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The Situation Room

Korean Missionaries Freed - At What Cost?; Bush Meets with Iraq Commanders; No Sixth Term; Thompson Catches On; World's Most Powerful Women; Remembering Diana

Aired August 31, 2007 - 17:00   ET

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

CAFFERTY: Glenn in Winnipeg writes: "The upcoming Iraq report will provide only one sure thing -- a topic for the back seat armchair pundits to bicker and boast about. Meanwhile, the troops are slugging away on increasingly dangerous, increasingly longer tours of duty. What they need to deliver on Iraq is one thing and one thing only -- a big, brightly lit exit sign."
Chuck in Arkansas: "The upcoming reports don't mean anything. Bush has no intention of changing course."

And Carl in Connecticut: "No matter how they spin these benchmarks, the best a report can do is provide that Colin Powell was exactly right to invoke the Pottery Barn rule: you broke it, you pay bought it. Except in this case, Bush dropped a piece of ancient Mesopotamian pottery and the American people are paying for it and they'll keep paying for it for a long time -- no matter who wins the next election."

Wolf.

BLITZER: Thank you, Jack, for that.

And to our viewers, you're in THE SITUATION ROOM.

Happening now, the consequences of negotiating with terrorists -- one country possibly pays the Taliban to free Christian hostages.

What does that mean for the strategy of never giving in to terrorists?

This is an important story with serious ramifications.

Top military commanders lay out their cards for President Bush today. They gave the president some straight talk, we're told, about Iraq just weeks before Americans hear an important report about how the war is going.

And on this list, women really do rule. A list of most influential women around the world. But you might not guess who's considered the most powerful woman in the world. We're going to tell you.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM. A month-and-a-half of terror over at last for a group of Christian missionary workers held by Taliban militants in Afghanistan. Details of their ordeal just coming out, allegations about what it took to get them back. We're just getting some new details into THE SITUATION ROOM right now.

I'm going to turn to CNN's Brian Todd.

He's following this dramatic story with enormous ramifications for everyone who goes into that part of the world.

NEVILLE: e cost of freedom -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Absolutely, Wolf.

The South Korean government had to make serious concessions to get those hostages freed and that government is now on defensive because of the security implications.

(BEGIN VIDEO TAPE)

TODD (voice-over): Overjoyed at their release, terrified that two of their countrymen were killed as hostages of the Taliban, South Korean Christian missionaries are also apologetic.

SUH MYUNG-HWA, FORMER TALIBAN HOSTAGE (THROUGH TRANSLATOR): We caused so much anxiety to the people and their government.

TODD: Anxiety which may be felt well outside the South Korean government. The Taliban walks away from this six week ordeal with an agreement from the South Koreans not to send other missionaries to Afghanistan. And Asian media reports the Koreans paid the Taliban $2 million for their release.

The South Korean government denies it.

CHEON HO-SEON, SOUTH KOREAN PRESIDENTIAL SPOKESMAN (THROUGH TRANSLATOR): There was no additional agreement made, except for what has been made public.

TODD: Experts say that statement may be for public consumption.

PETER BERGEN, CNN TERRORISM ANALYST: Given the fact that the Taliban didn't get their central demand, which is the release of Taliban prisoners, it seems to me that money probably was exchanged.

TODD: An exchange that, according to experts, will likely have immediate and deadly result.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: Other people's lives are now at risk because the Taliban will use that money to buy weaponry.

TODD: And to buy fighters. Between hostage-taking and opium trafficking profits, analysts say the Taliban can pay four times what the Afghan police can afford. But the Taliban have a broader strategy in mind. South Korea was already going to pull its 200 troops out of Afghanistan and the Taliban may now have a stronger hand in forcing other U.S. allies to crack.

BERGEN: They want to find the weak links in the chain -- countries like Germany, whose citizens are not very happy about the German presence there. That's why we've seen attacks on German soldiers in the north of the country.

(END VIDEO TAPE)

TODD: A top Afghan official told me his government was not part of the negotiations, does not make deals with the Taliban, is not aware of any ransom and would be disappointed if the Koreans paid out here -- Wolf.

BLITZER: Brian, but the Afghans apparently don't have much room themselves to talk.

TODD: They don't. Last March, they agreed to free Taliban prisoners in exchange for one Italian journalist. And when I pressed this Afghan official on that, he said that was a special circumstance, that they were under intense pressure to help the Italians.

BLITZER: All right, Brian.

Thanks very much.

Brian Todd reporting.

Another war we're following -- in that war an important huddle today before a very big battle. Top commanders digging in deep, talking about strategy for success in Iraq.

President Bush is meeting with top military advisers today, only two weeks before a possible new war over Iraq begins here in Washington on Capitol Hill.

