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The Situation Room

Democrats Divided Over Iraq; Bush's Visit to Latin America Turns Violent

Aired March 08, 2007 - 17:00   ET

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

SUZANNE MALVEAUX, HOST: Jack, thanks so much.
And you're in THE SITUATION ROOM.

Happening now, Congressional Democrats challenging President Bush with new moves to bring U.S. troops home from Iraq. But there are competing plans, revealing a new Democratic divide.

Also, protests against President Bush's visit to Latin America turn violent. Police clashing with demonstrators as thousands of people take to the streets.

And could Israel launch a first strike to take out Iran's nuclear program?

We'll talk about it with former Israeli Prime Minister Benjamin Netanyahu.

Wolf Blitzer is off today.

I'm Suzanne Malveaux and you're in THE SITUATION ROOM.

U.S. troops out of Iraq in about a year-and-a-half?

That's at the center of a new push by House Democrats to override President Bush and reshape the troubled war.

CNN Congressional correspondent, Andrea Koppel, joins us live at Capitol Hill with details of some of the new and competing efforts to essentially change the Iraq plan -- Andrea.

ANDREA KOPPEL, CNN CORRESPONDENT: That's exactly right, Suzanne.

Setting up a possible showdown with President Bush today, House Democratic leaders laid out a plan that they say will bring U.S. troops home by the end of August, 2008.

(BEGIN VIDEO TAPE)

REP. JOHN MURTHA (D), PENNSYLVANIA: This is all about readiness, all about protecting the troops and the families -- a small percentage of people in this country who are bearing this sacrifice and going back to war over and over again.

KOPPEL (voice-over): Under the Democrats' timetable, Mr. Bush would be required to certify by mid-summer and then again by mid-fall this year, the Iraqi government was making progress toward meeting key political and military benchmarks. If the president could not show progress, then U.S. troops would begin withdrawing immediately. But if Mr. Bush said Iraqis were achieving these goals, that would buy the White House a few more months -- but only until March 2008, when Democrats say U.S. combat troops must begin leaving Iraq and be out six months later.

Speaker Nancy Pelosi said she expected a majority of Democrats, including staunch anti-war members who want to get out now, will support this plan, which would be added to a request for about $100 billion in emergency war funding.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I believe, in the end, we will be unified on it. Many members of the Out of Iraq Caucus have committed to this. They understand the wisdom of it. They see that we are dates certain here for the first time in the Congress.

KOPPEL: Before Pelosi unveiled her plan, leaders in the anti-war movement in the House unveiled one of their own -- a proposal to withdraw U.S. troops by the end of this year, not next.

REP. JANICE SCHAKOWSKY (D), ILLINOIS: No more chances. No more waivers. No phony certifications. No more spending billions of dollars to send our children into the meat grinder that is Iraq.

(END VIDEO TAPE)

KOPPEL: Now, this afternoon, House Democratic leaders met with both members of the left -- the out of Iraq folks -- as well as the moderate and conservatives, Suzanne, have also expressed concerns to try to narrow the differences in the hopes of pushing this through.

The bigger question, however, is how they're going to push it through without any Republican support. Republican leaders have made very clear it's General Petraeus, not Nancy Pelosi, who should be dictating to combat troops on the ground.

MALVEAUX: And, Andrea, what is happening on the Senate side?

KOPPEL: Well, what's happening is that, again, Senate Democratic leaders today unveiled a plan to introduce binding legislation this time, as soon as next week, which would call for all U.S. combat troops to be out of Iraq by the end of March 2008 -- Suzanne.

MALVEAUX: Andrea Koppel, thanks so much for keeping us updated on all the latest.

And as the war over the war rages here in Washington, the real war rages in Iraq.

My next guest has written extensively about the Sunni-Shiite violence, calling the hatred between them toxic.

Bobby Ghosh is with "Time" magazine and joins me now from Baghdad.

And, first and foremost, I want to ask here, a lot of plans on the table. Clearly it just -- it's about deployment, pulling out U.S. troops.

You've written extensively about this Shiite and Sunni confrontation.

What will happen if U.S. troops were redeployed and pulled out?

BOBBY GHOSH, "TIME" MAGAZINE: Well, it's a question of timing, Suzanne.

If you ask -- and it's a question of who you asked.

If you asked members of the Shiite-led government, they would like to see the U.S. leave fairly quickly. But if you asked the Sunni community, who are -- who feel under threat from the Shiite majority Iraqi forces, they would like the Americans to stay as long as possible, and they would be disheartened by the news emanating from Washington today.

