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On the Story

Saddam Hussein's Daughter Speaks Out About Her Father's Capture; U.S., European Allies Trying to Mend Fences Over Iraq

Aired December 20, 2003 - 10:00   ET

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

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


SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Suzanne Malveaux, on the story of a huge victory for President Bush in Iraq and Libya.
RYM BRAHIMI, CNN CORRESPONDENT: I'm Rym Brahimi, in Baghdad, on the story of what is still a very dangerous situation in Iraq. And Saddam Hussein's daughter speaks out about her father's capture.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace, on the story of story of Democratic presidential frontrunner Howard Dean on the defense and trying to regain momentum now that Saddam Hussein is caught.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: I'm Andrea Koppel, on the story of the U.S. and its European allies trying to mend fences over Iraq. And a new salvo in the Middle East conflict.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, on the story of retailers hoping for a last-minute holiday shopping surge and a dose of sticker shock for cable TV subscribers.

Also coming up, the king of pop, Michael Jackson, officially charged with child molestation.

And we'll listen to the president's weekly radio address at the end of the hour.

Email us at onthestory@cnn.com.

Now, to Suzanne Malveaux and the capture of Saddam.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Good riddance. The world is better off without you, Mr. Saddam Hussein. I find it very interesting that when the heat got on, you dug yourself a hole and crawled in it.

(END VIDEO CLIP)

MALVEAUX: Well, President Bush savoring the news that stunned the world this week, Saddam Hussein now a prisoner in the custody of U.S. authorities in Iraq. There was really an extraordinary moment. It was just six days ago, but it seems like it was a long, long time ago. Everybody talking about this since the very beginning, and already it seems to have huge political payoffs for the administration.

We saw President Bush's poll numbers go up about 10 percentage points in job approval ratings. We also saw the cooperation of war opponents, France, Germany and Russia, all kicking in, saying they would help forgiving the Iraqi debt. And also the possibility now that we have documents and evidence from Saddam Hussein really giving us a new glimpse into inside al Qaeda, as well as some of the members of his own party. So it was a huge win for the administration this week.

BRAHIMI: Suzanne, as you know, there's a lot of awareness in this part of the world, in the Middle East, that there's a lot at stake here in Iraq for the U.S. administration. There's also a lot of awareness that there is an election coming up. What is, do you think, or what do you think will be the impact on the U.S. administration on this capture of Saddam Hussein?

MALVEAUX: Well, President Bush categorically, if you asked him -- and he had a press conference this week about whether or not any of this is political, and he really bristled at that, saying this is not about politics. But of course Republican strategists all looking at this saying, OK, well, how is this going to play out for the reelection bid?

Well, Democrats certainly hope that there's enough time, at least eight months, that all of this really won't make that much of a difference here. That, yes, Saddam Hussein has been captured, but a lot can happen. I mean, you still have U.S. soldiers dying almost on a daily basis, you don't know what the situation will be on the ground inside of Iraq, whether or not this Iraqi Governing Council will come together.

There's still a lot of unanswered questions that this administration has to face by the time the voters go to the polls. So they are really trying to weigh this very carefully. And they were very careful not to be gloating about this, overly enthusiastic, at least publicly, because of that "Mission Accomplished" fiasco that happened before.

WALLACE: But privately, Suzanne, they might gloat just a little bit, I'm sure. Because what do they think when it comes to this issue, the capture of Saddam Hussein? President Bush's critics have been pummeling him about what's going on the ground. How crucial do they think that this victory is right now, the timing of it, especially after a month or two, where we saw so many American soldiers killed in Iraq?

MALVEAUX: Well, Kelly, you bring up an excellent point, and that is the fact that they really needed this victory at this time. It was a lot of bad news that was happening.

There are a couple things, however, that the Democrats are really taking advantage of. And the big question is that, you know, Saddam Hussein was not responsible for 9/11, it was really Osama bin Laden. And that is what the Democratic presidential candidates and his critics have been asking, what about Osama bin Laden? It really brings up that point.

The other thing, of course, too, is the whole idea of weapons of mass destruction, and where are these weapons of mass destruction? Saddam Hussein saying, look, he doesn't have any, he made this whole thing up. But President Bush coming out saying that, well, he doesn't believe Saddam in the first place. But still they have yet to find these weapons of mass destruction.

Will that play out? Will that really gain some traction for the voters next year when they ask, was this justified, this war, in the first place?

KOPPEL: Suzanne, you mentioned that it feels longer than six days. I think that's just because of the lack of sleep that most people have had since the announcement first broke early Sunday morning last weekend. But I wanted to ask you about Libya.

Earlier this morning on CNN, I interviewed Sayeef Al Islam Hussein -- excuse me -- not Hussein, Gadhafi, who his Gadhafi's eldest son in Tripoli. And he sounded almost -- I don't want to say euphoric, but extremely optimistic that the latest move from Libya to open up its WMD programs to international inspectors could lead to a renewal and a new page in the Libyan-U.S. relationship.

Any sense from your sources at the White House whether or not that's in the offing?

MALVEAUX: Well, that really isn't on the table just quite yet. I mean, the administration doesn't really trust Gadhafi. If you look at his history -- and I say your interview, by the way. And they feel like perhaps lifting sanctions may be later down the road, but right now they really want to see whether or not he's good to his word.

This was really an extraordinary, stunning development yesterday. I mean, we were at the White House. And my Blackberry (ph) is going off, pager, calls all at once, essentially saying there's big news that's going to be broken out of England, and that Blair was actually going to be making that news.

Everybody thinking it's Osama bin Laden, it was weapons of mass destruction, something along those lines. Blair coming out, and then, of course, we saw the presidential podium being lifted out. And then just moments after, an announcement that President Bush would be addressing this directly to the American people.

A very significant development here. The president, the administration using this as an example first to say, look, we are justified in going to the war with Iraq, even if we haven't found weapons of mass destruction, because look at this leader over here who does have WMD. Well, he's turning them over.

The other thing is that there's a message to the rest of the world, this administration says, that's part of a much larger strategy for those trying to pursue these weapons, develop these weapons, give them up, it's not worth it. Perhaps you'll develop better relations with the U.S..

HAYS: Suzanne, one thing that struck me when the news broke is another example of how this White House can keep something so quiet. Tell us what you know now about the behind the scenes work to get this breakthrough.

MALVEAUX: Well, it really was extraordinary. And the breakthrough happened just a couple days ago, but it started nine months ago.

You had U.S. officials, you had Libyan diplomats, but it was Gadhafi's associates who first went to the Brits and said, look, we want to work something out here. It started after September 11, however. There were some signs that Libya wanted to cooperate and gain a greater relationship with the United States.

But nine months of these secret talks that were going on in London, in other cities, and they were essentially involving sometimes Gadhafi, sometimes Secretary Powell, intelligence agents, all of these people who were saying, how will we make this work? There were even CIA agents that were on the ground in two different sites inside Libya who were taking photos and samples and evidence of these weapons programs.

BRAHIMI: Well, there's at least one person who is willing to defend Saddam Hussein, and that is his eldest daughter. I'm on that story. And we'll be back in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RAGHAD HUSSEIN, SADDAM HUSSEIN'S DAUGHTER (through translator): I sat on the floor and began to cry. My daughter began to comfort me and hug me, but it was really horrific, painful and very cruel. It wounded me very deeply.

(END VIDEO CLIP)

BRAHIMI: Saddam Hussein's eldest daughter, Raghad Hussein, describing to me her reaction when she first saw the pictures of her father's capture on TV. Now, this was a very difficult moment for her. She says it was also quite difficult, she said, for her children.

Talking to the daughter of Saddam Hussein was a very interesting experience. She's someone I had met a couple times before, but I think I have never had such a difficult interview as to how to handle. I mean, you're really dealing in a way with the daughter of someone who is so hated for all the terrible things he did to his people. On the other hand, this daughter's life itself is like a Greek tragedy.

