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Protesters Fear Death in Tripoli; US Navy Moves Ships Closer to Libya; Newt Gingrich for President?; Dodd Goes Hollywood; Chaos Plagues Libyan Border; Thousands of Libyans Flee; From Libya's Streets to Your Computer; President Obama's Mideast Challenge

Aired March 01, 2011 - 17:00   ET

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

WOLF BLITZER, HOST: Brooke, thank you.

Happening now, the United Nations warns that a humanitarian catastrophe is in the making. More than 100,000 refugees mobbing the border right now in a desperate attempt to escape the bloodshed in Libya. Officials are overwhelmed. Supplies are limited. Plus, the U.S. military is moving in the region. The Defense secretary, Robert Gates, now directing two Navy warships into the Mediterranean.

And a dramatic new development in the race for 2012. The first major Republican contender is ready to take a critical step toward announcing a run for president.

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

Let's begin with the latest developments in the Libyan crisis -- reports of gunfire and assault in the city of Zawiya. That's where forces loyal to the Libyan leader, Moammar Gadhafi, attempted, but allegedly failed, to seize control from rebels.

Meanwhile, a strong show of force against Gadhafi just out of the United Nations. The General Assembly adopting a resolution to oust Libya from the U.N. Human Rights Council. We're monitoring this story from every angle on the ground, as only the global resources of CNN can.

First, let's go to Tripoli, where Gadhafi shows no signs of losing his grip on power in the capital. Some residents there have refrained from protesting, for fear of simply being killed.

CNN's senior international correspondent, Nic Robertson, was asked by the Libyan regime to convey a -- to cover a convoy attempting to deliver aid to a part of the country under opposition control.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Government officials told us this morning that if we didn't come and cover this aid convoy going to Benghazi, then we wouldn't be able to go to Misurata, the town 100 miles -- 160 kilometers east of Tripoli, where we've heard that there's fighting going on. That truck has got wafer biscuits on it. The other truck we've looked at has got sugar. We've been told about tomatoes being taken there.

But what seems very surprising about this is the drivers, even though they've got the green flag on, the green flag that symbolizes they support Moammar Gadhafi and they're going to an opposite area, they tell us they're going to be OK. It seems a little surprising, but that's what they're telling us.

Almost wherever we go now, whenever the cameras come out, you can almost guarantee there will be a crowd -- a spontaneous crowd that appears to gather, showing their support for Moammar Gadhafi.

Whenever the camera appears now, the crowds do, as well.

So far, despite the aid convoy apparently going through the contested town of Misurata, no trip there for us.

Nic Robertson, CNN, Tripoli, Libya.

(END VIDEOTAPE)

BLITZER: And Nic is joining us now from Tripoli -- Nic, how serious is this humanitarian problem in the Libyan capital right now?

ROBERTSON: In the capital, at the moment, it seems that the stores have the food that they need. It seems that -- that life can get back to normal, if people have enough faith in what the government is saying, that -- that it's safe for them to come out, safe for them to lead their normal lives. Of course, children aren't going to school and the government is giving out $400 for every family to help them out with their rising food prices.

And people are concerned about -- are concerned about the food prices right now. But they're not reaching astronomical levels. And -- and there aren't shortages that we're aware of so far -- Wolf.

BLITZER: A lot of our viewers are Tweeting me, asking me, Nic, how you're doing.

How secure is this situation for journalists in Tripoli right now?

ROBERTSON: You know, I think it's pretty secure. The government is pretty much firmly in control when we're out.

But having said that, when we go into some of these pro-Gadhafi demonstrations, a lot of the time, the crowd is not often a particularly well-educated crowd. They want to shout at the camera. They get rowdy. And they get -- they do get out of hand.

There was a situation a couple of days ago where they mobbed a couple of the vans that some of the journalists were in. And -- and something like that can turn pretty quickly. When the mob gets angry, as some of them were getting, then it's hard to get away. And it took a little while to drive out of that situation.

But I think, for the most part, right now, most people here feel pretty -- pretty safe most of the time. But, you know, you do you have to be careful. People do have agendas here. And everyone has that at the back of their mind, too.

BLITZER: Just be careful, Nic.

We'll check back with you.

Thanks very much.

Let's go over to the Pentagon right now, where the U.S. Navy is ordering its ships closer and closer to the coast of Libya.

Our Pentagon correspondent, Chris Lawrence, is standing by with more.

What's the latest from there -- Chris?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, Pentagon officials admitted today they don't have a clear idea how many people have been killed in Libya. But they know that the humanitarian crisis is rising. And that is where a lot of their efforts are going now.