Let's go to our Pentagon correspondent, Barbara Starr.

She's watching all of this for us.

We're hearing that there may be -- repeat may be -- some dispute between various military commanders over what to do next in Iraq.

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Wolf, the Joint Chiefs of Staff began laying their cards on the table today. In a 90 minute meeting in "The Tank," the secure conference room here in the Pentagon, when they sat down with President Bush and Vice President Cheney.

The opening round was dealt by them.

General David Petraeus was not in the room, but certainly a presence. The chiefs know that what General Petraeus wants is to be able to keep combat troops in Iraq as long as he possibly can to continue the surge. But General Petraeus certainly knows the surge begins to run out in April, when they begin to run out of fresh troops to send to Iraq.

So what are the chiefs telling the president today?

They are laying out that everything is fine right now, but it's not going to last forever. The chiefs have the responsibility for a trained and equipped force. They are telling the president right now things are good, but the troops are getting exhausted. That 15-month tour of duty on the ground is wearing people out. Families are exhausted. Young troops now on their second, third, maybe even fourth tour of duty in Iraq. And that is a concern. The chiefs want the troops to come home as soon as they feasibly can so they can rest, recuperate and begin training for whatever the next contingency may be -- Wolf.

BLITZER: When I interviewed General Odierno, Ray Odierno, the number two military commander in Iraq, on Sunday, he acknowledged they all know that they're going to have to start a drawdown by April, because the various commanders in Washington and the Joint Chiefs know that the U.S. Army potentially could be broken if this continues much longer than that.

But you've made a good point, Barbara, that where you sit helps determine what you're recommending and what you're seeing right now.

Explain to our viewers what you mean.

STARR: Well, Wolf, the president is faced with advice from many quarters on this issue. General Petraeus is in combat. His responsibility is give the president the best advice about what to do with U.S. troops to achieve combat goals in Iraq.

The chiefs -- the head of the Air Force, the Navy, the Army and the Marine Corps, as well as chairman of the Joint Chiefs of Staff, have the legal responsibility to give the president the best advice on how to keep a trained and ready U.S. military force for whatever wars or contingencies that they say might arise.

So now the president has this balancing act. It's not a fight. It's not really a disagreement. But he gets advice from these various places, including the secretary of defense, Bob Gates, and now he has to weigh all of the risks and all the recommendations -- Wolf.

BLITZER: All right, Barbara.

Thanks very much.

Barbara is watching all of this unfold at the Pentagon.

She's going to be very busy over the next few weeks.

Four U.S. lawmakers see firsthand just how dangerous the war in Iraq is. We're learning about an attack on a U.S. cargo plane carrying three U.S. senators and one Congressman. The plane they were on was a C-130, similar to the one you're seeing here.

Officials say the plane came under rocket fire last night in Baghdad. The plane made evasive maneuvers to save those on board. That crew included Republican Senators Richard Shelby of Alabama; Mel Martinez of Florida; James Inhofe of Oklahoma; as well as Democratic Congressman Bud Cramer. He was also on board.

The lawmakers were on their way to Amman, Jordan when they came under attack as that C-130 took off from Baghdad. Everything worked out. The maneuvers worked. All -- all of them are safe.

Richard Shelby, by the way, will be joining me Sunday on "LATE EDITION," Sunday morning, 11:00 a.m. Eastern.

Let's go to Jack Cafferty.

He's got the Cafferty File -- Jack.

JACK CAFFERTY, THE CAFFERTY FILE: You'll have to ask him about that flight. It sounds harrowing.

BLITZER: Yes. You know, I've been on that C-130 when it takes off from Baghdad and it's not a pleasant circumstance under any occasion...

CAFFERTY: No.

BLITZER: ...because they literally go almost straight up. They don't want to have a relatively low incline. They want to just get up as high as they can. Fortunately, when I was on that C-130 we didn't have enemy fire coming after us and then you have to start maneuvering, because that could be pretty scary.

CAFFERTY: Yes. Well, I guess the reason they want to get up and get out of there as quickly as possible is for that very reason...

BLITZER: Right.

CAFFERTY: ...to get out of the line of fire and out of the range of whatever might be waiting for them on the ground.

BLITZER: And that's why when they land, by the way -- I hate to explain -- they have that cork screw landing. They just go almost straight down so that...

CAFFERTY: Yes.

BLITZER: ...they don't get much of a target for enemy fire.

CAFFERTY: Well, I'm glad that the -- the senators and Congressman made it out of there OK.

The Bush administration, Wolf, wants to -- the power to grant legal immunity -- there we go again. They want to grant legal immunity to the telecommunications companies that were asked to help out with their domestic spy program.

The Associated Press reporting this would effectively shut down dozens of lawsuits that have been filed against phone companies that are accused of helping the Bush administration set up the spy program.