Her husband -- I mean, she and her sister, actually, were both married to their first cousins when they were 15 or 16, and they tried to do defect to Jordan at one point, went back thinking they had been pardoned by her father. And then her father is believed to be the one who actually killed her husband and her sister's husband.

And now, finally, they ran away after the war, after the collapse of Baghdad. They're in Jordan. And they're still all trying to come to grips with what happened. And they are discovering slowly things that they actually didn't really know or maybe were in denial about before.

KOPPEL: So Rym, to what do you attribute Raghad seeming outraged at the way her father is being treated by the Americans, considering, as you say, that her husband was, in fact, murdered by Saddam after he spilled the beans on the WMD program, came back thinking he was being pardoned. Is she just being a (UNINTELLIGIBLE) daughter, or does she really believe this?

BRAHIMI: There's a very weird relationship. I mean, I'm not a psychologist, of course, or a psychiatrist, but you can clearly see that there is somebody there who is trying to come to grips with what she should do, what her best duty is.

And it was very significant to me that, before answering my questions when we first started the interview, she actually started by reciting a verse from the Quran that says, "No matter what your parents do, no matter how they behave towards you, no matter how old they are, you still have to respect them. You owe it to them.

And she, after the interview, came back to me and said, "You realize that this is for me the most important answer I can give you about any of your questions."

And I think from what happened with my discussions with her before and after the interview is she was made to believe by her own family that in a way she was responsible for her husband's death, because she betrayed her father. And in a way, she's in a position of someone who has been in an abusive relationship with this father, but at the same time feels that she has a duty, maybe in front of god, I don't know, but she feels that she has to do this as a duty. At the same time, I mean, she's just discovering things.

MALVEAUX: Rym, does she want to go back to Baghdad, back to her home? And how do you think the Iraqis will receive her and her sister if they decide they will go back home?

BRAHIMI: I think -- no, she doesn't talk about going back at all. If anything, actually -- I mean, I don't think they would be very well received. There are a few people I have spoken to here who say, well, you know it's quite known that in our part of the world in this culture, they say, women are not really involved in anything that the men do that way. And fair enough, I mean, maybe Raghad and her sisters, they were under house arrest.

You know, she's 35 years old and she has never made a decision on her own. Everything has been decided for her by all these people in her family. So now it's the first time that she can actually decide what she wants to do with her future.

And what came across -- she said, "Listen, I did this interview, because I felt I had this duty that I had to say something. But I just really want to be left alone. I especially want my children to be left alone."

"I've always dreamed of having a normal life, of traveling, of not being recognized, of not having to deal with any politics. And I just want it to be over now. I just really want to move on and forget about the rest."

So there are contradictions there, as you can tell.

HAYS: Rym, I believe that Raghad also said that she would like to see her father tried in an international court. Now, in that case, if he were tried by the international tribunal, no death penalty.

Many Iraqis say, no, we want to try him here. He murdered 10 percent of the population, we want him held accountable for his crimes. Iraq does have a death penalty. What about that debate?

BRAHIMI: Well, what's interesting there is, again, she refused even off-camera when I tried to sort of approach her about how she felt what her father did, maybe, she again, she said, "Listen, I am the daughter of someone who was a politician, who's been this and that, but I was never involved." "All I'm trying to do is": -- as a daughter to a father she loves, try to do something and maybe try and get him something that is fair.

She is aware, and actually she's really only discovering certain things about her father. And also, she's just discovering how people really feel. You know, after we aired the interview, there were some viewer comments that we aired, all basically blasting this whole situation, saying that Saddam Hussein deserved to die, saying that Saddam Hussein should not be granted the justice he deny ied so to so many people.

I know from then speaking to her afterwards that she was in shock. She hasn't really realized all that's been happening and all that he did and how people see him. And it's just basically coming up now. That said, she's still very intent on -- she wanted, I think, to put that message out there, that as far as she's concerned, she wants an international tribunal, for what it's worth.

WALLACE: And Rym, a fascinating interview. What is she saying about the criticism her father is getting about basically surrendering to the American soldiers, not going down with a fight? What is she saying about that?

BRAHIMI: Well, that's also very interesting, because she still seems to be very much in denial about that. She acknowledged that she was in total denial when she just heard about the capture first before seeing the pictures. And it took her hours -- it's actually only when she saw the pictures that she accepted the truth.

She said, until then, she was just waiting and hoping for someone to call her to say it wasn't true. When she saw the pictures, she then decided that he could not have surrendered. And she said that off camera, on camera. She said, "He can't. I know my father. Somebody must have drugged him."

And she just really insisted that that must be the case. She knows him. He would not have surrendered. His enemies, even everybody was afraid of him, everybody knew he was courageous, according to her. And, you know, that's also something that -- she's really sticking to that version of her story.

HAYS: Rym, thank you for joining us, and also for sharing the story of not only the on-camera interview, but all the comments around it. What are you going to be working on in coming days?

BRAHIMI: Well, I'm back in Baghdad. It's been a while, actually, since I've come back, but there is always so much coming up. It will be the first Christmas in a very, very different atmosphere here for the Christian minority in Iraq, so we'll be looking at that.

We'll also be looking, of course, at the effects of the Saddam Hussein capture in Iraq itself and whether or not it will, as some hope, quell the violence, or whether it just won't change anything and there will be a lot of insurgents doing -- participating in attacks against U.S. troops or other people. So this is what we'll be looking at in the days to come.

HAYS: It's certainly interesting. You make me think back to a year ago, when there were pictures of Iraqis getting their Christmas trees and wondering when the war would start.

Well, from the mood in Iraq to the mood on Wall Street, and the cable industry's holiday surprise for consumers, I'm on the story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TED WEISBERG, SEAPORT SECURITIES: This is clearly a very positive psychological factor. It has to have a positive effect on the stock market.

(END VIDEO CLIP)

HAYS: Analyst Ted Weisberg of Seaport Securities on whether Saddam Hussein's capture could be a boost for the economy. We're back ON THE STORY.

And boy, that capture of Saddam Hussein, you could see the reaction so strongly in global financial markets. Stocks soared in Tokyo, they were up in Europe. The Dow soared nearly 100 points in the early hours.

But as people sat back and thought about it, they said, hey there's still a war on terror going on. It's great to catch Saddam, him, but the insurgents are still alive and well in Iraq. We have not captured Osama bin Laden.

(UNINTELLIGIBLE), and at the end of the day the Dow actually closed a bit lower. But still good news for the stock market because people are focused on the economy. And there's a lot of good news out there lately.

WALLACE: Kathleen, what is some of that good news, especially right now? What is this, the busiest shopping day of the year? How are retail sales looking, and how much are retailers hoping for a good shopping day today?

HAYS: Well, they certainly have their hopes high. At least it's not snowing in the Northeast today, so that's a good thing. The National Retail Federation estimates that people have about 30 percent of their shopping left to do.

Disappointing news at the beginning of the week. Wal-Mart, Target, even Pier One said, you know, we don't think the holiday shopping season is going to be as good as we thought.

But, for the month of November, great news on the economy. Industrial production the best number since October of 1999. Housing starts -- that's new home construction -- best level since 1984. Jobless claims coming down.

And excellent, excellent news. Consumer prices, the core CPI up at its lowest rate since 1966. You're looking at what's going to happen to the economy, and interest rates, you say, boy, low inflation can mean low rates. That's got to be good news for the White House.

But it's interesting. At his press conference on Monday, that President Bush, when asked, did not rule out more tax cuts next year if for some reason the economy needs them.

KOPPEL: Yes, but what about the cable industry, Kathleen, saying that they're going to raise rates in January? Is that a little splash of cold water on the holiday cheer?

HAYS: Well, a small one. You know, this is a regulated industry. And they raise their prices when the government tells them they can.

It's an average increase of about 6.5 percent. It will add a little more than $2 to the average family's monthly cable bill. And every $2 counts. We know that.

I think it will make more a discussion of, hey, how about more a la carte cable choices? The cable company saying, we give you so many more networks. That's why you're paying more.