(BEGIN VIDEOTAPE)

LAWRENCE: (voice-over): The amphibious assault ship USS Kearsarge is on its way to the Mediterranean Sea. But with more than 1,000 of the ship's Marines fighting in Afghanistan, the Pentagon is deploying 400 more Marines from home. But their purpose on the ship will be limited.

ROBERT GATES, SECRETARY OF DEFENSE: I would note that the U.N. Security Council resolution provides no authorization for the use of armed force.

LAWRENCE: That's why the mission is more assist than assault. With the Kearsarge and USS Ponce joining two Navy destroyers already in the Med, the ships will form a network of assets to transport relief or evacuate refugees.

The calls to impose a no fly zone over Libya were based on Colonel Moammar Gadhafi ordering pilots to fire on Libyan protesters. But Pentagon officials say they've yet to see concrete evidence of it.

GATES: And we've seen the press reports, but we have no confirmation of that.

GEN. JAMES MATTIS, U.S. CENTRAL COMMAND: That's correct. We've seen no confirmation whatsoever.

LAWRENCE: And no agreement, either. The U.N. would have to OK a no fly zone, and France and Russia don't support it. Turkey's prime minister called the idea "unthinkable."

MATTIS: My military opinion is, sir, it would be challenging.

LAWRENCE: The head of U.S. Central Command says imposing a no fly zone over Libya would first demand American pilots fire on its mobile ground-based anti-aircraft missiles.

MATTIS: You would have to remove the air defense capability in order to establish the no fly zone. So that there's just no illusions here, it would be a military operation. It wouldn't simply be telling people not to fly airplanes.

(END VIDEOTAPE)

LAWRENCE: And officials admit that could include actually having to fight Libyan aircraft if Colonel Gadhafi were to order some of those pilots into the air and they were to accept. All, in all, they're saying any sort of no fly zone, that would be an extremely complex mission, if it is ever authorized.

BLITZER: So correct me if I'm wrong, Chris, it doesn't look like folks at the Pentagon really have an appetite to get involved militarily on the ground inside Libya, per se.

LAWRENCE: That's right. They don't have an appetite for it. And right now, they don't really have a mandate for it. These assets seem to be being positioned in the Med to first help with humanitarian relief -- Wolf.

BLITZER: Chris Lawrence is watching it at the Pentagon for us.

Thank you, Chris.

The United Nations fears there could be a humanitarian crisis of catastrophic proportions, as thousands and thousands of refugees storm the Libyan border with Tunisia. We're going there for a live update. Stand by.

Plus, a money trail potentially worth more than $30 billion.

But will U.S. efforts to freeze Libya's assets here in the United States actually prevent this crisis from worsening?

And a major GOP contender comes one step closer to announcing a 2012 run for president.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Spending in -- spending, there's a lot of it going on by the federal government.

It's on Jack Cafferty's mind right now. He's here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: It's looking more and more now like the federal government will not shut down at midnight on Friday. The House, a short while ago, approved a new spending measure that will keep the government running for two more weeks past Friday's deadline.

There's a comfort.

Democrats and Republicans have agreed to $4 billion in spending cuts, mostly to earmarks and other programs, many of which President Obama proposed in his own budget. The measure now moves to the Senate.

You can bet that these cuts that pass the House are the easy ones -- none of the heavy-handed cuts that House Republicans passed in a bill a few weeks ago. Those included ending funding to Planned Parenthood, making cuts to education and programs that are associated with the EPA.

There still isn't a total agreement on the $4 billion measure. The president and some Democrats were hoping for a five -- a four or five week extension, cutting as much as $8 billion. According to a recent poll, 58 percent of Americans say they would rather have a partial government shutdown until Democrats and Republicans can agree on what spending to cut than have Congress avoid a shut down all together by keeping spending at the same level it was last year.

And since both parties can't agree on how much should be cut from the budget for the rest of this year, and which programs ought to face the ax, well, a government shutdown could well be in the cards very soon.

The question is this, would you favor a government shut down until significant spending cuts are agreed on -- not just chump change, real cuts?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: All right, Jack.

Thank you.

Speculation, meanwhile, is swirling over which Republicans will run for the Republican presidential nomination. And it's already looking like a very crowded field. We're learning right now that Newt Gingrich will announce Thursday that he plans to form a presidential exploratory committee. That's a key initial step. The former House speaker has staged a remarkable comeback in recent years.

Here's CNN's national political correspondent, Jessica Yellin.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, it's the first step toward a possible presidential run and just the latest chapter in Gingrich's colorful political career. (BEGIN VIDEOTAPE)

YELLIN (voice-over): Newt Gingrich has been called the conservative movement's philosopher king -- a bomb thrower, even cry baby, during the government shut down. He's best known as architect of the 1994 Contract With America, which helped propel the Republican Party to its first majority in 40 years and make him speaker of the House.

