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Rockets Fired from Lebanon Land In Major Israeli city; Zalmay Khalilzad Interview; Bill Frist Interview; Israel Fires At Beirut International Airport; Valerie Plame Sues Dick Cheney, Lewis Libby, Karl Rove; U.S. May Be Unprepared For Cyber Attack; Crude Oil Closes At Record High; Middle East Is, Has Long Been Powder Keg Waiting to Explode

Aired July 13, 2006 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Susan, thanks very much.
To our viewers, you are in THE SITUATION ROOM where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories. Happening now, the exploding Middle East crisis. Israel blasts the Beirut Airport a second time, stepping up its response to the killing and kidnapping of Israeli soldiers.

And rockets fired from Lebanon land in a major Israeli city. It's 11:00 p.m. in Israel, where the army chief of staff is warning nothing in Lebanon is safe right now. This hour, we will talk about the conflict with key players in the United States and in the region, the Senate majority leader Bill Frist, the U.S. ambassador to Iraq, Zalmay Khalilzad, and with tensions boiling over, oil prices are hitting new highs and threatening economies around the world.

Also ahead, the Israeli ambassador to the United States Daniel Ayalon, and the Syrian ambassador to the United States, Imad Moustapha. They will both be here in THE SITUATION ROOM. Is an all- out war in the Middle East in the making and could the entire region be swept up in it?

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

This hour, breaking news from the Middle East. The crisis there growing more volatile and dangerous by the minute. Israel's ambassador to the United States is calling a rocket attack on the northern Israeli port city of Haifa a major, major escalation. That's his words. And he's warning Iran and Syria that they are playing with fire for supporting Hezbollah militants and that those nations will face consequences.

Hezbollah, which warned it would fire rockets at Haifa, is now denying it launched them. And a Lebanese government is calling for a cease fire. The fighting continues today between Israeli forces and the Lebanon based Hezbollah. Israelis upped the ante with new attacks on Lebanon earlier today.

And a short while ago, the Beirut International Airport once again was bombed, this a second time by the Israelis. And the Israeli Navy is blockading Lebanese waters. That blockade currently in effect.

Meanwhile, the United Nations Security Council planning to meet tomorrow on this crisis. In Europe, President Bush says Israel has a right to defend itself after the kidnapping of those two Israeli soldiers along the border with Lebanon. We have reporters standing by.

Our White House correspondent Suzanne Malveaux is traveling with the president in Germany right now, but first let's go to Haifa and CNN's John Vause is standing by in this Mediterranean city. John, what's the latest from there?


Well, the Israeli Defense Forces claim that two Hezbollah missiles landed here within the last few hours. If that is in fact accurate, it will be the furthest that Hezbollah missiles have traveled ever. It is a dangerous escalation, at least in the opinion of the Israelis.

This is Israel's third largest city, home to 300,000 people. Here Israel's major oil refinery, a prime target for any attack. Hezbollah though denies the missiles were theirs, despite earlier making a threat to carry out an attack on Haifa. However, throughout the day, Hezbollah has claimed responsibility for almost 100 rocket attacks across northern Israel.

In the tourist town of Nasiriyah there were two attacks today. Katyusha rockets falling there in the morning and also in the afternoon. At least one person there was killed. In the town of Safed, home to Israel's northern command, one person was killed, others were wounded. Israel's chief of the military has warned that these attacked continue on Israeli towns and cities. Then in his words, Beirut will be a target. Israel continues to carry out air strikes across Lebanon, not just in the south.

The Israeli navy is blockading the coast of Lebanon and Israeli artillery continues to shell positions in the south of Lebanon. The strategy now, according to Israel's defense minister, not just to pressure the Lebanese government and Hezbollah for the freedom of those two kidnapped Israeli soldiers, but also to drive Hezbollah out of southern Lebanon and to ensure they never return.

BLITZER: John, are Israelis in Haifa and other areas in the northern part of the country now under instructions to go into bomb shelters?

VAUSE: Well, in the north of the country they are, because upper north, the residents there are used to the missiles flying, the mortars being fired from southern Lebanon. Haifa is a different story, it has never experienced the kind of attacks that those communities in the north have been going through for the last few years.

So in Haifa there's a good deal of shock and a good deal of panic now that it, too, could very well be in the range of those missiles. Here in Israel, though, Wolf, you know that all the homes, especially since the first Gulf War, are now equipped with what they call safe rooms, others have bomb shelters. So the situation here in Haifa will be similar to what it is up north if these missiles continue to fall.

John Vause, stand by. We will be coming back to you for any late-breaking developments. John Vause is on the scene in Haifa for us. Let's find out how the Bush administration is reacting to all of this. Suzanne Malveaux is traveling with the president. She's joining us now from Germany. What's the latest reaction coming from the president, Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well Wolf, just a moment ago, we got news that there will be an on-camera briefing. Secretary of State Condoleezza Rice, who is traveling with the president, as well as National Security Adviser Stephen Hadley, both of them going on camera in about 15 minutes or so, before a small group of reporters to give us an update. We have learned, as well, there's been a flurry of diplomatic diplomacy if you will.