Maybe people will want to pick and choose more. More questions about how deregulation since the 1996 Telecommunications Act is really working. A lot of issues will probably be revisited in the new year.

MALVEAUX: Kathleen, I'm one of those people who hasn't done a lick of shopping yet. I'm one of those last-minute folks. But tell us, you had mentioned before about the tax cuts and making those tax cuts permanent. What are your analysts, what are your sources saying about the impact of that, the possibility that that could happen in the next year?

HAYS: Well, I think this is -- President Bush capturing Saddam, you were saying, Suzanne, how anything can happy between now and the election. But I think when you think about the long-term impact for the economy and the markets, you have to figure the extent that this strengthens Bush's hand, strengthens his hand going into the election.

But it will help, if he is reelected, obviously so many of his policies. That would give him more momentum to make the tax cuts permanent. Some of the people on Wall Street are hoping that he'll even reduce the dividend tax further. Maybe even take it away entirely. We know if that were to happen, that would probably stocks another very positive boost.

The other side of it is the budget deficit. Of course, the White House and their supporters, say, look, the economy is growing strong, it's going to keep growing strong next year. That's going to make more revenues, that's going to make a smaller budget deficit. They're hoping that will happen.

But I do think there are people who are still watching closely saying, you know, we got the tax cuts this year, we'll get fat tax refunds next year. But we're past the home refinancing boom, it may be that the economy will need another boost. It will be interesting to see, again, if Bush really has to take that step. But right now, the optimists are saying, no, it's looking pretty good.

WALLACE: Kathleen -- and we always ask you this question, but I'm wondering, with all the good news you've been pointing to this week, are we seeing anything when it comes to jobs? Creation of more jobs, more unemployed workers getting jobs?

HAYS: You know that is so key to the whole thing of what happens to this economy, Kelly. Again, the new claims for unemployment benefits have come down to a substantially lower level than where they were running this summer, when the economy was looking quite weak and we didn't have any net new job creation. But people are still getting laid off.

And because of the way the world has changed, there's more competition from overseas, jobs outsourced -- very productive workers. All the technology, that means, you know, one person can do the work of three. That's what the economy is up against when it comes to creating jobs.

Until job creation picks up more, until the employment rate comes down, everybody says the economy isn't entirely out of the woods. And certainly not from a political standpoint, because that's the main thing people will be looking at, many of us when we go to the polls next year.

WALLACE: And a perfect segue for me, Kathleen, because we'll be moving to presidential politics after a break and a check of the hour's headlines.

I'm on the story of how Saddam's capture is affecting the Democratic candidates hoping to oust President Bush next year

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: The U.S. must make it clear that the capture of one very bad man does not mean this president and the Washington Democrats can declare victory on the war on terror.

(END VIDEO CLIP)

WALLACE: And that is Democratic presidential candidate Howard Dean firing back after he was taking hits from his Democratic rivals for days over his position on the war and his comments regarding the capture of Saddam Hussein.

Welcome back to ON THE STORY. I'm Kelly Wallace.

We have been covering Dean quite a bit this week, and we asked him on Thursday why he decided to fire back. Well, he told us that -- he said he's not used to being a wallflower, in his words, when people are taking hits at him. He said he had exercised what he called admirable restraint, but that he decided it was time to set the record straight.

Clearly, he has seen a slight dip in the polls. He still has a very strong lead in Iowa and New Hampshire. And this did come at a time when he did see, again, his critics and the polls showing a slight drop based on his comments after the capture of the Iraqi leader.

MALVEAUX: Kelly, this White House could not be happier that Howard Dean is the candidate that is the frontrunner among all the Democrats, because they really don't believe that he has much of a chance against President Bush. They say just take a look at the latest polls that show still anywhere from 65 to 70 percent of Americans believe that it was worth it to go to war, and they believe that he's basically out of step with most voters.

Is there any sense that he needs to cater his message somewhat more to the moderates?

WALLACE: Well, it's interesting, Suzanne. Definitely, when you look at the polls, because when you look at Howard Dean up against George W. Bush after the capture of Saddam Hussein, there is -- I think a 25-point spread in the favor of President Bush. No question that Dean campaign aides know that if things on the ground improve dramatically in Iraq, then Howard Dean's main message, his opposition to the war, could lose some significant momentum. That ultimately, he is going to have to reach out to the middle. He was trying to do that a little bit this week. He gave a speech on Monday on foreign policy, where he tried to convey the message that he is somebody who would use the military, he is somebody who has a command of foreign policy. He did a speech on Thursday talking about domestic policy. So he's trying to speak to a number of audiences right now, but no question, they know if things improve dramatically in Iraq, one of the main messages of this candidate will begin to go away.

HAYS: Well, and not only that, Kelly. It seems like the political gods are really smiling on George Bush right now.

Look at the economy. I just ran through the list of all the things that are going well, the expectation that things will continue to go well next year. And that if for some reason they don't, President Bush hasn't ruled pulling out of his hat once again those magical tax cuts. I think if I were a Democrat right now, I'd be getting really depressed.

WALLACE: You can imagine, Kathleen. Democratic aides were basically just -- they couldn't believe it. The news on Sunday morning, of course, Saddam Hussein's capture, welcomed by the United States, welcomed by the world. But privately, you had a few Democratic aides who say they just can't believe what they call sort of the luck of this administration.

Obviously, a lot of things went into play into capturing Saddam Hussein, but Democrats are, no question, frustrated because they see the economy and Iraq as two key issues they thought they would have where they thought the president would be vulnerable. If both of those start to improve, they know that George Bush will be a very, very strong candidate, and will make Democrats very difficult to defeat him next year.

KOPPEL: Kelly, what about some of the other Democratic candidates? For Joe Lieberman, for John Kerry, for, you know, the other contenders, Wesley Clark, could there be an opening for them?

WALLACE: Well, they think there is an opening here, Andrea. In fact, Senator Lieberman is saying that he's seeing more momentum in his campaign in New Hampshire and other places. He's been the strongest supporter of the war in Iraq and taken a lot of heat for that. And now he is coming out saying, you see, my position is vindicated by the capture of Saddam Hussein. And he has been pouncing the hardest, really, on Howard Dean, sensing a momentum here.

John Kerry as well, both in New Hampshire and Iowa. And then there's Wesley Clark, the retired general, who had also been somewhat critical of the war on Iraq, but at the same time applauding the administration for the capture of the Iraqi leader. So all these other candidates seeing there could be an opportunity here in trying to break some of Howard Dean's momentum.

KOPPEL: And you've got to love that endorsement that Clark got from the material girl. That will really pick up in the polls, isn't it? We'll talk about that when we come back.

Listen, from presidential politics to international diplomacy, the U.S., France, Germany and Russia strike a deal on Iraq. I'm on that story when we return.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICHARD BOUCHER, STATE DEPT. SPOKESMAN: We're more hopeful that people will step forward and say, yes, I want to be part of Iraq's future, because Iraq's future is a little bit clearer now.

(END VIDEO CLIP)

KOPPEL: State Department spokesman Richard Boucher suggesting that Saddam Hussein's capture could mean a change of heart for U.S. allies reluctant about becoming involved in post-war Iraq. That's mostly wishful thinking. And just so our viewers know it, it isn't just U.S. officials who can successfully spin American reporters, but even foreign officials are able to do so.

On Sunday, just a matter of hours after Saddam Hussein's capture, I was talking to French and German officials. And both of them were saying, you know, it's going to be very difficult. Don't think that just because Saddam Hussein is in custody that we'll be able to turn things around because of the Pentagon memo the week before which said that only those coalition partners who had fought alongside U.S. troops were going to get a piece of $18 billion, essentially slamming the door on countries like France, Germany and Russia, who oppose the war.

And lo and behold, James Baker goes to all of those capitals this week and they had a change of heart. So clearly, that's what I get for listening to those officials.