(BEGIN VIDEO CLIP FROM SEPTEMBER 27, 1994)

GINGRICH: Those of us who ended up in a majority stood on these steps and signed a contract.

(END VIDEO CLIP)

YELLIN: Under his watch, the GOP clashed with the Clinton White House over spending cuts, which led to two government shutdowns. To Gingrich's surprise, the public turned its rage on the GOP.

(BEGIN VIDEO CLIP FROM NOVEMBER 9, 1995)

GINGRICH: It's very difficult to work with a president who seems to be primarily driven by his political advisers to engage in public relations stunts.

(END VIDEO CLIP)

YELLIN: During the impeachment of President Clinton then Speaker Gingrich lashed out at the White House.

GINGRICH: What you have lived through for two-and-a-half long years is the most systematic, deliberate, cot -- obstruction of justice, cover up and effort to avoid the truth we have ever seen in American history.

YELLIN: What he didn't mention, at the time, he was having his own extramarital affair with a Congressional staffer. He's now on his third marriage.

Ethics problems dogged Speaker Gingrich and he resigned, leaving Congress in some disgrace.

But then, a comeback. Gingrich spent a decade writing books, opinionating on Fox News and pushing his endless stream of policy ideas. Sometimes those ideas square with Tea Party values --

GINGRICH: I think that you -- you have to migrate to a system that is Social Security based on personal contributions.

YELLIN: But not always.

GINGRICH: In order to have an American energy policy, we need to replace the Environmental Protection Agency with a new, fundamentally different environmental solutions agency.

YELLIN: Many Republicans acknowledge Gingrich the candidate has some big hurdles to overcome.

(END VIDEOTAPE)

YELLIN: On the one hand, Gingrich is an idea factory, excellent when it comes to fundraising and he already has high name recognition. But on the other he comes with political baggage during his time as speaker and even some of his supporters question whether he has the discipline it takes to successfully run for president -- Wolf.

BLITZER: All right, Jessica, thank you.

Gingrich, by the way, is in fourth place in CNN's most recent national poll of Republicans top picks for the GOP presidential nomination.

Let's bring in our CNN political analyst Gloria Borger, she's here.

What's the decision-making process leading to now for Gingrich to take this initial step?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: well, when you announce an exploratory committee what it means is that you're alerting your contributors that they can now legally donate to a potential presidential campaign.

It doesn't mean that he's actually running. He could decide in a few months down the road, you know what, I played with it a little bit, I don't think I'm going to do it.

But most people I talked to today, Republicans, say, Newt Gingrich is a very, very serious candidate for the Republican nomination. And one source, one very plugged in Republican source said we should look for Tim Pawlenty to be next and announce possibly in a couple of weeks.

BLITZER: Cause this is going to -- it's going to put pressure on some of the other Republicans to jump in because they don't want to get behind.

BORGER: It does, although, you know, there's more opportunity if you jump in now to mess up. You know, the ground you gain now isn't necessarily going to stick with you towards the end of a long primary process which is why we see them kind of holding back.

This is really about getting the -- the money people on your side and letting folks align with you early on.

BLITZER: How polarizing is Gingrich?

BORGER: Well, Newt Gingrich is pretty polarizing. We've been polling, as you showed, the Republican candidates and when we look at the unfavorable ratings, about a quarter of all Republicans have a negative view of him. That's only a couple points less than Sarah Palin. So the two of them are the most polarizing candidates, but that may be because people know him and people lots of people remember him from the '90s when he was a polarizing House speaker.

But I was talking to some Republicans today who said, look, this is an opportunity for Newt Gingrich to reintroduce himself to a new generation of Republicans who don't remember that shutdown like you and I do. I covered that shutdown.

And so, he -- he's a politician full of ideas. Lots of people say more ideas from Newt Gingrich. He's not such a great strategist. We'll have to see.

BLITZER: But he's not necessarily the face of the new Republican Party.

BORGER: That's right, no.

BLITZER: Because a lot of us who covered him back in the '90s remember.

BORGER: It's the old Republican Party.

BLITZER: Basically.

BORGER: Yes, and he was the new Republican Party back --

BLITZER: In the '90s he was the new Republican Party, but not so much now.

BORGER: No. You know, but here's the thing about the Republican Party. The Republican Party is not known for picking new people and making them presidential candidates. They usually sort of dig deep back into the establishment, the person whose turn it is. You know, last time, John McCain. This time, well, it could be Mitt Romney, but he's not a new face either. Neither is newt Gingrich.

BLITZER: You know, I'm going to be curious to see if this decision to create this exploratory committee results in his losing his contract with Fox.

BORGER: Yes, won't we all.

