Return to Transcripts main page

The Situation Room

Israel On the Offensive in Gaza, Lebanon; Hezbollah Leader Declares Open War on Israel

Aired July 14, 2006 - 19:00   ET

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

WOLF BLITZER, CNN ANCHOR: Thanks very muck, Lou. And to our viewers, you're 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 tonight's top stories.
Happening now -- we're following breaking news out of the Middle East. Israel strikes a government building in Gaza as its offensive in Lebanon continues as well. Plus Hezbollah's leader declares open war against Israel. It's 2:00 a.m. Saturday already along the Israeli/Lebanese border and both sides are taking aim at provocative new targets, Hezbollah headquarters and an Israeli warship. We'll have live reports from the region.

And we'll also get two very different perspectives on this spiraling conflict from the former Israeli Prime Minister Benjamin Netanyahu and the president of the Arab American Institute, James Zogby.

Also this hour former CIA operative Valerie Plame Wilson speaking out accusing Vice President Dick Cheney and others in the Bush administration of shameful conduct. It's 7:00 p.m. here in Washington where Wilson and her husband say they expect their new lawsuit against Bush administration officials to be a tough fight.

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

Israeli and Hezbollah forces are entering a fourth day of fierce fighting, and they're going for the jugular. The Israeli military telling local media that an unmanned aircraft packed with explosives slammed into one of its gun ships off the Lebanese coast and Lebanon is trying to deal with its own problems.

That ship, by the way, is still burning four hours after the attack. It's being towed back to Israel. Israel, meanwhile, hit back hard as well striking at the heart of Hezbollah. Its warplanes destroyed the group's headquarters in the southern suburbs of Beirut, soon after Hezbollah's leader gave a fiery speech saying Israel had chosen an all out war and he vowed to take the war too the Israeli city of Haifa and beyond, Haifa pounded by rocket fire only yesterday.

With the crisis escalating, oil prices are soaring right now. U.S. oil futures closed at just over $77 a barrel, yet another record high. We have reporters standing by throughout the region. CNN's John Vause is in northern Israel in Nasariya. Nic Robertson is standing by in the Lebanese capital of Beirut, and Ben Wedeman is joining us live from Gaza. There's breaking news coming out of Gaza, Ben, let's start with you.

BEN WEDEMAN, CNN CORRESPONDENT: Yes, Wolf, Israeli aircraft had been busy in the skies over Gaza. Just about an hour ago we heard a missile zip by this building and hit the Palestinian economy ministry, which is just north of here. We're told the building is still in flames. There were no casualties in this case.

Now, to the south of here there was another rocket strike on a bridge that's on the main highway linking the northern and southern parts of the Gaza Strip. That was a bridge that in fact the Israelis had already rendered inoperable earlier this month.

Meanwhile in the far south of the Gaza Strip in the town of Raffia (ph), Hamas militants were involved in a different sort of action.

(BEGIN VIDEOTAPE)

WEDEMAN (voice-over): They came pouring out of Egypt, hundreds of Palestinians stuck since late June at the only border crossing between Egypt and Gaza. Now, liberating from limbo by Hamas gunmen, who blew a hole in the fence as Egyptian and Palestinian border guards looked on. Israel forced the closure of the crossing when one of its soldiers, Gilad Shalit, was abducted by Hamas militants three weeks ago. And as they entered Gaza, who did the Palestinians thank?

UNIDENTIFIED FEMALE: (SPEAKING FOREIGN LANGUAGE)

WEDEMAN: (INAUDIBLE) says this woman, referring to the leader of Hezbollah. In the chaos people helped themselves to bags of rice from a nearby warehouse. As dusk descends, Israeli helicopters hover overhead...

(SHOTS)

WEDEMAN: ... firing warning shots to disburse the crowd. Earlier in the day Hamas was on the march. The radical Islamic group, which has held one Israeli soldier for almost three weeks, organized rallies all over Gaza in support of Hezbollah, which is holding two Israeli soldiers. Hezbollah's yellow flag flies next to Hamas' green banner.

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

WEDEMAN: God willing, everything will come down on the heads of the Jews, and we'll defeat them says Hamas supporter Abu Mujahid, little chance of that happening. But the fighting in Lebanon has ignited passion among the militants and their supporters for a regional war against Israel. Gaza's misery it appears loves company.

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

WEDEMAN: Addressing the crowd Hamas spokesman Majid Mussede (ph) called on Arab and Islamic leaders to get off the sidelines and join the fight against Israel or face the anger of their people.

(SOUNDS)

WEDEMAN: And while Gaza's streets are noisy, its front lines have gone relatively quiet.

(on camera): And Israel seems to have suspended most of its military operations in Gaza if only for now.

(voice-over): Shortly after dawn residents in central Gaza returned to areas evacuated by withdrawing Israeli forces.

(SOUNDS)

WEDEMAN: But Hamas didn't suspend its military operations against Israel firing Kassam rockets near the Israeli town of Sidot (ph). No injuries or damage were reported. Not much compared to Hezbollah's arsenal.