HAYS: Andrea, explain that to me, because the capture of Saddam Hussein, why would you suddenly be that much more sympathetic? Is it simply because the French, Germans and Russians say, hey, the tide has turned so much in favor of President Bush's policies? He's captured Saddam, we might as well just get on board and do whatever needs to be done?

And we know that forgiving the debt is a really, really big deal, because there's tons of money out there. If the Iraqis have to start paying that back, it could really be a drain on the economy, at a time when they're going to need all their resources to build back up.

KOPPEL: Absolutely. It's a couple of things, Kathleen.

It is a psychological factor and it's also a security factor. The premise is that if you have Saddam Hussein in custody, that could help diminish over time the efforts of the insurgents and certainly those former Ba'ath Party officials who had been out there thinking that Saddam Hussein might come back one day. And even the Iraqi people themselves thinking, gee, we can't be too supportive of the Americans and the British, because we don't want to be caught if Saddam Hussein comes back to power.

It's also really more about they want to close the chapter. Both the Americans and their European allies, the French, the Germans and, of course, the Russians, they would like to put this post-war saga behind them and really look towards the future. Don't expect France, Germany or Russia to be putting any troops on the ground.

What they will do, as you said, they're going to talk about substantial debt relief for Iraq, which is, you know, about $40 billion. Nineteen countries known as the Paris Club that Iraq owes about $40 billion. And it could really give a big boost to the provisional government when it comes into power in July.

WALLACE: Andrea, you cover diplomacy. What did James Baker go, though, there, to offer the French, the Germans, the Russians? Is there any sense of these sub-sub-subcontracting accounts, contractors, that they might get to those deals? Even if they're not going to get the primary deals, there still could be some business for them in Iraq if they went ahead and forgave -- go ahead and forgive this debt.

KOPPEL: To directly answer your question, the answer is, even before James Baker left, you heard Scott McClellan from the White House, you heard Richard Boucher and (UNINTELLIGIBLE) at the State Department saying, look, none of these contracts are written in stone. So thereby opening the door to the possibility, they realized oops, we shouldn't have maybe necessarily shut the door to that carrot that's out there if they were able to help reduce some of the Iraqi debt.

But on the other side, again, French and German officials I spoke with said, we're not getting a lot of pressure from our companies in Germany and France banging down the doors saying, we want to get into Iraq. And the answer is security.

You saw, in fact, some South Korean contractors getting the heck out of dodge because the security situation is so bad. So until the security situation is brought more under control, there really aren't going to be -- at least according to these officials who spun me on that other issue -- a lot of push to get in there and get ahold of the money. I think they're looking perhaps years down the road, though.

HAYS: Well, another major story a bit closer to home. Big news on the legal docket this week, including Michael Jackson vowing to take the gloves off in his fight against criminal charges.

We're on the story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MARK GERAGOS, DEFENSE ATTORNEY: I can tell you right now categorically that, based upon this complaint that has been filed, that Michael Jackson is unequivocally and absolutely innocent of these charges. (END VIDEO CLIP)

HAYS: Michael Jackson's attorney, Mark Geragos, on the offensive after his client was formally charged with seven counts of child molestation this week. Mark Geragos also saying, you know, it's really about the money. He is still charging that this is simply an attempt to get more money out of Michael Jackson, but still he was charged on Thursday.

He was freed on $3 million bail, free to travel to the U.K. for Christmas. It's pretty clear that a big aspect in the defense's case is going to be that in February and March, when these incidents are alleged to have occurred, there was some kind of discussion, some kind of investigation by the child welfare agency in Los Angeles into this whole issue. And at that time, the child and mother said nothing happened.

But clearly, Tom Sneddon, the DA, saying we launched our own investigation, they're going to go ahead with the arraignment in mid January. But it just gets more curious.

There was a story this week that Michael Jackson was joining the nation of Islam and he was -- nation of Islam people were going to take over his whole team. That was denied. A rumor that Johnny Cochran, the big O.J. Simpson trial lawyer, that he was going to join the team, also denied. So this thing is just kicking into higher gear all the time.

WALLACE: One interesting thing, this is now, of course, moving to the courts. But if you look at the court of public opinion, as the story has been reported and as there have been some questions raised about the prosecution's case, it's very interesting. If you look at Americans as they're polled, more people since the story first surfaced, and as these other questions have come up, now are thinking that the allegations could be false.

Now, obviously the public relations offensive by both sides will continue. But it is interesting, if you look at that, as some more questions have been raised publicly, more Americans are saying maybe these charges could be incorrect.

KOPPEL: I thought one really interesting story this week was Essie Mae Washington-Williams, the 78-year-old mixed-race daughter of the former U.S. senator now deceased, Strom Thurmond, and a woman who was his family's maid. I thought this was a really heartwarming story, the fact that this 78-year-old woman was finally able -- or felt finally able to tell the world who she is, and to accept publicly now her father, who was a segregationist, and acknowledge the fact that she has been keeping this secret now for so many, many decades.

And that Strom Thurmond had been given her money over the years and whatnot. It was just one of those slightly unusual stories, but also really heartwarming that she could finally be honest to the public as to who she is.

MALVEAUX: And it was a well-known secret as well. Because a lot of friends that I spoke with said, yes, they were very much familiar with that story. It just had yet to become public.

But just ahead, President Bush is getting his say with his weekly radio address. And we'll be back on the story after this

(COMMERCIAL BREAK)

MALVEAUX: Thanks to my colleagues. And thank you for watching ON THE STORY. We'll be back next week.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on Saddam Hussein and Osama bin Laden. At 12:00 noon Eastern, 9:00 a.m. Pacific, "CNN LIVE SATURDAY." And at 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY."

Coming up at the top of the hour a check of the top stories. But first, the president's weekly radio address.

(BEGIN AUDIOTAPE)

BUSH: Good morning.

Every year during the holidays, families across America gather to celebrate our blessings. And we unite to share those blessings with others, particularly in this time of giving. Our thoughts turn to fellow citizens who face hardship or illness or loneliness. Their burden often seems even greater at Christmas time, yet the hope of the season was meant for them as well.

The American people see these needs, and they are responding, as always, with great generosity. Just this week, a government report found that more than 63 million Americans volunteered over the past year. About four million more than in the year before. On average, volunteers get 52 hours, more than a full week of work of their year in service to others. This increase in volunteering is evidence of the new culture of service we are building in America, especially among young people.

Nearly two years ago, I created the USA Freedom Corps to continue the momentum generated by the countless acts of kindness that we saw after the attacks of September 11, 2001. I asked every person in America to commit 4,000 hours over a lifetime or about 100 hours a year to serving neighbors in need. The response was immediate and enthusiastic and has remained strong.

Over 75,000 service organizations now work with USA Freedom Corps, and a growing percentage of Americans have answered the call to service. Americans are volunteering in every region of the country and in nearly every part of the world.

Many communities have formed citizen corps councils to train neighborhoods and emergency response. About 50,000 are enrolled in AmeriCorps, which carries out vital work in education, the environment and homeland security. And the Peace Corps expanded over 7,500 volunteers in 2003, the highest level of participation in almost three decades. Every time I travel in America, I have the honor to meet some of our country's most dedicated volunteers. They include people like Fong Wen (ph), a high school student in Denver who gives hours of her free time to lead service projects for the American Red Cross. And Anna Cooper (ph), of Miami, who helps senior citizens with daily needs like grocery shopping. And Bill Sellers (ph), an 83-year-old man from Houston, who has dedicated almost half his life to feeding the hungry.

Some of the men and women I've met are members of the armed forces, who volunteer time in their communities on top of their service to the nation. And next week, I look forward to helping a generous group from Virginia distribute angel tree gifts to children whose parents are in prison.

The high level of volunteerism in our country is encouraging, though not surprising. America is a compassionate and generous land. With their good work, volunteers are living out the spirit of the season, and year round they are showing the heart and soul of our people, which is the greatest strength of our nation.

Thank you for listening.