BLITZER: I assume once he becomes a formal candidate he has to give up the hundreds of thousands of dollars he makes from FOX News as a contributor, but I wonder if he has to give up right away with the creation of an exploratory committee.

BORGER: Well, we'll have to see whether he's on FOX, but I would presume once he's a declared presidential candidate that he would no longer be a paid contributor on a television network.

BLITZER: Once he has -- he'll still be on FOX.

BORGER: Maybe you'll get him here in THE SIT ROOM, Wolf.

BLITZER: If he's no longer a FOX News contributor, we'd love to invite him here into THE SITUATION ROOM.

BORGER: Yes, meet those independent voters.

BLITZER: Right now, they won't let him come here. We would love to have him at some point.

BORGER: Absolutely.

BLITZER: Thank you very much.

BORGER: Sure.

BLITZER: Pressure wrapping up on Washington to reinvestigate the deadly Lockerbie bombing and Gadhafi's role in it. We're taking a closer look.

And we're -- and what about getting the message out. Five Facebook faces and three phones add up to a global mission for a young Libyan-American.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now.

Lisa, new developments in that investigation into that attack on a U.S. agent in Mexico.

LISA SYLVESTER, CNN CORRESPONDENT: That's right, Wolf.

A weapon used in the fatal attack on the U.S. Immigration agent last month in Mexico originated in the United States. The Bureau of Alcohol, Tobacco and Firearms and Explosives said today three men were arrested in a Dallas suburb in connection with the purchase of a weapon used in the attack against Jaime Zapata and another ICE agent on February 15th.

A massive wildfire is raging through Florida today, but rain has put a damper on its momentum. Fire officials say the blaze, which started yesterday, has morphed into about 16,000 acres. They say it's about 25 percent contained right now. No injuries reported so far, but hundreds of homes are in harm's way south of Daytona Beach.

And former Connecticut Senator Chris Dodd, he has a new job. The Democrat will become the new head of the Motion Picture Association of America. That is Hollywood's most powerful lobbying group. Dodd assumes his role as chairman and CEO of the association March 17th. He retired from the Senate in January after serving for 30 years -- Wolf.

BLITZER: There's a rule, though. He can't lobby the Senate, his old chamber, for two years under this now job that he has. I wonder if the bosses at the Motion Picture Association knew that he could lobby the House, but he could not lobby the Senate.

SYLVESTER: Yes. I think he's bringing in, though, his name alone, that's what they are hoping it will elevate and bring attention to the association. BLITZER: Does lobbying mean you can invite senators to come to the Motion Picture Association, the place here, to watch movies? Is that part of the lobbying?

SYLVESTER: I'm sure an invitation is fine. It's just it's all a matter of what they are actually discussing, Wolf.

BLITZER: Well, we wish Chris Dodd a lot of luck in his new job, Lisa. It's going to be a fascinating new experience for him.

Thousands of refugees now mobbing the Libyan border with Tunisia. Just ahead, a live update on what the United Nations fears could quickly become a humanitarian crisis.

Plus, his family members are fighting on the streets of Libya. Just ahead, we're going to show you how one Libyan-American is sharing their reality with the world.

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story, the crisis in Libya.

Right now, chaos erupting rat the Libyan board with Tunisia as tens of thousands of refugees attempt to flee the death and destruction. Now the United Nations fears it could have a serious humanitarian crisis on its hands.

CNN's Arwa Damon is on the border for us, she's joining us now live.

Arwa, what's the latest? What are you seeing?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, Wolf, the U.N. is not just saying, as you mentioned there, that this is already a humanitarian crisis, but that in the next few days it could easily turn into a humanitarian catastrophe.

Imagine, yesterday, in the span of just 12 hours, 14,000 people crossed over from Libya into Tunisia. They are expecting that same number to have crossed over, if not more, today.

The scenes that we saw at that border crossing, complete chaos, complete desperation. People have been stuck for days in between Tunisia and Libya, and they were so anxious to reach safety. They were shoving up against one another. Literally, stepping on top of one another, in some cases, pushing up against this blue gate that was all that separated them from perceived safety in Tunisia.

We saw one man who was buckling underneath the weight of the suitcase and had crushed up against this metal gate. He ended up collapsing, fainting. Doctors and medics rushing to his aid when he came to the first thing, the first thing they said to him is don't worry, you're safe. You finally made it to Tunisia.

Aid organizations, volunteers, Tunisian volunteers we're talking to this, highlighting over and over again, just how grave the situation already is, risks becoming. And many Tunisians we're talking to, volunteers there, they are very upset about what they say is the lack of sufficient international aid -- Wolf.

BLITZER: I know that there's a million Egyptians who have been living in Libya, working there. I assume most of the refugees are Egyptians, but they come from all sorts of countries. Isn't that right?