UNIDENTIFIED MALE: (INAUDIBLE)

WEDEMAN: But enough for Hamas to make sure its voice isn't drowned out by the guns in Lebanon.

(END VIDEOTAPE)

WEDEMAN: And, Wolf, really Palestinians are transfixed by what's going on in Lebanon. When they heard, for instance, that an unmanned Hezbollah aircraft had hit that Israeli war ship off the coast of Beirut, people I saw around me started cheering and you could even hear gunfire, celebratory gunfire in the streets. Really people are watching that situation very closely -- Wolf.

BLITZER: Ben Wedeman reporting for us from Gaza. Ben, thank you very much. Be careful over there.

Let's go up the Mediterranean Coast to Beirut. Nic Robertson is on the scene for us. Nic, we heard from the Hezbollah leader today with some very ominous words. Update our viewers on what's going on right now.

NIC ROBERTSON, CNN CORRESPONDENT: Well, Wolf, just as dusk was falling we were in the southern Beirut suburbs which is where Hezbollah's strong hold is which is very close to -- we were very close to Sheikh Hassan Nasrallah's headquarters. We were talking to people about the bombing; there was some very loud explosions. We got in the car, drove away, more loud explosions, we drove to the street where Sheikh Hassan Nasrallah's headquarters was. The street was full of smoke. His house or his headquarters at least had been targeted by an air strike.

We raced back to our bureau. Within minutes, Sheik Nasrallah was on television saying to the Israelis if you want war, we'll have an open war. And then he delivered a very surprising message for a lot of people. He said if you look out to the boats that have been shelling you, the Israeli boats that have been shelling you in the sea, you will see one on fire. Within 10 or 15 minutes of that one of those boats was in fact on fire. We've now learned from a newspaper in Israel quoting Israeli defense forces that it was a drone that flew into that ship off the coast, but what was very interesting about how this played out in Beirut, Sheikh Hassan Nasrallah clearly got on the television to show that he was alive.

When he finished speaking before his threat had been carried out for an attack, there was gunfire erupting all over the city, not just in the Hezbollah strongholds, but all over the city, an apparent show of support for his apparent defiance coming out on television. The prime minister, meanwhile, I had an explosive interview with him earlier in the day, he's been talking about the disproportionate retaliation that he says Israel is placing on Lebanon at this time, but he's also -- while Hezbollah is talking about attacks, he is still talking about a cease-fire.

(BEGIN VIDEO CLIP)

FOUAD SINIORA, LEBANESE PRIME MINISTER: I am in no way justifying any irresponsible behavior, but I mean desperate people keep in mind will commit desperate things or desperate behavior. I repeat we have a problem at our hands now, in Lebanon. We have to really concentrate our efforts on trying to solve this problem. Starting by finding an immediate way how to affect the cease-fire.

(END VIDEO CLIP)

ROBERTSON: So in striking that ship and coming out on television with all that fiery talk the head of Hezbollah here really seems to be dominating the scene and despite whatever the prime minister says, who isn't able to rein Hezbollah in, seems Hezbollah is driving Lebanon towards a war, Wolf.

BLITZER: Nic Robertson on the scene in Beirut for us. Nic thank you.

In Damascus, the ruling Baath Party says Syria will back Hezbollah and Lebanon against Israel's attacks. A communicae just released says the Syrian people will extend full support to the Lebanese people as they -- quote -- "confront the barbaric Israeli aggression."

Let's go to northern Israel right now, hit once again by a barrage of Hezbollah rockets. Let's bring in CNN's John Vause. He's joining us from the northern Israeli town of Nahariya. John, give us an update on what's happening in the northern part of Israel.

JOHN VAUSE, CNN CORRESPONDENT: Well, Wolf, tonight it seems that life here has come to a virtual standstill. Few have ventured out during the day. Shops have been ordered closed by police and residents are once again spending an anxious night in bomb shelters, as well as safe rooms. The Israeli military says today Hezbollah fired more than 90 Katyusha rockets, more than 300 in the past 48 hours.

Another two Israeli civilians have been killed today, a mother -- a woman, rather, and her grandson died when their home took a direct hit. And here in Nahariya there's been another round of Katyusha attacks, two rounds of attacks. Hezbollah seems to be keeping to a pattern, attacking in the early morning and then again in the early evening. Here 30 people were hurt, at least a dozen more were injured in the town of Safed -- Wolf.

BLITZER: John Vause in northern Israel. Thank you for that -- much more coming up on this crisis in the Middle East. We're going to continue to watch it throughout this hour. Jack Cafferty is joining us right now from New York with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Thanks Wolf. You remember how the Senate voted overwhelmingly to build 370 miles of new fencing along the Mexican border a couple of months back? It was in May, I believe. Well apparently they didn't mean it, because yesterday they voted 71 to 29 against providing the money to construct the fence.

Alabama senator Jeff Sessions said -- quote -- "We do a lot of talking. We do a lot of legislating. The things we do often sound very good, but we never quite get there" -- unquote. Sessions was the one who offered an amendment to authorize $1.8 billion to pay for construction of the fence. One Republican senator who voted against the funding says it would have required across the board cuts to the rest of the Homeland Security Bill, and that would have meant cutting things like border patrol agents and new detention beds for illegal aliens, very important you know that illegal aliens have nice new beds to sleep in, maybe with feather pillows and down comforters. What a joke. What an absolute disgrace.