Secretary Rice reaching out to all the counterparts in the region, most notably of course, U.N. Secretary-General Kofi Annan. She has also reached out to Israeli Ehud Olmert and as well as administration official Elliott Abrams, all of them, to figure out what is the strategy now, where do they push those buttons.

Now, we heard from President Bush earlier today as well as the German Chancellor Angela Merkel, both of them speaking with one voice on this, appealing for calm in the Middle East. We heard President Bush quite boldly and frankly say that he believes that Israel is doing the right thing in terms of the attacks, and Lebanon.

Saying that Israel has a right to defend herself but at the same time warning against any kind of movement that would undermine or weaken the Lebanese government. The United States has really invested quite a bit in the diplomatic reform. We also heard of course Merkel and Mr. Bush emphasizing that this is a problem with the terrorist organization Hezbollah.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When peace advances, it's in the terrorist interests in some cases to stop it and that's what's happened. We were headed toward the road map. Things looked positive, and terrorists stepped up and kidnapped a soldier, fired rockets into Israel, now we have two more kidnappings up north. Hezbollah doesn't want there to be peace. The militant arm of Hamas doesn't want there to be peace. Those of us who do want peace will continue to work together to encourage peace.


MALVEAUX: And, Wolf, also what we heard from the president, he is putting quite a bit of pressure on the Syrian government, specifically President Asad, saying that that is a government and regime that is supporting Hamas, as well as Hezbollah. Do not be surprised if we hear more details about President Bush reaching out to some of the Middle Eastern allies to put pressure on the Syrian government, essentially to take responsibility and accountability for what is happening in Israel and Lebanon right now.

BLITZER: We will come back to you as soon as we hear from the secretary of state and the national security adviser. Among others, Suzanne Malveaux, traveling with the president in Germany. Thanks very much.

Iraqis, meanwhile are watching all of this wearily as their neighbors exchange military fire and verbal threats. Could the situation in Iraq become even less stable and more dangerous if this other conflict in the Middle East spreads?

We are joined now here in THE SITUATION ROOM by the United States Ambassador to Iraq, Zalmay Khalilzad. Mr. Ambassador, it's never dull in the part of the world you serve. Before we get to Iraq, specifically, you studied in Beirut, you know this region about as well as any American diplomat. How dangerous is the situation right now?

ZALMAY KHALILZAD, U.S. AMBASSADOR TO IRAQ: I think it's a very dangerous situation. I believe that it has a lot to do with the evolving situation with regard to the Iranian nuclear issue. It is possible that as the Iranians refuse to cooperate with the proposal that was offered to them and as they come under more pressure to cooperate, that they may escalate things in Lebanon, in Israel, the Palestinian area, as well as in Iraq. So we have to be very careful and be resolute in terms of the future circumstances that we will face.

BLITZER: Because it was interesting, yesterday the immediate reaction from the White House was to say that Iran and Syria have a lot of responsibility for what Hezbollah does and perhaps what Hamas does elsewhere.

KHALILZAD: Well, I don't want to get too far into that, in terms of the details because I'm very much focused on Iraq, and others in the administration are dealing with this issue. But I think that the broader issue of the future relations with Iran over the nuclear issue is going to have a significant impact, potentially, on both the Iraqi theater as well as on the Israeli-Lebanon-Palestinian theater as well.

BLITZER: I want to move onto Iraq, but what I hear you saying is that as the Iranians feel the heat on their nuclear program, they're reacting by maybe encouraging their allies in Hezbollah or Hamas to take these kinds of actions, sort of to show that they have some muscle as well.

KHALILZAD: Exactly. I will not rule that out that there is a connection between those two events.

BLITZER: Let's talk a little bit about what's happening in Iraq right now. You are back in Washington. You are heading back, I assume, in the next few days. It looks likes the situation is spiraling in a worse kind of way with the sectarian violence, the awful stories that we have been hearing since the weekend, for example, Shiite militiamen going into Sunni neighborhoods, looking at I.D. cards. If the name is a Sunni name, these people are simply shot in the head?

KHALILZAD: Wolf, Iraq is in a difficult transition. There is good and bad happening simultaneously. On the good side, you know that today we turned over the control and leadership in the security domain of the Muthanna province to the Iraqis, so they're standing up, taking responsibility.

But with regard to sectarian violence, the terrorists have adapted to the success of the unity government to take advantage of the sectarian faultline to increase that conflict, and that is very much the dominant problem right now facing the Iraqis, particularly in Baghdad.

BLITZER: Is the situation controllable in the sense that these militias which we have seen in Lebanon -- and you know a lot about that situation. Hezbollah was once just a militia. Now it's actually part of the government.

Is the militia situation -- at least does it have an indication it can come under control there, whether the Mehdi militia or the Badr or any of these other militias that are basically independent of the government?

KHALILZAD: It's very important for Iraq to succeed to become a successful Democratic government that the militias, as well as the insurgency, come under control. Right now ...

BLITZER: The militias right now are the key focus.

KHALILZAD: The militias are the key focus. The terrorists attack Shiite targets to provoke sectarian violence and the militias respond by attacking Sunni areas. But for the militia problems to be dealt with, there has to be a decommissioning and demobilization and reintegration of the militia forces.

