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The Situation Room
DP World to Sell Operations to U.S.-Based Company; Bush Signs Patriot Act
Aired March 09, 2006 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, HOST: To our viewers, you're in THE SITUATION ROOM where new pictures and information from around the world are arriving all the time.
Happening now, a tidal wave in the port storm. An 11th hour collapse after Republican leaders tell the president the Dubai deal is dead D.P. World backs out. It's 4:00 p.m. here in Washington. Are lawmakers now backing off from a showdown with the White House? Presidential clout now an the line, he signed the Patriot Act today, but can he celebrate with all the damage that he suffered from the ports controversy?
Also this hour, new alarm about the Iran nuclear threat. The secretary of state speaks out and members of U.N. Security Council weigh in, but Iran is no less defiant.
I'm Wolf Blitzer and you're in THE SITUATION ROOM.
At this moment, members of Congress still have many new questions about the dramatic new development in the port security controversy. Dubai Ports World now says that it will turn over all its operations of U.S. ports to a still to be determined in a firm. This comes on an action-packed day in the ports controversy including a striking confrontation over at the White House. And this important political story has serious implications for lots of people in the United States and around the world. Our correspondents Dana Bash and Andrea Koppel are stunning by. Let's go over to Capital Hill where Ed Henry has all the late breaking developments -- Ed.
ED HENRY, CNN NEWS CORRESPONDENT: Wolf, one dramatic development after another coming in fast and furious and I can tell you leaders in both parties are still trying to sort it all out, but the bottom line at this hour is that the port deal as it was originally constructed is dead. It's done. And that grim assessment was delivered directly to the president of the United States this morning at the White House by Republican leads in both the House and the Senate. Speaker Dennis Hastert, Senate Majority Leader Bill Frist delivering that bad news that the political reality was such that they were going to be able to halt this port deal with votes both in the House and the Senate and more importantly they were going to have overwhelming bipartisan majorities to override any threatened presidential veto if the president actually went through that.
But then, a short while later there was yet another amazing turn when Republican Senator John Warner who has been trying to broker a deal here, a last-minute compromise, he told me he was up to the wee hours last night talking directly to officials D.P. World trying to work out some last minute deal. He went to the Senate floor with what he thought might save it all
(BEGIN VIDEO CLIP)
SEN. JOHN WARNER (R-VA), ARMED SERVICES CHAIRMAN: D.P. World has decided to transfer fully the U.S. operation of P&O Ports North America to a United States entity. This decision is based on an understanding that D.P. World will have time to effect a transfer in an orderly fashion and that D.P. World will not suffer economic loss. We look forward to working with the Department of Treasury to implement this decision.
(END VIDEO CLIP)
HENRY: Now that sparked some confusion, the use of the word "transfer" as if it was not actually the U.S. assets were not being sold off, which is what Republican leaders up here wanted to hear. But a spokesman for Senator Warner, a short while ago, and clarified that Warner's office has now spoken to a company lawyer for D.P. World and they've made clear that this is quote, "a full divestment of the U.S. portion of the P&O deal, about 10 percent of this deal. That is in fact dead. The other 90 percent will -- they will at least try to move forward on that. But Democrats like Chuck Schumer still say they want to see the fine print, they want to see -- they say the devil is in the details and that's why they're separate -- on a separate track, moving forward on legislation to halt this deal while all the details are looked at. Here's Senator Schumer.
(BEGIN VIDEO CLIP)
SEN. CHARLES SCHUMER (D), NEW YORK: Nobody knows any details of it. I spoke to Senator Frist, he said he doesn't know the details of it. To simply say that the U.S. entity will be separate isn't enough. How is it separate? How thick is the wall? And until we have all of those details. We can't say anything. I'm dubious of anything where the Unite Arab Emirates has any control at all and I think my colleagues would join me in that sentiment.
(END VIDEO CLIP)
HENRY: Now the bottom line, looking beyond the port deal is that Democrats now believe that they've had a political victory here. They think that they've gained some traction in what should be the president's strong suit, security, and since this is a mid-term election year, they are not about to let up. They're moving on and trying to pivot off this issue to beat up on the president. A whole range of security issues -- Wolf.
BLITZER: And just to be precise, that statement that John Warner read on the Senate floor, that was the press release in affect that Dubai Ports World release, that wasn't his statement, he was reading the announcement on the Senate floor.
HENRY: That's right. And use of the word "transfer" confused a lot of people because it didn't really seem to hit the nail on the head on what a lot of people want to hear, but they're now clarifying. Of course, you still have to wait for the details and the lawyers will look at it, but they're saying that in face it is a divestiture -- Wolf.
BLITZER: Ed Henry, we'll see later in THE SITUATION ROOM, thanks very much.
Let's go over to the White House right now. Officials there desperately would like to port storm to go away. Dana Bash, our White House correspondent with reaction.
What are they saying there, Dana?
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, they think that this actually might be the thing that will make it go away, Wolf. You heard Ed talk about this meeting here at the White House this morning -- the president and leaders from his own party essentially talking about the bottom line, hard truth, the political reality is and was that there was no way for the president's own party leaders to stop the train of massive opposition of this particular deal. And we're told by a senior official that the president, who had, of course, issued a veto threat before didn't feel the need to do that today. Why? Because everybody understood where everybody's position on this particular issue.
