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On the Story

Financial Institutions Go On High Alert; July Jobs Numbers Frustrate, Disappoint

Aired August 07, 2004 - 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.


CATHERINE CALLAWAY, CNN ANCHOR: U.S. forces battle Shiite militiamen in Najaf for a third straight day. Sporadic explosions and gunfire echoed through that city today after intense fighting on Thursday and Friday. At least two Marines were killed yesterday in fighting there. And in Baghdad, an insurgent attack killed a U.S. soldier.
Meanwhile, back here in U.S., President Bush taking a break from the re-election campaign today. Mr. Bush is at the family compound in Kennebunkport, Maine, where he will attend the wedding of his nephew.

And Senator John Kerry and his running mate, John Edwards, are heading west today aboard their campaign train. And they've talking about the nation's economy and yesterday's bleak jobs report, among other things. The Democratic candidates have stops scheduled today in Colorado and New Mexico.

Another day of hearings on the prisoner-abuse scandal in Iraq under way this morning. An investigator's testified Private Lynndie England described the leash as an intimidation device. Now, a photo shows England holding a leash attached to a naked prisoner. England is accused of abusing prisoners in Iraq, and that hearing will determine if she should face a court martial.

Keeping you informed, CNN, the most trusted name in news. I'm Catherine Callaway in Atlanta. ON THE STORY begins right now.

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week.

I'm Maria Hinojosa, ON THE STORY of the largest gathering of journalists of color and the push for more diversity in newsrooms.

DEBORAH FEYERICK, CNN CORRESPONDENT: I'm Deborah Feyerick, ON THE STORY of fresh terror alerts for New York, Washington, and allegations that the threats are being hyped for political gain.

GERRI WILLIS, CNNfn CORRESPONDENT: And I'm Gerri Willis, ON THE STORY of disappointing new job numbers, Wall Street's reaction and concerns that the economy may be losing momentum.

JILL DOUGHTERY, CNN MOSCOW BUREAU CHIEF: I'm Jill Dougherty in Kennebunkport, Maine, ON THE STORY -- President Bush and Senator John Kerry battling it out over the war on terror, and who is more fit to be commander in chief. ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: And I'm Andrea Koppel, ON THE STORY of unprecedented challenges for American diplomats headed to Iraq and new tactics for keeping them safe in what they say is the world's most dangerous post.

We'll also talk about a study that says shopping at Wal-Mart is costing you more than you think.

Please e-mail us at ONTHESTORY@cnn.com.

Now to Deborah Feyerick and the terror alerts.

(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: The terrorists wish to make Americans that live in freedom live in fear. And just by showing up at work, you have made a powerful statement that they will not succeed.

(END VIDEO CLIP)

FEYERICK: That was Homeland Security Secretary Tom Ridge, giving a pep talk to workers, as well as CEOs at Citigroup in New York this week. That's after the government raised the terror-threat level for New York City; Newark, New Jersey; and Washington, D.C. Intelligence suggesting that financial institutions may be likely targets.

The alerts were barely issued before questions were raised about the motivation behind them. Some people saying that it's for political gain.

DOUGHERTY: Deborah, I have a question for you: why, right now? Why these terror alerts right now?

FEYERICK: Well, what's interesting about this is that for the first time, intelligence investigators got their hands on a computer, belonging to an al-Qaeda suspect. And they really think that this guy was very much sort of undervalued within the whole regime. That being that he was the one who was sending coded messages across the world, to different people, different contacts, who are intent on carrying out certain attacks.

This is really the first time that intelligence authorities have their hands on something concrete. And that's why they're going out and investigating all these different leads. And that's why they sort of alerted everyone that these are potential targets, because they're seeing them for the first time.

Financial groups always knew they might be targeted. But now they have names like Citigroup, Prudential, the World Bank in Washington, as well as the International Monetary Fund.

So it was a pretty big deal, a pretty big get for the CIA.