The insurgency, which has become a kind of Sunni militia, has also -- has got to come down. These two things are related to each other. I am glad that Prime Minister Maliki was a very strong leader, an effective leader who is confronting these problems as well as a reconciliation plan to deal with the insurgency problem. He also is working, and we're helping him, to develop a plan how to deal with the militia problem. These two things have to be dealt with.

BLITZER: And I heard earlier he's planning on coming here to Washington in the coming days?

KHALILZAD: He will be here on the 24th, and also will be visiting the United Kingdom on the way to Washington.

BLITZER: This is a man -- you know this man, because a lot is riding on Nuri al-Maliki. You trust him? You think he can get the job done?

KHALILZAD: He is a good, strong leader who believes in winning for Iraq, stabilizing Iraq, bringing Iraqis together. He's got the right priorities, makes decisions in a timely fashion. And, no, I think we are very encouraged by the decisions that has taken and by his style of leadership.

BLITZER: Zalmay Khalilzad arguably has one of the most difficult and dangerous jobs in the U.S. government. Thanks for coming into THE SITUATION ROOM. I know you are heading back to Beirut -- to Baghdad pretty soon. I hope you're not going to Beirut, but be careful over there.

KHALILZAD: Well, at the rate that I am going, I have been to Kabul, Baghdad, I don't know where I will be heading next.

BLITZER: Well, let's see. Hopefully it will be a nice site, safe location ...

KHALILZAD: Well, thank you, Wolf.

BLITZER: ...given the history that you've had. Appreciate it very much.

KHALILZAD: Thank you. It's good to be with you.

BLITZER: Thank you.

KHALILZAD: Thank you.

BLITZER:: Let's go to New York. Jack Cafferty is standing by with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Back to the Middle East, Wolf, Israel reacted, as you expect they might have, to the kidnapping of their soldiers by terrorist groups. They lashed back swiftly, violently, but at what price?

The soldiers are still in the terrorists' custody and military conflagrations in Gaza and Lebanon are growing. Warnings are being issued to other countries like Iran and Syria. World markets are scared. Oil hit records highs today. Stocks plunged for a second day in a row.

And questions are being asked about what Israel's response to the kidnappings is really accomplishing. In an editorial, the "New York Times" this morning wrote this: "The repeated lesson of recent history is that inflicting pain and humiliation on Arab civilians does not make them angry at the terrorists who provoked the violence, it makes them angrier at Israel," unquote.

On the other hand, conducting military operations in inhabited areas without inflicting pain on civilians is easier said than done, so here's the question: Has Israel overreacted to the kidnapping of three of its soldiers? E-mail us at, or go to -- Wolf.

BLITZER: Thanks, Jack, very much. And to our viewers, if you want a sneak preview of Jack's questions plus an early read on the day's political news and what's ahead right here on THE SITUATION ROOM, you can sign up for our daily e-mail alert. Just go to

Coming up, we will have a live report from Lebanon and the latest attacks and counterattacks, featuring Israel and Hezbollah. CNN's Alessio Vinci, he is standing by in Beirut. We'll go to him shortly.

Up next, though, the Senate Majority Leader Bill Frist -- what can and should the United States do to prevent the Mideast powder keg from escalating into a full-scale explosion? Stay right here for more of our breaking news coverage of the Middle East in crisis.

We're also standing by for live interviews with the Israeli and Syrian ambassadors to the United States. Stay with us. You are in THE SITUATION ROOM.


BLITZER: We're just getting this in, a new story involving the speaker of the House of Representatives. Let's bring in CNN's Fredricka Whitfield. She's joining us from the CNN Center with the latest. What are we picking up, Fred?

FREDRICKA WHITFIELD, CNN ANCHOR: Well, Wolf, House Speaker Dennis Hastert has been admitted into the Bethesda Naval Hospital for treatment of a skin bacterial infection called cellulitis. The recommendation is he stay in the hospital for 72 hours to get treated intravenously with antibiotics.

He apparently felt this hot swelling of an area in his lower leg just a few days ago. The infection spread, it worsened, so his doctor recommended that he now be admitted into Bethesda Naval Hospital, which he was earlier today, and the expectation he will be back to his normal schedule as early as next week.

BLITZER: Fred, thanks very much. And we, of course, wish the speaker of the House a speedy recovery.

We are also following all the fast-moving developments in the Middle East crisis. Just a short time ago, the United States vetoed a U.N. Security Council resolution condemning Israel's two-week incursion into Gaza. The U.S. says the resolution was untimely in light of the current conflict between the Israeli forces and Hezbollah in Lebanon.

Rockets fired from Lebanon struck the Israeli -- the northern Israeli town -- city of Haifa in what Israel is calling a major escalation of the crisis. Hezbollah denies involvement despite an earlier threat from Hezbollah to attack Haifa.

And we're waiting to hear directly from the Secretary of State Condoleezza Rice and the National Security Adviser Stephen Hadley. They are expected to speak out about the situation in the Middle East. They are with the president in Germany. The briefing will not be on camera but we will bring you the information, what they say, as soon as we have that.