(END AUDIOTAPE)

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




Capture; U.S., European Allies Trying to Mend Fences Over Iraq>


Aired December 20, 2003 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Suzanne Malveaux, on the story of a huge victory for President Bush in Iraq and Libya.
RYM BRAHIMI, CNN CORRESPONDENT: I'm Rym Brahimi, in Baghdad, on the story of what is still a very dangerous situation in Iraq. And Saddam Hussein's daughter speaks out about her father's capture.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace, on the story of story of Democratic presidential frontrunner Howard Dean on the defense and trying to regain momentum now that Saddam Hussein is caught.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: I'm Andrea Koppel, on the story of the U.S. and its European allies trying to mend fences over Iraq. And a new salvo in the Middle East conflict.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, on the story of retailers hoping for a last-minute holiday shopping surge and a dose of sticker shock for cable TV subscribers.

Also coming up, the king of pop, Michael Jackson, officially charged with child molestation.

And we'll listen to the president's weekly radio address at the end of the hour.

Email us at onthestory@cnn.com.

Now, to Suzanne Malveaux and the capture of Saddam.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Good riddance. The world is better off without you, Mr. Saddam Hussein. I find it very interesting that when the heat got on, you dug yourself a hole and crawled in it.

(END VIDEO CLIP)

MALVEAUX: Well, President Bush savoring the news that stunned the world this week, Saddam Hussein now a prisoner in the custody of U.S. authorities in Iraq. There was really an extraordinary moment. It was just six days ago, but it seems like it was a long, long time ago. Everybody talking about this since the very beginning, and already it seems to have huge political payoffs for the administration.

We saw President Bush's poll numbers go up about 10 percentage points in job approval ratings. We also saw the cooperation of war opponents, France, Germany and Russia, all kicking in, saying they would help forgiving the Iraqi debt. And also the possibility now that we have documents and evidence from Saddam Hussein really giving us a new glimpse into inside al Qaeda, as well as some of the members of his own party. So it was a huge win for the administration this week.

BRAHIMI: Suzanne, as you know, there's a lot of awareness in this part of the world, in the Middle East, that there's a lot at stake here in Iraq for the U.S. administration. There's also a lot of awareness that there is an election coming up. What is, do you think, or what do you think will be the impact on the U.S. administration on this capture of Saddam Hussein?

MALVEAUX: Well, President Bush categorically, if you asked him -- and he had a press conference this week about whether or not any of this is political, and he really bristled at that, saying this is not about politics. But of course Republican strategists all looking at this saying, OK, well, how is this going to play out for the reelection bid?

Well, Democrats certainly hope that there's enough time, at least eight months, that all of this really won't make that much of a difference here. That, yes, Saddam Hussein has been captured, but a lot can happen. I mean, you still have U.S. soldiers dying almost on a daily basis, you don't know what the situation will be on the ground inside of Iraq, whether or not this Iraqi Governing Council will come together.

There's still a lot of unanswered questions that this administration has to face by the time the voters go to the polls. So they are really trying to weigh this very carefully. And they were very careful not to be gloating about this, overly enthusiastic, at least publicly, because of that "Mission Accomplished" fiasco that happened before.

WALLACE: But privately, Suzanne, they might gloat just a little bit, I'm sure. Because what do they think when it comes to this issue, the capture of Saddam Hussein? President Bush's critics have been pummeling him about what's going on the ground. How crucial do they think that this victory is right now, the timing of it, especially after a month or two, where we saw so many American soldiers killed in Iraq?

MALVEAUX: Well, Kelly, you bring up an excellent point, and that is the fact that they really needed this victory at this time. It was a lot of bad news that was happening.

There are a couple things, however, that the Democrats are really taking advantage of. And the big question is that, you know, Saddam Hussein was not responsible for 9/11, it was really Osama bin Laden. And that is what the Democratic presidential candidates and his critics have been asking, what about Osama bin Laden? It really brings up that point.

The other thing, of course, too, is the whole idea of weapons of mass destruction, and where are these weapons of mass destruction? Saddam Hussein saying, look, he doesn't have any, he made this whole thing up. But President Bush coming out saying that, well, he doesn't believe Saddam in the first place. But still they have yet to find these weapons of mass destruction.

Will that play out? Will that really gain some traction for the voters next year when they ask, was this justified, this war, in the first place?

KOPPEL: Suzanne, you mentioned that it feels longer than six days. I think that's just because of the lack of sleep that most people have had since the announcement first broke early Sunday morning last weekend. But I wanted to ask you about Libya.

Earlier this morning on CNN, I interviewed Sayeef Al Islam Hussein -- excuse me -- not Hussein, Gadhafi, who his Gadhafi's eldest son in Tripoli. And he sounded almost -- I don't want to say euphoric, but extremely optimistic that the latest move from Libya to open up its WMD programs to international inspectors could lead to a renewal and a new page in the Libyan-U.S. relationship.

Any sense from your sources at the White House whether or not that's in the offing?

MALVEAUX: Well, that really isn't on the table just quite yet. I mean, the administration doesn't really trust Gadhafi. If you look at his history -- and I say your interview, by the way. And they feel like perhaps lifting sanctions may be later down the road, but right now they really want to see whether or not he's good to his word.

This was really an extraordinary, stunning development yesterday. I mean, we were at the White House. And my Blackberry (ph) is going off, pager, calls all at once, essentially saying there's big news that's going to be broken out of England, and that Blair was actually going to be making that news.

Everybody thinking it's Osama bin Laden, it was weapons of mass destruction, something along those lines. Blair coming out, and then, of course, we saw the presidential podium being lifted out. And then just moments after, an announcement that President Bush would be addressing this directly to the American people.

A very significant development here. The president, the administration using this as an example first to say, look, we are justified in going to the war with Iraq, even if we haven't found weapons of mass destruction, because look at this leader over here who does have WMD. Well, he's turning them over.

The other thing is that there's a message to the rest of the world, this administration says, that's part of a much larger strategy for those trying to pursue these weapons, develop these weapons, give them up, it's not worth it. Perhaps you'll develop better relations with the U.S..

HAYS: Suzanne, one thing that struck me when the news broke is another example of how this White House can keep something so quiet. Tell us what you know now about the behind the scenes work to get this breakthrough.

MALVEAUX: Well, it really was extraordinary. And the breakthrough happened just a couple days ago, but it started nine months ago.

You had U.S. officials, you had Libyan diplomats, but it was Gadhafi's associates who first went to the Brits and said, look, we want to work something out here. It started after September 11, however. There were some signs that Libya wanted to cooperate and gain a greater relationship with the United States.

But nine months of these secret talks that were going on in London, in other cities, and they were essentially involving sometimes Gadhafi, sometimes Secretary Powell, intelligence agents, all of these people who were saying, how will we make this work? There were even CIA agents that were on the ground in two different sites inside Libya who were taking photos and samples and evidence of these weapons programs.

BRAHIMI: Well, there's at least one person who is willing to defend Saddam Hussein, and that is his eldest daughter. I'm on that story. And we'll be back in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RAGHAD HUSSEIN, SADDAM HUSSEIN'S DAUGHTER (through translator): I sat on the floor and began to cry. My daughter began to comfort me and hug me, but it was really horrific, painful and very cruel. It wounded me very deeply.

(END VIDEO CLIP)

BRAHIMI: Saddam Hussein's eldest daughter, Raghad Hussein, describing to me her reaction when she first saw the pictures of her father's capture on TV. Now, this was a very difficult moment for her. She says it was also quite difficult, she said, for her children.

Talking to the daughter of Saddam Hussein was a very interesting experience. She's someone I had met a couple times before, but I think I have never had such a difficult interview as to how to handle. I mean, you're really dealing in a way with the daughter of someone who is so hated for all the terrible things he did to his people. On the other hand, this daughter's life itself is like a Greek tragedy.

Her husband -- I mean, she and her sister, actually, were both married to their first cousins when they were 15 or 16, and they tried to do defect to Jordan at one point, went back thinking they had been pardoned by her father. And then her father is believed to be the one who actually killed her husband and her sister's husband.