HINOJOSA: So, Deb, talk to me about what was happening on the streets of New York. I wasn't there on Monday, but what was -- I mean, were people just in a state of panic in these places? Tell me about the street.

FEYERICK: It's not that they're under panic -- or it's not that they're panicking. I think, really, what's going on there is that whenever these alerts go out, you see a lot of heavy armed guards, people walking past, you know, police holding submachine guns and these semiautomatics.

And there's a sense of nervousness. It's not the most comforting thing to walk past these guys, and yet it's better to have them than not have them.

People went to work, as they normally do. But there's a greater sense that, certainly during the Republican National Convention, people will be staying home. They just don't want to take the chance.

WILLIS: Hey Deb, I live in New York. There's a lot of nervousness, certainly, as you get on subway and go elsewhere.

But I also want to ask you about this idea that these warnings -- some people criticizing the government, saying, Hey, you know, they were made a long time ago. It's nothing to worry about.

What do you make of that?

FEYERICK: The government was really on the defensive, and that's why they sent Tom Ridge to the Citigroup building, to send the message that, in fact, no, we have this information. We would be derelict if we didn't share that information. And that was really the sentiment of many politicians and also, the New York City police chief.

You know, they -- yes, the surveillance was done three or four years ago. But let's look back at the time line. The World Trade Center was attacked three years ago. So, for example, if you have intelligence -- and not that any indication has come out that, in fact, the World Trade Center was on that computer -- but, for example if four years ago we knew that the World Bank was going to be attacked or if we knew four years ago that the trade centers were going to be attacked, that's a pretty big deal.

Is it old? Is it dated? Perhaps. But the terrorists go back to the targets that they're interested in, just the way they hit the trade center not once but, obviously, twice.

KOPPEL: Deb, I know from watching some of your reports this week and Kelli Arena's report, one of the main questions you guys kept raising in your scripts was the idea that there was no idea when this attack might take place.

So how long can they keep this orange level threat alert on?

FEYERICK: Good question, Andrea, because the orange level alert is not only tiring for police -- because they're doing 12-hour shifts. But it's also very tiring for the public at large. Not that there's a great sense of malaise, that, Oh, again, this is happening. But, you know how -- how long can you really be on edge, that "when is the attack coming?" Is it going to be tomorrow? Is it going to be the next day?

And I did speak to one law enforcement source who said, you know, that's the problem. There is no time line. Americans are simply going to have to get used to the fact that we live in a time of great uncertainty. And you're going to have to get comfortable with that uncertainty, because there's no way around this.

DOUGHERTY: And Deborah, this is Jill. Is there a concern that people will be so, you know, inundated with these attacks and then finally feel that there is a political component and they shouldn't pay as much attention as they perhaps should?

FEYERICK: Well, see, very interesting, because Howard Dean came out very strongly saying that this was politically motivated. And he said, you know, it's George Bush who made this a political issue by saying that he is the wartime president. Well, if you're going to say you're a wartime president, then you better be able to buffer those attacks when people say, you know, is this real, is this not real?

So it's going to be a big issue, and we're going to see a lot more of it also coming out, certainly, in the weeks leading up to the election.

HINOJOSA: But Deb, you know, also some interesting criticism of Tom Ridge. On Sunday, when he made this announcement, people are saying, Why didn't he give the context then? Why didn't he say, Look, this is information that we got four years ago, so let's put this in the sense of context. Because then that came out later and then that raised the question of, like, So why are you telling us now?

So anything on that?

FEYERICK: Well, that's one of the reasons that -- that he was out there on Tuesday.

It's very dangerous when you only give select information. You may remember Jose Padilla, the enemy combatant. Well, when John Ashcroft came out with that statement about the fact he was going to detonate the dirty bomb, that he was, you know, "this close" to carrying it out, and then all of a sudden there was a lot of back- tracking.