Here's the question. What does it mean when the Senate votes to build a fence along the Mexican border and then two and a half months later votes against funding it? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Jack, thank you. Jack Cafferty in New York.

And coming up here in THE SITUATION ROOM, in the Middle East crisis do all roads lead toward Iran and to its radical and unpredictable president? Bill Schneider is standing by. He'll examine the Iran connection.

And will the open war as Hezbollah's leader is calling it have a reverse domino effect in the Middle East? Jeff Greenfield takes a closer look at the fight to bring democracy to the region.

And former CIA operative Valerie Plame Wilson speaks out about the leak that made her famous and about her new lawsuit against Vice President Dick Cheney, White House aide Karl Rove and former White House aide Lewis "Scooter" Libby. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get to the latest on the tensions in the Middle East right now. Israel striking a government building in Gaza City as its offensive in Lebanon continues. Palestinian sources say a rocket hit the Palestinian Economic Ministry. Meanwhile, Israel says one of its war ships was hit by an unmanned Hezbollah aircraft rigged with explosives.

The Israeli media -- the Israeli military, that is, tells local media the ship was seriously damaged. The Pentagon is drawing up plans for a possible evacuation, meanwhile, of some 25,000 U.S. citizens living in Lebanon. And officials in Lebanon say 63 people are now confirmed dead while Israeli officials say 12 people have been killed, and over 100 wounded in Israel.

Iran's president is blasting what he calls the Zionist invasion of Lebanon, and he's expressing strong support for the Lebanese people and for their Syrian allies. Our senior political analyst Bill Schneider is joining us now with more on the Iran connection to this current crisis -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Wolf, the Middle East crisis involves Israel, Lebanon, Hamas, and Hezbollah, and many observers believe Iran.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Do all roads lead to Tehran? In Iran the government refuses to curtail its nuclear program. In Iraq, Iran has ties to Shiite militias. In Israel, Iran is suspected of being a player in the current crisis. The United States says so.

CONDOLEEZZA RICE, SECRETARY OF STATE: Iran is a principal funder and supporter of Hezbollah.

SCHNEIDER: The Israelis say so.

DANIEL AYALON, ISRAELI AMBASSADOR TO THE U.S.: They want to see a Middle East, which is under the influence of Iran.

SCHNEIDER: Israelis believe Hezbollah is trying to transfer the kidnapped Israeli soldiers to Iran. Since the Iraq war, Iran has become a more powerful player in the Middle East.

SHIBLEY TELHAMI, BROOKINGS INSTITUTION: Iraq is not going to be a major power in any foreseeable future no matter what happens militarily. So Iran is the dominant power in the Gulf.

SCHNEIDER: Iran's influence in the Middle East has always been limited by the fact that Iranians are not Arabs. They're Persians and Shiites. They find a natural ally in Hezbollah, a radical Shiite group based in Lebanon.

SEN. JOHN MCCAIN (R), ARIZONA: The Iranians have nurtured Hezbollah and helped them put all these rockets in place in Lebanon.

SCHNEIDER: For years Iranians have tried to assert their leadership of the Palestinian cause.

TELHAMI: Iran since the revolution, since Ayatollah Khomeini has highlighted the question of Palestine, particularly the question of Jerusalem as a Muslim issue.

SCHNEIDER: That's the danger. It may be working.

TELHAMI: Iran, which is not a natural ally and certainly not one that Arabs have held as a model, is finding residence in this environment.

(END VIDEOTAPE)

SCHNEIDER: It's also a big risk for Iran. Hezbollah could end up defeated or weakened, and many Arab governments do not want this war. And they resent the influence of Hezbollah and Iran in provoking it -- Wolf.

BLITZER: Bill Schneider, thank you.

So what happens if the current crisis simply spirals out of control? CNN's Tom Foreman is here in THE SITUATION ROOM. He's been looking at that awful scenario -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Yes, there's no agreement at all on this. I've talked to a lot of experts. Listened to a lot of people today. No idea for sure what's going to happen. Again, let's look at where we are. It's the northern end of Africa basically is the portion that we're talking about. And a really quite small area, a border only about 40 miles long, but along here this is Israel down here, up here is Lebanon, and what we have is these people who are internationally recognized terrorists basically covering the bottom end of this country here, running that part of Lebanon.

And they came across and captured these Israeli soldiers and since then everything has just gone wild in this entire area. So what we have now is Israel striking into this area up into here and into Lebanon, and rockets being fired down here into Israel as well. Look at all the different places that have been hit in this area. Today there's been a good bit more in south Beirut as Israel tried to hit really the base of these operations.

They struck many of the intersections here. They hit some of the headquarters. They even hit the road out to the airport, and of course they have made a blockade out here in the ocean with ships like this, and one of the ships was hit today, as we mentioned, by a rocket fired from -- in this area. The question really is how could this spill out from this area?

