arab world if Congress blocked the deal. So while White House officials say a voluntary delay would be a win for everyone, President Bush is still standing firmly behind his veto against an attempt by Congress to impose a delay. Wolf?

BLITZER: John Roberts. Thanks very much.

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

Still to come here in THE SITUATION ROOM, he oversaw the rescue of Hurricane Katrina's victims. Now General Russel Honore is training troops for another battle, this one in Iraq. He's here in THE SITUATION ROOM.

And he sacrificed his life for the war in Iraq. Now why is his mother forced to fend off protesters at his funeral? Our Ed Lavandera saw the whole thing unfold. Stay with us.

(COMMERCIAL BREAK)

BLITZER: My interview with General Russel Honore coming up right here in THE SITUATION ROOM. We'll talk about hurricane Katrina. Now he's training troops for Iraq. That's coming up. First, though, back to Zain at the CNN Center for some other news making headlines around the world.

Zain?

VERJEE: Wolf, British police have arrested two people and are looking for others after an audacious heist that netted as much as $88 million in cash yesterday. Authorities say that the robbery was carried out with military style precision. The thieves raided a cash depot outside of London, abducted the manager and his family and then tied up the guards before making off with the money.

Secretary of state Condoleezza Rice made a surprise stop in Beirut where she reaffirmed U.S. support for Lebanon's independence. She says she's confident of the future of democracy in the country and she is also calling on Syria to cooperate with the U.N. probe into the murder of the former Lebanese Premier Rafik Hariri. Rice has now moved on to the United Arab Emirates.

Muslims fleeing the wave of sectarian violence in southeastern Nigeria. More than 120 people have been killed in fighting their between Muslims and Christians. In one city, a whole Muslim neighborhood was burned to the ground. The violence was basically set off by weekend protests over the publication of cartoons of the Prophet Mohammed that depicted him essentially as a terrorist.

In Russia, rescue teams and dogs are combing through debris after a roof collapse at a busy Moscow market. Dozens of bodies have been recovered but the authorities are saying that they have been in cell phone contact with survivors trapped in the rubble. Cold temperatures and a night of heavy snow may have contributed to the collapse.

Wolf?

BLITZER: Zain, thank you very much.

Just ahead, the truly worsening situation in Iraq and the White House Katrina report. I'll speak about both with the man New Orleans mayor once called that John Wayne dude. Lieutenant General Russel Honore, he's here in THE SITUATION ROOM.

Plus, why a church group said god is killing U.S. soldiers. They're picketing the funerals. We'll show you what one group is doing to block them. Stay with us.

(COMMERCIAL BREAK)

BLITZER: As we noted the White House has released a report in the lessons learned in the aftermath of Hurricane Katrina. It says federal, state and local governments were ill prepared to handle the relief effort.

Meanwhile, one man who stared down the ensuing calamity and took charge is now talking about the lessons he learned, Lieutenant General Russel Honore.

(BEGIN VIDEOTAPE)

BLITZER: General Honore, thanks very much for joining us. Let's talk about some of the lessons learned from Hurricane Katrina. One of the lessons was the U.S. military, specifically the National Guard, are well qualified to get involved in these major disasters. What do you take away? The major lesson you learned for the U.S. military from what happened in the aftermath of Hurricane Katrina?

LT. GEN. RUSSEL HONORE, U.S. ARMY: Well, we know that early on, planning, preparation and integration and execution is key.

What threw all that off was the enormity of this storm and the aftereffects of the flood that was created. We had similar situations in Mississippi. What we did not have, we had equal destruction and devastation in Mississippi. What we did not have to deal with was the aftermath of the flooding, which created -- and overwhelmed the capability of the local National Guard, thereby creating national guardsmen who expertly and swiftly deployed to New Orleans, a considerable amount of distance and a number of troops moved and did a superb job of getting there.

Again, the dynamics of the search and rescue mission was to get enough helicopters there to complete that mission. But early on integration, compatibility, enduring communication, ability to tap into the satellite network, because the cell towers and the fixed communications were down, is some big lessons and the report reflects that and we've gotten our homework and we'll go about getting it done, so we'll be prepared for the next hurricane season, over.

BLITZER: The House report also wrote this: "The failure of initiative cost lives, prolonged suffering and left all Americans justifiably concerned. Our government is no better prepared to protect its people than it was before 9/11."

Even if we are, we're less than 100 days now, General, from the next hurricane season. Are we better prepared right now to deal with a hurricane?