You've got to be honest with the American public. If you're going to tell them what you have, be honest about it. And I think that -- that sort of in retrospect, looking at -- just from speaking to a number of people this week, yes, when Tom Ridge came out with the announcement on Sunday, he took it up to this level I think without sort of the context, without the foundation, without the explanation. And I think that's what had people very concerned and very worried and second-guessing. Certainly, nobody likes to be second second-guessed. But when you give one piece of information without giving the other piece of information, there's no way you can't raise eyebrows.

WILLIS: Deb, thanks so much for that.

The question now is whether the latest employment figures will push the economy past terrorism as the deciding issue in this year's presidential campaign.

I'm ON THE STORY with that in just two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GREG MANKIW, BUSH ECONOMIC ADVISER: The economy is creating jobs, it's moving forward, but not at a rapid enough pace. The president has said many times that he won't be satisfied until every American who wants a job can find a job.

(END VIDEO CLIP)

WILLIS: That was President Bush's top economic adviser, Greg Mankiw, trying to put the best face possible on a dismal jobs report. A paltry 32,000 jobs created in July. Now that's far short of what economists were expecting; they expected 200,000 jobs. Add that to an employment rate virtually unchanged -- you can see guys, it's just a confusing situation all around.

KOPPEL: So obviously, it was a surprise to have the jobs rate be so low. What -- what's behind that?

WILLIS: Well, you know, it wasn't just the economists who were surprised. It was the journalists, too.

We were getting word from the White House that they would have people available to talk so everybody sort of naturally assumed that the report was going to be really, really good. As it turned out, job growth -- and that's what they mean when they say payrolls -- dismal disappointment. And the economists were saying they didn't get it right. They, in fact, missed it by a factor of 10 because it's a really volatile number anyway; it changes dramatically.

But I got to tell you, they went back and looked at June, revised that number down as well. So you've got to think at this point that the concerns people have out there about jobs may not be misplaced. Their anxiety is real.

FEYERICK: Gerri, you've got oil rising, you've got the threat of terrorism, you have the Iraq war -- what do the executives on Wall Street think about the economy and about the direction it's going in? Because the economy's going to be a huge issue come election time.

WILLIS: Oh, you bet.

I think that Wall Street -- you saw the stock market sell off. Each of the markets now, they are at lows for the year. There's a lot of concern, a lot of worry.

And most of the worry focuses on this: if consumers become anxious, depressed, they're going to stop spending. That could hurt corporate earnings. And despite the fact that we had seen something of a rebound in the bottom line for corporate America, that could be in jeopardy. Now, I did want to mention consumer's bottom lines here because it's so important. It's being affected not just by the fact that the market's going down, hurting their 401(k)s. Jobs are an issue.

But oil prices here are spiking. I'm sure you've seen these numbers -- we could through $50 a barrel on oil this week -- that's the fear in the marketplace out there. And everybody is watching and wondering.

DOUGHERTY: Gerri, this is Jill again. The -- getting back to the political component on this, the Bush campaign has been talking about the fact that overall, the trend is in the right direction. This may be a temporary dip, et cetera.

But is this a blip or is this, would you say, like, more longterm?

WILLIS: Well, we thought it was a blip last month, quite frankly. Jobs report not exciting then either. But now you've got a second month of this.

And there are other numbers coming out as well. Layoffs out. A report just this week: one in five Americans who were laid off in the last three years, they're still looking for work. Of those who were re-employed, they're making less than they did before.

I think people who are experienced out there thought, you know, at the end of the day, when the economy picks up, I'm going to be employed. And it's not happening. I think people out there have questions.

Another report, interesting, from Berkeley, about Wal-Mart. This is the country's biggest employer, and in the state of California, the taxpayers there sponsor Wal-Mart employees with all kinds of benefits, especially health care, to tune of $86 million a year. So you've got to wonder: is the quality of jobs exactly what we want to be seeing?

HINOJOSA: All right. So Gerri, let's talk about the political spin. Who's doing what, who's saying what, who's happy, who's not so happy with these numbers?

WILLIS: Hey, it was all about spin Friday. Everybody was out, trying to put their spin on these numbers. The Democrats saying, you know, this is a disappointing number, the economy's not coming back. The Republicans saying, these numbers are being completely misread.