DAMON: That's right, Wolf. The majority of the people crossing over are Egyptian. They are very critical of their government saying that it's not doing enough to try to evacuate its nationals back to Egypt.

We also saw a number of Bangladeshis, people from African nations who are stuck in this no-man's-land, and they are getting no aid at all, they're saying, from their respective countries. They are so desperate and holding up signs that say, "help, help, help." Others saying, "United Nations, where are you?"

One Bangladeshi man on the verge of tears begging for anyone to just pay attention to their case saying, please, we only want one thing and that is for someone to come and save us. The conditions that they are living in absolutely abysmal. There's no food, no water, nowhere to sleep. We saw, in fact, volunteers throwing over the wall across the gate into the masses, things like bread, water, milk, cookies, anything that they could get to try to relieve people's suffering in this area.

But one can hardly put into words the despair that the individuals are feeling, and, you know, they finally do end up crossing, that relief that you see painted across their faces -- Wolf.

BLITZER: So the United Nations is not yet present in any significant capacity in Tunisia helping these refugees. But are any international relief organizations on the ground other than Tunisians themselves helping these tens of thousands of refugees?

DAMON: Wolf, we saw a number of people from other international organizations. The United Nations actually just really arrived in full force yesterday. They were underscoring the gravity of the situation.

They are really trying to put forward an aggressive effort to get a number of tents in. They were planning on have having 2,000 tents in place by tonight. And eventually, they want to build up a tent city that would eventually be able to sleep around 12,000 people.

But the bulk of this effort has really been by the Tunisian military and then especially by Tunisian NGOs and volunteers, people from around the area, from across the entire country, coming together in their communities, loading trucks with bread, other basic supplies, bringing that in. And we see it expressed by the refugees coming across, just how grateful they are to the Tunisians for everything that they have been putting forward. But, again, a lot of criticism that these international NGOs, the international community, people's respective countries, really aren't doing enough to prevent this already dire situation from becoming even more catastrophic.

BLITZER: Well, let's hope they get their act together and get on the ground soon. Thank those Tunisians from all of us. Arwa, thank you.

Gadhafi has clamped down on media access in the uprising that's going on in Libya, but a Libyan-American who has relatives fighting on Libya's streets is bringing images of the reality on the ground to the rest of the world.

CNN's Mary Snow is following this part of the story for us. She's joining us live.

What's going on here, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, the man you're about to meet is on a mission half a world away from Libya. He's working to make sure the voices of the opposition are heard.

(BEGIN VIDEOTAPE)

ALEX SALEM, LIBYAN-AMERICAN: Is this it? You're going to see how Gadhafi's regime is killing people.

See that? See that?

SNOW (voice-over): For 37-year-old Alex Salem, a Libyan- American, posting these videos from Libya online is his megaphone to the world. While Moammar Gadhafi has gone on TV to say everyone loves him, Salem wants to show the world the truth as he knows it directly from the Libyan people.

(on camera): Five Facebook pages?

SALEM: I have five Facebook pages.

SNOW: Three phones.

SALEM: Three phones.

SNOW: Constantly going.

SALEM: Constantly.

SNOW (voice-over): Updates are sent every few minutes. Some of the videos are too graphic to show. They are pictures of dead bodies and body parts. Others, like this one, are in stark contrast to the Gadhafi regime's claim that it's not using force.

Salem says this was shot in Benghazi several days ago, a stronghold of government opponents.

SALEM: As you can see, this is not bullets.

SNOW: And among those fighting are family members.

(on camera): Are you scared for your siblings and your cousins, your family member?

SALEM: I believe when your time comes, time will come, and that's how it's meant to be. But I'm so proud of all of them, what they are doing.

SNOW (voice-over): Salem speaks to his cousin from Benghazi who tells him things are better than when his wife and kids had to sleep in a closet to stay safe while he was on patrol.

Working with Salem are other Libyan-Americans who plan to protest at the U.N.

AMMAR ELFFESI, LIBYAN-AMERICAN: We have to stop (ph) the no-fly zone for Gadhafi so he can't fly with his planes and kill people, because we don't have a lot of weapons, guns, planes, and stuff like that.

SNOW: And while Gadhafi continues to insist his regime is not using force against its own people, Salem continues to hope that the images he posts will help bring an end to Gadhafi's days in power.

SALEM: We need people to stand up and stand up and stand out and tell the world what's going on, and Libya to stop this brutal regime. They are liars and they are lying to everybody.

(END VIDEOTAPE)

SNOW: And Wolf, the Libyan-Americans we met with today, as you might have heard, they say the number one thing they want to see is no-fly zone established over Libya. It will take their message to the U.N. tomorrow. They're planning a protest there -- Wolf.