HONORE: Yes, I think so from the perspective of the awareness of the American people on the importance of evacuation, the importance that local and state government ensure evacuation happens, the importance of early on moving special-needs patients, to include those from old folks' homes and from hospitals, and the effects of the flood, to try and mitigate that as much as we can.

But as far as the Department of Defense, we are prepared to respond. We've gotten our homework. We'll go back and then the department will deal with it in conjunction with Northern Command.

But we must not forget, this was a storm -- we had not experienced one of this type before, and it stretched every aspect of our government, and it set back technology 80 years.

And we have a over-reliance on technology. Our ability to communicate to our people, our ability to move was being hindered by -- it tore the roads up and bridges. It closed all the airports, and we couldn't communicate by normal telephones. So this storm had a vote.

Now, we could continue to beat ourselves up, but this was one big, bad storm and those of you that witnessed it and the survivors, our people who were affected by the storm, know that.

So we would want to get there quicker and provide as much assistance as we can. That's been laid out in our after-action reports. It's a function of us taking the action from what the leadership has given us, and tying all that together before the next hurricane season.

But people should not discount that this was one enormous storm that created enormous damage, over.

BLITZER: General, while I have you, you're the commanding general now of the First U.S. Army. I assume you're getting troops ready, training them, to go over to Iraq. What are you doing specifically to deal with enormous threat of IEDs, improvised explosive devices?

HONORE: Well, it is -- we're constantly working that. We have it integrated in all of our training and it is -- we're using the latest technology that is available. The department has appointed retired General Meigs to be our guide way, working with the joint IED task force. We take the training task as given to us by General Casey and General Abizaid. We integrate those into our National Guard and Reserve training. And we are up to date, within 24 hours of something happening and a new technique emerged, we are working on a way to counter those IED, and to defeat the IED.

It is our number one training priority and we focus on that. And our troops adapt well to it, but we continue that fight, over.

BLITZER: What about body armor and armor for the vehicles? Are you satisfied with the level that has been provided at this point?

HONORE: Our troops have the best body armor available. As new body armor become available, we are providing that to them, priority first, is those soldiers (ph) fall out (ph) on the battlefield, as they deploy, they get that in the theater, over.

BLITZER: What about the current situation there? It looks, in the aftermath of this bombing of this Shiite mosque, that the country now may be on the brink of serious sectarian civil war. What is your assessment?

HONORE: Well, as you know, as you stated earlier, I am in the business of training the troops. We do take assessments, so we make sure our troops are well trained, but we are in the process now of sending troops in the next coming days to replace a group we have there that worked with the Iraqi army and with the Iraqi police.

And all the reports we get back, the key part, of the law and order piece is to have the functioning Iraqi army and a functioning Iraqi police. And we're doing our part to provide those and every day they get better.

And right now, they are doing their job to enforce the curfew that is in place, so they're doing their job and we're proud of the fact that we helped train them and we'll continue to send those troops over to provide those missions, over.

BLITZER: General, we're almost out of time, but is there anything that you really need right now to get your troops trained, prepared, for Iraq, for Afghanistan, that you're not really getting? Is there anything you really need?

HONORE: No, but there is one thing that we're getting -- we would like to thank the American people for the support they've given our soldiers, sailors, airmen and Marines and our Coast Guard men in fighting the global war on terrorism, and the great support that they provide to the families of those soldiers, and our employees (sic), who hire and maintain the jobs for our National Guard and Reserve troops while they're deployed.

So we, in the Department, in the Army, particularly here at First Army, as our job is to focus on National Guard and Reserve, is that taking care of those families and supporting our troops, that American spirit that remind our troops that they are cared for and that the American people support them and support their families while they are deployed is one of the things we'd like to thank the American people for continuing to do, just like they're doing with the Katrina survivors and taking care of them. There's a lot of work left to do, and this is a long war, over.

BLITZER: General Honore, good luck to you, good luck to all the men and women who work with you. Thanks very much for joining us.

HONORE: Sure.

(END VIDEOTAPE)

BLITZER: Right back to General Honore. Up ahead, they've been protesting at the funerals of gay men for years. Now they're targeting the funerals of United States soldiers. We'll show you why they say God is punishing the United States.

And is it time for the United States to get out of Iraq? It's our question of the hour. Jack Cafferty standing by with your e-mail.

(COMMERCIAL BREAK)

BLITZER: For years they've been an unwelcome fixture at the funerals of gays and those they believe are friendly to gays. Now members of a small Kansas church are protesting at the funerals of United States soldiers killed in Iraq. CNN's Ed Lavandera is joining us now from Anoka, Minnesota, with this incredible story. Ed, tell our viewers what's going on.