Interestingly, that at that time, when they were meeting here, about in the 10:00 hour this morning, Wolf, there were a lot of rumors, I'm told, a lot of discussion about what the company could or couldn't do, but nobody really knew. And that has really been part of the pattern here and the frustration at this White House, that the president stood firm that he wanted this deal to go through, but then after that, politically and in terms of the policy and the process, it was out of his hands. So, at this point, they are hoping that this is going to be behind them. But as you heard from Ed Henry, they are waiting to see the fine print on Capital Hill. But, talking to people here, at the White House, Wolf, they do believe that this particular move to allow -- or to get rid of, essentially the operating from the perspective of D.P. World will end this enormous controversy.
But in terms of the relationship, Wolf, that the president has with the leaders of his own party in Congress and more importantly the rank and file, this cold be just the beginning of a very, very different relationship then we've seen over the past five plus years.
BLITZER: And we're going to get more on that later this hour, on the possibility the president is emerging already as a lame duck. This has to be, Dana, so humiliating for the president. He came out a couple weeks ago, right after this deal was announced, and he said he would veto any legislation trying to block it. He hasn't vetoed anything since becoming president of the United States. Are we waiting to hear from the president right now or anybody at the White House make a public statement reacting to this announcement?
BASH: Not right now, probably not. The president's actually on his way to Georgia to -- for a political event. At this point, we don't expect him to make any statement. In face, when he was leaving the South Lawn to get in his helicopter some reporters tried to shout a question at him and he did the old Ronald Reagan, he put his hand up to his hear and pretended like he couldn't hear it. So, we don't expect any news at this point, but I can tell you that certainly they are not happy.
This has been a very tough time for this White House on this issue. And I think more than anything else, there is frustration that from there their perspective, they think that this is one of few times that the president has been on the side of the international community on an issue and bucked his party politically, bucked his party domestically, and there's frustration about the fact that -- that, I think, they think that that particular part of this story isn't necessarily getting out there. But it is very hard to do that in an election year when you have Republicans who are -- made it pretty clear, they're essentially chomping at the bit to separate themselves from this president -- made very clear that it is not like it had been. He is not on the ballot and he is nowhere near where they need him to be in terms of being a political asset where he his poll numbers are -- Wolf.
BLITZER: All right, Dana, thanks very much. Dana Bash over at the White House.
Let's get a better sense of what D.P. World is saying about its new plan to alter the ports deal and give up operations of the U.S. ports. Our Andrea Koppel is following this part of the story.
I know you're speaking with sources close to D.P. World. What are they saying to you about, Andrea, about this notion that they are going to completely divest, sell off, these port operations from this overall purchase of P&O?
ANDREA KOPPEL, CNN NEWS CORRESPONDENT: What they're telling me, Wolf, is that the exact "mechanisms," that's the words that they used -- the exact mechanisms as to how this will work has yet to be worked out. I think it's fair to say, Wolf, that we have seen this story just today go from zero to about 200 in the course of a few hours. This has D.P. World, let alone congressmen, senators, and the White House reeling, their heads are spinning right now. I can tell you, according to the sources I spoke to, close to D.P. World, they're absolutely stunned. Remember, they had already passed through what -- they though they had already cleared the hurdles, the legal hurdles that they thought that they needed to back in January, when CFIUS, the Committee for Foreign Investment of the United States, gave them the green light. Then they find themselves in the middle of this firestorm.
They thought they had smooth sailing and they agreed to this initial 45-day investigation that the Treasure Department would head up. So, they thought they had at least another, you know, 30 days -- at least another month or so to kind of iron everything out and wham, yesterday, they get hit on both sides, both by the House and by the Senate, Wolf, and they felt that this was the only option that they had. BLITZER: And they're still buying P&O, that's a done deal. It's nearly $700 billion, only about 10 percent of that, less than $700 million is the U.S. part of the purchase of P&O. So, they're still and ahead.
KOPPEL: Absolutely.
BLITZER: They're going to try to sell off. But what they do make clear in their statement, Andrea, is that when they do sell off, let's say, the $600 to $700 million part of it to an American company, they don't want to lose any money on this deal.
KOPPEL: Absolutely. And that's a really important point that the company will say time and again that when they bought P&O, that British company, that was a $6.8 billion deal. It had -- they had operations around the world. The North American part of that $6.8 billion deal is only 10 percent, about $680 million and they clearly, Wolf, have gotten some signals behind the scenes from the White House and from others that they are not going to lose that money, Wolf.
BLITZER: All right, thanks very much Andrea for that.
President Bush found himself in an odd position today. He thanked some of the congressional Republicans who strongly opposed him on the port deal. It happened over at a signing ceremony for the renewal of the USA Patriot Act. Mr. Bush fought long and hard to extend the anti-terror law, finally cleared Congress with new privacy projections. The president never mentioned the ports controversy over at that event at the White House. Let's bring in our chief national correspondent, John King who's watching all of this unfold.