Every economic piece of information that comes out now is part of the political debate and I think we're just going to continue this for four weeks to come.

HINOJOSA: But interesting that you say what's interesting, is that these economists -- they're not Democrats. They're not hoping to help John Kerry or President Bush. I mean, they're just numbers people and they're not -- they're not understanding.

WILLIS: Well, I think what's interesting is the president trying to put the spin on these numbers, especially the jobless data. That, you know, you're just not looking at the right number, you should be looking at something else.

But, you know, it's -- the markets at the end of the day, who are saying the most important number is jobs creation, payroll -- and they're just trying to gauge what the economy's doing. They don't have a political ax to grind in this case.

KOPPEL: So -- so what can they do. I mean, in terms of -- obviously, this had an impact on the market on Friday. It closed down quite a bit.

WILLIS: Right.

KOPPEL: What can economists do? Are there any other indicators that they could be looking for to gauge? Obviously, the Bush administration, the Kerry team, looking to see how this is going to play out in November.

WILLIS: Well, I think we're all looking at every piece of data that comes out. And, right now, frankly there is just one silver lining for consumers, and it's mortgage rates. Expectations that rates here are going to come down again. And you know the impact more broadly on the economy when that happens. People refinance. They take out home equity loans, lines of credit. They spend money, upgrading their houses or buying new ones. And you find that the economy typically picks up.

But I think the back beat -- the question that people are asking now is, When is corporate America going to step up? Consumers may be tapped out here. We're seeing consumer-confidence levels fall. Retail sales at some institutions in the last month fell as well. When does corporate America step up with the kind of hiring, consistent hiring that would make good on the president's promise of creating millions of jobs before the end of the year?

FEYERICK: Gerri, when you look at the economy, and take it back sort of four years ago -- and this is sort of asking you a broad question here. That is, when you looked at the economy four years ago, when it seemed so strong, and now what we're hearing is, you know, we're getting better, we're getting stronger.

How do you describe it to people who obviously are -- see their bills going up? What has happened in the last four years? Are we better? Are we worse? Are we going up? Are we going down? Because there's so many numbers.

WILLIS: Right.

FEYERICK: What is happening?

WILLIS: Deb, that's a really interesting question because some of the numbers we have even now, if you really put them in context, are not that bad.

The jobless rate right now, 5.5 percent. That's full employment in many economies. Most people wouldn't be upset about this.

But there is such a back beat, a drum beat of information out there about some people not being able to get jobs, particularly experienced workers. And I think people are fearful, particularly with terrorism in the background, oil prices moving higher, that things could fall apart.

I even heard someone ask a question this week about double-dip. Could we get a double-dip recession here, could we go back down?

HINOJOSA: OK, double-dip -- a new term for me at least, because I'm not an economist.

But anyway, from concerns over the economy to questions about racial diversity in journalism. I'm on that story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We have been averaging up to 30 percent now of all applicants being minorities. We want to do even better. We want minorities in the State Department. We want to see more and more minority ambassadors, minority political counselors, minorities at every level. Because in order for us to live our value system for real, and to show the rest of the world what America is all about and what America looks like, I want my department to look like America.

(END VIDEO CLIP)

HINOJOSA: So progress has been made, but there's still a long way to go. That's according to Secretary of State Colin Powell about the number of people of color working in the foreign service.

Now Secretary Powell made those remarks at this week's unity convention here in Washington, a gathering of nearly 8,000 Latino Asian American, African-American and Native American journalists. The conference also heard from President Bush and his Democratic challenger, John Kerry.

WILLIS: Maria, I just am so interested in this meeting because it sounds like it was, A, a lot of fun and, B, really interesting to see the reactions of journalists in this setting.

Tell me, though, when you're in the newsroom, how does it look today? Is it more diverse or no?

HINOJOSA: Compared to 40 years ago, it's absolutely more diverse. Compared to the representation of America as a whole, not a lot.