Republicans say that immunity is necessary in order to protect those companies that responded to presidential orders to try and catch terrorists after 9/11. The reason the protection is necessary is those companies might well have been breaking the law.

But some Democrats are concerned that this would, in fact, have a much wider reach -- potentially protecting anyone who gave aid to the government as part of the eavesdropping program without warrants.

In other words, they say it might also protect any government officials who may have broken the law.

And then, of course, there's this. The administration doesn't want to identify which telephone companies helped them out. So it's asking Congress to just let the attorney general handle it -- intervene on behalf of anyone -- anyone accused of participating, whether they actually did or not.

When Congress gets back to work next week and considers changes to the FISA law, it's expected that a leading issue will be how the government conducts surveillance for national security investigations.

Maybe they could also consider if they want to let all the phone companies that participated in some of this questionable activity off the hook.

So the question this is this -- should telecommunications companies be granted immunity for cooperating with the White House's domestic spy program?

E-mail us at caffertyfile@CNN.com or go to CNN.com/caffertyfile.

On the one hand, I guess, Wolf, you've got the president saying look, you've got to help us here. We've been attacked. It's important to go after these people. On the other hand, I don't want my phone company giving anybody any information about me at all, period, nada, end of discussion.

BLITZER: All right, Jack.

We'll see what our viewers think.

CAFFERTY: OK.

BLITZER: Thanks.

Stand by.

Up ahead, typical college students or dangerous terrorists?

Two people face serious accusations in Florida after they were caught with pipe bombs in their car. That's the allegation.

Also, we know what kind of president he was in the movies.

But what type of president might he be in reality?

Soon to announce Republican candidate Fred Thompson. In our continuing "What If" series, we'll take a closer look at the possible White House contender -- the politician, the actor, Fred Thompson.

And need a home that's safe from the mortgage crisis?

We're going to show you some special properties that are for sale right now and they'll only set you back about $100 million.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're getting some new details of two terrorism indictments. The charges involve two Egyptian students attending school over at the University of South Florida near Tampa and alleged explosives they had with them when police stopped them in South Carolina.

Let's go to our national correspondent, Susan Candiotti.

She's down in Miami.

She's watching the story for us.

All right, tell us what we learned today -- Susan.

SUSAN CANDIOTTI, CNN CORRESPONDENT: Well, Wolf, these two Egyptian students, according to authorities, were picked up, remember, back on August 4th. They were pulled over for speeding. And at the time, they insisted that they just had homemade fireworks with them.

But today, a two-count indictment from a federal grand jury in Florida, where these students are attending school at the University of South Florida. They are now charged with, let's see, distributing information about building explosive devices. And one of them is charged with teaching someone how to use these devices. Both are charged with taking explosives across state lines without the proper permits.

Now, law enforcement sources are now telling us that the suspects plan to put these explosives in some sort of model cars about the size of a bread box. But they don't have any information about how they plan to use them. There's no evidence of any plot or plan to use these devices.

The sheriff who pulled them over -- his department pulled them over -- had this to say about what happened today. (BEGIN VIDEO CLIP) SHERIFF WAYNE DEWITT, BERKELEY COUNTY, SOUTH CAROLINA: As an end result, here we have two that had been federally indicted, and I think under substantial charges. And the only information that I can probably reveal further would be that we feel like the charges and what the Federal Bureau of Investigation has is quite substantial to effect those charges and keep them in force.

(END VIDEO CLIP)

CANDIOTTI: Now, again, law enforcement sources say that they have uncovered -- have not uncovered any kind of plan of a specific target. And University of South Florida, in the meantime, has suspended these two students, pending the outcome of the case -- Wolf.

BLITZER: Who is making the point, Susan, that they were picked up near a military facility where the U.S. currently holds some enemy combatants?

CANDIOTTI: Well, if there is any connection, authorities aren't telling us what that might be, only that these students were going to school in Florida and were picked up in South Carolina.

BLITZER: All right, we'll watch it.

Susan, thanks very much.

Republican sources telling CNN Senator Larry Craig could be resigning very, very soon. If he does, the senator from Idaho would do so under enormous pressure from within his own party.

Let's go back to Carol Costello.

She's watching this for us -- Carol, there's a lot of interest in this story, obviously.

Here are the questions.

Is the pressure on Senator Craig to resign worse than the usual for scandals here in Washington involving other politicians?

CAROL COSTELLO, CNN CORRESPONDENT: Well, here's the short answer, Wolf.

Yes.

Other politicians weathered some nasty sex scandals and are still serving today.

So why the intense pressure on Larry Craig to resign?

(BEGIN VIDEO TAPE)

UNIDENTIFIED MALE: Senator Craig to resign.