BLITZER: How many videos has he received actually in the course of this operation?

SNOW: Yes. We asked him that, and he really doesn't have a number because they are constantly coming in.

He said it's safe to say they are in the hundreds, but he has five Facebook pages that are up there. And just to give you a sense, we were with him for a half hour, the first half hour today. In that time, he had gotten 46 e-mails alone, and that includes videos and messages from Libya.

BLITZER: Mary Snow, thanks very, very much.

Going after Gadhafi. More countries are putting the squeeze on his financial assets, but will the global pressure really in the end make much of a difference?

And President Obama won the Nobel Peace Prize. So will the uprisings we're seeing flaring across the Middle East and North Africa present a major opportunity for the White House or a setback?

(COMMERCIAL BREAK)

BLITZER: The worsening crisis inside Libya, raising new questions about who actually is representing Libya here in the United States. Just who is the ambassador right now?

Listen to what we heard out of the State Department only yesterday, and then we'll listen to what the Libyan ambassador in Washington told me here in THE SITUATION ROOM later in the day.

(BEGIN VIDEO CLIP)

P.J. CROWLEY, STATE DEPT. SPOKESMAN: We were informed by the government of Libya that they have withdrawn their recognition of their ambassador, Ambassador Aujali. He no longer represents Libya's interests in the United States.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

ALI SULEIMAN AUJALI, LIBYAN AMB. TO U.S.: If the United States does not recognize me as ambassador of the new Libya, then they have no credibility.

(END VIDEO CLIP)

BLITZER: All right. Let's discuss it with our foreign affairs correspondent, Jill Dougherty.

Who is representing Libya in the United States right now, Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, according to the United States, Mr. Aujali, the man that you spoke to, is still the ambassador, and the reason is they got that fax yesterday, right before P.J. Crowley came out to brief everyone. And they are looking at that fax.

They say it's a fax. It's not a letter. It's not a hard letter, a diplomatic letter. And so, until they determine the authenticity of that fax, Mr. Aujali, in their view, is the ambassador, even though he has denounced the regime, the Gadhafi regime, and even though the regime has named a charge d'affaires.

BLITZER: We know that the U.S. Embassy in Tripoli has been shut down. All U.S. diplomats have left. But does the United States still technically have diplomatic relations with Gadhafi's government?

DOUGHERTY: It does. Technically, it does, although we are told by a senior State Department official just this afternoon that it is under review, whether or not the United States would sever diplomatic relations.

I mean, there are a couple of ways you could look at this. If you severed relations, traditionally you could send a message of displeasure, anger, et cetera. If you don't, this official tells us you still have a way of communicating, and that might be useful because there are still, according to the State Department, Americans in Libya.

And let's say there were a humanitarian mission or something like that. It would be useful to have communications with the Libyan government, even if you don't like that government, to give them directions and tell them what you are going to do.

BLITZER: When I interviewed the ambassador, Aujali, on Friday, he said there was no doubt in his mind that Gadhafi was responsible for the Lockerbie tragedy, the downing of Pan Am 103. But what's going on in the State Department right now? Are they taking another look at all of this?

DOUGHERTY: They are. In fact, Secretary Clinton was on the Hill today, and there are a number of people up there who do want the U.S. certainly to take another look.

She said she will be talking with the FBI and with the Justice Department with the idea of seeking prosecution of Gadhafi because, after all, there are some members of his government who have defected, and they are pointing the finger directly at Gadhafi and saying he was a man who ordered the shoot-down of Pan Am 103. Remember, Ali Megrahi, that intelligence officer, was the person who was found guilty, but now they are saying it's Gadhafi himself who really did give the order.

BLITZER: Very interesting. All right. Thanks very much.

And he's still alive, by the way. The British government sent him back to Libya. He supposedly was on his deathbed. He's still alive and kicking in Libya right now, despite that. The British deeply embarrassed, as you know, by their decision to let him go back to Libya.

He's a winner of the Nobel peace Prize, but is President Obama doing enough right now to bring about peace in the Middle East? We're going to talk about that in our "Strategy Session."

Plus, at war over land and oil, the latest clashes between armed rebels and pro-Gadhafi troops.

(COMMERCIAL BREAK)

BLITZER: Let's talk about President Obama and Libya in our "Strategy Session."

Joining us now, two CNN political contributors, the Democratic strategist, Paul Begala, and the Republican strategist, Alex Castellanos.

Guys, thanks very much for coming in.

Alex, first to you. As you know, President Obama won the Nobel Peace Prize. A lot of his critics didn't think he deserved to win the Nobel Peace Prize. But he's got a shot now at showing the world he does deserve it by what he could be doing in the Middle East and North Africa.