I think a lot of these journalists -- and you're talking about high-powered journalists all the way to entry level, young people just coming out of college, thinking that they want to get into this business. You get different opinions. Many of the people who have been around say, you know what? We've made progress, but it just doesn't -- we don't feel it in our newsrooms, we're not feeling that -- that these journalists are able to change the story selection. It's about hiring, but it's also about story selection, what gets on the air. What stories finally make it out there?

A lot of the young journalists, though, feeling really enthused. And you have to kind of balance both of these. You know, the older journalists wanting to make sure that these younger journalists feel like there's a place for them, and yet know that they're going to meet a lot of these barriers.

KOPPEL: So what do...

DOUGHERTY: Maria...

KOPPEL: ...experienced journalists like yourself tell the younger journalists? And I know that you're involved in mentoring. How do you both kind nurture that enthusiasm, yet at the same time not dampen it?

HINOJOSA: You know what I tell them, Andrea? I tell them if journalism is something that you're doing because it means something to you, like it does to me, then you need to know that that passion that you have -- you have to hold on to it -- but you're going to confront struggles, because you are a minority within the newsroom. So be prepared for that.

I think that -- you know, I didn't have that. I was the first Latina hired at National Public Radio, the first Latina here at CNN. So I didn't have anyone to kind of give me that perspective. So I just tell them, look, Be prepared, stick to your guns, find your voice, which is actually what Dick Parsons, when he addressed a group there, said. Stick to voice, remain true to it and -- and be prepared for a long haul.

But you know what? We all do in our professional careers. We just got to be real about it.

DOUGHERTY: Maria, some people have made a bit about the fact that some of the journalists at least applauded when Kerry was there and they were a bit colder when the president was there. And they would say it just proves that the media are really liberal.

What do you say to that?

HINOJOSA: Well, I have to say, when Senator Kerry walked out on stage and -- about half of the room stood up and applauded even before he had said a word -- and I'm sitting there with my arms crossed because I just -- for me, that's what I do. I don't applaud for any politicians anywhere at anytime.

I felt uncomfortable, and I raised that to a lot of the people who I was with in the convention. There were other people who said, Listen, you need to understand though. When you're -- when you have presidential candidates or the president addressing the ASNI conference or RTNDA -- these are professional journalism conferences around the country -- the same thing happens. They stand up and they applaud.

Was there more of an enthusiasm for Senator Kerry? Absolutely. I think that President Bush got a more tepid response and he got more -- he got more difficult questions, edgier questions, because he's the president.

FEYERICK: You mentioned stories before, Maria. What stories do people feel just are not being covered?

HINOJOSA: Oh, Deb -- I mean, that's huge. It's -- you know, on the local level, there are reporters who say, you know, I want to cover a particular communities, or cover particular stories of people who we don't usually see. I moderated a big opening-session panel where it was a discussion of entertainment. How come hip-hop is still not -- even though it's part of the mainstream culture, it's not so much of what we cover. A lot of complaints around that.

I think that when you have journalists who care about these issues and they feel like it's kind of glossed over, we have to remember -- look, who are the people who are making the main decisions about all of the journalism that we hear, see and consume? It's pretty much a very small, monolithic group that is not very diverse.

And we're all affected by that. All of us as journalists, all of us as consumers, get less information as a result, and that's just bad.

FEYERICK: You know, and just a follow-up question: what is it -- what about the audience? Because we talk about the people sort of at the top of the spectrum, who are sort of making the decisions. But also, there's an audience. There's a market.

Where does that come into play, for example? Are the decisions being made because those kinds of stories don't sell? Or what's the issue?

HINOJOSA: You know what? I think -- and this is where I come at in terms of issues of diversity in journalism -- when you have the most diverse newsroom that you possibly can, we are giving the best kind of journalism that we can possibly give. And yes, they should absolutely be looking at markets. But you know what? Power doesn't change easily. People don't give up power. And if you have people who don't have the experience of a diverse reality, then they can't understand what makes a good story or what's an important story for an different community.