ED LAVANDERA, CNN CORRESPONDENT: Hi, Wolf. Well, this is the ultimate test of the first amendment. And it's happening more often than you think. These religious protesters have been going around the country lashing out at the families of fallen soldiers.

(BEGIN VIDEOTAPE)

SHIRLEY PHELPS, PROTESTER: You crossed the line. Now God is your enemy.

LAVANDERA (voice-over): Shirley Phelps says American soldiers, even heterosexual ones, are doomed to hell for representing a country that encourages homosexuality.

She delivers this message not at a public rally or in a speech, but instead at the funeral of a fallen soldier in earshot of mourning family members. 23-year-old Corporal Andrew Kemple (ph) was laid to rest today in Anoka, Minnesota. He was killed in Iraq after his Humvee was attacked by small arms fire. Corporal Kemple's friends say these protests must stop.

LISA MURPHY, FAMILY FRIEND: There's no reason a mother should have to face this. You know, bury your child and then have to deal with people like this. It's insanity.

PHELPS: Disobey! He will curse you.

LAVANDERA: Phelps is unfazed by criticism. She claims to have protested at more than 100 military funerals. The signs her supporters carry are ruthless. One reads "thank God for dead soldiers."

When Andrew's mother came over and asked the group to leave, they lashed out at her.

PHELPS: You made that child the tormented child he was because you taught him that God was a liar.

LAVANDERA (on camera): You don't think you've crossed the line of indecency at all?

PHELPS: They sent the child to hell.

LAVANDERA: The question was, have you crossed the line of indecency?

PHELPS: Hon, they crossed the line of indecency. America is doomed and you're talking to me about decency? God says they'll be buried with the burial of a jackass and don't you mourn them.

(SINGING)

LAVANDERA (voice-over): But Phelps' protests have angered people like John Lutsch. He is with a group that calls itself Patriot Riders, dedicated to drowning out Phelps' voice with patriotic songs.

JOHN LUTSCH, PATRIOT RIDERS: It's about having empathy for the family and expressing your patriotism. And that's -- it's a moving thing for me. I get a little choked up about it.

LAVANDERA: More than a dozen people turned out in support of the Patriot Rider group. By the end of the funeral, Phelps and her protesters had left. Corporal Andrew Kemple's friends say he finally received the peace and honor he deserves.

(END VIDEOTAPE)

LAVANDERA: Now, these religious protesters might be small in numbers, but they have been generating a great deal of anger where they go. In fact, we understand that more than a dozen states in the United States are now considering legislation that would severely restrict the kind of protests that you've seen here at funerals.

So word is spreading, especially among military families, that these people are showing up at funerals and they've been calling out to this to Patriot Rider group for help -- Wolf.

BLITZER: What a story. What a shocking story. Ed, thank you very much for bringing it to us and to our viewers.

The Pentagon has updated its casualty figures. It now says that as of today, 2,286 United States servicemen and women have been killed in Iraq since the start of the war nearly three years ago.

Up ahead, a number of important issues not addressed in the White House Katrina report. We're going to show you what was left out.

And U.S. ports in the spotlight, with an Arab country poised to take control of some of them. But how do ports really operate? Our Ali Velshi is standing by with the "Bottom Line."

(COMMERCIAL BREAK)

BLITZER: More now on the White House report on the Hurricane Katrina response. For all the information that's in it, there's a lot that isn't. CNN's Tom Foreman is here in THE SITUATION ROOM with that -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: That's exactly what excited Democrats in Congress and critics of this administration, because they're saying whitewash about this report. And the reason why are the things that are left out.

Big on the list, Michael Chertoff, the Homeland Security secretary. Here's somebody who has been under fire. Some people say that he's the guy who should be out of a job primarily because he is the guy at the top in this whole response. He's still there. People are saying this is not addressed in this, whether or not he should keep his job, whether or not he personally failed.

Another issue is FEMA itself. Many professional disaster experts say the fundamental flaw here was that FEMA was under Homeland Security instead of independent. They couldn't deal directly with the president. That's not addressed in this report.

Beyond that, the things that local people are complaining about is there's no addressing of the continuing problems. This report acts as if the Katrina incident ended a couple weeks or a month after this was done, and it is not an ongoing problem. Many local people down there will say fundamentally they're facing ongoing problems right now and they still feel that FEMA and Homeland Security are not responding.

And beyond all of that, one other area for sure is the levees. This is something that's been from the beginning a big issue. Were the levees properly maintained? Could they have ever stopped this storm? And to what level will they be rebuilt?