Let's go to the United Nations right now where Israel's continuing military offensive in Gaza was the subject of a debate earlier today. A U.N. resolution criticizing Israel was vetoed by the United States.

Let's bring in our senior U.N. correspondent Richard Roth -- Richard.

RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT: Wolf, of course, the Lebanon violence overhanging the action on Gaza. The first veto for U.S. Ambassador Bolton, first veto in nearly two years by the United States. It blocked a resolution which would have condemned Israel for its Gaza incursion.

The Palestinians tried in the last few weeks to make it more balanced. There's a part in that resolution saying that the abducted Israeli soldier should be released, and rockets not to be fired, but it was not enough. John Bolton said the resolution was outdated and unbalanced. The Palestinians said Israel is turning Gaza into a prison and this veto sends the wrong message to Israel -- Wolf.

BLITZER: Is the situation in Gaza -- clearly, that was the sources of this resolution. We expect a full debate, though, on what's happening on the northern Israeli border with Lebanon as well, right Richard?

ROTH: Yes, urgent session tomorrow morning starting at 10:00 a.m. Lots of speeches. We don't know if there will be a resolution.

BLITZER: And, finally, Richard, before I let you go, the United States vetoes this resolution, what was the vote? Did any other countries come to Israel's defense in this resolution?

ROTH: The U.S. was the only veto in the Council, but there were several other countries that abstained: Britain, Peru, Slovakia, and Denmark.

BLITZER: Richard Roth, reporting for us from the United Nations. Richard, thank you very much.

The United States is standing by Israel, as we just heard, as it intensifies its attacks in Lebanon. At the same time, President Bush is warning Israel not to weaken Lebanon's government. He's trying to put new pressure on Syria to try to tamp down the conflict.

Let's talk about this and other subjects with the Senate Majority Leader Bill Frist. He's joining us from Capitol Hill.

Senator Frist, thanks very much for coming in. Is the U.S., in your opinion, doing enough to try to quiet this escalating violence in the Middle East?

SEN. BILL FRIST (R-TN), MAJORITY LEADER: Wolf, I think that we are. There are certain pressure points that we can push. I think we do need to continue to call upon the international community, as you just covered in the piece setting this up.

I am very disappointed, and I am sure everybody in the United States is disappointed, in the fact that we had to veto today the resolution. It was the right thing to do. It was very one-sided. It was imbalanced, as Mr. Bolton said.

We need to continue to put pressure. Right now, Israel clearly has the right to defend itself and we need to continue to support Israel and need to continue to put international pressure on bringing some resolution to all the chaos that's going on in the Middle East.

BLITZER: I don't know if you heard my interview with the U.S. ambassador to Iraq, Zalmay Khalilzad, just now in THE SITUATION ROOM, but he made the point -- he was pointing a direct finger at Iran, saying that the Iranians who are under enormous pressure because of their own nuclear program may be using their influence with Hezbollah and Hamas to up the ante elsewhere, to show that they have some influence in that part of the world as well. Do you see Iran and/or Syria involved in this escalating tension?

FRIST: Well, I think that they are, and I think that the details of that and how much emphasis to put on it we won't know for a few days probably. But what we do know is that Hezbollah has been supporting Iran, has been supporting Syria. Syria has been supporting Hezbollah.

Iran has been supporting Hezbollah, and Hezbollah is a terrorist organization that is behind much of the activity that is underway, so I do hold Iran responsible and Syria, and because of that very direct relationship in financially and otherwise supporting Hezbollah.

BLITZER: We heard Russian officials and French officials earlier, others, saying that Israel is overreacting to this situation. The "New York Times" in an editorial made that point as well. Is Israel overreacting, for example, by taking out the runways at Beirut International Airport?

FRIST: No, I don't believe so at all. They have the right to defend themselves, and you ask really are we doing enough now. We need to continue to call, as a country and as an international community, of the immediate release of these captive soldiers.

And that may take some of the pressure off, but absolutely not. I think Israel is acting appropriately. They have every right to be able to defend themselves, and I am sure that we're going to continue to be supportive.

BLITZER: Let me move onto a totally different subject while I have you because it's going to be coming up for a vote in the U.S. Senate, embryonic stem cell research. On this issue, you've separated yourself from the president, from the White House.

He's threatening to veto any legislation which calls for new funding for embryonic stem cell research. Tell our viewers how you see this whole battle unfolding and why the stakes, from your perspective, are so enormous. FRIST: You know, Wolf, the whole issue of embryonic stem cell research and stem cell research generally does really come at this nexus, this changing nexus of advancing science with all the hope and potential for the future with ethics and with morality. And this brings that debate to a crux.

And first of all, we ought to point out that the president was the first president to ever support embryonic stem cell research with federal dollars. In 2001, he set up a system to support embryonic stem cell research which, at that time, we didn't know would be as limited as it is.

At that time we thought there were 78 to 100 cell lines that would be available. It's only about 20. All of those cell lines are contaminated with mouse feeder cells. Those are the sort of details that we will be talking about next week.

The larger implications that we'll be talking about on Monday and Tuesday are how far should the federal government go to support what is legal today -- that is embryonic stem cell research -- as well as support other type of research that stops short of the destruction of the embryo which I am very much in favor of, obviously, as we go forward to give that hope and potential the opportunity to be explored in the future.