SEN. JOHN MCCAIN (R), ARIZONA: He should resign. COSTELLO (voice-over): Calls for Senator Larry Craig to resign are deafening. But now, days after the scandal broke, there is a voice wondering if there's been a rush to judgment. And it's the voice of Tom DeLay, who himself resigned from Congress after being accused of violating campaign finance rules.

(BEGIN VIDEO CLIP FROM "THE TODAY SHOW," COURTESY NBC)

TOM DELAY (R), FORMER HOUSE MAJORITY LEADER: It's really unfortunate that people rush to judgment like they have. And I'm not defending Larry Craig. I have great sympathy for what his wife and his family is going through right now.

But the decisions that Larry Craig needs to make are up to Larry Craig and his constituents in Idaho.

(END VIDEO CLIP)

CRAIG: Viciously harassed.

COSTELLO: Craig insists there's a media witch-hunt to get him.

And on that point DeLay agrees, as he told "The Today Show" on NBC.

(BEGIN VIDEO CLIP FROM "THE TODAY SHOW," COURTESY NBC)

DELAY: The double standard in the media is amazing. The feeding frenzy, the sharks in the water that's going on right now because of a Republican.

COSTELLO: Delay launched into the media, accusing it of not shining a light on the peccadilloes of Democrats like Congressman Barney Frank. In 1989, he admitted to a sexual relationship with a male prostitute.

REP. BARNEY FRANK (D), MASSACHUSETTS: I'm not going to resign because I think resignation is acknowledgment of a very, very serious breach of duty and I don't believe that the stupidity I showed in hiring a prostitute and reacting as I did to the pressures that I didn't handle well reaches that level.

COSTELLO: Frank received a reprimand for the House Ethics Committee. But one of its members voted for the more serious punishment of censure, then House member Larry Craig.

Conservatives insist that President Clinton's conduct in the midst of the Lewinsky scandal was no more credible than Craig's today.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman.

CRAIG: I am not gay.

COSTELLO: The difference?

Democrats did not desert Clinton, who was also determined to fight for his job.

JONATHAN HARRIS, POLITICO.COM: Bill Clinton said I don't care a wit about the conventional wisdom. I don't care what anyone says. I am going to fight and save my career.

COSTELLO: So why is Senator Craig more vulnerable than other politicians caught up in sex scandals?

HARRIS: This is harder for a Republican politician to withstand because Republicans -- their coalition includes a lot of social conservatives, who are genuinely offended by homosexual conduct.

(END VIDEO TAPE)

COSTELLO: And illicit gay sex, hypocrisy, it is something many in the Republican Party can't stomach. And when your friends desert you, Wolf, you're pretty much out.

Remember Richard Nixon?

He didn't resign when Democrats moved to impeach him. Oh, no. He resigned only when Republicans went to the Oval Office and said they were going to back the Democrats' efforts and they told Richard Nixon it was time for him to go.

BLITZER: Carol Costello, thanks very much.

And this just coming in from the Associated Press in Boise, Idaho. The A.P. reporting that Senator Craig will announce his future plans tomorrow, Saturday. This amid widespread calls from fellow Republicans, among others, to resign. The Associated Press quoting Senator Larry Craig's spokesman as saying he will make an announcement tomorrow about his future plans.

We're watching this story.

We'll get more information for you as we develop it.

But, as you know, there has been widespread speculation that he will step down.

We'll watch this story and bring you updates as we get them.

Other news we're following, when we come back, many homeowners are hurting. President Bush says he feels their pain. He's announcing some major news to help thousands of homeowners struggling to keep their homes.

Meanwhile, for those in the housing market who don't need any financial help, some very expensive homes on the market right now. We're going to show you what $100 million can buy.

And a 107-year-old woman is angry. She wants her money that's frozen in a bank. We're going to tell you what's happening and how Cuba is involved.

Lots of news right here in THE SITUATION ROOM.

All that, coming up.

(COMMERCIAL BREAK)

BLITZER: Once again, the Associated Press quoting a spokesman for Senator Larry Craig of Idaho, saying he will make an announcement tomorrow, Saturday, about his political future.

We're watching this -- this, obviously, amidst all of the pressure on Senator Craig to resign. That coming in from the A.P.

Let's check back with Carol Costello.

She is monitoring some other stories incoming into THE SITUATION ROOM right now -- Carol.

COSTELLO: A new tropical depression is forming in the Atlantic ocean. It's the sixth of the 2007 hurricane season. At last report, the depression carried top sustained winds of 35 miles an hour. Tropical storm warnings have been issued for St. Vincent, the Grenadines, Tobago and Grenada. If it becomes a tropical storm, it would be named Felix.