John, this is really, for those of us who have covered the president for a long time now, it's an amazing turn of events.
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wow. Just wow. It's moving so fast. I think sometimes we forget to stop and take a look at the depth of this. This is a Republican president who has been at war for a couple of weeks now with the leadership with the leadership of his own party. And his own party -- now just in a fight with the president, but as Dana was noting, happy to be in a fight with the president, actually looking for more reasons to fight this president. And he's at 38 percent in the polls, he has to start thinking, was this one episode? Is this over? Assuming the fine print satisfies everybody and DPW sells the U.S. assets, finds a U.S. buyer and the ports controversy passes, what next for this president? Can he have more celebrations like signing the Patriot Act or are their more fights coming down the road? Many think the answer to that will be more fights.
BLITZER: Can we look ahead to the midterm elections and draw some lessons, what this might mean for the congressional elections?
KING: Well let's look at the potential fights coming ahead. Any Republican strategist will tell you they don't think it's healthy for a Republican president to be fighting with the Republican congressional leadership throughout the election year. But there's a fight brewing over spending in the president's budget. Many conservatives saying the president has not done enough to reign in spending.
There's a fight brewing over immigration policy. The president says he's determined to push his plan which has that guest worker program. People don't like it, call it amnesty, for the president's picking a fight with the Republicans on that issue. There's beginning to be signs of revolt on the right when it comes to Iraq. Both Richard Pearl and William F. Buckley out in articles say right war, boy, bad strategy. If other Republicans, nervous about Iraq, think that there's protection on the right plank, if you will, the White House is worried and Republican strategists say don't be surprised if it happened if more Republicans start to break with the president on Iraq. So, there is a lot to watch following this, now that it is clear that Republicans not only are willing to stand up to the president, but some think it helps them to stand up to the president.
BLITZER: And we're going to be watching every step of the way. John, thanks very much.
Let's go up to New York. Jack Cafferty is watching all of this from outside the Beltway. Jack, what do you think?
JACK CAFFERTY, CNN NEWS ANCHOR: You know, Wolf, the place isn't the same since you left here.
BLITZER: It was a lovely day, yesterday, in New York.
CAFFERTY: It was fun. All right, on to the ports deal, it's about time. Remember when President Bush said this? We quote here, "They," meaning the lawmakers, "ought to look at the facts and understand the consequences of what they're going to do. But if they pass a law, I'll deal with it, with a veto," unquote.
Well, that was the president threatening his first veto in five years in office. He never got the chance. The idea of a country with ties to terrorism being allowed to control terminal operation at six key United States ports was so outrageous that even President Bush and his rubberstamp Congress couldn't shove it down the country's throat. Not only were the House and Senate set to block the ports deal from happening, but the president was told this morning there were more enough votes to override any veto. It's about time.
Until now the Republican Congress had marched in lockstep with the administration. And the president was able to take the Congress for granted. No more. It's about time.
Here's the question: What is the collapse of the ports deal mean for President Bush? E-mail us your thoughts at caffertyfile@cnn.com or go to cnn.com/caffertyfile.
I recall your interview with the CEO of that company, Dubai Ports World, Wolf, where he expressed with what could only be described as brimming confidence, his opinion that this deal was set to go, and it would absolutely go though, no questions asked. I wonder what he's saying tonight. BLITZER: Yeah. I don't know but I'll give him a call.
CAFFERTY: OK.
BLITZER: All right, Jack, thanks very much.
(LAUGHTER)
CAFFERTY: See you later.
BLITZER: Coming up, is President Bush looking more and more look a lame duck? We'll discuss the state of his political clout at how much the ports controversy has hurt him.
Also ahead, has the port storm passed on Capitol Hill? Is it too late for Mr. Bush to repair the damage? The uproar examined, that's coming up in our "Strategy Session."
And the secretary of state warns of a world in interest Iran has nuclear weapons. How bad could it be? We'll tell you what's happening, now in the war of words and nuclear ambitions.
You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: The Dubai Ports deal, at least that part in the United States is over with. It's done. That it collapsed, at least that is the appearance that we're getting from all sides today. Much more on this story coming up. Let's go to Zain Verjee, though, at the CNN Global Headquarter in Atlanta with a closer look at other stories that we're following -- Zain.
ZAIN VERJEE, CNN INTERNATIONAL CORRESPONDENT: Wolf, Iranian President Mahmoud Ahmadinejad says that Iran will not abandon its nuclear program, which he calls peaceful, and he says the West will suffer more than Iran if it takes action over Iran's nuclear facilities. Iran's supreme leader, meanwhile, accusing the U.S. of waging psychological war on the country's Islamic government to head a U.N. Security Council debate on the nuclear issue, next week. The Bush administration is warning that Iran would pose a major threat to U.S. interests in the Middle east if it acquires a nuclear weapon.
(BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, SECRETARY OF STATE: We may face no greater challenge from a single country that than from Iran whose policies are directed at developing a Middle East that would be 180 degrees different than the Middle East would like to see developed.
(END VIDEO CLIP)
VERJEE: We're going to bring you a live report on the Iran nuclear standoff in the next hour.