I just feel like eventually things are going to become more inclusive. But we're not quite there yet. But we've certainly made a lot of progress.

KOPPEL: OK, but what I want to know is: who is doing it well? There have to be some examples out there that all of us can learn from. How are they doing it well and who? HINOJOSA: Well I'll tell you -- I mean, even at CNN, we had a reception last night and to look around the room that we were all in, all of the journalists of color, CNN has made tremendous movement forward. It wouldn't have been the same five years ago. So I think I hold up CNN as an example.

There are a lot of people look at USA Today, say that they've done a good job, Gannett in general has done a good job. Less so in terms of the networks.

Now interestingly, the networks will not give numbers. They will not say how many people of color they employ. So it's hard to tell.

You know, I think that we can't make a broad generalization. It's something that we should all be aware of, though, because again, we're all consuming this information. We're all the better of it if we get more information, and worse off if we don't have this kind of diversity in our newsrooms.

DOUGHERTY: OK, so we're going to thank Deborah Feyerick for being with us and move on from the fight for a more diverse newsroom to the presidential campaign trail.

I'm ON THE STORY of President Bush and Senator John Kerry's tug- of-war for swing-state voters after a break.

But first, a check of the latest news.

CALLAWAY: Hello, everyone. I'm Catherine Callaway. On -- in the news now:

President Bush is taking a break from the re-election campaign today. He is at the family compound in Kennebunkport, Maine, where he will attend the wedding of his nephew.

John Kerry says the economy shifted into reverse. Kerry cited the July employment report as proof that President Bush isn't doing his job when it comes to creating jobs. The Kerry-Edwards whistle-stop campaign chugs through Colorado and New Mexico today.

The fiercest fighting in months is now raging in the Iraqi holy city of Najaf. Two U.S. Marines have been killed. And the Iraqis say hundreds of insurgents and civilians are also dead.

In the meantime, Iraq's interim leader announced about three hours ago that he has placed a 30-day amnesty into affect. It is aimed at people wanted for minor crimes.

Keeping you informed, CNN, the most trusted name in news.

I'm Catherine Callaway at the headquarters in Atlanta. ON THE STORY will be back in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: President Bush is just a few blocks from here. It occurred to me that he could come here for a great discussion about America's future if he were really willing to just turn the corner.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When it comes to fighting the threat of our world, when it comes to making America safer, when it comes to spreading peace, we're moving forward and we're not turning back.

(END VIDEO CLIP)

DOUGHERTY: So, President Bush and Senator Kerry -- neither man wants to cede an inch of ground when it come to getting the voters in those crucial swing states.

Both men were out this week in the Midwest campaigning very heavily. And in one particular Midwest city, Davenport, Iowa, it turned out that both men showed up, same date, same time, just down the street from each other.

Welcome back to ON THE STORY.

HINOJOSA: So, Jill, I know that when we were talking before, you said the debate was who made the reservations first?

So who made the reservations first? Was there ever a final outcome?

DOUGHERTY: You know, I don't think there really was, because they had both people apparently -- the campaigns both reached them pretty early. But that debate is still in progress.

But it was pretty striking, as we drove into the city. We passed the Kerry campaign spot and then we go down, right to the Bush campaign spot, on the Mississippi River. And you could walk there in five minutes.

KOPPEL: I know one of the press reports I read about the event -- or, about the day, Jill, mentioned that Senator Kerry was 50 minutes late show showing up for one of his events. And this was a big deal with the local anchors there.

You covered President Clinton, who was notorious for being late. How -- how do the two candidates compare with your experience covering the White House before?

DOUGHERTY: Well, you'd have to say -- if you compare President Bush to President Clinton, there is no comparison. President Bush is rigorously on time, as far as I can see. And President Clinton used to go on -- loved to talk to people, was notoriously late. Depends, I guess, on their style. For us, it's not particularly good because life is unpredictable.