But at the bottom, I think everybody here agrees with what General Petraeus said earlier today, that regardless of the troop presence, at the end of the day, the solution for Iraq's problems, and including the violence, has to be political and has to come from the Iraqi political process, from Iraqi political leaders.

And that is where the news is most distressing of all, because there is very, very little political progress taking place.

MALVEAUX: What do they need to do? What kind of threshold do they need to meet in order to make that kind of political progress that you're talking about, concrete -- concrete solutions?

GHOSH: Well, it's difficult to define because -- precisely because it is political. But they have to arrive at a situation where all the communities in Iraq -- Shiite, Sunni and Kurd -- have to feel that they have a fair share in power. That is not the case right now.

Sunni Iraqis believe and feel that they are being put upon by the Shiite majority. And that is not a comfortable position to be in.

MALVEAUX: My concern is here, is like there are a lot of suggestions July, perhaps next year, a U.S. troop withdrawal.

If they withdraw right away, sooner as opposed to later, is that going to lead to a bloodbath? Is that going to make things worse?

GHOSH: At the moment, all indications are that it will lead to a bloodbath. There has been a lot of violence in Baghdad over the past year and there has been an immediate decrease in that violence as soon as the U.S. troops arrived.

So it would indicate to me that if the troops were to leave suddenly, we would have the pressure valve removed from the situation. What you need to prevent that from happening is a political progress while the U.S. troops are here, so that when they leave, the communities are able to communicate and they're able to work together for the future of Iraq.

And right now that's not happening.

MALVEAUX: Bobby Ghosh, thank you so much.

And please be safe.

GHOSH: Thank you, Suzanne.

MALVEAUX: He isn't even in the area yet, but protests have already started. President Bush has left for his seven day trip to Latin America. One stop -- Colombia, where protesters are in the streets and leftist guerrillas are planning attacks and sabotage.

CNN's Karl Penhaul is on the phone from the Colombian capital -- Karl.

KARL PENHAUL, CNN CORRESPONDENT: Suzanne, several hundred masked students fought running battles with riot police in downtown Bogota on the campus of Colombia's largest public university this afternoon. All this in protest of President Bush's forthcoming visit to Bogota.

The masked students were throwing rocks, homemade explosives and were also firing fireworks through PVC tubes.

The riot police used water cannons and opened fire with tear gas, forcing many of the students to flee deeper into the campus. But, as I say, the running battles lasted for about three-and-a-half hours.

Student leaders told me that they opposed President Bush's visit because they oppose what they see as Washington's meddling in Colombia's internal affairs. These students say they oppose U.S. funding for the anti-drug and counter-insurgency effort in Colombia and they also feel that the United States is pressuring Colombia to push through free trade deals -- Suzanne.

MALVEAUX: Karl Penhaul, thank you very much, out of Bogota, Colombia.

And protests aside, the president is facing major challenges in Latin America.

CNN White House correspondent Ed Henry is traveling with Mr. Bush.

He joins us live from Sao Paolo, Brazil.

You've already got a jump on the president here -- Ed.

What does his trip look like? What's his itinerary?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Suzanne, what's quite interesting is that, as you say, the president is still aboard Air Force One and when he lands here in Brazil, what he's going to find in Sao Paolo is a very bustling city. As you can see, a little bit of it behind me.

But on the way in from the airport, I also noticed all these makeshift shacks on the side of the highway. People really living in an abject poverty. And that gulf between rich and poor and allegations that the U.S. has not done enough to change it, has really put Mr. Bush on the defensive.

(BEGIN VIDEO TAPE)

HENRY (voice-over): In the 2000 campaign, George W. Bush vowed to use his experience as Texas governor to make neighboring Latin America a top priority.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: Should I become the president, I will look south not as an afterthought, but as a fundamental commitment to my presidency.

HENRY: Seven years later, that promise has become yet another casualty of the Iraq War. Now, the president, looking for legacy items, is trying to make up for lost time with a seven day swing through South and Central America.

BUSH: The fact is that tens of millions of our brothers and sisters to the south have seen little improvement in their daily lives. And this has led some to question the value of democracy.

(VIDEO CLIP OF ANTI-BUSH PROTESTS)

HENRY: Fuel for the anti-American Venezuelan strongman, Hugo Chavez, whose education and health programs have won the hearts and minds of the impoverished in his nation, as American development programs have lagged.

Chavez has formed a close alliance with Cuban dictator Fidel Castro and, armed with massive oil revenue, wants to spread his brand of socialism.