Do you see him on a track to really achieve peace throughout this region?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: I wish I did, Wolf, but I don't think he's going to be a repeat winner of the Nobel Peace Prize this year. I think, as a matter of fact, American foreign policy right now is characterized by a perception of weakness.

Case in point in Libya. There, our European allies and even some Arab organizations have had a much stronger response to Moammar Gadhafi murdering his own people than this administration.

The administration said, well, we don't want to risk American lives by making any kind of strong statements. Well, gee, you know, the president of the United States has just told terrorists and thugs that we'll sit on the sidelines if you threaten our citizens.

A president can't do that. You need respect to drive for peace, and I think the Obama administration is just not strong enough.

BLITZER: Is he on a track to winning the Nobel Peace Prize again, Paul? What do you think?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Yes. You know, I mean, partisanship aside, I think Alex's critique is just unfair.

I don't know what more an American president could or should do to advance America's interests and the world's interests in the region. Look -- just look at what he's done.

He's pursuing on all fronts, first off, with a remarkable calm. He's not freaking out and invading the wrong country like his predecessor did after 9/11. He's in fact -- look what he's doing.

He's using our military power. Let's start with that since Alex criticized that.

We're steaming three warships, the Enterprise, which can bring the wrath of God -- it's one of our great aircraft carriers. That's going to the Suez Canal right now, steaming toward the Suez.

The Kearsarge bringing great capacity and hundreds and hundreds of Marines, should we need them, but also humanitarian capacity. Projecting America's power into the region should, God forbid, we need it.

Second, he's got Admiral Mullen going throughout the Middle East, meeting and talking with allies just in case. He's got -- the secretary of state has gone to meet with our allies in Europe. He's had his U.N. ambassador push through aggressive sanctions. He's had his domestic folks -- I guess the Treasury Department -- freeze $30 billion of Libyan assets.

On all fronts this president is moving. And he's moving with real steel but not, frankly, the sort of panic that we saw from his predecessor.

I'm serious. I think any fair-minded person would give him high marks here.

BLITZER: So he's making the case for the Nobel Peace Prize again.

What do you think, Alex?

CASTELLANOS: Well, I think that's pretty good political spin, but, again, when our European allies have acted already much more forcefully and have, for example, suggested no-fly zones, when we're seeing the French and the British -- and again, European/Arab organizations standing up, this president -- you know, this is a bottom-up revolution in places like Libya. We're the force for freedom in the world.

For the United States, the greatest, brightest light for freedom in the world, not to speak forcefully on behalf of those demonstrators, let's that voice of freedom be silent -- and we're not hearing from this president. And that's what he needs to not only win the Nobel Peace Prize again, but to actually support those people dying and fighting in the streets right now.

BLITZER: A lot of Iranians, especially those outside of Iran, who live here in the United States, and many in Iran, Paul, as you know, were disappointed that the president of the United States really was not very forceful in his public rhetoric back in 2009 during the revolution, the demonstrations after that false election that occurred in Iran, that he missed the boat and he didn't speak out more forcefully.

Was that a blunder on his part? Does he have an opportunity now to fix that?

BEGALA: Yes. I don't know if it's a blunder. I think the great risk, of course, is to allow a dictator like Ahmadinejad to blame his failings and his faults on the Americans.

And so if you have too heavy a hand in that, it gives the dictator something to talk about and something to blame, much as, as Alex well knows, Fidel Castro blaming America for his failings for 50 years. So I think you have to be careful.

But did you see our secretary of state go after the Iranians just the other day? I mean, this administration I think has developed a much tougher line on Iran.

BLITZER: Is she trying to fix the record because she didn't do that in 2009?

BEGALA: Well, I think circumstances are changing. It's a fluid situation.

But I think that the American attitude toward Iran has been very firm. And frankly, again, coming back to Alex's point about Libya, also, if there is to be a no-fly zone, it must be done in concert with allies, and you have to lay that groundwork. That's what the secretary of state is doing. That's what the president is doing.

There are some very thoughtful Republicans in the Senate who think the president is being too bellicose. Rich Lugar, probably the Republican Party's foremost expert on foreign policy, former chairman of the Senate Foreign Relations Committee, he has said that maybe -- I'm just paraphrasing him, I'm not quoting him. But he's concerned that perhaps we're moving too quickly into a no-fly zone. Senator Lindsey Graham, who himself is an Air Force officer in the Reserve, has been concerned and expressed some concern that perhaps we're being too aggressive.

So you're getting Republicans saying --

CASTELLANOS: That's not the issue.

BEGALA: -- that the president is maybe a little too hawkish, and Alex thinks he is being too dovish.

BLITZER: Ten seconds, Alex. Very quickly.