There are a couple of possibilities that we have to bear in mind. One is Syria, right next door. Syria has been a long-time supporter. They're in this area. They do not like Israel. The question is would Israel spill over into that area as they pursue the people who they perceive to be their enemies.

The other question, of course, is Iran. And just to give you a sense of where it all is, Iran is over here. That's Iran way over on this side, and that's another possible player in this whole issue. And in the middle of it all, the thing that makes it so volatile potentially is Iraq where U.S. soldiers are. So when you look at it this way and you look at just the geography, you can see why people are so concerned.

Nobody has a pattern as to why all these problems would expand throughout that region, but when you consider the things Bill was talking about, you consider the proximity of all these forces it becomes a potentially volatile situation.

BLITZER: A good geography lesson indeed. Thanks very much. Geography having some significance in that volatile part of the world.

Still to come, two very different takes on the Middle East crisis. The former Israeli prime minister, Benjamin Netanyahu and the president of the Arab American Institute, James Zogby, both will join me in THE SITUATION ROOM.

But first hot and miserable, that's how fire officials describe conditions in southern California where wildfires are burning out of control right now. We'll have an update. Our Chris Lawrence is on the scene. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: We have much more ahead and the breaking news coming out of the Middle East. We're going to get you all the new developments, what's happening this hour. That's coming up shortly.

But right now I want to go out West. There are two major blazes in southern California right now potentially; they're merging into one simply giant wildfire. The Associated Press reporting the so-called -- both of these fires have combined into a massive 61,000-acre conflagration.

CNN's Chris Lawrence is joining us now live from the fire lines with the latest -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Wolf, we've just confirmed that those two wildfires have now merged into one super blaze. As you mentioned, it is more than 60,000 acres, and it's smoldering on the mountain there behind me. The total fire represents an area about four times as large as Manhattan.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): It was the worse case scenario firefighters feared, a wildfire burning into a populated tourist area surrounded by forest. Now, it looks like Big Bear is safe.

TRACEY MARTINEZ, SAN BERNARDINO CO. FIRE DEPT.: There's very low probability that the fire will turn towards Big Bear, very low probability.

LAWRENCE: And even if it does...

UNIDENTIFIED FEMALE: There's already a firebreak in place so that will help us slow down the fire if not stop it at that location.

LAWRENCE Residents in Morongo Valley are keeping a close eye on the fire's direction.

UNIDENTIFIED MALE: About 12:00 I went to bed, I did set my alarm for like every hour and a half just to you know wake me up and get up and make sure it's not any closer.

LAWRENCE: The sheriff ordered Doug Hudsman (ph) and other residents to evacuate. Most refused.

UNIDENTIFIED MALE: As of right now I haven't seen any reason to leave.

LAWRENCE: Crews have kept most of the flames confined to the mountains, so a lot of homeowners just aren't concerned enough to comply with the order.

UNIDENTIFIED FEMALE: Not unless the house burns down. Then I'll leave.

LAWRENCE: There was some concern that when the two fires merged it would create an inferno. Now some fire officials say a single fire could help remove islands of unburned fuel or in layman's term patches of unburned brush and trees.

MONICA VASQUEZ, CALIFORNIA DEPT. OF FORESTRY: It's better to watch it, let it burn together and burn out those islands, so then we have less to mop up.

LAWRENCE: Making things a little bit easier for overworked crews.

(END VIDEOTAPE)

LAWRENCE: Now, as firefighters work on controlling that fire, a 20-man crew is now searching for a man missing from nearby Pioneertown. He's 57 years old, and his wife tells us that no one from the family has seen him since Tuesday -- Wolf.

BLITZER: Chris Lawrence reporting for us. Chris, thank you very much.

Just ahead much more on the escalating tensions in the Middle East. Right now Israel is targeting Hezbollah -- various Hezbollah targets in Lebanon, but will it go after Syria? Perhaps even Iran? I'll ask the former Israeli prime minister, Benjamin Netanyahu.

And how is the Arab world viewing the crisis? I'll speak to the president of the Arab American Institute, James Zogby. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Tonight the Middle East crisis exploding on two fronts, breaking news out of Gaza, an Israeli rocket hits the Palestine Economic Ministry. No injuries are reported, but at last word the building still was burning. And the Israeli military tells local media that an unmanned aircraft packed with explosives slammed into one of its gun ships off the Lebanese coast and damaged the steering capabilities.

The ship was still burning four hours after the attack and is being towed back to Israel. President Bush, meanwhile, has been working the phones in urgent talks with regional leaders. He's in St. Petersburg, Russia right now for the G-8 summit. Our White House correspondent Suzanne Malveaux is traveling with the president -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, President Bush is here in St. Petersburg Russia two days ahead of the official start of the G-8 summit for what White House officials say will be frank and private discussions with his old friend, Vladimir Putin. Of course there's reported tension between the two leaders over issues, North Korea as well as Iran and human rights violations.

That all threatening to overshadow the G-8 agenda, but what has become very clear is that it is the crisis in the Middle East that is taking center stage now. President Bush even before Air Force One touching down making a round of critical calls to allies, the leaders of Egypt and Jordan not only to thank them for trying to deescalate the crisis, but also to try to push them to use their influence with Hezbollah to return those Israeli soldiers.