PETER DESHAZO, CENTER FOR STRATEGIC INTERNATIONAL STUDIES: Chavez has enormous resources at his disposal. He's trying very hard to promote himself as the leader of a hemisphere wide revolution.

HENRY: The White House insists this is not an anti-Chavez tour. But the itinerary suggests otherwise, with stops in five democracies ringing Venezuela.

BUSH: The trip really is to remind people that we care. I -- I do worry about the fact that some say well, the United States hasn't paid enough attention to us.

HENRY: But is it too little too late?

MICHAEL SHIFTER, INTER-AMERICAN DIALOGUE: Bush is in a very weak position. His political capital is depleted. There's a lot more mistrust in the region. And so he's got his work cut out for him.

(END VIDEO TAPE)

HENRY: Now, the White House strategy is to try and not directly challenge Chavez in a back and forth, because that's what the Venezuelan strongman really wants. He craves more attention.

But it's going to be hard for Mr. Bush to avoid Chavez and his various comments. In fact, over this weekend, when the president is in Uruguay, just across the river in Argentina, Chavez himself is going to be leading a major demonstration -- Suzanne.

MALVEAUX: Thanks, Ed.

Keeping an eye on our beat.

Appreciate it.

Thanks again.

And, of course, Jack Cafferty in New York keeping an eye on his beat, as well, The Cafferty File -- Jack, what do you have?

JACK CAFFERTY, CNN CORRESPONDENT: Suzanne, the bookies think that "Scooter" Libby is going to get a pass. One online futures exchange is offering Libby pardon futures. The CEO of intrade.com says that traders have so far predicted a 23 percent chance of a Libby pardon by the end of this year and a 63 percent chance by the time President Bush leaves office at the end of next year.

Now, if you're a conspiracy theorist, a pardon is a slam dunk. You should pardon the expression. You could say that President Bush and Vice President Cheney let Libby take the fall with the understanding that between delays, pending the outcome of appeals and motions for a new trial, he'll never see the inside of a prison cell and the president will pardon him before leaving office.

On the other hand, Libby was convicted of perjury and obstruction of justice. He was part of the inner circle at the highest levels of the Bush White House, Vice President Cheney's chief of staff. A presidential pardon would give off an aroma reminiscent of a barnyard.

It's OK that you lied and impeding a federal criminal investigation. We don't care, as long as you didn't tell the authorities what you really know about how Valerie Plame's identity became public.

Here's the question -- do you think President Bush should pardon "Scooter" Libby?

E-mail your thoughts to caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Suzanne, people will bet on anything.

MALVEAUX: Well, Jack, so far, the president is staying mum on this one. So we'll see what happens.

CAFFERTY: All right.

MALVEAUX: OK.

And up ahead, a former sailor accused of spying for terrorists on board a U.S. Navy ship. We'll have details of the stunning charges against him.

Also, an Israeli strike against Iran -- how likely is it?

I'll ask former Israeli Prime Minister Benjamin Netanyahu. He joins us live this hour.

And gas prices soaring again, up more than 30 cents a gallon in just a month. We'll show you why.

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

(COMMERCIAL BREAK)

MALVEAUX: A former U.S. sailor is accused of spying while on active duty and passing classified information to two men suspected with ties to terrorism.

CNN homeland security correspondent Jeanne Meserve joins us with that story -- Jeanne.

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Suzanne, in 2001, as he served on the USS Benfold in the Middle East, Paul Hall, now known as Hassan Abujihaad, was allegedly passing information to people with terrorist ties, information that could have facilitated an attack on his own ship.

(BEGIN VIDEO TAPE)

MESERVE (voice-over): Hassan Abujihaad is alleged to have passed along the date his battle group was scheduled to travel through the Strait of Hormuz. Because of the potential for attack in the narrow passage, it was to occur at night under a communications blackout.

Abujihaad allegedly included this sketch of the formation and a notation: "Weakness: They have nothing to stop a small craft with RPG, etc. except their Seals' stinger missiles."

All this was on a floppy disk recovered during the earlier investigation of Babar Ahmad. The government alleges Ahmad provided al Qaeda, the Taliban and Chechen rebels with money and equipment. He also ran very influential pro-Jihadist Web sites.

PAUL EEDLE, TERRORISM ANALYST: It had a lot of importance, I think, as the granddaddy of English language Jihadi Web sites.

MESERVE: E-mails from Abujihaad praising Osama bin Laden and the attack on the USS Cole were recovered during the Babar Ahmad investigation. But it is unclear whether investigators could link Abujihaad's name to the document with the classified Navy information.

LAURA MANSFIELD, TERRORISM ANALYST: They may have wanted more information to go with it. It may not have been enough by itself.