So it will be an interesting debate as we go forward. We will be voting on Tuesday. Good debate on Monday and Tuesday.

BLITZER: But you don't have enough votes to override a threatened presidential veto. You need 68 in the Senate. Do you have enough votes to override a veto?

FRIST: I think we don't know at this juncture. One of the reasons I wanted to take, and responsibly take, three different bills that had to do with the research at the embryo level and at the fetus level is to allow everybody the opportunity to position themselves on what is a very, very tough issue, to reflect where the American people are, where individual consciences are among the various senators.

And this has been already been voted on in the House, one of those three bills, and at some point I would hope all three bills are considered in the House of Representatives.

BLITZER: And if the president were to veto this legislation, it would be his first veto since taking office.

Senator Bill Frist, the majority leader, thanks for coming in.

FRIST: Good to be with you, Wolf. Thank you.

BLITZER: And still ahead, our breaking news coverage from the Middle East and fears of an all-out war. We'll have a live report on the situation in Beirut. That's coming up.

And we will compare this crisis to so many others that have rocked the region for so long. Plus, the Middle East fallout that you will feel at home. Learn why one analyst fears the price of gas would reach $4 per gallon for regular. Stay with us. You are in THE SITUATION ROOM.


BLITZER: I'm Wolf Blitzer in Washington. Welcome back to THE SITUATION ROOM.

The news keeps breaking this hour in the crisis in the Middle East. Israel is striking at the heart of Lebanon's economy right now, with two attacks on the Beirut International Airport and a naval blockade of Lebanese water.

It's a stepped-up response to the abduction of two Israeli soldiers by Hezbollah militants -- all this unfolding, and the situation apparently getting worse. In response, Hezbollah is threatening to attack various locations in Israel, including the northern port city of Haifa. In fact, rockets landed there, two of them.

Hezbollah, though, is denying that it launched those rockets. Israel isn't buying it, calling this a major attack and a major escalation of the conflict.

We are waiting to hear directly from the secretary of state, Condoleezza Rice, and the president's national security adviser, Stephen Hadley. They are expected to speak out on the Middle East situation. They are traveling with the president in Germany. We will give you those remarks.

We are now told they will be on camera. As soon as we get those remarks, we will bring them to you.

Lebanon is taking a beating from the Israeli air force and from artillery strikes. And Israel's ambassador to the United States is warning that his country will continue to pound targets in Lebanon, until Hezbollah militants have no capacity to endanger Israelis in the north.

Let's go to Beirut. CNN's Alessio Vinci is joining us from the Lebanese capital.

What is the latest, Alessio?


Well, the latest is that, at nightfall, an Israeli gunboat fired rockets from -- presumably at a fuel depot at Beirut's International Airport -- a television station here showing pictures of a large fire there in that location.

We understand there are no casualties, but, obviously, a huge amount of damage there. And that was only hours after, in the morning, the Israeli air force had targeted all three international -- all three runways of Beirut's International Airport, basically forcing it to shut down, forcing incoming passengers to be diverted to Cyprus.

And passengers here in Beirut who wanted to leave actually had to go by car, either to Syria or to other neighboring countries, in order to be able to leave the country.

We understand, also, many tourists have left the country in the last few hours.

And speaking of the tourists, on a Thursday night here in Beirut, Wolf, we are in the middle of the summer. The streets of this city should be packed with young kids eating outside, drinking, having a good time. It is the summer, as I said. Well, none of this is happening. There is definitely a sense here that something bad is happening.

We have heard reports that the Israeli air force has even dropped leaflets in the southern part of Beirut. That is where, obviously, the predominantly Muslim community lives and supports Hezbollah, dropping those leaflets, urging the civilians to leave that area, possibly because, of course, there might be some further military activity in that area as well.

So, there is a sense of apprehension here, perhaps, that the bad old days here are quickly coming back, specifically because Israel is hitting hard at the infrastructure that is hurting pop -- you know, the civilian population here, rather than just the Hezbollah militia.

BLITZER: Alessio...

VINCI: Wolf.

BLITZER: ... the Israelis say that what they are doing is designed to put pressure on the Lebanese government to crack down on the Hezbollah militia, to stop them from launching rockets against northern Israel, going into northern Israel, killing and kidnapping Israeli soldiers.

Is there any indication that the Lebanese government is responding to that, and the Lebanese army is about to crack down on Hezbollah?

VINCI: Well, first of all, the Lebanese government has acknowledged that it has no control over the southern part of this country, and, therefore, it has really very little leverage on the Hezbollah militia group, and, therefore, very little power to bring about -- or at least to help bring about an end to the current crisis.

As far as the Lebanese army is concerned, right now, we have no indication whatsoever that it will get involved into this mess right now -- again, the Lebanese government making it clear that, while denouncing the attacks by Israel, at the same time, it is distancing from Hezbollah and from the kidnapping of the two Israeli soldiers -- so, no word whatsoever of an involvement yet from the regular army.