President Bush also made a call to Lebanon's prime minister, Siniora, to reassure him that his administration is urging Israel to use restraint when it comes to its military campaign against Hezbollah to spare the innocent and to respect Siniora's authority.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And we've also felt that democracy in Lebanon is important for the Lebanese people and it's important for the region, so the concern is that any activities by Israel to protect herself will weaken that government, and we have made that -- or topple that government, and we've made it clear -- we've -- in our discussions.

(END VIDEO CLIP)

MALVEAUX: But White House officials deny that President Bush is urging Israel to stop its attacks. They say that decision must be made by Israeli military -- Wolf.

BLITZER: Suzanne, thank you very much. Suzanne Malveaux traveling with the president.

Likely among the things President Bush is watching and just how many innocent civilians are caught up in the crossfire. How might Israel ensure they're not being unduly punished?

(BEGIN VIDEOTAPE)

BLITZER: And joining us now is the former prime minister of Israel, Benjamin Netanyahu. He now leads the opposition in the Knesset.

Prime Minister, thanks very much for coming in on such a hectic day.

This is a little war right now, but is it about to become a bigger war?

BENJAMIN NETANYAHU, FMR. ISRAELI PRIME MINISTER: Well, it has to be a successful battle to stop the rocketing of Israeli towns and cities by the criminal Hezbollah terrorist organization. I think that if we don't stop it, then Hezbollah will arm itself with still longer- range missiles, deadlier projectiles, to wreak more havoc and more death on innocent civilians.

And coincidentally, it would also vitiate completely Lebanon's sovereignty. Lebanon is not now a sovereign country. It has a state within a state, a criminal organization that is controlled and directed by two foreign states, Iran and Syria. And it's doing -- Hezbollah is doing whatever it pleases on Lebanon's soil.

So, destroying Hezbollah's fighting ability, which is what U.N. Resolution 1559 stipulated when Israel left Lebanon, I think is important for our security and for the hopes of millions of Lebanese that they'll regain their country.

BLITZER: Since the Lebanese government is incapable or unwilling to take on Hezbollah, as you point out right now, is that Israel's military objective right now, to destroy Hezbollah's military capability?

NETANYAHU: I think it should be, and I believe it is. But, of course, you'd have to ask that of the government. What we've done in Israel is to close ranks behind the government when our country is being attacked by these wanton savage rocket attacks.

BLITZER: Why punish so many innocent people in Lebanon, many of whom may be sympathetic, may be critical themselves of Hezbollah's role in Lebanon? Why go after the innocents in Lebanon who are being punished, in effect, by some of the Israeli strikes, for example, on the Beirut International Airport?

NETANYAHU: The Beirut International Airport, like the Damascus International Airport, is a source of conduit for weapons, for material, for weapons and for other things that Hezbollah has been using, as is the Beirut-Damascus highway. These targets have been hit not to punish Lebanese, but to interdict Hezbollah capabilities.

You know, the terrorists are very clever. I mean, as we speak, rockets are being fired by Hezbollah from crowded neighborhoods. What they're doing is targeting civilians in Israel and hiding behind civilians in Lebanon in the hope that they'll purchase immunity.

No same government would give the terrorists such immunity as they rocket our population. But what a responsible government tries to do is try to minimize civilian casualties as we target the terrorists. And this is being done, again, as we speak, by America and Britain and others in Iraq, in their battle against terrorism.

BLITZER: Let me interrupt for a moment and read to you what the president of Iran, Mahmoud Ahmadinejad, said yesterday.

He said, "If the occupying regime of Jerusalem attacks Syria, it will be equivalent to an attack on the whole Islamic world and the regime" -- namely, Israel -- "will face a crushing response."

Do you take a threat like that from the Iranian leader seriously?

NETANYAHU: Oh, I take all his threats seriously, because when a person says that he's -- while denying the Holocaust, is openly saying that he's preparing a new Holocaust by developing atomic bombs which he says openly he will use against Israel, yes, I take the rantings of a person like that seriously. Not because they're sane, but because he may actually mean it.

So, yes, I take Iran seriously. But at the same time, I also know that Syria harbors terrorists.

Khaled Mashaal, the controller of the Hamas terror organization, sits openly in Damascus. And in Damascus, there are -- the Syrian government itself is controlling and directing Hezbollah.

BLITZER: So should the Israeli military go after targets in Syria and/or Iran?

NETANYAHU: I think what we should do is get the international community to press Syria and Iran rather than pressing Israel, which is merely fulfilling U.N. resolutions. Israel, which vacated Lebanon completely, and with a promise of a U.N. resolution that it will not be attacked from Lebanon, and that Hezbollah would dismantle there, is merely filling -- fulfilling -- forcibly trying to fulfill the international resolution that Lebanon has failed to fulfill.

So, Israel -- the last thing the international community should do is press on Israel. It should press on Syria and Iran for condoning this criminal activity in violation of international law and common sense.