MESERVE: But then another terror arrest -- Derrick Shareef, charged last December with plotting to detonate grenades in an Illinois shopping mall during the busy holiday season. Shareef had lived with Abujihaad in Phoenix, where the former sailor worked for UPS. According to court documents, Shareef told investigators that when Abujihaad read a story about the investigation of Babar Ahmad and the recovery of classified Navy information, he said: "I think this is about me."

(END VIDEO TAPE)

MESERVE: Officials close to the investigation do not believe that Abujihaad and Shareef were part of a larger terrorist cell in the United States. But the allegations against them underline the possibility that there may be terrorists not only in our midst, but in our military -- Suzanne.

MALVEAUX: Fascinating and yet alarming, too.

Jeanne Meserve, thank you so much.

And that e-mail sent by what former -- that former Navy sailor to the alleged terror financial backers are online.

Our Internet reporter, Jacki Schechner, is taking a closer look at that aspect -- Jacki, what are you seeing?

JACKI SCHECHNER, CNN INTERNET REPORTER: Well, Suzanne, you can take a closer look for yourself at the criminal complaint against Hassan Abujihaad. And I'll tell you, it tells a very interesting and convoluted tale. But there's also these exhibits that come along with it.

First, we want to take a look at that ship formation document, which they refer to as the battle group document. And you can see here the USS Benfold. That's the ship that Abujihaad himself was on. It's also details about how much personnel was on each ship, what types of ship in particular they were and also the notations on the date that it's going to pass through that strait; also, that many sailors do not like the Gulf.

Of course, it then says please destroy this message. Obviously, they did not.

There's also e-mails here that Abujihaad sent from his Navy e- mail address. One in particular to the producers of that Azzam Web site, asking for a video that he ordered, if they had received his money for that. Another e-mail that he sent from his Hot Mail account, talking about Osama bin Laden, how the latest video was seen by a lot of people, but saying that there was a -- an anxiety in the military, frankly, because of the attack against the USS Cole.

We've put it online, cnn.com/situationroomblog. Go there and take a closer look for yourself -- Suzanne.

MALVEAUX: A lot of interesting information on the Internet.

Thanks again, Jacki.

And, of course, coming up, a city official losing his job after his plans for a sex change go public. We'll have details of a story rocking one Florida town.

Plus, fresh pain at the pump -- millions of Americans once again paying sky high prices for gas.

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

(COMMERCIAL BREAK)

MALVEAUX: And Carol Costello joins us now with a closer look at other stories that are making news at this hour -- Carol, what are you following?

CAROL COSTELLO, CNN CORRESPONDENT: Oh, word about spam, Suzanne.

The Securities and Exchange Commission is cracking down on spam. The SEC says it's suspended trading in 35 companies that are hyped up in spam e-mail by mystery market manipulators.

The 100 million e-mail messages a week show up with subject lines like "ready to explode," "ride the bull" and "fast money." They can create dramatic strikes -- spikes, rather -- before investors lose their money. The suspensions, dubbed Operation Spamalot, will last 10 business days.

In other news affecting small businesses, the return of $3 a gallon gas. It hit and passed the benchmark in California, Hawaii and now New York. A few stations in the New York metro area are selling gallons of even regular gas for more than $3 a gallon. AAA says nationally, regular gasoline is averaging $2.50, up more than 30 cents in the past month.

In other news, paper or plastic in San Francisco may soon become a thing of the past. City supervisors are proposing to ban plastic bags at grocery stores. They say the bags harm the environment. The proposal would require the use of recyclable bags. It will be considered next week.

That's a look at the headlines right now -- Suzanne.

MALVEAUX: Carol Costello, thank you so much.

Appreciate it.

And, of course, coming up, Cheney's changing role -- is the powerful vice president now losing his clout in the Bush administration?

We'll show you the series of setbacks plaguing him.

Plus, Israel within reach of possible Iranian nuclear missiles. What action would the country take to protect itself?

My interview with former Prime Minister Benjamin Netanyahu is coming up.

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

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, busting up the bureaucracy at the Walter Reed Army Medical Center. Wounded troops will now have someone to help them cut through the red tape. The Army's vice chief of staff says he has named a new so-called bureaucratic buster to address soldiers' issues quickly.

Also, a jury has had its say. Now Congress wants in in the CIA leak affair. Outed former CIA operative Valerie Plame is expected to testify to a House committee next week. The committee is looking into how Vice President Cheney, presidential adviser Karl Rove and others dealt with Plame's outing.