BLITZER: All right, Alessio, stand by. We are going to be coming back to you. This could be a long, long night in Beirut -- Alessio Vinci reporting from the Lebanese capital -- much more on this story coming up.

But there's another story we're watching right now, new developments this hour in the CIA leak controversy here in Washington. The CIA operative whose identity was leaked is now suing the vice president, Dick Cheney, his former top aide, Lewis Scooter Libby, and presidential adviser Karl Rove.

Let's bring in our -- CNN's Brian Todd. He's in the newsroom with details -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, we got the documents just a moment ago. Here they are right here.

Valerie Plame Wilson, former CIA officer, and her husband, former U.S. Ambassador Joe Wilson, filing suit in U.S. district court here in Washington, essentially accusing Vice President Dick Cheney of others of conspiring -- and the word conspiracy is used at least twice in these documents that I have seen -- of conspiring to ruin her career and that of her husband, former Ambassador Joe Wilson.

Cutting to the chase, the defendants listed in this lawsuit are Vice President Dick Cheney, his former top aide, Lewis Scooter Libby, who is facing obstruction of justice and other charges relating to this case. Deputy White House Chief of Staff Karl Rove is also a defendant in this case. And also listed here, defendants John Does numbers one to 10.

And they characterize them as persons whose identities currently are unknown, but who are believed to be persons who were either employed by the U.S. government in senior positions or who were political operatives with close ties to those persons.

They are seeking compensatory and punitive damages -- no monetary amount listed. But, in the injuries listed to Valerie Plame Wilson and her husband, Joe Wilson, they claim that the defendants, as we said, conspired to take away their constitutional rights.

But it says here, Mr. and Mrs. Wilson have suffered gross invasions of privacy, that they fear for their safety and that of their children, that, as a result of the defendants' actions, Mrs. Wilson was impaired in her ability to carry out her duties at the CIA and to pursue her career there, and also that she and former Ambassador Wilson were impaired in their ability to seek professional opportunities elsewhere.

We have placed three calls to the vice president's office since we got these documents less than an hour ago, have not gotten a formal response yet. We hope to get that very soon. We have also called former Ambassador Wilson to get any further clarification and guidance on this lawsuit.

He is not commenting this afternoon. But we understand that he is going to hold a news conference tomorrow.

So, again, just to repeat, Vice President Cheney, Deputy White House Chief of Staff Karl Rove, Cheney's former top aide, Lewis Scooter Libby, are being sued in federal district court by former CIA officer Valerie Plame Wilson and her husband, former U.S. Ambassador Joe Wilson, for, essentially, conspiring to ruin their careers -- Wolf.

BLITZER: Just curious, Brian, do you have the name of the lawyer representing Valerie Plame Wilson and Ambassador Joe Wilson in this lawsuit?

TODD: Let's see if I have got it here.

It's -- there's a lawyer here listed as Christopher Wolf. There's also another one listed as Charles Simms (ph), signed here on behalf of the plaintiffs.

So, we're going to try to contact them as well. But that's what we know now -- again, not a response from Vice President Dick Cheney's office just yet. We have called them several times. They are working on it. They are probably reading these documents as we speak.

BLITZER: Chris Wolf is a well-known, prominent Washington attorney. He has represented Valerie Plame Wilson for some time now. So, he's obviously involved in this. I was just curious.

Thanks, Brian, very much.


BLITZER: We will stay on top of this story.

Up next, we are standing by for more on our breaking news coverage of the crisis in the Middle East.

Also, we will be speaking with the Israeli and the Syrian ambassadors to the United States. We will be speaking live with them.

We are also awaiting to hear from Condoleezza Rice, the secretary of state, and the president's national security adviser, Stephen Hadley. They are traveling with the president in Germany. They are going to be speaking with reporters shortly. We will get you that videotape as soon as it comes in.

Also ahead, we are going to take a closer look at the House speaker's skin ailment. The speaker, Dennis Hastert, has now been admitted to a Washington, D.C., area hospital. We are going to tell you what's going on with the speaker of the House of Representatives, Dennis Hastert.

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


BLITZER: Welcome back.

We are continuing to cover all the breaking news from the Middle East this hour. We are standing by to hear from Condoleezza Rice, the secretary of state, as well as the president's national security adviser, Stephen Hadley. They are briefing reporters right now in Germany traveling with the president.

Meanwhile, a leading senator today unveiled a bill that would require court review of the National Security Agency's controversial domestic surveillance program. This is a potentially significant development.

Let's bring in our congressional correspondent, Andrea Koppel, to update us on what's going on -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, after months of insisting that he had inherent constitutional authority to authorize those secret warrantless wiretaps, President Bush has made an about-face.

He has made a significant shift -- that according to chairman of the Judiciary Committee, Arlen Specter, who had been digging in his heels for months, insisting that the Bush administration come around. Well, according to Arlen Specter, he and President Bush met earlier this week, and President Bush told him he will sign off on proposed legislation to allow a secret federal court known as a FISA court to review the program, to determine if it's constitutional.


SEN. ARLEN SPECTER (R), PENNSYLVANIA: They're going to review it, and they're going to decide if it's constitutional. The bill does also say, if they decide it's not constitutional, the attorney general can revise it and submit a revised plan. But the court will have to determine constitutionality for it to continue to operate.