BLITZER: One final question. I know you're supporting the position of the Israeli government right now. You're the leader of the opposition. Is this a moment that the Likud should come back into the government and there should be a national unity government encompassing almost all of the major political parties in the Knesset?

NETANYAHU: There's national unity right now in the mere fact that I'm here talking to you and defending the government. It tells you that we've all closed ranks.

I'm not sure that translates into a political shift, because we're not on the eve of the Six Day War on the eve of Yom Kippur. This is not in that magnitude.

There is a need to take forceful action. The government regrettably delayed taking this action for a long time. And the terror forces were emboldened to increase their aggression.

But I think, right now, I, and so many others are supporting the government, precisely because it's doing late -- but not better late than ever. It's doing the right thing. I think I can fully support this without having a seat round the government table. I can do that from my seat in the Knesset just as well.

BLITZER: Benjamin Netanyahu, the former prime minister of Israel.

Thanks very much for coming in.

NETANYAHU: Thank you.

BLITZER: Joining us now is James Zogby, the president of the Arab American Institute, a long-time observer of this region with deep personal roots in Lebanon as well.

You were telling me you have a nephew who is sort of stranded in Beirut right now?

JAMES ZOGBY, PRESIDENT, ARAB AMERICAN INSTITUTE: Stuck in Lebanon because the highway's gone, the airport's gone. And he was just on a Rotary fellowship to the American University of Beirut and was about to come home when -- when this hit.

BLITZER: Have you heard from him?

ZOGBY: We have. We've spoken with him, although right now it's difficult because, you know, the cell towers have been bombed. So you can't get cell phone calls in easily.

Some areas of the country are OK. But apparently there's not a communications -- not an ease in communications right now.

BLITZER: Was it wrong for Hezbollah to go across that line and go into Israel, kill and kidnap those Israeli soldiers?

ZOGBY: I think many Lebanese agree that it was wrong. It was provocative and it was reckless. But I agree with the Lebanese prime minister that Israel's response to this has been wholly disproportionate and a form of collective punishment.

Frankly, Lebanese have seen this time and time again. But what happens is that moderate forces end up losing out in a situation like this because anger rules the street.

At some point, Israel and the United States have to begin to get it, that these kinds of responses don't end up defeating extremism, they end up fueling the next round of extremists.

BLITZER: What should Israel have done when this very provocative act occurred? How should Israel have responded?

ZOGBY: Let's not forget the context in which it occurred. I understand that people are pointing the finger at Iran, but the timing of this, no doubt, had to do with the fact that there was the situation going on in Gaza. And the Arab street, throughout Arab world, is inflamed by what is happening in Gaza.

And right now we in the United States have forgotten about it. Our attention is focused to another place.

BLITZER: We haven't totally forgotten it. We have Ben Wedeman, our reporter there.

ZOGBY: Right.

BLITZER: And we're watching the situation.

ZOGBY: 1.4 million people are under siege and have been under siege now for many, many months. No access or egress, vegetables rotting at the -- at the exit points. And medicines are in short supply, et cetera.

In that context, Hezbollah had an opportunity...

BLITZER: Let me just interrupt for one second. In that context, though, there were acts, those rockets coming into Israel from Gaza. It's clearly a provocative act, too.

ZOGBY: There's been a cycle. There are pathologies on all sides here.

There were assassinations of Palestinian leaders, there were the families that were killed, the one on the beach, the one in the home. There were literally scores of Palestinian civilians killed in the period leading up to this, as well as these Kassam rockets.

So the cycle is there. The assault on Gaza is there. And Hezbollah takes advantage of that in order to play to the Arab street and say, we defend honor.

BLITZER: Is this a Hezbollah decision in and of itself, or, as so many U.S. officials...

ZOGBY: Right.

BLITZER: ... and Israeli officials and other observers insist, this is really Hezbollah doing the work of Iran, which is trying to change the subject from the pressure on it to -- because of its nuclear program?

ZOGBY: Well, there's no question that Iran and Hezbollah have close ties. There's no question that they're funded, no question that they're armed, and no question that, to some extent, there may be direction. But there's also a more immediate context here in which Hezbollah found that it could act at this time, in the context of what was going on in Gaza, and play to Arab support.

So...

BLITZER: So, is Hamas and Hezbollah, are they now, in effect, in an alliance?

ZOGBY: Well, the alliance is the fact that both are fighting the same enemy. Both are groups that have found common cause, and a common timing for their cause.

But, because they have defined the game doesn't mean we had to play. And when the president of the United States ends up appearing more like a coat holder or a cheerleader instead of someone who can both talk about restraint, act on restraint, and send a mediator who will actually begin to unravel this situation, we're in danger here of having this spin out of control.

And let's remember precisely because Hezbollah and Iran are as close as they are, we happen to be right now in Iran's backyard. We have soldiers at risk in a very volatile region, and we have to be careful here how we operate.

BLITZER: James Zogby, the president of the Arab-American Institute. Let's hope your nephew and everyone else survives this current escalating, tense situation in the region.

ZOGBY: Thank you, Wolf.

(END VIDEOTAPE)

BLITZER: And still ahead tonight, the latest departments from the Middle East.