And now, finally, they ran away after the war, after the collapse of Baghdad. They're in Jordan. And they're still all trying to come to grips with what happened. And they are discovering slowly things that they actually didn't really know or maybe were in denial about before.

KOPPEL: So Rym, to what do you attribute Raghad seeming outraged at the way her father is being treated by the Americans, considering, as you say, that her husband was, in fact, murdered by Saddam after he spilled the beans on the WMD program, came back thinking he was being pardoned. Is she just being a (UNINTELLIGIBLE) daughter, or does she really believe this?

BRAHIMI: There's a very weird relationship. I mean, I'm not a psychologist, of course, or a psychiatrist, but you can clearly see that there is somebody there who is trying to come to grips with what she should do, what her best duty is.

And it was very significant to me that, before answering my questions when we first started the interview, she actually started by reciting a verse from the Quran that says, "No matter what your parents do, no matter how they behave towards you, no matter how old they are, you still have to respect them. You owe it to them.

And she, after the interview, came back to me and said, "You realize that this is for me the most important answer I can give you about any of your questions."

And I think from what happened with my discussions with her before and after the interview is she was made to believe by her own family that in a way she was responsible for her husband's death, because she betrayed her father. And in a way, she's in a position of someone who has been in an abusive relationship with this father, but at the same time feels that she has a duty, maybe in front of god, I don't know, but she feels that she has to do this as a duty. At the same time, I mean, she's just discovering things.

MALVEAUX: Rym, does she want to go back to Baghdad, back to her home? And how do you think the Iraqis will receive her and her sister if they decide they will go back home?

BRAHIMI: I think -- no, she doesn't talk about going back at all. If anything, actually -- I mean, I don't think they would be very well received. There are a few people I have spoken to here who say, well, you know it's quite known that in our part of the world in this culture, they say, women are not really involved in anything that the men do that way. And fair enough, I mean, maybe Raghad and her sisters, they were under house arrest.

You know, she's 35 years old and she has never made a decision on her own. Everything has been decided for her by all these people in her family. So now it's the first time that she can actually decide what she wants to do with her future.

And what came across -- she said, "Listen, I did this interview, because I felt I had this duty that I had to say something. But I just really want to be left alone. I especially want my children to be left alone."

"I've always dreamed of having a normal life, of traveling, of not being recognized, of not having to deal with any politics. And I just want it to be over now. I just really want to move on and forget about the rest."

So there are contradictions there, as you can tell.

HAYS: Rym, I believe that Raghad also said that she would like to see her father tried in an international court. Now, in that case, if he were tried by the international tribunal, no death penalty.

Many Iraqis say, no, we want to try him here. He murdered 10 percent of the population, we want him held accountable for his crimes. Iraq does have a death penalty. What about that debate?

BRAHIMI: Well, what's interesting there is, again, she refused even off-camera when I tried to sort of approach her about how she felt what her father did, maybe, she again, she said, "Listen, I am the daughter of someone who was a politician, who's been this and that, but I was never involved." "All I'm trying to do is": -- as a daughter to a father she loves, try to do something and maybe try and get him something that is fair.

She is aware, and actually she's really only discovering certain things about her father. And also, she's just discovering how people really feel. You know, after we aired the interview, there were some viewer comments that we aired, all basically blasting this whole situation, saying that Saddam Hussein deserved to die, saying that Saddam Hussein should not be granted the justice he deny ied so to so many people.

I know from then speaking to her afterwards that she was in shock. She hasn't really realized all that's been happening and all that he did and how people see him. And it's just basically coming up now. That said, she's still very intent on -- she wanted, I think, to put that message out there, that as far as she's concerned, she wants an international tribunal, for what it's worth.

WALLACE: And Rym, a fascinating interview. What is she saying about the criticism her father is getting about basically surrendering to the American soldiers, not going down with a fight? What is she saying about that?

BRAHIMI: Well, that's also very interesting, because she still seems to be very much in denial about that. She acknowledged that she was in total denial when she just heard about the capture first before seeing the pictures. And it took her hours -- it's actually only when she saw the pictures that she accepted the truth.

She said, until then, she was just waiting and hoping for someone to call her to say it wasn't true. When she saw the pictures, she then decided that he could not have surrendered. And she said that off camera, on camera. She said, "He can't. I know my father. Somebody must have drugged him."

And she just really insisted that that must be the case. She knows him. He would not have surrendered. His enemies, even everybody was afraid of him, everybody knew he was courageous, according to her. And, you know, that's also something that -- she's really sticking to that version of her story.

HAYS: Rym, thank you for joining us, and also for sharing the story of not only the on-camera interview, but all the comments around it. What are you going to be working on in coming days?

BRAHIMI: Well, I'm back in Baghdad. It's been a while, actually, since I've come back, but there is always so much coming up. It will be the first Christmas in a very, very different atmosphere here for the Christian minority in Iraq, so we'll be looking at that.

We'll also be looking, of course, at the effects of the Saddam Hussein capture in Iraq itself and whether or not it will, as some hope, quell the violence, or whether it just won't change anything and there will be a lot of insurgents doing -- participating in attacks against U.S. troops or other people. So this is what we'll be looking at in the days to come.

HAYS: It's certainly interesting. You make me think back to a year ago, when there were pictures of Iraqis getting their Christmas trees and wondering when the war would start.

Well, from the mood in Iraq to the mood on Wall Street, and the cable industry's holiday surprise for consumers, I'm on the story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TED WEISBERG, SEAPORT SECURITIES: This is clearly a very positive psychological factor. It has to have a positive effect on the stock market.

(END VIDEO CLIP)

HAYS: Analyst Ted Weisberg of Seaport Securities on whether Saddam Hussein's capture could be a boost for the economy. We're back ON THE STORY.

And boy, that capture of Saddam Hussein, you could see the reaction so strongly in global financial markets. Stocks soared in Tokyo, they were up in Europe. The Dow soared nearly 100 points in the early hours.

But as people sat back and thought about it, they said, hey there's still a war on terror going on. It's great to catch Saddam, him, but the insurgents are still alive and well in Iraq. We have not captured Osama bin Laden.

(UNINTELLIGIBLE), and at the end of the day the Dow actually closed a bit lower. But still good news for the stock market because people are focused on the economy. And there's a lot of good news out there lately.

WALLACE: Kathleen, what is some of that good news, especially right now? What is this, the busiest shopping day of the year? How are retail sales looking, and how much are retailers hoping for a good shopping day today?

HAYS: Well, they certainly have their hopes high. At least it's not snowing in the Northeast today, so that's a good thing. The National Retail Federation estimates that people have about 30 percent of their shopping left to do.

Disappointing news at the beginning of the week. Wal-Mart, Target, even Pier One said, you know, we don't think the holiday shopping season is going to be as good as we thought.

But, for the month of November, great news on the economy. Industrial production the best number since October of 1999. Housing starts -- that's new home construction -- best level since 1984. Jobless claims coming down.

And excellent, excellent news. Consumer prices, the core CPI up at its lowest rate since 1966. You're looking at what's going to happen to the economy, and interest rates, you say, boy, low inflation can mean low rates. That's got to be good news for the White House.

But it's interesting. At his press conference on Monday, that President Bush, when asked, did not rule out more tax cuts next year if for some reason the economy needs them.

KOPPEL: Yes, but what about the cable industry, Kathleen, saying that they're going to raise rates in January? Is that a little splash of cold water on the holiday cheer?

HAYS: Well, a small one. You know, this is a regulated industry. And they raise their prices when the government tells them they can.

It's an average increase of about 6.5 percent. It will add a little more than $2 to the average family's monthly cable bill. And every $2 counts. We know that.

I think it will make more a discussion of, hey, how about more a la carte cable choices? The cable company saying, we give you so many more networks. That's why you're paying more.

Maybe people will want to pick and choose more. More questions about how deregulation since the 1996 Telecommunications Act is really working. A lot of issues will probably be revisited in the new year.