For the second time, a California family has buried a son killed in Iraq. U.S. Army Corporal Nathan Hubbard was honored at his funeral in Fresno today. Hundreds of people packed the church. Hubbard died last week in a helicopter crash. His older brother Jared was killed in Iraq three years ago.

embattled Democratic fundraiser Norman Hsu is being held on $2 million bond. He surrendered to police to face a 16-year-old charge of grand theft. CNN reported yesterday that Senator Hillary Rodham Clinton's campaign had returned a donation linked to Hsu. Hsu has contributed to a number of Democrats, including Senator Barack Obama.

Take a look at the headlines right now -- Wolf.

BLITZER: Thanks, Carol, very much.

His supporters call him a giant. Even his political opponents say he's one of the most highly regarded in Washington. Republican Senator John Warner of Virginia just made a major announcement about his political future.

We'll have some more details on that.

And he's the first African-American governor of Virginia, the current mayor of Richmond.

What does Doug Wilder have to say about the man hoping to become the first African-American president, Barack Obama?

Doug Wilder here in THE SITUATION ROOM.

All that, coming up. (COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, the Iowa, Nevada, New Hampshire and South Carolina Democratic Parties are calling to presidential candidates to stick to the election calendar. They issued a pledge to the candidates today which, if signed, would restrict campaigning to the so-called early states through February 5th of next year, so-called Super Duper Tuesday.

Senator John Warner says he will not -- repeat not -- seek another term. The Virginia Republican today announced his decision to serve out his current term of office, which ends in January of 2009. Warner will have served in the U.S. Senate for 30 years.

And Karl Rove has left the building. With a tear and a wave, the adviser considered the so-called architect of much of President Bush's political career, departed the White House just a couple of hours ago.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Doug Wilder holds a unique place in political history as the first African-American governor in the United States. He also briefly ran for president in 1992. Now the mayor of Richmond, Virginia, he's keeping a close eye on the presidential race, especially Barack Obama's campaign. I spoke with Doug Wilder and asked him why he wants Obama to be the next president of the United States.

MAYOR DOUG WILDER (I), RICHMOND, VIRGINIA: Well, as you know, I have not formally endorsed Mr. Obama, Senator Obama at this point. But as I have said to you people and you now, I'm leaning so strongly. I've been so impressed with his campaign of unity, of bringing people together, of freshness, of recognizing he is electable. Some few years ago, 1992 as a matter of face, I tried for three months to throw my hat in the ring until the people of Virginia dragged me back to Virginia and said no, not you. And what I can see now, in 2007, not only someone who is electable, but who is charismatic, who is raising money, and in my judgment, can unify this nation because he's hitting the themes, talking about the issues that the people want to hear.

BLITZER: Let me read to you a quote to you from the Politico, you gave an interview to the Politico the website. Here's the quote. "So many people have made a living off the pimping of race. I told him when he runs, one of his big problems he will have is with the African-American leadership as such. He didn't question it, he said, I think I know what you mean." Tell our viewers, who you are referring to when speaking of issue of pimping of raise.

WILDER: Well those people who appear regularly on the radio shows and television shows, they always take the different view. Let me give the African-American view, let me give a view which is black enough. I was at an event at Hampton University, sponsored by the black state of the union. They were critics because Obama wasn't there he was in Illinois, in Springfield, announcing the kickoff of his campaign. And there was some criticizing he should be here. Why? Why can he not kick off his campaign in the capital of the state for which he has been elected and been running. It's those people who have been called, shortly after this. With others like yourselves, asking questions about the election, what makes him not electable. What is black enough? What does he have to do? No, he's not going to play the saxophone on Arsenio Hall show. Does that qualify to be "black enough?" Of course not. It's silly.

So that's one of the reasons that I am there at this point because he has met the test. He's been elected in local offices. He's shown his concern for people by going into the neighborhoods recognizing what it is. He preaches unity. Not us versus them. And he is not an African-American who is running for office, he's running for office who happens to be an African-American.

BLITZER: You also suggested Governor, correct me if I'm wrong, you think Barack Obama can actually help the democrats carry the south where they had a lot of trouble there over recent decades. You think Hillary Clinton would have a bigger problem?

WILDER: No, I don't think so. I think this. I think the democrats for so long have written off Virginia. I was in Little Rock when Bill Clinton won his first election standing next to Hillary. And she said wow look at election returns in Virginia. Boy, if you had campaigned there. If you spent resources there, you could have won. We're not a red state. This is not a backwards state. The south is not backwards. The south is the birth place of many people who have gone to other places but the south is also America. And people in the south want representation. They don't want to see that constantly New Hampshire and heavily campaigned states. Guess what, if do you it well enough you can win the south.