And New York's mayor says: "When children die, everyone around them dies, as well." This after a fire engulfed a building in the Bronx and killed nine people. Eight of them were children.

Wolf Blitzer is off today.

I'm Suzanne Malveaux and you're in THE SITUATION ROOM.

The U.S. is taking the lead in opposing Iran's nuclear program.

But could Israel wind up making the first strike?

CNN's Tom Foreman is here with a look at some of the sobering scenarios and, of course, some of the fallout -- good evening, Tom.

TOM FOREMAN, CNN CORRESPONDENT: This is an important issue that we have been looking at in recent weeks and talking about a lot and we're talking about again today. There's hot debate in Israel on the ways to stop Iran's nuclear program and the options that are being considered do include military action.

(BEGIN VIDEO TAPE)

FOREMAN (voice-over): Iran's missiles are currently unable to reach as far as the United States. But America's long time ally, Israel, is well within range.

JOHN PIKE, GLOBALSECURITY.ORG: The Shahab-3, which is currently operational, has a range of 2,000 kilometers. It can get to Israel.

FOREMAN: So, top Israelis are calling for action to stop Iran's nuclear program. EHUD OLMERT, ISRAELI PRIME MINISTER: There's a lot that still can be done and ought to be done. And the sooner it will be done, the better it will be.

BENJAMIN NETANYAHU, ISRAELI OPPOSITION LEADER (THROUGH TRANSLATOR): We can stop Iran. This is possible. This is our major task.

FOREMAN: The talk is still focused on diplomacy and sanctions. For years, it's been widely believed that Israel has nuclear weapons. They have never confirmed the claim. But the Israeli government has said in the past that Israel would not tolerate a nuclear Iran. And in 1981, the Israelis bombed a reactor in Iraq over similar concerns.

Would they strike Iran now and how hard?

BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: It doesn't necessarily mean Israel would use nuclear weapons against Iran, maybe conventional strikes. But if they feel that it's inevitable that they're going to be attacked, and knowing that things get out of control and that's why wars do start, quite often, that they would take preemptive action.

FOREMAN: And that's when it gets very tricky for other nations. If Israel were to strike Iran, Iran would strike back at Israel, and perhaps Israel's friends, including America.

COL. SAM GARDINER, U.S. AIR FORCE (RET.): They' have a significant retaliation capability. They could go after us in Afghanistan, they could even do terrorist attacks on U.S. facilities. There could be a very high price to pay for the use of a military option.

(END VIDEOTAPE)

FOREMAN: So, you see very much why that matters to people here. We of course spoke with the Israeli Embassy here in Washington recently. They told us they want comment on a hypothetical situation. They have spoken in the past about diplomatic solutions, or perhaps putting more economic pressure on Iran.

We'll just have to see what happens -- Suzanne.

MALVEAUX: Very hot topic, of course. And we've got a very important guest to talk about that, as well.

How likely is it that an Israeli strike would happen against Iran?

Now joining us from New York to talk about it, former Israeli prime minister Benjamin Netanyahu, here in THE SITUATION ROOM, of course.

Mr. Netanyahu, I would like to start off by asking, polls in your country actually show that you could become the next prime minister. Very popular. That would mean that you are in charge of your own security.

If you found that Iran had nuclear weapons, would you go after them? Would you strike?

BENJAMIN NETANYAHU, FMR. ISRAELI PRIME MINISTER: Well, that would be kind of late, don't you think? I mean, the whole idea is to -- for the international community to do everything in its power to prevent Iran from acquiring nuclear weapons. And it seems to me, before people discuss a hypothetical military action against Iran, there are plenty of other ways to make this regime stop.

Either bring down the Ahmadinejad regime itself, or make it -- suspend the nuclear option by applying massive economic pressure on it. That's one of the things I've been -- I'm going to talk to people in Washington about, just -- including the Democratic and Republican candidates, those who will be available in the next couple of days.

I just spoke to Major Giuliani, and he said, "Let's apply economic sanctions as fast as we can." I'm going to do -- talk to Vice President Cheney and others about this.

I think that those who are concerned with the consequences of a military action by anyone, not necessarily by my country, have another option, and that option is to apply enormous and effective economic sanctions on this regime which is very vulnerable to economic sanctions. Ahmadinejad just lost by elections a few weeks ago because of the economic difficulties this regime faces.

So, have divestment. Have the U.S. state pension funds and federal pension funds divest from companies, European and other companies, that are investing in Iran. That will fall like a ton of bricks on the regime's head and that might accelerate a suspension of the Iranian nuclear program.