MALVEAUX: Kathleen, I'm one of those people who hasn't done a lick of shopping yet. I'm one of those last-minute folks. But tell us, you had mentioned before about the tax cuts and making those tax cuts permanent. What are your analysts, what are your sources saying about the impact of that, the possibility that that could happen in the next year?

HAYS: Well, I think this is -- President Bush capturing Saddam, you were saying, Suzanne, how anything can happy between now and the election. But I think when you think about the long-term impact for the economy and the markets, you have to figure the extent that this strengthens Bush's hand, strengthens his hand going into the election.

But it will help, if he is reelected, obviously so many of his policies. That would give him more momentum to make the tax cuts permanent. Some of the people on Wall Street are hoping that he'll even reduce the dividend tax further. Maybe even take it away entirely. We know if that were to happen, that would probably stocks another very positive boost.

The other side of it is the budget deficit. Of course, the White House and their supporters, say, look, the economy is growing strong, it's going to keep growing strong next year. That's going to make more revenues, that's going to make a smaller budget deficit. They're hoping that will happen.

But I do think there are people who are still watching closely saying, you know, we got the tax cuts this year, we'll get fat tax refunds next year. But we're past the home refinancing boom, it may be that the economy will need another boost. It will be interesting to see, again, if Bush really has to take that step. But right now, the optimists are saying, no, it's looking pretty good.

WALLACE: Kathleen -- and we always ask you this question, but I'm wondering, with all the good news you've been pointing to this week, are we seeing anything when it comes to jobs? Creation of more jobs, more unemployed workers getting jobs?

HAYS: You know that is so key to the whole thing of what happens to this economy, Kelly. Again, the new claims for unemployment benefits have come down to a substantially lower level than where they were running this summer, when the economy was looking quite weak and we didn't have any net new job creation. But people are still getting laid off.

And because of the way the world has changed, there's more competition from overseas, jobs outsourced -- very productive workers. All the technology, that means, you know, one person can do the work of three. That's what the economy is up against when it comes to creating jobs.

Until job creation picks up more, until the employment rate comes down, everybody says the economy isn't entirely out of the woods. And certainly not from a political standpoint, because that's the main thing people will be looking at, many of us when we go to the polls next year.

WALLACE: And a perfect segue for me, Kathleen, because we'll be moving to presidential politics after a break and a check of the hour's headlines.

I'm on the story of how Saddam's capture is affecting the Democratic candidates hoping to oust President Bush next year

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HOWARD DEAN (D), DEMOCRATIC PRESIDENTIAL CANDIDATE: The U.S. must make it clear that the capture of one very bad man does not mean this president and the Washington Democrats can declare victory on the war on terror.

(END VIDEO CLIP)

WALLACE: And that is Democratic presidential candidate Howard Dean firing back after he was taking hits from his Democratic rivals for days over his position on the war and his comments regarding the capture of Saddam Hussein.

Welcome back to ON THE STORY. I'm Kelly Wallace.

We have been covering Dean quite a bit this week, and we asked him on Thursday why he decided to fire back. Well, he told us that -- he said he's not used to being a wallflower, in his words, when people are taking hits at him. He said he had exercised what he called admirable restraint, but that he decided it was time to set the record straight.

Clearly, he has seen a slight dip in the polls. He still has a very strong lead in Iowa and New Hampshire. And this did come at a time when he did see, again, his critics and the polls showing a slight drop based on his comments after the capture of the Iraqi leader.

MALVEAUX: Kelly, this White House could not be happier that Howard Dean is the candidate that is the frontrunner among all the Democrats, because they really don't believe that he has much of a chance against President Bush. They say just take a look at the latest polls that show still anywhere from 65 to 70 percent of Americans believe that it was worth it to go to war, and they believe that he's basically out of step with most voters.

Is there any sense that he needs to cater his message somewhat more to the moderates?

WALLACE: Well, it's interesting, Suzanne. Definitely, when you look at the polls, because when you look at Howard Dean up against George W. Bush after the capture of Saddam Hussein, there is -- I think a 25-point spread in the favor of President Bush. No question that Dean campaign aides know that if things on the ground improve dramatically in Iraq, then Howard Dean's main message, his opposition to the war, could lose some significant momentum. That ultimately, he is going to have to reach out to the middle. He was trying to do that a little bit this week. He gave a speech on Monday on foreign policy, where he tried to convey the message that he is somebody who would use the military, he is somebody who has a command of foreign policy. He did a speech on Thursday talking about domestic policy. So he's trying to speak to a number of audiences right now, but no question, they know if things improve dramatically in Iraq, one of the main messages of this candidate will begin to go away.

HAYS: Well, and not only that, Kelly. It seems like the political gods are really smiling on George Bush right now.

Look at the economy. I just ran through the list of all the things that are going well, the expectation that things will continue to go well next year. And that if for some reason they don't, President Bush hasn't ruled pulling out of his hat once again those magical tax cuts. I think if I were a Democrat right now, I'd be getting really depressed.

WALLACE: You can imagine, Kathleen. Democratic aides were basically just -- they couldn't believe it. The news on Sunday morning, of course, Saddam Hussein's capture, welcomed by the United States, welcomed by the world. But privately, you had a few Democratic aides who say they just can't believe what they call sort of the luck of this administration.

Obviously, a lot of things went into play into capturing Saddam Hussein, but Democrats are, no question, frustrated because they see the economy and Iraq as two key issues they thought they would have where they thought the president would be vulnerable. If both of those start to improve, they know that George Bush will be a very, very strong candidate, and will make Democrats very difficult to defeat him next year.

KOPPEL: Kelly, what about some of the other Democratic candidates? For Joe Lieberman, for John Kerry, for, you know, the other contenders, Wesley Clark, could there be an opening for them?

WALLACE: Well, they think there is an opening here, Andrea. In fact, Senator Lieberman is saying that he's seeing more momentum in his campaign in New Hampshire and other places. He's been the strongest supporter of the war in Iraq and taken a lot of heat for that. And now he is coming out saying, you see, my position is vindicated by the capture of Saddam Hussein. And he has been pouncing the hardest, really, on Howard Dean, sensing a momentum here.

John Kerry as well, both in New Hampshire and Iowa. And then there's Wesley Clark, the retired general, who had also been somewhat critical of the war on Iraq, but at the same time applauding the administration for the capture of the Iraqi leader. So all these other candidates seeing there could be an opportunity here in trying to break some of Howard Dean's momentum.

KOPPEL: And you've got to love that endorsement that Clark got from the material girl. That will really pick up in the polls, isn't it? We'll talk about that when we come back.

Listen, from presidential politics to international diplomacy, the U.S., France, Germany and Russia strike a deal on Iraq. I'm on that story when we return.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICHARD BOUCHER, STATE DEPT. SPOKESMAN: We're more hopeful that people will step forward and say, yes, I want to be part of Iraq's future, because Iraq's future is a little bit clearer now.

(END VIDEO CLIP)

KOPPEL: State Department spokesman Richard Boucher suggesting that Saddam Hussein's capture could mean a change of heart for U.S. allies reluctant about becoming involved in post-war Iraq. That's mostly wishful thinking. And just so our viewers know it, it isn't just U.S. officials who can successfully spin American reporters, but even foreign officials are able to do so.

On Sunday, just a matter of hours after Saddam Hussein's capture, I was talking to French and German officials. And both of them were saying, you know, it's going to be very difficult. Don't think that just because Saddam Hussein is in custody that we'll be able to turn things around because of the Pentagon memo the week before which said that only those coalition partners who had fought alongside U.S. troops were going to get a piece of $18 billion, essentially slamming the door on countries like France, Germany and Russia, who oppose the war.

And lo and behold, James Baker goes to all of those capitals this week and they had a change of heart. So clearly, that's what I get for listening to those officials.