More deadly violence today in Iraq. A string of attacks in Baghdad killed at least 13 people including a child and a female aide worker. One roadside bomb targeted an Iraqi army convoy. Officials say it struck civilians inside. Defense Secretary Donald Rumsfeld told a Senate hearing today, Iraqi troops would take the lead if a full blown civil were to erupt.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, SECRETARY OF DEFENSE: The plan is to prevent a civil war and to the extent one were to occur, to have the -- from a security stand point, have the Iraqi security forces deal with it to the extent that they're able to it.
(END VIDEO CLIP)
VERJEE: The U.S. military says a U.S. Marine was killed in enemy action in the volatile Anbar province, yesterday. Now, that brings the total number of U.S. troop deaths to 2,307 since the war began three years ago -- Wolf.
BLITZER: Zain, thank you very much. More now on our top story. It's been one thing after another for the president. We've seen the toll on his poll numbers and on his influence on the members of his own parry. Has the Dubai Port deal been the final straw for this second term president? Let's bring in our senior analyst, Jeff Greenfield. He's watching this story for us -- Jeff.
JEFF GREENFIELD, CNN SR. ANALYST: Well, Wolf, with all this lame duck president chatter, we haven't heard so much about a wounded foul sense the vice president's unfortunate hunting accident. But what's curious and telling about Mr. Bush's dilemmas is how much they are rooted in discontent within his own party.
(BEGIN VIDEOTAPE)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I earned capital in the campaign, political capital and I now intend to spend it.
GREENFIELD (voice-over): It sure seemed like Bush was in the catbird seat after election day 2004 -- a reelected president with gains for his party in the House and Senate seemed ready to enact an ambitious second term agenda.
"On a roll," proclaimed the non-partisan "National Journal," but since then, the roll has been almost all downhill.
UNIDENTIFIED MALE: The president of the United States.
GREENFIELD: The domestic centerpiece of the second term, Social Security reform, has vanished without a trace and with virtually no effort by congressional Republicans to fight for it. The disastrous response to the Katrina disaster brought a storm of criticism down on the federal government with House Republicans leading the charge.
UNIDENTIFIED FEMALE: Thank you, Mr. President. Thank you very much. GREENFIELD: The stillborn nomination of Harriet Myers to the Supreme Court left some conservatives openly doubting Bush's conservative credentials. The president's surrender to Republican John McCain on the torture issue.
SEN. JOHN MCCAIN (R), ARIZONA: We've sent a message to the world that the United States is not like the terrorists.
GREENFIELD: And now House Republicans promise to scuttle the Dubai Ports deal. As Republicans fear they may lose their potent advantage on security issue in the fall midterms. It was that issue, remember, that helped Republicans take the senate back four years ago.
(END VIDEOTAPE)
Now a president who's strong in his own party can't always help that party prevail. Ronald Reagan was hugely popular among Republicans, but the GOP lost the Senate back in 1986. But, a second term president is always in a sensitive position since his party doesn't need to protect him in a presidential reelection bid. But a second term president whose party sees him as a political liability, as they approach the fall election, that president is not a lame duck, that president could be a dead duck -- Wolf.
BLITZER: Jeff Greenfield in New York. Jeff, thanks very much.
Let's bring in our senior political analyst, Bill Schneider.
Bill, how politically damaging is this Dubai Ports deal collapse for the president?
BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, when we saw a Republican congressional delegation visit the White House today to meet with President Bush to tell him the ports deal was dead, it bore an unsettling resemblance to the Republican delegation that once visited President Nixon in 1974 to tell him, "Mr. President, it's all over."
Now of course, to use Jeff's analogy, they told President Nixon he was a dead duck and this president does look like a lame duck. He's still in office for almost three more years, but he's rapidly losing his effectiveness. On issue after issue, he's parted company with his own conservative base. He appears to be putting commercial interests and big business interests ahead of conservative values. On the ports deal, on immigration, the India deal is going have a tough time getting ratified by the United States Senate; and of course, as Jeff mentioned, Harriet Myers. He's isolating himself from his base.
An interesting question is, what happened to the once formidable White House political operation? Here's on theory. That they have lost discipline over President Bush because he done face another reelection campaign. So, he really doesn't have to listen to him as closely as he did during his first term. Maybe what we're seeing now is the real President Bush.
BLITZER: And a lot of people have suggested they simply may be exhausted after all these years and they maybe some new blood on the staff over at the White House, as well.
SCHNEIDER: Yes.
BLITZER: Thanks very much, Bill Schneider, for that.
Up next, the attorney general, Alberto Gonzales, on the collapse of the Dubai Port deal. Can the administration find any kind of silver lining in the storm?
And the spying controversy still dogging the Bush White House. Tough questions for the attorney general about his legal defense of the eavesdropping program. I'll speak with the attorney general. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Back now to our top story. New developments in the port security controversy, and the legal and political questions still on the table. Joining us now, the attorney general of the United States, Alberto Gonzales.
Attorney General, thanks very much for joining us.