MALVEAUX: But Mr. Prime Minister, there have been Israeli sources, officials who have actually said that, according to their intelligence, it's just a couple of months away before they believe that Iran would have the capacity to build a bomb.

How much time does Israel have?

NETANYAHU: I'm not sure we know exactly, but the best estimate that I can give you is to quote what was said -- and this was publicly -- this was published, so I can reiterate it, what the chief of the Mossad -- the Israeli Mossad -- has said. He said it's about three years away.

Well, if it's three years, that sounds like a lot of time, but it's only 1,000 days, and this day has just gone. So I think the international community has really three options.

It can do nothing, in which case Iran will get there. It can resort to military means. Or it can take a middle course right now, and that middle course says that what you have to do is to apply massive diplomatic, but especially economic sanctions on a vulnerable regime, hated by the majority of the people. It's corrupt. Seventy-five percent of the Iranians can't stand it. They regularly have to execute political opponents inside the country, make them disappear, in order to stay in power. And the people are raising their voices. And even in Iran, even in this closed society, the people have something to say. And I think that...

(CROSSTALK)

MALVEAUX: What if those economic sanctions don't work? What if those economic sanctions don't work? That Ahmadinejad really isn't moved to the point that he would give up enriching uranium?

What are the other options here? It seems as if you have run out of them.

NETANYAHU: Well, I can only quote what I heard Mr. Giuliani say to me today. He said, from his point of view, the military option has to be there on the table for the economic sanctions to work.

In any case, I think that they should be tried and exhausted. And it won't take a long time. The divestment of pension funds -- Iran desperately needs investment. It's got basically one branch in its economy, which is oil. And the oil industry has been shrinking.

Oil production has been shrinking 10 percent a year for the last few years, because they need this new investment. And if they don't get it because European and other firms will be hesitant to invest there, because of these sanctions, then you can actually create a very rapid disintegration of the regime's hold on the people because of the economic difficulties. I think that has to be tried before we consider stiffer action.

MALVEAUX: Mr. Prime Minister, you are taking obviously a little bit more of a moderate stance, but I want to bring back something that you said earlier, because you did compare Iran to Hitler's Germany. This, of course, November.

You said that "It's 1938 and Iran is Germany. And Iran is racing to arm itself with atomic bombs. Ahmadinejad is preparing another Holocaust for the Jewish state."

Clearly, there were some people in this government, as well as the Israeli government, who thought you were being alarmist. This from Secretary of State Condoleezza Rice when told about this, your comment. She said, "I'm fond of historical analogies, but not that fond."

It sounds like you don't have the U.S. support, at least when it comes to these kind of expressions. This kind of action that you were suggesting earlier, a much tougher line that you were taking.

NETANYAHU: No, it's -- I actually advocated the same thing. In fact, I heard Condoleezza Rice's full statement. She said the difference is that we now are not complacent, the international community is not complacent about Ahmadinejad's extremist policies. She didn't say that Ahmadinejad doesn't seek the destruction of Israel. He says that openly. She didn't say that he doesn't deny the Holocaust. He denies it, brazenly.

So we know that this is an apocalyptic, Messianic and extreme regime that denies the Holocaust while they prepare another one. And in that sense, I think that comparison to the '30s was apt.

But the difference is that we have the experience of the '30s before us, and that ought to make all the difference. And indeed, let the international community prove that it learned something from a previous encounter with a crazy ideology that wants to arm itself to the teeth and has no compunctions whatsoever about obliterating entire countries.

What is the example of the '30s? It is that you must act in time.

In the 1930s, my people, the Jewish people, had no capacity and didn't, in fact, talk on CNN. There was no CNN. There was no television.

They didn't mobilize parliaments, they didn't mobilize governments, they didn't mobilize economic sanctions. And there certainly wasn't a military option available to us. Or to the world.

And people said, well, you know, that was a Jewish problem. Hitler was a Jewish problem. Now people will say Iran is an Israeli problem, a Jewish state problem.

No it isn't. Iran is threatening Israel, but it's opening saying, we're just...

MALVEAUX: One last...

NETANYAHU: ... you're the big Satan. And this was their priming right now, intending to reach Europe and the sub-orbital device -- the rocket they experimented with two weeks ago is aimed to have ICBMs directed ultimately at the United States. So it's everyone's problem.

MALVEAUX: Sorry to interrupt here -- I'm sorry to interrupt her, but one last question. Of course, we know that the U.S. is possibly having side discussions with Iran, perhaps as early as this weekend, perhaps Secretary Rice herself will follow up at a later date. What do you think that will accomplish? Do you think that that's actually going to be fruitful, anyway, considering the kind of threat you have talked about, the kind of threat from Iran to your country?