WILLIS: Jill, talk to us a little bit about -- you know, there used to be a Rose Garden strategy in the summer. A sitting president did not go out and campaign. They stayed in Washington; they did the business of the country.

But boy, that's not what the president is doing.

DOUGHERTY: That's a very good point.

You know, this campaign has really begun early. It's very, very intense. And there is no Rose Garden strategy any more. They are really in the trenches.

This is a fight. It's a fight essentially on two issues -- terrorism, which you'd have to say is good for president Bush in the sense that the polls show he is still leading Kerry on that issue. But it's a very tricky issue, because if there is more terrorism, then that can have a bad effect on President Bush. So it kind of cuts both way.

And then you have the domestic economy, and that's where you have the president looking at some not-so-good news, trying to spin it in a positive direction and Kerry trying to show what would he do any better than Bush.

HINOJOSA: So Jill, what was -- because you're now back on this campaign trail, what's been the thing that you've just been totally surprised by?

DOUGHERTY: In terms of the way the campaign is run, I'd have to say I'm very surprised by the control as we -- of the media, as we go along the campaign trail. Very tight control of where cameras are placed, the access to the president. Sure, all of the candidates -- I'm sure the Kerry campaign and every other campaign has a stump speech and it's very controlled in that sense.

But going back to -- I covered President Bush's father and also the first Clinton one, in the presidency, and it is far more controlled. The media really are kept in line very carefully.

KOPPEL: Getting back, Jill, to your day in Iowa, did you get a feeling -- because obviously that's a very tight state, which is why both men were there. Did you get a sense as to which one may have made any headway there?

DOUGHERTY: You know, When you look at these numbers, they are so incredibly tight that a lot of times the difference is simply the margin of error in the polls. So to say that anybody is particularly leading in these swing states is very difficult.

I think you'd have to say that the strategy now seems to be President Bush, knowing that there -- he's got his people in his camp, Kerry has his people in his camp. And then for the people who are undecided, they may not be that happy with President Bush, but they're not in the Kerry camp yet.

So that's where they're going for, that's -- that's -- they're the people they're looking for. And interestingly, in the stump speech of the president this week, he introduced the phrase "look for discerning Democrats and wise independents." He was telling his voters get out there and talk to those people because that's the only hope that this campaign is going to budge in either direction.

WILLIS: Jill, so early for the fight to be this intensive. And just this week, the Swift Boat ad controversy surfacing here.

Give us the latest on that.

DOUGHERTY: Well, the Swift Boat controversy, as you know, is that ad -- an attack TV ad that was put together by an independent group, people who -- it was attacking Senator Kerry for his record in Vietnam, and specifically saying he lied about his record.

Now, the Bush campaign was asked about what they thought of that ad. And although they did not directly say that the ad should be pulled and they didn't criticize the ad per se, they said that ads like this are not good, should be eliminated, and they called upon the Kerry campaign to help them eliminate these ads.

Now, we should point out that the ads at this point are against Kerry, but the ads were used in the primary against Senator McCain, who was of course a Republican. McCain came out and actually defended Kerry and attacked those ads, and said no one should have that type of attack on them.

HINOJOSA: All right. So from attacks to something a little bit more personal, Jill -- there's a wedding going on where you are. I didn't know that George P. was getting married. What's up with that?

DOUGHERTY: Well, know you know, 28 years old.

You remember him. He is a very attractive son of Jed (sic) Bush, the governor of Florida. And some people have touted him as a possible candidate, maybe in the future. He seems to have all the characteristics that would lead to that.

So they're having a marriage here, a wedding in Kennebunkport at the presidential compound. And there are a number of people obviously here, happy about that. By the way, he's marrying a Texas lawyer, a young Texas lawyer.

KOPPEL: But of course.

Well, from weddings and the presidential campaign, to the new Iraq and the unique way American diplomats are preparing to work there. I am on that story just ahead.