What do you make of this announcement from Senator Warner that D.P. World is now let an American company, in affect, take charge of operating these six major ports in the United States? Is that something that the Bush administration accepts?
ALBERTO GONZALES, ATTORNEY GENERAL: Well Wolf, this is the decision to be made by this company based upon business considerations and I don't know the details of this announcement and so I'd hesitate to comment further without knowing what those details exactly are. But again, the Bush administration is most concerned about what is in the best national security interest of this country.
BLITZER: The Justice Department signed off on this deal during the initial CFIUS, Committee on Foreign Investments in the United States, review. Did you personally approve this deal?
GONZALES: I'm not going to get into a discussion about the specifics of internal deliberations. Wolf, we did a very, very careful process to ensure that the national security interests of the country is protected. Each agency has its own individual process. We have a good process in place and we believe that we did our job in this particular case. But again, at the end of the day, what's important that the national security interests of the country be protected. There are a verity of ways that that could be achieved and perhaps what's being announced today that's one way to get there.
BLITZER: As the point man in the law enforcement community of the United States government in fighting terrorism, are you comfortable -- were you comfortable that the Untied Arab Emirates, which owns this country, a country that had relationships with the Taliban, two of the hijackers came from the UAE, they funneled $180,000 through the UAE to Mohamed Atta and his hijacking associates -- were you comfortable with this deal? GONZALES: The UAE has been a terrific ally to the United States, Wolf. They have provided airspace, they've provided space at their ports, they've provided assets to the United States of America, so they've been a very close ally.
You know, Richard Reid had ties, of course, to Great Britain. That doesn't mean that we are not going to do business with Great -- with British companies.
So, in this particular case, we felt very, very comfortable. We did our work. We did an analysis of -- of what, as a department, we were required to look at. And we had no objections to the transactions moving forward.
BLITZER: Some of your Republican associates in the Senate and the House totally opposed to this deal. They think it was just all about money and globalization and trade.
Listen to what Duncan Hunter said here on CNN, and Senator Shelby, Republican senator from Alabama, on the whole process on how it was approved.
(BEGIN VIDEO CLIP, "LOU DOBBS TONIGHT")
REP. DUNCAN HUNTER (R), CALIFORNIA: We need to reform that doggone Committee on Foreign Investment, because what they have turned into is a group that simply shapes foreign investment in a way that it always passes. They never stop a deal. And those aren't the people you need for watchdogs.
SEN. RICHARD SHELBY (R), ALABAMA: Everything is not for sale in this country, that security tops everything in this country. If we don't have security, we don't have anything.
(END VIDEO CLIP)
BLITZER: The critics saying -- some of them, at least -- that this was all about making money, at the expense of national security.
GONZALES: Well, of course, I disagree with that. I think the number-one priority for the department, and certainly for this president, is the -- the security of this country.
It is why we have been successful in prohibiting -- preventing another attack, domestic attack, here in the United States of America.
And so that -- we are very much focused on ensuring that -- that we do our job, in the protection of the national security of this country. We have a very careful process to ensure that that happens. I -- in my judgment, that happened in this particular case.
But, again, at the end of the day, the question is whether or not -- is the national security of this country protected? Perhaps the -- what you have announced today means that there is a way we can move forward and get beyond this in -- in a way that -- that the national security continues to be protected. BLITZER: Let's move on, on this day that the president is signing the Patriot -- Patriot Act, the extension of the Patriot law, to some questions about the war on terror vs. civil liberties back here at home.
First of all, are you ready to go along with the Senate Intelligence Committee and the House Intelligence Committee; they're going to have this new subcommittee that will review, every 45 days, the warrantless surveillance that the president authorized after 9/11?
GONZALES: We have had a lot of good discussions with this -- with the Congress, exploring ways that we can provide, even further, more information about the program. And, so, I'm optimistic, as are others in the administration, that we can find some kind of accommodation to make more information available to the Congress.
BLITZER: Well, what about this proposal they have now to have this subcommittee review it and over -- and oversee it on a 45-day basis?
GONZALES: Again, Wolf, we are -- we're in discussions about a wide variety of -- of approaches to making more information available to the Congress.
And, obviously, this is something that we're looking at very closely.
BLITZER: So, you haven't decided yet on whether or not you like this idea or hate it?
GONZALES: Well, we are -- we're doing everything we can to try to find ways to make more information available to more members of Congress.
BLITZER: David Kris, who served during the Bush administration as a former associate deputy attorney general, he was quoted in "The Washington Post" as saying: "In sum, I do not believe the statuary law will bear the government's weight. I do not think Congress can be said to have authorized the NSA surveillance."
Those are strong words from someone who worked with the then- Attorney General John Ashcroft at the Justice Department.
GONZALES: Well, there are a number of lawyers, equally fine lawyers, who have reached a different conclusion, that, in fact, the president has the constitutional authority, as commander in chief, to authorize the electronic surveillance of the enemy during a time of war, and that that constitutional authority has been supplemented by congressional authorization, under the authorization to use military force.