BLITZER: Recent polls under those leaning democrats who are African-Americans, we had Hillary Clinton with 50 percent. Senator Obama with 37 percent. She's actually doing better among registered African-Americans, democrats than Barack Obama is. How do you explain that?

WILDER: That's today. People who know, have heard me say the only poll that counts is the poll taken on Election Day. You won't see those numbers on Election Day. If the two of them were there for the choices to be made, Barack Obama, not only could his own, will hold his own because there's will be no justifiable reason for people to vote against him based on race.

BLITZER: Governor Doug Wilder is now the Mayor of Richmond. Governor, thanks very much for coming in.

WILDER: Thank you so much, Wolf. I know we'll be talking together again. Thank you very much.

BLITZER: He's dipped his toes in the water. Now Fred Thompson is about to jump in with both feet. Can his presidential campaign raise the big money though it needs to reach the finish line? And the most powerful women in the world. The list is now out. We'll tell who is on the rise. Who is slipping? Who is number one?

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

(COMMERCIAL BREAK)

BLITZER: The wait is over. Former Senator Fred Thompson is going to be jumping into the presidential race with both feet next week. Our special correspondent, Frank Sesno, ponders the next big question. Frank.

FRANK SESNO, CNN CORRESPONDENT: Wolf, Fred Thompson makes it official next week. Finally. What if this is the real thing? What if Frederick Dalton Thompson actually catches fire? Critics and some competitors scoff at the idea. They say Thompson's long on platitude and short on ideas. But these candidates know they could be in a lot of trouble because Thompson could scramble the field. He'll position himself as reliable and likeable, in contrast to McCain, as a family values guy, compared to Giuliani, though they've both been divorced and as a true and consistent conservative as an alternative to Romney, though Thompson once did a little lobbying for a pro-choice advocacy group. Like all of the candidates, Thompson likes to conjure up Ronald Reagan. But only Thompson shares the acting roots from DA Arthur Branch to Admiral Joshua Painter.

FRED THOMPSON: Senior captains don't start something this dangerous without having thought the matter through.

SESNO: His fame gives him following and a camera-ready advantage and he'll use it. He has. A few months back he cut a biting 38 second response to Michael Moore's health care documentary.

THOMPSON: Mental institution, Michael might be something you ought to think about.

SESNO: What if Thompson's critics are proven wrong? Those who grumble that his reliance on tax cuts and smaller government read like an old script than new idea that he can't match Reagan's heart felt shining city on a hill optimism, that some of his speeches have fallen flat. Well Thompson's been rehearsing for months. He knows his lines. If he can deliver them well and organize a credible campaign, he could catch fire and turn this race on its head.

These are all big ifs, Wolf, but Thompson's counting on a hunger out there for a folksy, familiar conservative who can bring some personality to a republican marathon. It may work. Even before his announcement, a new poll shows he's in second place among republicans behind Rudy Giuliani. Stay tuned, Wolf.

BLITZER: We certainly will, Frank. Thanks very much.

Some names you know, others you may never have heard of. But they're considered the most powerful women in the world. The list from "Forbes" magazine is who's who of international affairs. Let's bring in our state department correspondent Zain Verjee. She's here in THE SITUATION ROOM. This is quite an impressive list. ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: It really is. One CNN correspondent was on that list along with the secretary of state.

Condoleezza Rice's star power seems to be dimming, at least according to "Forbes" magazine's list powerful women of the world. After the start of the Iraq war, Rice topped the list in 2004, same in 2005, she dropped to number two in 2006, this year number four.

ELIZABETH MACDONALD, SENIOR EDITOR, FORBES: Condoleezza Rice slipped down in the rankings because of lack of support for the president's policies around the globe.

VERJEE: Germany's chancellor Angela Merkel clinched the number one spot for the second year in a row impressing "Forbes" with her cool leadership. It was another good year for women in government overall, 29 on the list. At number two, the vice premiere of China, Wu Yi.

MACDONALD: What we're looking at are woman's career accomplishments, her title and the amount of money she has swayed over and the influence she's wielded around the globe.

VERJEE: Supreme Court Justice, Ruth Bader Ginsburg, made the number 20 slot, just ahead of Oprah who is 21.

CLINTON: I would be the first woman's president. I think it's a good barrier for America to break.

VERJEE: She could become the next president but right now Senator Hillary Clinton is only number 25. House Speaker Nancy Pelosi took 26 and First Lady Laura Bush number 60.

On another interesting note, on this list, Meredith Vieira, the host of "THE TODAY SHOW" was at number 55. She actually beat her predecessor Katy Couric who's at number 63. And CNN's Christiane Amanpour was 74, Wolf.

BLITZER: I noticed on the list there are a lot of women from the Middle East.