NETANYAHU: I think that any discussion with Iran can only succeed if it's backed up by the pressure of sanctions, the pressure of -- the knowledge that the United States, as the administration has said time and time again, will simply not tolerate the acquisition of or development of nuclear weapons by this retrograde and extremist regime. This is a threat to the entire world, to Israel, to America, to the rest of mankind.

MALVEAUX: Thank you very much.

Former Israeli prime minister Benjamin Netanyahu, here in THE SITUATION ROOM.

Appreciate your time.

NETANYAHU: Thank you.

MALVEAUX: Thank you.

MALVEAUX: And, of course up ahead, some call him the most powerful vice president in history. But in the wake of the Lewis "Scooter" Libby trial and a change of policy toward Iran and Syria, is Vice President Cheney's influence waning?

Brian Todd will take a look.

And he wanted to change his sex, but not his job. Our Carol Costello brings you this intriguing story just ahead.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: He's been characterized by some as the real power behind the presidency, but with less than two years left in office, many say Vice President Dick Cheney's influence is waning and that he now may be causing more harm than good for the Bush administration.

CNN's Brian Todd joins us with that story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Suzanne, Dick Cheney was never charged in the CIA leak case and volunteered to stick his own neck out politically and testify for his former aide. He never had to do that, but the trial of Scooter Libby raised new questions about the vice president's maneuverings and his current status inside the White House.

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TODD (voice over): A former aide tells CNN the trial of his former chief of staff was tremendously painful to Vice President Cheney. A trial that pulled back the curtain not only on Cheney's influence, but also his penchant for secrecy and payback, portraying him as so politically touchy, that he directed a campaign to publicly rebuke a prominent war critic.

The fallout for Cheney, according to one analyst...

STEPHEN HESS, BROOKINGS INSTITUTION: I think the vice president is the big loser after Scooter Libby himself. It showed him involved in a degree of manipulation that most of us thought should have been well below his pay grade.

TODD: A former colleague tells CNN Cheney's not a vindictive person, but says the company against Joe Wilson showed poor judgment. The resulting criminal trial is the latest of several recent developments raising questions about Cheney's influence inside the White House, including the ouster of his close ally, Donald Rumsfeld, the president's new initiative in Iraq, and the administration's diplomatic overtures to North Korea, Iran, Syria, regimes that Cheney always favored taking a tougher line with.

But one journalist who's written inside accounts of this White House believes those foreign policy moves actually spotlight Cheney's leverage.

RON SUSKIND, AUTHOR, "THE ONE PERCENT DOCTRINE": Well, I think the view is, is that in the dance of force and diplomacy between nations, we need a bad cop who people really fear, and Dick Cheney, well, he's perfect in that role.

TODD: In response to our inquiries, Cheney's office would only say he remains a trusted aide, that the president depends on his counsel. Publicly, White House officials shut down any talk of a chill.

UNIDENTIFIED MALE: Has his relationship changed in any way?

TONY SNOW, WHITE HOUSE PRESS SECRETARY: No.

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TODD: Those who know him and cover him point out, although Dick Cheney may be losing some political arguments right now, he still has very close access to the president. How close? Only two people know for sure if his influence on President Bush is waning or not, and they're not talking -- Suzanne.

MALVEAUX: That's absolutely right, Brian. And of course he's -- one thing, he is consistent.

TODD: That's right.

MALVEAUX: So thank you very much. Appreciate it.

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MALVEAUX: And, of course, up ahead, the new U.S. commander in Iraq says exactly what many people back in the United States do not want to hear. Our Barbara Starr brings us the comments of General David Petraeus in the 7:00 p.m. Eastern hour of THE SITUATION ROOM.

Also, the intriguing story of the transgender city official. It's a story you don't want to miss, and Carol Costello has it for us next.

You're in THE SITUATION ROOM.

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MALVEAUX: In Florida, a man's secret is revealed. Now public attention could cost him his job. There are new developments in the story of a city official who was the subject of praise but is now facing putdowns.

Here's CNN's Carol Costello.

CAROL COSTELLO, CNN CORRESPONDENT: Suzanne, this is happening in Largo, Florida. Today, Steven Stanton announced he will appeal his firing. You know, it's not your everyday political story.

Stanton, a respected city manager, wants a sex change. Never a good political move.

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COSTELLO (voice-over): Steve Stanton was city manager of tiny Largo, Florida, for 14 years. He recently got a raise for doing a good job. He was a devoted husband, a loving father, a great citizen. But it all fell apart when the local press revealed his secret.