As I have said many, many times, these are very complicated, tough issues to try to resolve. Good lawyers are -- are going to disagree. But we feel very, very strongly in our position in this particular case. BLITZER: The chairman of the Senate Judiciary Committee, Arlen Specter, is not satisfied with the level of cooperation, the answers he has been getting from the Justice Department. And he issued a very strong warning on Tuesday directly to you. Listen to what he said.
(BEGIN VIDEO CLIP)
SEN. ARLEN SPECTER (R-PA), CHAIRMAN OF THE JUDICIARY COMMITTEE: I want to put the administration on notice, and this committee on notice, that I may be looking for an amendment to limit funding as to the electronic surveillance program, which is the power of the purse, if we can't get an answer in any other way.
(END VIDEO CLIP)
BLITZER: What do you say to him? That's a strong threat. He's going to stop funding for the program -- Congress controls the power of the purse -- unless he gets answers.
GONZALES: Well, we -- we have provided a lot of information to the Congress already. I spent eight hours before Chairman Specter's committee. We continue to work to provide additional information. We are responding to written questions.
And, so, we're going to try to get that information as quickly as we can to the Congress. We understand that the Congress needs information in order to its job. And, so, we are exploring the ways that we can make that information available.
BLITZER: And, so, the answer is -- are you going to give him the more information, or are you just exploring ways?
GONZALES: Well, again, we are working on answers to the questions that have been posed to me and to the department, all with the goal of trying to provide as much information as we can.
(END VIDEOTAPE)
BLITZER: And we are going to have much more in the next hour, more of my interview with the attorney general, Alberto Gonzales, including his comments on the newly signed renewal of the Patriot Act, and his strong reaction to allegations that U.S. forces have been torturing detainees at Guantanamo Bay.
That's coming up, right here in THE SITUATION ROOM, in the next hour.
Up next, though, President Bush and the port deal collapse, that's in our "Strategy Session." How much political pain is Mr. Bush feeling right now?
And will Republicans pick any new fights with him?
And Zacarias Moussaoui has his words thrown right back at him at -- at his sentencing trial -- coming up, life and death and the fate of a confessed al Qaeda conspirator. Stay with us.
(COMMERCIAL BREAK)
BLITZER: In our "Strategy Session" today, the Dubai-based company involved in the port controversy giving up its attempt to manage six major U.S. ports, will it be enough to satisfy the critics? Has the incident caused any long-term political damage?
Joining us now to assess these questions and more are the Democratic strategist and CNN political analyst Donna Brazile, and Terry Jeffrey, the editor of "Human Events."
I want your -- your immediate reaction, though, to the collapse of this deal.
Donna, what does it mean for the president?
DONNA BRAZILE, CNN POLITICAL ANALYST: Well, first of all, there's a crack in his foundation now.
The fact that he had to meet with his Republican supporters today to -- to try to calm them down, and then this happened later today, they're in serious trouble. Once again, it showed that by -- by not taking control of this issue, by not educating Congress, by keeping them in the dark, this time, the -- the Republicans on Capitol Hill decided not to become the rubber stamp. Instead, they stood up and said no to this deal.
BLITZER: What about you, Terry?
TERRY JEFFREY, EDITOR, "HUMAN EVENTS": Well, it's a good thing for the president that it collapses now, Wolf, because he didn't want to get into a protracted battle with his own party that he was going to lose.
I think Duncan Hunter had dug in. He would have beat the president on this issue, if it went to the floor of the House and Senate. So, to get it done now, forget it, get it -- get it done with, and then move ahead is good for the president.
BLITZER: To cut your losses, basically, that is what you're saying.
JEFFREY: Yes. Absolutely.
BLITZER: Mark Foley, a Republican congressman from Florida, familiar to many -- many of us, he says this: "The resulting outcry of concern from across the country went unanswered by the administration. Today, Dubai Ports World itself seems to have answered those concerns."
Have you ever seen, certainly not in this administration, where Republicans themselves have taken the lead against the president, who happens to also be a Republican? JEFFREY: Well, I think it -- it has happened in a number of circumstances, but not with this kind of momentum. There have been a number of circumstances where conservatives in the House decided against the president...
(CROSSTALK)
BLITZER: Hold -- hold on, Terry. I am going to interrupt you for a second.
JEFFREY: Sure. Sure.
BLITZER: Senator John Warner, the chairman of the Senate Armed Services Committee, is speaking about the ports deal on the Hill right now.
(JOINED IN PROGRESS)
SEN. JOHN WARNER (R), VIRGINIA: ... on all fronts, and, as well as the other nations in that region, Qatar, Bahrain, Kuwait. And I think you -- you basically thought -- that was your view also, General.
GENERAL JOHN ABIZAID, COMMANDER, U.S. CENTRAL COMMAND: Yes, sir.
I would -- I would certainly say that the United Arab Emirates is absolutely vital to our -- our stake in the Arabian Gulf area, that they have been good partners, good allies.
I'm -- I'm very dismayed by the emotional responses that some people have put on the table here in the United States that really comes down to Arab and Muslim bashing. That was totally unnecessary. I -- I don't want to comment on the -- the port issue, but I will say that the UAE is -- is a good friend, and we need to keep it that way.
(CROSSTALK)
WARNER: Just let me finish.