CASTELLANOS: No. It's the White House itself that has said the reason it's remained silent, that the voice of freedom has remained silent, is because we didn't want to put our diplomatic corps there at risk.

You do not tell thugs and tyrants that we'll sit on the sidelines. You can silence us. All you have to do is threaten our citizens. That's weakness from the Obama administration. It was a huge mistake.

BLITZER: Alex and Paul, guys, thanks very much.

Much more coming up on Libya. Hundreds of thousands of refugees believed to be trying to flee the country right now. It's not only prompting humanitarian concerns, why some now fear there could be economic repercussions around the world.

Plus, your e-mail and Jack Cafferty. He's asking, do you favor a government shutdown until significant spending cuts are agreed on?

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BLITZER: Jack is back with "The Cafferty File" -- Jack.

CAFFERTY: The question this hour is: Would you favor a government shutdown until significant spending cuts are agreed upon?

Kevin writes, "Of course not. Having suffered through the last time the Republicans played this game, I'm well aware of the real world consequences -- contracts canceled, people unemployed, seniors and veterans not receiving benefits. And this time we've got two wars going on, plus a shaky economic recovery that's just trying to survive."

Richard in Texas, "Not only would I favor a government shutdown, I would be willing to fly from Texas to Washington, D.C., to protest until significant cuts are agreed upon. Jack, kicking the can down the road has gone on long enough. We're at the end of the road, and all those cans are blocking our way out of the dead end called government debt."

Paul in Hawaii writes, "Why do we have nonessential workers in our government?"

What a great question.

"How many non-essential workers does CNN employ? My guess would be zero."

It's true, except for Wolf.

"If our government shuts down, they say all the non-essential workers will be laid off. Think of the billions we could save by firing these non-essential workers."

Frank in Indiana, "No, this is a tactic of juveniles, not elected representatives. We need to increase revenue, not cut spending. That means tax the super rich at 90 percent as we did under Eisenhower."

Kathy writes, "With our financial house in ruins, drastic and painful solutions are unavoidable. Regrettably, a government shutdown may be what's needed to shake the Democrats from their out-of-control spending. It would be similar to using a defibrillator on a person suffering a heart attack."

And S. writes from Florida, "If you mean pay the Republican ransom, I'll have to say no. How about we start collecting taxes again?"

If you want that read more on this, you can go to by blog, CNN.com/caffertyfile.

BLITZER: You think I'm useless, Jack? Is that what you're saying?

CAFFERTY: It said non-essential. Of course not. It was a joke. You're the mainstay of this entire operation. You carry this network around on your shoulders --

BLITZER: All right. All right.

CAFFERTY: -- day after day after day. We would all be dead without you, Wolf.

BLITZER: Thank you. Thank you.

Jack Cafferty, he is essential. Really essential. Thank you, Jack.

Protesters chanting, "Death! Death to the dictator!" Just ahead, an inside look at new unrest now springing up in Iran.

And the war over land and oil. A live report ahead on clashes between armed rebels and pro-Gadhafi forces.

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BLITZER: Anti-government protesters have toppled regimes in Egypt and Tunisia and threatened right now Libya's Moammar Gadhafi, are resurging in hard-line Iran as well and meeting violent resistance.

We're getting an inside glimpse of the unrest.

Let's go to CNN's Reza Sayah. He's monitoring developments from nearby in Islamabad, Pakistan.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Wolf, pockets of protests and clashes in Tehran today, but nothing widespread. We also didn't see very many amateur video clips posted on YouTube and other social networking sites, which could be another indication that the protests weren't big today, and security forces were pretty much in control.

This is one of the few video clips posted on YouTube. It shows protesters chanting, "Death to the dictator!" Witnesses telling us in other parts of Tehran, protesters chanted, "Khamenei, the supreme leader, is a murderer. His authority is void (ph)!"

In another neighborhood in Tehran, another witness says he saw protesters racing towards a cleric, riding as a passenger on a motorbike, and ripping off his robe.

What witnesses described to us today is pretty much the scenario we've heard in the previous few protests. The protesters did come out. They were defiant, but they were outnumbered and out-muscled by a huge number of security agents. One witness said Tehran looked like a military base today.

The opposition movement called for demonstrations today to protest what it called the illegal imprisonment of their leaders, Mir- Hossein Mousavi and Mehdi Karroubi. A whole lot of conflicting reports about their whereabouts and what's happened to them.

One opposition Web site says they've been jailed. Another says they've been placed in a safe house for their own security. But the government's official position is that they haven't been arrested or detained, but they're facing strict restrictions when it comes to their movements and their telephone calls. Which begs the question, on what legal basis have these restrictions been placed on these men if indeed they're not being charged with a crime? -- Wolf.

BLITZER: Reza, thank you.