VERJEE: That's right. The number has apparently been increasing each year. It increased substantially on this list. You have the minister of economy of the United Arab Emirates, Sheikha Lubna, who's at number 99. As well as the first lady of Qatar who's at number 79. There are also on this list a lot of women running major companies in the Middle East.

BLITZER: Both of those women in Qatar and the United Arab Emirates they are very impressive and guess what? They are very powerful as well. Those countries are very important. Unfortunately, Zain, you weren't on the list. But there's always next year.

VERJEE: And there's always 101.

BLITZER: That's right. One of these days you'll make it. Up ahead. A fortune languishing in a Boston bank and she gets less than $100 a month. Why this 107-year-old Canadian woman won't leave Cuba to thaw her frozen funds.

And listening in, should telecommunications companies be granted immunity for cooperating with the White House's domestic spy program? Jack Cafferty and your email, all that coming up right here in THE SITUATION ROOM.

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BLITZER: One of her many admirers said she had the beauty of a model and compassion of a saint. Princess Diana. Today many people around the world remembered her life that was cut so short exactly ten years ago. CNN's Richard Quest is watching events today in London.

Richard.

RICHARD QUEST, CNN CORRESPONDENT: Wolf, royal occasions and events are usually so solemn and official is hard to work out if anyone had any heart at all. That certainly wasn't the case today where we saw princes William and Harry address congregation of government and royal and celebrities about their late mother.

PRINCE HARRY, UNITED KINGDOM: When she was alive we completely took for granted her unrifled love of life. Laughter, fun and folly. She was our guardian, friend and protector. She never once allowed her unfaltering love for us to go unspoken or go undemonstrated.

QUEST: It was a deeply emotional moment. One in which we got glimpse and insight into the character of Diana's sons. There were also other memories of Diana at Kensington Palace where she lived and in Paris at the tunnel where the accident took place.

Even though the allegations of the circumstances of her death still swirl around, there was the reminder from the bishop of London, that ten years is a long time. And it's probably best now to let Diana rest in peace. Wolf.

BLITZER: Richard Quest in London for us. Thank you, Richard.

There's an elderly Canadian woman in Havana. She's long widowed and there's a fortune waiting for her if she leaves. But she's stubbornly remaining in Cuba.

CNN's Morgan Neill has her story from Havana.

Morgan.

MORGAN NEILL, CNN CORRESPONDENT: When Fidel Castro took over Cuba's government in 1959, most of the well-to-do caught the first flight out. We met one woman didn't. She's neither American nor Cuban and she's caught right in the middle of their long running conflict.

Canadian Mary McCarthy lives here on Havana's Embassy Row where since she's been here since 1945. She tells us at 107 years old she's waited long enough to get access to her own money. It's been frozen in a Boston bank that they imposed a trade embargo on Cuba nearly 50 years ago.

MARY MCCARTHY, CANADIAN RESIDENT IN CUBA: The money was never there. It was deposited by my husband in American dollars. It should be given to me as his widow. I need it. I need it for doctors. I'm old.

NEILL: Mary met her husband, a Spanish businessman, in the 1940s in Boston where she was studying music. The two married and then moved to Havana where his leather factory supplied boots for the war. Mary was a prominent socialite and worked with various charities. When her husband died, she stayed on in Cuba. When Fidel Castro and rebels came. Mary saw her friends abandon the country.

MCCARTHY: They felt this was not a sufficiently equipped country for people who were accustomed to all kinds of luxury.

NEILL: But Mary stayed, and she paid the price. The new communist government nationalized her properties. All that was left was her house, the Villa Mary. But as decades of neglect the mansion like so much of Havana has taken on the air of a forgotten museum. Mary says she doesn't get visitors, but she dresses and puts on makeup for those who do come. In the afternoon, she takes a glass of sweet wine and feeds peacocks that wonder the grounds. With the help of Canadian diplomats, she has been able to get an allowance from her bank, $96 a month. Mary says it's not as if she had big plans for the money anyway.

What would you do if you had the money now?

MCCARTHY: Pay all of the bills I owe.

NEILL: She was told the problem would disappear if she just would leave Cuba. But she says with all of the dignity of her 107 years, that's just foolish.

Now Mary McCarthy is very not political. She said the leaders of United States and Cuba good men. She says she's sure if President Bush knew about her problem he would fix it.

Wolf.

BLITZER: Maybe he'll know about it. Thanks very much Morgan Neill, our man in Havana. Let's go to Jack Cafferty. We all know about the problem that this 107-year-old woman has, Jack.

JACK CAFFERTY, CNN CORRESPONDENT: What a great story. And what a fine upstanding gentleman Fidel Castro is. The question this hour is should the telecommunications companies be granted immunity for cooperating with the White House's domestic spy program?