Plus, could it be a reverse domino effect? President Bush has long said the march of freedom in the Middle East will help bring peace to the region, yet right now, that's being put to the test. Jeff Greenfield will report.

And an outed CIA officer speaking out for the first time. Valerie Plame is talking about her ordeal and her new lawsuit against top officials of the Bush administration. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Let's have the latest now on the tensions in the Middle East. Syria's ruling Baath Party says Syria will back Hezbollah and Lebanon against what it calls, quote, "the barbaric Israeli aggression."

Also Israel strikes a government building in Gaza City as its military offensive in Lebanon continues on that second front. Palestinian sources say a rocket hit the Palestinian Economy Ministry in Gaza City.

Meanwhile, Israel says one of its warships was hit by an unmanned Hezbollah aircraft rigged with explosives. The Israeli military tells local media the ship was seriously damaged.

The Pentagon, meanwhile, is drawing up contingency plans for a possible evacuation of as many as 25,000 U.S. citizens living in Lebanon. The crisis in the Middle East is a daunting test for a bedrock principle of the Bush administration. Let's bring in our senior analyst, Jeff Greenfield -- Jeff.

JEFF GREENFIELD, CNN SENIOR ANALYST: Wolf, conflicts produce casualties not just among combatants and civilians, but for hopes, ideas, and policies. Right now, one potential casualty of Middle East violence is a root premise of the Bush administration, that the spread of democracy is the best way to increase the prospects for stability and peace in that region.

(BEGIN VIDEOTAPE)

GREENFIELD (voice-over): All during the run-up for the Iraq invasion and ever since, the president has argued that there is an inextricable link between freedom and stability.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We seek the advance of democracy for the most practical of reasons, because democracies do not support terrorists or threaten the world with weapons of mass murder.

And as freedom advances, heart by heart, and nation by nation, America will be more secure, and the world more peaceful.

GREENFIELD: Moreover, prominent neoconservatives have been arguing for years that the replacement of Saddam Hussein by a free Iraqi government would trigger a benevolent reverse domino effect in the region, encouraging regime change in Iran, which would in turn dry up support for Hezbollah and Islamic Jihad, which would in turn increase chances for Middle East peace.

Well, there have been exercises in democracy in the region, at least if we define democracy in the narrow sense of relatively free elections. Hezbollah, condemned by the United States as a terrorist organization, ran in the Lebanese elections last year, won about 20 percent of the seats in parliament and heads two cabinet ministries. But that political power has greatly limited the power of Lebanon's government to disarm Hezbollah, which now holds two Israeli soldiers.

Iran, which funds and supports Hezbollah, had a free election in June of 2005 and chose as its president, Mahmoud Ahmadinejad, who has repeatedly denied that the Holocaust ever happened and who has made what may be charitably be described as provocative threats against the very existence of Israel.

And in January of this year, Hamas, another organization the U.S. calls a terrorist organization, won a landslide victory in Palestinian parliamentary elections. Hamas claims responsibility for capturing an Israeli soldier, an act which triggered the current outbreak of violence that now threatens to spread to Syria and possibly even Iran.

(on camera): It would, of course, be ludicrous to look at the source of current trouble in the Middle East in the decision to invade Iraq. The Middle East has been at or over the edge of violence for decades. But it's also fair to ask whether the optimism about democracy was well placed. From Germany in the '30s to Yugoslavia 15 years ago, freely-elected governments have pursued highly aggressive policies, and given more recent events, the idea that the spread of democracy would inevitably lessen hostility seems to have been severely weakened by events -- Wolf.

(END VIDEOTAPE)

BLITZER: Jeff Greenfield reporting for us. Thank you, Jeff.

Up ahead here in THE SITUATION ROOM, Jack Cafferty is wondering about this question: What does it mean when the U.S. Senate votes to build a fence along the Mexican border but then votes against the funding for that fence? We'll get his thoughts and your thoughts as well.

And she might be as comfortable with an AK-47 as she is with a Jaguar convertible. Jeanne Moos has an inside look at an outed former CIA operative. That would be Valerie Plame Wilson. Stay with us for Jeanne Moos' report. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

CAFFERTY: Wolf, the question is what does it mean when the U.S. Senate votes to build a fence along the Mexican border, which they did last May, and then votes against providing the money to construct it, which they did yesterday?

Here are some of the e-mails we've gotten. Jim in Franklin Square, New York: "Even a retarded earthworm could figure this one out. It means we have a bunch of weasel senators who are trying to have it both ways. They want to get out votes by saying they're vigilant and proactive about border security, yet still be able to get huge contributions from big business by ensuring it will be business as usual with no real border control or security."

Frank in Pennsylvania: "It means everyone is taking a page from the John Kerry playbook. I voted for it before I voted against it. Jack, we're talking about 100 people who are more concerned about the title of senator than they are of doing the job of a U.S. senator."

Kim in Texas writes: "I can't even pretend to be shocked. What have these idiots done in the recent past that even remotely reflects the will of the people they were elected to represent?"

Ron in Springfield, Missouri: "It's the old D.C. two-step. Dance around the issue until after the election. Then forget about it."