KOPPEL: Now, a White House spokeswoman, Dana Perino, confirmed the terms of this agreement with CNN, saying that President Bush recognized that this was an optional choice; it wasn't a mandatory decision that he submit this to the FISA court, Wolf. This could come up for debate as soon as next week -- Wolf.

BLITZER: Andrea, thank you very much.

Is the United States prepared to fend off a disabling cyber- attack? The country's top cyber-security official has yet to be named. And today marks one year that that job has remained vacant.

Standing by here in THE SITUATION ROOM with the latest is our senior Internet producer and cyber-crime analyst, Alex Wellen.

What are we talking about? What kind of threat is there out there?

ALEX WELLEN, CNN SENIOR INTERNET PRODUCER & CYBER CRIME ANALYST: When we say a cyber-threat, disabling attack, it's like a cyber-Pearl Harbor. That's what experts sometimes refer to it.

Critical infrastructure, banking, finance, security, transportation, all of those things, could they be taken offline? And, if not taken offline, what if we had a low-level attack, an explosion somewhere, and then hackers, or the bad guys, then took offline our emergency services? Then we would find ourselves in a lot of problems.

BLITZER: What's the problem? Why can't the -- the government find someone to be in charge?

WELLEN: It's a hard job to fill. And there aren't that many people who can do it.

It's been about a year that this position has been open. And, in addition to that, we have seen, you know, about a half-dozen people go through this process and -- and -- and a mass exodus in that regard.

What we are talking about right now is that most people complain that what is happening with this department is that it's not being treated as a priority. Not enough money is being given to it. It's not something where they are getting enough support, and they can get to the most important players.

BLITZER: You have spoken to the Department of Homeland Security.

WELLEN: I have.

BLITZER: What do they say?

WELLEN: Well, and the fear, of course, Wolf, is that we will have a Katrina-type scenario where we don't have someone in the position.

The Department of Homeland Security says there is someone in place who has been acting, that they are very close to the final stages, and this is a very difficult position to convince someone who is coming from a high level in the private sector to make the sacrifices for this job.

So, we will have to watch it very closely. What we don't want to happen is to be in a scenario like we are with FEMA in the past, before Katrina, where we don't have things in place, if, in fact, we see a cyber or a disabling attack.

BLITZER: Alex Wellen, thanks very much for that.

Alex Wellen is our senior Internet producer and cyber-crime analyst.

Coming up, we are going to continue to update you on all the latest developments involving the escalating violence in the Middle East. We are standing by to speak with the Israeli and the Syrian ambassadors to the United States -- and, then, a detailed geographic look at the hot spots around the region.

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

(COMMERCIAL BREAK) BLITZER: The fallout from the Middle East crisis now being felt around the world -- at the United Nations, the United States today vetoed a resolution condemning Israel for an ongoing excursion into Gaza.

The U.S. says the resolution was untimely, in light of the current conflict between Israeli forces and Hezbollah in Lebanon.

Secretary of State Condoleezza Rice, National Security Adviser Stephen Hadley, they are briefing reporters in Germany about the explosive situation, the tensions in the region. We will bring you those comments as soon as we get them.

And crude oil closed at a record high in trading in the United States, closing at $76.70 a barrel -- clearly, all of that involved in what's going on in the Middle East.

Let's get a close-up view of this crisis.

For that, as always, we turn to CNN's Tom Foreman -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: You are hitting the nail on the head here, Wolf. Really, the whole world right now is getting very involved in 40 miles and many years of disagreement.

What are the 40 miles? Well, let's move in here and take a look at all of this. This is where all of this trouble has been breaking out, along this border here, where Israel is down here. Lebanon is up north.

This is the border where the initial trouble broke out to begin with. It's about 40 miles long. And this is where the soldiers were taken in this brief incursion -- about 40 miles, end to end, and, yet, all along this border, all sorts of trouble today.

One of the biggest strikes that we have been paying attention to all day has been up here in Lebanon, to the north, specifically at the airport, the Beirut airport. Let's move in and look at that. Israeli warplanes went in and struck earlier today.

And, specifically, they took out these runways along the airport there. That was earlier this morning. Then, after rockets landed in Israel, which they believe were fired by the forces in the southern part of the country here, then they went back, and they struck again.

This time, they hit fuel storage, which we believe is right over here. This is what you have seen burning on TV all day, big-time, burning in the night. Fuel storage, normally alongside airports, that's what was hit.

But the bombs and rockets have been flying all day here. Right now, Israel has set up a blockade off the coast here. The idea behind hitting the airport and blockading sea supplies is because Israel says, basically, that's how supplies are being brought in to the people who are operating out of the southern part of the country. Those are the people they are after. Down in Israel today, of course, there were many hits, as various rockets came in. We had hits in Safed, in Nahariya, up here closer to the border. And the furthest that missiles have gone in a long, long time -- maybe ever -- was all the way down to Haifa down here, a port city of about 300,000 people.

So, there have been many, many other explosions, many, many other problems on both sides of the border here all day long. And it just keeps escalating and escalating, at least at this point.