Joe writes from Maryland, "Of course we should give them immunity. After all, we don't want our companies to be harmed by any lawsuits. And we should also give the White House immunity for breaking the law. We can't have our leaders come under fire. This is all stupid. Plain stupid.

Cherie in Maine, "Are you joking? First the administration breaks the law on the hush-hush, then certain phone companies agree that it's OK and now everybody's been found out, they want protection! Absolutely incredible. Frankly there are not enough people leaving the White House today."

Robert writes, "The phone companies should be protected from lawsuits. They were doing their patriotic duty, responding to requests from the government at a time of crisis and uncertainty. A time they are still in."

Michael in Nebraska, "I think we've heard the "just following orders" defense before. We didn't let it work then and we shouldn't now."

Lisa in Virginia, "No, absolutely not. This is part and parcel of the Bush administration's criminality. "Do whatever I want, and a pardon will be arranged." This is Scooter Libby time, but for AT&T. No immunity. Prosecute them now, and severely and maybe next time they won't leap to obey the next illegal whim of King Bush."

And Rick in Medina, Ohio is pragmatic. He said, "Jack, leave them off the hook. Otherwise, the cost of their defense will result in yet another surcharge on an already unreadable phone bill."

If you didn't see your e-mail here, go to CNN.com/CaffertyFile. We post more of them online as well as video clips on the Cafferty File.

Wolf.

BLITZER: Jack, thanks very much. Stick around. I want you to see the next piece that's coming up. The mortgage crunch has some homeowners shaking in their boot but we're going to tell you why owners of homes like these aren't worried in the least. We'll tell you what's going on. When we come back.

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BLITZER: Right now, many Americans are hurting and President Bush says he understands. Today he outlined a plan to help struggling homeowners keep their homes. It involves thousand of sub prime borrowers who payments increased as their loans matured. President Bush outlined initiatives to help those borrowers with government programs and new legislation. Meanwhile some people shopping for homes won't need much help at all. CNN personal finance editor, Gerri Willis, is in New York.

GERRI WILLIS, CNN PRESONAL FINANCE EDITOR: Listed at $100 million even, the 20,000 square foot Tranquility in Zephyer Cove, Nevada owned by the former CEO of Tommy Hilfiger. There's an indoor glass mosaic swimming pool, boathouse, pavilion, stable and two par three golf holes.

On the market for $125 Flor de Lee in Los Angeles California, five acres, all steel construction with imported limestone exterior. The main house 41,000 square feet. Park nine cars in garage, or enjoy three rose gardens, a jogging path, 70 foot pool, 12 person spa or two tennis courts.

Also going for $125 million, Donald Trump's Maison de la Mutai in Palm Beach, Florida. It's seven acres with 475 feet of ocean frontage and includes indoor parking for 36 cars.

WILBUR RODRIGUEZ, BROWN HARRIS STEVENS: There's something in the abstract of combination of the location and sort of views, and the ability to duplicate that property somewhere else. The uniqueness factor. It's certainly not in the construction.

WILLIS: This ranch will cost you $135 million. This one belongs to Prince Bandar bin Sultan of Saudi Arabia. Its 56,000 square feet with 15 bedrooms on 95 acres, views of the Elk Mountains, an eight- horse stable and a government level security system to keep it all safe. And the Beverly house compound in Beverly Hills, California formerly owned by William Randolph Hurst, 72,000 square feet on six and a quarter acres, will cost a cool $65 million.

ROBERT FRANK, THE WALL STREET JOURNAL: My guess one of those properties will sell at over $100 million over the next three years. Not all will sell at the current asking price. Again, the market is soft. Even at the top the market is soft. The rich want to wait and be cautious and not going to overpay on a market that's not going up for them.

WILLIS: What is the price to beat? The most expensive residential sale in this country to date is a 40-acre spread sold earlier this year in East Hampton, New York, for $103 million. There's no guarantee though that any of the houses you saw will fetch their asking price but you can sure bet their agents are looking to claim that top spot in the record books.

BLITZER: And anybody who buys them I don't think they'll need a mortgage. Thanks very much. Gerri Willis for that. You'll see much more about Gerri's reports about the housing market each weekend on CNN's "OPEN HOUSE." It airs Saturdays at 9:30 a.m. eastern and 3:30 p.m. eastern on "HEADLINE NEWS" on Saturdays and Sundays. Gerri Willis, "OPEN HOUSE."

We're here in THE SITUATION ROOM weekday afternoons from four to six p.m. eastern. We're back for another hour at seven p.m. eastern, one hour from now. A lot more news coming up then.

Until then, thanks very much for watching. I'm Wolf Blitzer in Washington. "LOU DOBBS TONIGHT" starts right now Christine Romans is filling in for Lou.

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