Ron in Las Vegas: "It means I'm absolutely ready for a third party. Anything but Republicans and Democrats."

Mary in Minneapolis writes: "The reason the Senate won't fund the fence they voted for is because the money is needed to protect the petting zoo in Alabama from terrorist attacks."

And one other letter I got from a guy in Philadelphia. He says, "I'm in Philadelphia. I'm going to go down and bang my head on the Liberty Bell."

If you didn't see your email here, you can go to CNN.com/caffertyfile, where we posted a bunch more of them online for your viewing pleasure. Wolf.

BLITZER: Jack, we'll see you Monday. Have a great weekend. Appreciate it very much.

Let's find out what's coming up right at the top of the hour. That means Paula is standing by. Hi, Paula.

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

Our correspondents are standing by with live reports from all over the war zone in the Middle East. Thousands of Americans at this hour trapped in Lebanon because of the fighting, particularly those that got caught in and around the airport. We're going to find out what plans the Pentagon is making in case they have to get out, and we're going to catch up with an American woman who finds herself in that trouble spot. She has no idea how to spirit away her and her two teenagers out of the country. She just happened to be a tourist at the wrong place at the wrong time, Wolf.

BLITZER: All right, thanks very much, Paula. We'll be watching.

Still ahead, her husband called her Bond, Jane Bond. A profile of the woman who may be America's most famous former spy. Jeanne Moos. That's coming up.

(COMMERCIAL BREAK)

BLITZER: This just coming into THE SITUATION ROOM from the Reuters News Agency. A missile fired at an Israeli naval vessel off the coast of Lebanon early Saturday missed the target and apparently hit an Egyptian vessel instead. That according to an Israeli army spokesman. We're getting more information on this. We're following this story and bringing you more as soon as we get it.

In the meantime, let's take a closer look at some of the hot shots coming in from the Associated Press, pictures on the Middle East likely to be in your hometown newspapers tomorrow.

Dramatic pictures. Israeli soldiers cover their ears while firing an artillery piece into southern Lebanon.

In Rafa (ph), in Gaza, Palestinians crowd the main road leading to the border crossing between Egypt and Gaza.

In northern Israel, an Israeli man sits beside the covered body of his 5-year-old son. He and his grandmother were killed by a Hezbollah rocket fired from Lebanon. In Gaza City, a young Palestinian participates in a demonstration. He's wrapped in a Palestinian flag, wearing a Hamas hat, and waving a Hezbollah flag.

That's today's -- some of today's hot shots, pictures often worth a thousand words.

She's arguably the country's most famous former spy, now suing Vice President Dick Cheney, among others, for allegedly blowing her cover. Valerie Plame, the woman at the center of the CIA leak case, spoke out today, along with her husband, the former U.S. ambassador, Joe Wilson. CNN's Jeanne Moos shows us how the couple's high profile news conference unfolded.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): It was a flash bulb frenzy. After all those months of being seen but not heard, America's most glamorous former spy spoke.

VALERIE PLAME, FORMER CIA OPERATIVE: Joe and I have filed this action with heavy hearts.

MOOS: She spoke for less than a minute, but then aren't undercover agents supposed to be men and women of few words?

UNIDENTIFIED FEMALE: Who are you?

PIERCE BROSNAN, ACTOR: Bond, James Bond.

MOOS: Bond, Jane Bond. That's how Joe Wilson has referred to his wife Valerie.

She may not know how to defuse a nuclear bomb, but she sure knows how not to bomb in a pantsuit. This ex-spy posed for "Vanity Fair," seated in the couple's Jaguar.

Valerie Plame was no Mata Hari. The World War I era dancer turned double agent used seduction as a technique.

UNIDENTIFIED FEMALE: You wouldn't do that for me?

MOOS: Mata Hari supposedly blew a kiss to the firing squad that executed her. Valerie Plame seems more inclined to kiss her husband. She told "Vanity Fair" it was love at first sight, that on their third or fourth date they were in the middle of a heavy makeout session, when she confessed to him that she was undercover with the CIA.

As female spies go, she seems more Emma Peel than...

UNIDENTIFIED FEMALE: Ivana Humpalot.

MIKE MYERS, ACTOR: Excuse me?

UNIDENTIFIED FEMALE: Ivana Humpalot.

MOOS: Instead of using threatening lines, like you hear in "Alias," Valerie Plame threatens legal action...

PLAME: Must answer for their shameful conduct in court.

MOOS: Angelina Jolie has nothing on Valerie Plame.

(on camera): "Time" magazine has described Plame as a crack shot with an AK-47, the best shot in her class at CIA spy school.

UNIDENTIFIED FEMALE: You've been showing big guns to (inaudible) people.

MOOS (voice-over): The necks Valerie Plame would like to wring are listed on the front of her lawsuit. Unlike spies like La Femme Nikita, La Femme Valerie even got a hot sauce named after her -- Valerie Flame hot sauce. It will blow your cover.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: And that's it for us. I'll see you Sunday on "Late Edition." Among my guests, the Israeli vice prime minister, Shimon Peres. Until then, thanks very much for joining us. Let's go to Paula in New York.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com