BLITZER: And it looks like it's not going to stop, at least any time soon.

Thanks very much, Tom, for that.

Up next: more on the Middle East crisis, an-all-too familiar situation in a region rocked for so long by so much violence.

CNN's Jeff Greenfield, standing by, he will consider whether there's still any room for hope.

And, at the top of the hour, live reports from the region on the latest fighting between Israeli forces and Hezbollah guerrillas.

Stay with us. You are in THE SITUATION ROOM.


BLITZER: New attacks between Israel and Hezbollah guerrillas are a grim reminder that the Middle East is and has long been a powder keg waiting to explode.

Let's turn to CNN senior analyst Jeff Greenfield -- Jeff.

JEFF GREENFIELD, CNN SENIOR ANALYST: Wolf, it's a headline we probably ought to keep in our most active file: Violence, tensions rise in the Middle East. And unpleasant as it may be to say this, it may be time for an airing of unblinkered, full-throttle pessimism.


GREENFIELD (voice-over): Wait, the optimist in me says. Remember when Egypt's Sadat went to Jerusalem in 1997? The year after, he and Israel's Begin met with Jimmy Carter and renounced war. There's been no full-scale conflict in the region since.

Yes. And, in 1981, Sadat paid for that exercise in courage with his life, killed by extremists in his own country.


GREENFIELD: Well, didn't Israel's Rabin reach out to Yasser Arafat and Bill Clinton, and exchange mutual recognition with the PLO?

Yes. And, in 1995, Rabin paid for that courage with his life, killed by an extremist in his own country. More broadly, there are enough pictures of enough meetings and conferences and peace plans and working papers and road maps to fill warehouses. But, then, inevitably, it seems, come the other pictures, rockets and suicide bombers, and reprisals, where civilians die.


GREENFIELD: A little more than two weeks ago, I was in Petra, Jordan, at a conference of Nobel laureates convened by Jordan's King Abdullah II and Elie Wiesel. Palestinian Authority Mahmoud Abbas and Israel Prime Minister Olmert came, breakfasted, shook hands, pledged more meetings.

And then came the rockets, and the kidnappings, and the airstrikes, and the real threat of a region-wide conflict.

NELSON MANDELA, SOUTH AFRICAN LEADER: This agreement is the leap forward.

GREENFIELD: Look, we know old conflicts can end, when leaders have the will and the authority to preside over historic change. We saw it when South Africa's de Klerk said enough to apartheid and racial supremacy and sat down with Nelson Mandela to negotiate a peaceful revolution.

We saw it when Gorbachev saw the Berlin Wall fall, and did not send troops in to preserve a crippled empire, and began the process of dismantling the Soviet Union itself.


GREENFIELD: We thought we had seen it so many times in the Middle East. And, so many times, those wishes turned out to be little more than wishful thinking. There may be a logical, rational way to resolve a conflict when both sides believe God gave them the same piece of land, but, right now, it's a little hard to glimpse that through the smoke and the fire and the blood -- Wolf.

BLITZER: Jeff Greenfield, thank you very much.

Up next: Jack Cafferty with your e-mail. Has Israel overreacted to what's going on?

Also, at the top of the hour, much more of our breaking news coverage -- I will speak live with the Israeli and the Syrian ambassadors to the United States.

We will be right back.


BLITZER: Let's go right to Jack in New York with "The Cafferty File" -- Jack.

CAFFERTY: Wolf, the question this hour is: Has Israel overreacted to the kidnapping of three of its soldiers? A lot of mail.

Arnie wrote: "No, Israel has not overreacted. What would any other nation do if rockets were continually being fired into their country from the other side of the border, and if their soldiers were kidnapped? How would any other nation react after hundreds and hundreds of individual terrorist attacks targeted their civilians in buses, malls, bus stations, pizza shops, and restaurants?"

Ed in Fairless Hills, Pennsylvania: "Yes, Israel has overreacted in a big way. The government of Lebanon is powerless to prevent the terrorists. And, by attacking them, Israel is making themselves the aggressor in the situation. Did Britain invade the Republic of Ireland when the IRA attacked in London?"

John in Macon, Georgia, writes: "If this were the first time that an Arab state had attacked Israel, then, yes, it would be an overreaction. However, Israel has had to deal with the bias and prejudice against them from the entire region for decades. And I think they finally just had it. To be honest, Jack, I don't I blame them."

Kyle in Flint, Michigan: "The answer is, absolutely. Israel has the right to be upset, but not to go and start blowing people up. Both sides seem to be making rash decisions that do nothing but get innocent people killed."

Don in Jacksonville, Florida: "What would you do if you were in their place, surrounded on all sides by Arab countries that want to eliminate them? I sometimes wonder if the United States should have their attitude."

And D. in Crooksville, Ohio: "Escalating things into an all-out war seems to be an overreaction. But I'm just an American. What do I know? We bombed the heck out of Iraq when we couldn't find the cave where Osama bin Laden was hiding. Maybe everyone in the world of politics needs to take some anger-management courses."

That's probably a good idea -- Wolf.

BLITZER: What a story.

Jack, thanks very much -- Jack Cafferty in New York.