The chairman also spoke on this issue.
GENERAL PETER PACE, CHAIRMAN, JOINT CHIEFS OF STAFF: Sir, I did.
WARNER: He had -- and he wrote me an extensive letter on the question, as did General Abizaid. And I'm putting those in the record.
PACE: Sir.
The United Arab Emirates had been, at least since 9/11, as a good a partner and friend as we could have possibly asked for as a nation. And everything that we have asked them to do with us in the Gulf, all the support that they have given us in -- in sharing intelligence and in military operations, they have been a great partner.
QUESTION: General... WARNER: And I -- do you have reason to think we are going to be able to continue that strong relationship?
PACE: Sir -- sir, absolutely. We -- we should. We need to. It's -- it's vital for both of our countries, theirs and ours. And we -- we must press forward and do the right thing, like we have been trying to do in the past.
QUESTION: General Abizaid, could you -- could you tell us what the U.S. military plan is, should Iraq begin to move toward civil war? And is the plan to allow the Iraqi security forces to handle it?
ABIZAID: It's my impression that Iraq is not moving towards civil war. Sectarian tensions are very high.
We are -- we are certainly concerned. But, with the emergence of a government of national unity, and with the continued good performance of the Iraqi security forces, we feel like the Iraqi security forces will continue to -- to take the lead on most military operations, like they're currently doing. And we will be in support.
(CROSSTALK)
QUESTION: Can I ask you about Abu Ghraib, sir? There's a report out that -- today -- that the prison (INAUDIBLE) shut down in a couple of months.
UNIDENTIFIED MALE: Mr. Secretary?
PACE: I would be happy to handle that, if you would like me, too. Sure.
We do have plans to -- and -- and are in the process of building other facilities to -- to move the detainees who are under U.S. control out of Abu Ghraib. The facility then will be owned and operated by the Iraqi government. And that government will decide when -- when that facility closes, if it does.
QUESTION: General Pace, why close it now? The worst of the prison scandal has passed. And is there any way to build such a fortified place as what you have got at Abu Ghraib now?
PACE: What we are doing is building a new -- newer facilities, more modern, more correct for the kinds of detainees that we need to process, moving -- moving out of Abu Ghraib. The facility, then, will be, as I said, an Iraqi facility. And that government will do -- will decide whether it will stay open or not.
(CROSSTALK)
BLITZER: All right. We are going to break away from this little informal news conference going up on Capitol Hill, the leaders of the defense intelligence in the Bush administration having briefed the Senate Armed Services Committee, talking about all sorts of things, including the announcement today that the U.S. will shut down its operations at the Abu Ghraib prison in Iraq, questions about a civil war in Iraq, and also the decision to go forward and see this port deal effectively collapse.
We heard the top generals there saying, the United Arab Emirates is a close ally of the United States, and they hope it will remain so, even in the aftermath of this deal.
We are going to continue to cover the story. Terry Jeffrey and Donna Brazile are sticking by.
We will take a quick break -- more of our "Strategy Session" right after this.
(COMMERCIAL BREAK)
BLITZER: Welcome back -- our "Strategy Session" continuing, Donna Brazile and Terry Jeffrey.
You know, Terry, you heard the generals, General Abizaid, who is in charge of the Central Command, that part of the world, the Persian Gulf, the Middle East, General Peter Pace, the chairman of the Joint Chiefs of Staff, say, no country has been a better ally since 9/11 than the United Arab Emirates. This potentially could have some serious strategic military ramifications, the collapse of this Dubai Ports World deal.
JEFFREY: Well, first of all, those are excellent men. And I take their word for it. But I think there's a certain disconnect, Wolf, between what they're saying and the way President Bush has been explaining his foreign policy here.
The United Arab Emirates, as you know, is not a democracy. They have no elections. They have no democratic bodies. We're saying we need to spread democracy in the Middle East to save ourselves against terrorists. Yet, our top generals are saying, we have to align ourselves with the United Arab Emirates, this unfree country, because they are excellent in helping us place our military assets in the Middle East.
I think this is a debate that is going to forward. It's going to be a debate where Republicans are divided among themselves, as well as Democrats. But the ultimate question is, how do we secure ourselves? And I will take the generals' word for it. We secure ourselves right now by having an ad hoc friendship with the UAE, because it helps us in the war on terrorism.
BLITZER: Donna, what do you think about this whole -- this whole impact on the -- the U.S. strategic position, if you will, in the Persian Gulf?
BRAZILE: Well, the United States must continue to build allies in the Middle East. But we can do it without giving up our security. And I think this debate on Capitol Hill will continue.
Look, the members are still waiting to see the details of this divestiture. They want to know exactly what is going to happen, what is the wall of separation. So, I don't think this debate is over with, because there is legislation now to -- to make sure that no port is -- is operated by any foreign government.
BLITZER: As much -- as much as Democrats opposed this deal, you have to admit, it was really the Republicans that killed it.
BRAZILE: Well, they're the majority. Of course. They could kill everything. But the -- the fact is, the Democrats were united. And the Democrats, over the years, have put forward many ideas, many amendments to try to strength port security.