The report does not address any of this. And many of these disaster managers I've talked to said that may be like jazz music. The things you leave out may be what matters most as the new hurricane season comes around.

BLITZER: All right, Tom. Thank you very much for that.

Meanwhile, in some parts of New Orleans, colorful faces and a kaleidoscope of fun. They're celebrating Mardi Gras. And many say they won't let Hurricane Katrina damage stop them.

CNN's Chris Lawrence is joining us now with more on what's going on -- Chris. CHRIS LAWRENCE, CNN CORRESPONDENT: Well, Wolf, you know, there are parts of New Orleans where you couldn't even tell Hurricane Katrina happened. But we looked closer and found out that this Mardi Gras isn't the economic boost some people were expecting.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): There's still good times on Bourbon Street, but walk one block over. Stores are empty.

UNIDENTIFIED FEMALE: It's real bad. Every business is suffering.

LAWRENCE: Maria Nelson (ph) says sales have dropped 70 percent. Her gallery depends on older tourists who appreciate artwork.

UNIDENTIFIED FEMALE: And we're not getting that at all. We're getting the younger generation.

LAWRENCE: Visitors could be confused by the different signals this city is sending. Open and closed. Hopeful. Still hurting.

HAROLD PINKLEY, VISITOR: Downtown where I was, you know, it's -- superficially it looks OK but you can tell there's just not a lot of people down there.

STEVE PERRY, CONVENTION & VISITORS BUREAU: Well, New Orleans right now is a tale of two cities.

LAWRENCE: Steve Perry runs the Convention and Visitors Bureau. He says the tourist industry is New Orleans' largest employer and generates one third of the city's operating budget. Perry says New Orleans has reopened 28,000 hotel rooms.

PERRY: We're almost sold out for Mardi Gras, which is great. We've got over 1,000 restaurants open and almost 30,000 people back to work.

LAWRENCE: But take a closer look. That number of rooms is still 10,000 fewer than normal. It's sold out because some big hotels are still shut down, the Ritz Carlton and Fairmont just to name two. A lot of restaurants are still boarded up. And for every person back to work, there are two jobs that haven't been filled.

UNIDENTIFIED FEMALE: After Katrina, everything changed. It won't be the same ever again.

(END VIDEOTAPE)

LAWRENCE: Maybe not. But it's not all bad news. The Ritz Carlton hopes to reopen by the end of the year, and Southwest Airlines announced today that it's adding a new flight from Phoenix to New Orleans -- Wolf.

BLITZER: Chris, thank you very much. The controversy over an Arab company running U.S. ports is putting the industry in some sort of spotlight right now, but most of us really don't know how port operations work. Our Ali Velshi has been looking into that. He's in New York and he has got the bottom line -- Ali.

ALI VELSHI, CNN CORRESPONDENT: Hello again, Wolf. Well, the Port of New York and New Jersey saw 5,400 ships last year, and it carried the equivalent of 4 million shipping containers.

It's all controlled from one place, a place called Ft. Wadsworth in Staten Island. Now, Ft. Wadsworth is a VTS. That stands for vehicle traffic service. It's the maritime equivalent of a control tower. It's run by the Coast Guard, which generally only boards a ship if something seems unsafe or to support Customs agents. The Coast Guard boarded about 350 ships in the New York area last year.

Now, the VTS is not concerned so much with what's on the ships as long as it doesn't fall off. Containers sometimes do go overboard, they told us, and that ties up shipping traffic while they fish the cargo out.

And once the ship is parked, cranes unload the containers, sometimes as fast as 50 an hour.

If you didn't know much about America, you could learn a lot at the port. Crude oil goes straight to nearby refineries. About 700,000 cars a year go to one of two onsite prep centers before they go to dealerships. About 300,000 containers are transferred directly onto rail cars. Oranges that come in get squeezed and made into juice at two blending operations at the port. And gypsum gets made into dry wall all onsite, to feed America's building frenzy. Food and produce also can be stored there at a refrigerated warehouse.

Here's an interesting fact, Wolf. Only trained New York, New Jersey harbor pilots can steer a ship into the port. So they meet the incoming vessel in the water, then they clamor up the side of the ship using a rope ladder. The ship's captain then cedes control to the harbor pilot, who guides the ship in and parks it.

A lot of shipping is done for stuff that ends up at Wal-Mart. I told you about Wal-Mart a little earlier, Wolf. I just want to clarify something. I was saying that one of the announcements they've made is that they're going to lessen the wait time that part-time workers have to wait in order to qualify for health coverage. Right now it stands at 24 months. I said that they're going to bring it in line with full-time workers at six months. Wal-Mart has pointed out that they have not made a decision as to how short that wait time is going to be. So it's going to be somewhere less than the current 24 months, Wolf.