HAYS: Andrea, explain that to me, because the capture of Saddam Hussein, why would you suddenly be that much more sympathetic? Is it simply because the French, Germans and Russians say, hey, the tide has turned so much in favor of President Bush's policies? He's captured Saddam, we might as well just get on board and do whatever needs to be done?

And we know that forgiving the debt is a really, really big deal, because there's tons of money out there. If the Iraqis have to start paying that back, it could really be a drain on the economy, at a time when they're going to need all their resources to build back up.

KOPPEL: Absolutely. It's a couple of things, Kathleen.

It is a psychological factor and it's also a security factor. The premise is that if you have Saddam Hussein in custody, that could help diminish over time the efforts of the insurgents and certainly those former Ba'ath Party officials who had been out there thinking that Saddam Hussein might come back one day. And even the Iraqi people themselves thinking, gee, we can't be too supportive of the Americans and the British, because we don't want to be caught if Saddam Hussein comes back to power.

It's also really more about they want to close the chapter. Both the Americans and their European allies, the French, the Germans and, of course, the Russians, they would like to put this post-war saga behind them and really look towards the future. Don't expect France, Germany or Russia to be putting any troops on the ground.

What they will do, as you said, they're going to talk about substantial debt relief for Iraq, which is, you know, about $40 billion. Nineteen countries known as the Paris Club that Iraq owes about $40 billion. And it could really give a big boost to the provisional government when it comes into power in July.

WALLACE: Andrea, you cover diplomacy. What did James Baker go, though, there, to offer the French, the Germans, the Russians? Is there any sense of these sub-sub-subcontracting accounts, contractors, that they might get to those deals? Even if they're not going to get the primary deals, there still could be some business for them in Iraq if they went ahead and forgave -- go ahead and forgive this debt.

KOPPEL: To directly answer your question, the answer is, even before James Baker left, you heard Scott McClellan from the White House, you heard Richard Boucher and (UNINTELLIGIBLE) at the State Department saying, look, none of these contracts are written in stone. So thereby opening the door to the possibility, they realized oops, we shouldn't have maybe necessarily shut the door to that carrot that's out there if they were able to help reduce some of the Iraqi debt.

But on the other side, again, French and German officials I spoke with said, we're not getting a lot of pressure from our companies in Germany and France banging down the doors saying, we want to get into Iraq. And the answer is security.

You saw, in fact, some South Korean contractors getting the heck out of dodge because the security situation is so bad. So until the security situation is brought more under control, there really aren't going to be -- at least according to these officials who spun me on that other issue -- a lot of push to get in there and get ahold of the money. I think they're looking perhaps years down the road, though.

HAYS: Well, another major story a bit closer to home. Big news on the legal docket this week, including Michael Jackson vowing to take the gloves off in his fight against criminal charges.

We're on the story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MARK GERAGOS, DEFENSE ATTORNEY: I can tell you right now categorically that, based upon this complaint that has been filed, that Michael Jackson is unequivocally and absolutely innocent of these charges. (END VIDEO CLIP)

HAYS: Michael Jackson's attorney, Mark Geragos, on the offensive after his client was formally charged with seven counts of child molestation this week. Mark Geragos also saying, you know, it's really about the money. He is still charging that this is simply an attempt to get more money out of Michael Jackson, but still he was charged on Thursday.

He was freed on $3 million bail, free to travel to the U.K. for Christmas. It's pretty clear that a big aspect in the defense's case is going to be that in February and March, when these incidents are alleged to have occurred, there was some kind of discussion, some kind of investigation by the child welfare agency in Los Angeles into this whole issue. And at that time, the child and mother said nothing happened.

But clearly, Tom Sneddon, the DA, saying we launched our own investigation, they're going to go ahead with the arraignment in mid January. But it just gets more curious.

There was a story this week that Michael Jackson was joining the nation of Islam and he was -- nation of Islam people were going to take over his whole team. That was denied. A rumor that Johnny Cochran, the big O.J. Simpson trial lawyer, that he was going to join the team, also denied. So this thing is just kicking into higher gear all the time.

WALLACE: One interesting thing, this is now, of course, moving to the courts. But if you look at the court of public opinion, as the story has been reported and as there have been some questions raised about the prosecution's case, it's very interesting. If you look at Americans as they're polled, more people since the story first surfaced, and as these other questions have come up, now are thinking that the allegations could be false.

Now, obviously the public relations offensive by both sides will continue. But it is interesting, if you look at that, as some more questions have been raised publicly, more Americans are saying maybe these charges could be incorrect.

KOPPEL: I thought one really interesting story this week was Essie Mae Washington-Williams, the 78-year-old mixed-race daughter of the former U.S. senator now deceased, Strom Thurmond, and a woman who was his family's maid. I thought this was a really heartwarming story, the fact that this 78-year-old woman was finally able -- or felt finally able to tell the world who she is, and to accept publicly now her father, who was a segregationist, and acknowledge the fact that she has been keeping this secret now for so many, many decades.

And that Strom Thurmond had been given her money over the years and whatnot. It was just one of those slightly unusual stories, but also really heartwarming that she could finally be honest to the public as to who she is.

MALVEAUX: And it was a well-known secret as well. Because a lot of friends that I spoke with said, yes, they were very much familiar with that story. It just had yet to become public.

But just ahead, President Bush is getting his say with his weekly radio address. And we'll be back on the story after this

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MALVEAUX: Thanks to my colleagues. And thank you for watching ON THE STORY. We'll be back next week.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on Saddam Hussein and Osama bin Laden. At 12:00 noon Eastern, 9:00 a.m. Pacific, "CNN LIVE SATURDAY." And at 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY."

Coming up at the top of the hour a check of the top stories. But first, the president's weekly radio address.

(BEGIN AUDIOTAPE)

BUSH: Good morning.

Every year during the holidays, families across America gather to celebrate our blessings. And we unite to share those blessings with others, particularly in this time of giving. Our thoughts turn to fellow citizens who face hardship or illness or loneliness. Their burden often seems even greater at Christmas time, yet the hope of the season was meant for them as well.

The American people see these needs, and they are responding, as always, with great generosity. Just this week, a government report found that more than 63 million Americans volunteered over the past year. About four million more than in the year before. On average, volunteers get 52 hours, more than a full week of work of their year in service to others. This increase in volunteering is evidence of the new culture of service we are building in America, especially among young people.

Nearly two years ago, I created the USA Freedom Corps to continue the momentum generated by the countless acts of kindness that we saw after the attacks of September 11, 2001. I asked every person in America to commit 4,000 hours over a lifetime or about 100 hours a year to serving neighbors in need. The response was immediate and enthusiastic and has remained strong.

Over 75,000 service organizations now work with USA Freedom Corps, and a growing percentage of Americans have answered the call to service. Americans are volunteering in every region of the country and in nearly every part of the world.

Many communities have formed citizen corps councils to train neighborhoods and emergency response. About 50,000 are enrolled in AmeriCorps, which carries out vital work in education, the environment and homeland security. And the Peace Corps expanded over 7,500 volunteers in 2003, the highest level of participation in almost three decades. Every time I travel in America, I have the honor to meet some of our country's most dedicated volunteers. They include people like Fong Wen (ph), a high school student in Denver who gives hours of her free time to lead service projects for the American Red Cross. And Anna Cooper (ph), of Miami, who helps senior citizens with daily needs like grocery shopping. And Bill Sellers (ph), an 83-year-old man from Houston, who has dedicated almost half his life to feeding the hungry.

Some of the men and women I've met are members of the armed forces, who volunteer time in their communities on top of their service to the nation. And next week, I look forward to helping a generous group from Virginia distribute angel tree gifts to children whose parents are in prison.

The high level of volunteerism in our country is encouraging, though not surprising. America is a compassionate and generous land. With their good work, volunteers are living out the spirit of the season, and year round they are showing the heart and soul of our people, which is the greatest strength of our nation.

Thank you for listening.

(END AUDIOTAPE)

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




Capture; U.S., European Allies Trying to Mend Fences Over Iraq>