BLITZER: We will leave it there.
Donna, Terry, thanks very much.
JEFFREY: Thank you.
BLITZER: Up next, we will have more on the ports deal. It certainly appears to be dead and, as I said, buried by a Republican revolt. What does that mean for the president? Jack Cafferty standing by with your e-mail.
And a new timetable for when bird flu may reach the United States, that's coming up here in our 7:00 p.m. Eastern hour, right here in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Let's get back to our top story right now. Dubai Ports World says it will turn over all its operations at U.S. ports to a still-to-be-determined American entity. Who are some of the possible U.S. contenders to purchase this deal?
Investigating online, our Internet reporter, Jacki Schechner -- Jacki.
JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, here's the press release where they use the term United States entity.
Now, nothing has been announced yet, but we wanted to take a look at some of the possible options. First, Dubai Ports World could set up a U.S. company, call it something like DPW U.S. Or they could use a company they already own. They have purchased, in January 2005, a part of CSX called CSX World Terminals. That handles transportation at international ports. And they could use something like this. We put in a call to CSX. They have not gotten back to us yet.
It could be a major U.S. port operations company. But, frankly, there just aren't a lot of those out there anymore. We did contact one company on the West Coast, SSA Marine. And they said to us they had not heard about this development at the time we spoke to them. They wanted to make clear there were no conversations that they were involved in at this time.
It could be something like Halliburton, a company that deals in oil, and gas, and engineering. Now, of course, we put in a call them as well, have not heard back. There's nothing confirmed at this point, but just wanted to bring you some of the options out there -- Wolf.
BLITZER: And D.P. World, according to all of the reports we are getting right now, they have agreed to fully sell off the U.S. portion of this deal, this purchase of the British company P&O.
Jacki, thank you very much.
Let's go up to New York. Jack Cafferty is standing by with "The Cafferty File" -- Jack.
CAFFERTY: Wolf, "What does the collapse of the ports deal mean for President Bush?" is the question we asked at a little after 4:00. Got a lot of e-mail.
John in Sacramento, California: "The collapse of the deal means that Bush can go on permanent vacation in Crawford now. He has lost the one issue, national security, that has propped him up through thick and thin."
George writes from Melbourne, Florida: "I guess it will mean that he will have to explain to his non-American friends that he doesn't really run this country, only that he holds it in trusteeship for the real owners, the American people."
Andrew in Philadelphia: "The untenable position in which Mr. Bush finds himself demonstrates that his arrogance generally, and misunderstanding of world affairs specifically, has finally come home to roost. It amazes me that it has taken this long."
Alex in West Covina, California: "It means that, if political capital were a credit card, President Bush received an over-limit notice in the mail."
John in Manassas, Virginia: "We have all witnessed a public neutering today. It was as if Clint Eastwood's Dirty Harry said, 'On second thought, don't make my day.' This loss of face won't heal quickly."
And Steve in Oak Creek, Wisconsin: "As much as it will gall Bush, he has just gotten a reminder from the American people that we all live in a democracy. We have spoken. We have prevailed. And it is about time the president learns that he works for us" -- Wolf.
BLITZER: Jack, correct me if I'm wrong. You predicted the collapse of this deal, not only days ago, but at least a couple weeks ago.
CAFFERTY: Yes. It just didn't mean to make any sense. I mean, I had nothing to base that on, except the fact that you look at the history of what's going on with the war on terror, and the connection that the United Arab Emirates had to some of those organizations, and the fact that this country has been conditioned for five years to be afraid -- we have been told by the White House, be very afraid -- so, hey, and we are afraid.
And when we found out that a country with ties to terrorism had made a deal to occupy terminals at six of our ports, this country, boy, said, oh, American people ain't going to buy that thing.
BLITZER: Jack, see you in a few minutes. Thanks very much.
Still to come, much more on out top story, the collapse of the ports deal -- we are going to live -- we will go live to Capitol Hill for all the late-breaking developments.
Up next, though, has the FBI overstepped its authority? There's a disturbing new report out from the Justice Department. What it's saying about possible eavesdropping on your conversations, that's coming up here in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Just as President Bush renewed the Patriot Act today, new details have surfaced concerning more than possible 100 violations of the act by the FBI -- that according to a new report just released from the Justice Department.
Let's get some more details from our Internet reporter, Abbi Tatton -- Abbi.
ABBI TATTON, CNN INTERNET REPORTER: Wolf, intercepting the wrong phone number, tracking communications for more than a year more than permitted, those are some of the 108 possible violations reported by the FBI and detailed in a new report from the Department of Justice, from their section the Office of the Inspector General.
Now, a lot of these possible violations involve the over- collection of information, getting too much information, more than was authorized or for longer than authorized.
In one case, telephone communications, 181 of them were collected, when it was just the billing information that they should have been looking at. In another case, it was simply an incorrect e- mail address. The report makes clear that, in some of these cases, it was the mistake of a third party, for example, a telephone company.
Now, this report is required by the Patriot Act to come out twice a year from the U.S. Department of Justice's Office of the Inspector General -- Wolf.
BLITZER: Abbi, thanks very much.
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