BLITZER: Ali, thank you very much for that.

The Dubai-based company set to take over operations at ports in six major U.S. cities will be limited to certain terminals. Our Internet reporter Abbi Tatton has more on that -- Abbi. ABBI TATTON, CNN INTERNET REPORTER: Yes, Wolf. This Dubai-based company would be taking over the leases of certain terminals within these ports rather than the ports themselves.

Let's look at how this works. At the Port of Baltimore, they have 14 terminals there. Dubai -- this Dubai company would be taking over lease operations involved in two of them, one of them very important, the Seagirt container terminal -- this is the most productive along the North Atlantic.

Looking at another here, the Port of New Orleans. Also, Dubai Ports World would be taking over two terminals there. And they're by no means the only foreign company operating out of that port. Other foreign companies operating alongside them hail from Japan, Italy and Denmark, Wolf.

BLITZER: Thank you very much, Abbi, for that.

Let's go up to New York. Paula Zahn standing by with a preview of what's coming up in a few moments -- Paula.

PAULA ZAHN, CNN ANCHOR: Hi, Wolf. Thanks so much.

Coming up in just about six minutes from now, authorities say they have never seen anything like this. Who is kidnapping teenage boys and forcing them to rob banks?

We're also going to have the very latest in a very bizarre investigation. Who would actually steal bones and tissue from dead bodies? It is forcing some transplant patients to get tested for HIV and has led to some recent arrests.

And remember these pictures from outside a courthouse? A gunman chasing and shooting a lawyer. What happened to both of these men? They will tell us for the very first time. All that coming up at the top of the hour, Wolf.

BLITZER: Thanks very much, Paula, for that.

Still ahead, is it time for the United States to get out of Iraq? It's our question of the hour. Jack Cafferty standing by with your e- mail.

(COMMERCIAL BREAK)

BLITZER: There he is, Jack Cafferty. He's got "The Cafferty File." Hi, Jack.

CAFFERTY: That's a frightening sight, isn't it, Wolf?

Yesterday's bombing of a Shiite mosque in Iraq has turned that country into more of a tinderbox than it already was, perhaps now teetering on the brink of civil war. The question: Is it time for the United States to get out of there?

Eric in Chicago: "If the situation in Iraq disintegrates into civil war, the U.S. must get the troops out of there immediately. We got ourselves involved in a civil war 40 years ago, lost the lives of many brave Americans in the process. Secure the airports and get them out now."

Eileen in Alexandria, Virginia: "Congressman Murtha was right. This is a civil war. Nothing the administration has said from the beginning has held true. And now, after the death and maiming of our troops and the considerable expenditure of our national treasury, it all seems to have been not only a waste, but a devastating ignition of deep unrest in the entire region."

Andrea in New York: "Our enemies are carrying out these violent attacks just to hear these words broadcast across the U.S.: "We should get out!" Try not to help them too much, OK?"

Julia in Amesbury, Massachusetts: "Let me see. This is a tough one. Since our invasion of Iraq, the U.S. is now hated worldwide, we've lost our allies, we're handing our ports over to the enemy, we're almost bankrupt, and our president's lost his mind. Yes, it's time to buy that one-way ticket home from Iraq. Not a great place to visit, and don't want to rule there."

W.J. in Las Vegas, a different view. "I feel not only should they stay there, but be reinforced, by more troops to secure the borders and more Air Force participation to control the insurgents. The fighting in Iraq is just the beginning of bigger battles to come, and we need to be gearing up now."

And finally, Mary in Box Elder, South Dakota: "Jack, it's way past time to have left. When we are getting blamed for blowing up mosques and have spent half a trillion dollars, we need to come home and rebuild the Gulf Coast and the Army."

Wolf.

BLITZER: Was the e-mail divided into stay and finish the job, as opposed to leave right now?

CAFFERTY: No. More e-mails saying we should get out than e- mails saying we should stay. We got about 700. I didn't read them all. I probably looked at 300 of them. I'm guessing 80/20 in favor of getting out of there.

BLITZER: Jack Cafferty, we'll see you tomorrow here in THE SITUATION ROOM. Thanks very much as usual.

We're here weekdays 4:00 to 6:00 p.m. Eastern, back at 7:00 p.m. Eastern. I'm Wolf Blitzer in THE SITUATION ROOM. Let's head over to Paula Zahn in New York -- Paula.

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