This 48-year-old man was planning to become a woman. Public reaction was fierce.

UNIDENTIFIED MALE: Terminate Mr. Stanton.

UNIDENTIFIED MALE: The ethics bothers me a lot.

UNIDENTIFIED MALE: And everybody in the city of Largo is just supposed to roll over and accept that.

UNIDENTIFIED FEMALE: although several city commissioners had promised their support, after this hearing they voted to fire him.

STEVE STANTON, LARGO, FLORIDA, CITY MANAGER: Seven days ago I was a good guy. And now I have -- I have no integrity, I have no trust. I have no confidence.

COSTELLO (on camera): Did you expect you were going to be fired once this information became public?

STANTON: Not at all.

COSTELLO: You didn't expect you were going to be fired?

STANTON: No. Not at all.

COSTELLO (voice over): Steve Stanton has been a winner all of his life, but even as a little boy he was haunted by a secret.

STANTON: What you feel when you're growing up with this condition is you feel that the outside doesn't match the inside in a very -- in a very real way.

COSTELLO: On his wedding day he hoped the confusion would end.

STANTON: That young man was thinking like many other transgender people do, that, "If I get married, if I settle down and find love, I can outrun this thing."

COSTELLO: But he couldn't. And 17 years later, he is trying to outrun an angry public, announcing he will appeal his firing.

STANTON: I know each one of these folks. They've been my friends. And I'm absolutely confident that if the environment has settled down -- which it has -- that they'll be in a better position to evaluate my credentials, my skills, knowledge and abilities.

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COSTELLO: So, in the next few weeks there will be a public hearing. Stanton will speak before probably hundreds and hundreds of people, and then the commissioners will vote again on whether to fire him. And when they vote, that will be a final vote, and you know the decision will stand -- Suzanne.

MALVEAUX: A very interesting story. Thank you very much, Carol.

And up next, Jack Cafferty wants to know if you think President Bush should pardon Lewis "Scooter" Libby. Your e-mails are in "The Cafferty File" just ahead.

You're in THE SITUATION ROOM.

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MALVEAUX: Time now to check back in with Jack Cafferty.

Jack, what do you have?

JACK CAFFERTY, CNN ANCHOR: Suzanne, the question this hour is: Do you think President Bush ought to pardon Scooter Libby?

Maryann in Pleasantville, New York, "No, I don't think there should be a pardon. What was the point of the trial and the judicious consideration by the jury? Is everything political?"

"Perjury? Obstruction? Are we no longer a nation of laws? I have lost all hope."

Rob in California writes, "The current administration is more corrupt than the Nixon administration, and I think Bush, Cheney and Rove should be in jail with Scooter and not have the opportunity to pardon him."

Christian writes, "Of course President Bush should pardon him. If he was only the fall guy, then he's innocent. And why not? President Clinton pardoned so many crooks and liars, it only makes sense."

Keith in Yorktown, Virginia, "Of course he should be pardoned if the conviction is not overturned. He didn't out anyone, and the special prosecutor knew that before he questioned Mr. Libby. This was nothing more than a political prosecution."

Chris in Mooresville, Indiana, "Why shouldn't Scooter get a pardon? El Presidente loves to pardon criminals and keep the people that tried to protect our border behind bards. We need to clear out the prisons so there is more room for the border agents."

Paul in Park City, Utah, "If he pardons Libby, America will never pardon him."

And Hashim in Rochester, Minnesota, "With approval ratings in the 20s, I don't think Bush has anything to lose by pardoning Libby. But should Bush decide otherwise, I would suggest to Mr. Libby that he drop his nickname of 'Scooter' before serving his prison sentence."

If you didn't see your e-mail here, you can go to cnn.com/caffertyfile and read more of these online -- Suzanne.

MALVEAUX: So, Jack, what do you think? You think that the president should pardon him?

CAFFERTY: No. I don't think there should be any pardons for anybody who is convicted in a court of law by a jury of his peers. The last president let all these -- these worms and weasels go on his last day in office, and I just think it's wrong.

A jury looked at the evidence, convicted Libby of committing perjury and obstruction of justice. Those are felonies. He ought to do his time and forget the presidential pardons.

MALVEAUX: OK.

Jack Cafferty out of New York.

And of course we're here every weekday afternoon from 4:00 to 6:00 Eastern, and we're back at 7:00 p.m. Eastern, just one hour from now.

Until then, I'm Suzanne Malveaux in THE SITUATION ROOM.

"LOU DOBBS TONIGHT" starts right now.

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