(BEGIN VIDEOTAPE)

ANNOUNCER: Andrea Koppel is CNN's State Department correspondent. She joined CNN in 1993. She's a former CNN Beijing bureau chief and Tokyo correspondent.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FRANK TAYLOR, ASSISTANT SECRETARY OF STATE FOR DIPLOMATIC SECURITY: It's our feeling that if we were asking people to go into challenging situations, we had to make sure they had the skills that we thought they might need to -- if there was a problem, to survive and come home alive.

(END VIDEO CLIP)

KOPPEL: That's the Assistant Secretary of State for Security -- for Diplomatic Security Frank Taylor, saying a new but very dangerous landscape in Iraq requires a different approach for preparing Americans heading for a different type of duty at the U.S. embassy there. For this group, basic survival skills are paramount.

Welcome back to ON THE STORY.

This is a program that's been in place, that the State Department's been running, really, for years. But now, only since December, has it been mandatory for all American diplomats. And they'll ultimately be about 1,000 who are going to Iraq. It's -- began in December.

DOUGHERTY: Exactly.

You know (UNINTELLIGIBLE), Andrea this reminds me very much of the combat-zone or conflict-zone training that journalists are having for areas like the Mid East and Afghanistan, Iraq, et cetera.

But getting -- getting back to the issue of Baghdad, what kind of State Department employees are actually sent there? Who ends up there?

KOPPEL" Well, in fact, most of them are from the State Department. Most of them are diplomats who, in some instances, have been behind a desk for much of their career, or been posted to some post like in Moscow, where you usually are.

But some of them are actually coming from other federal agencies, from the FAA, from the IRS. I met one guy who was an auditor for the U.S. Air Force in Ohio, and they've decided that they want to do this for a variety of different reasons. Some of them -- one guy was 59 years old. He said this is probably the last real challenge, the last real adventure that he would have in his career.

Others are doing it -- one woman 42-year-old Nancy Pillin (ph), who usually is in protocol at the State Department, said that she's been a Bush supporter for so many years she wants to go and put a good face on the American effort in Iraq and that's why she's going.

HINOJOSA: So, like, totally willing to say, I'm going to risk my life, I'm going to learn how to shoot -- I mean, you were saying that they're not just shooting, you know, 8 mm glocks or 9 mm glocks -- you know how much I know about military -- but that they're prepared to say, OK, I'm going to go into this intensive training, knowing that I'm putting my life on the line, because I want to make a political statement?

KOPPEL: Right. I mean, some of them say that they don't really believe a lot of reports that they've been hearing coming out of Iraq and they don't necessarily think it is quite as bad and quite as dangerous as some of us have been reporting.

That said, they also recognize the importance of knowing -- they're not going to be carrying these weapons. They learned how to shoot four different types of weapon, including an AK-47. This is part of the classroom training that you're seeing right here. But they learned to shoot four different types of weapons, not because they're going to be carrying them, but in the event that one of the diplomatic security officers that's with them or one of the U.S. Army or military officials there -- if their weapons get knocked out of their hands, if they get injured or killed themselves, that these young men and women would be able to either disarm the weapon so that it doesn't fire indiscriminately, or that they would be able to pick it up and protect themselves to save their life.

Part of the classroom -- actually, what you're seeing right there is a car that's going to -- that's going to explode. They had about a dozen different types of improvised explosive devices that went off. And the point of that was showing that car exploded from just one stick of dynamite. And I was standing in the little structure that they had folks in that was protected. It has Plexiglas so that there so there wouldn't be flying glad or anything that would hurt you. And I actually found myself jolted from the explosion. And you -- we were protected. I knew we wouldn't be hurt.

But the point is to prepare people for the eventuality that they will have an explosion go off. They're going to be in the Green Zone. You hear the rockets flying throughout the night, throughout the day, and so that they won't be quite as startled once they're in that environment.

WILLIS: Well, Andrea, isn't it also the case though -- this is going to be largest embassy anywhere, right? And weren't you also told that if the situation were as dangerous somewhere else, they wouldn't be sending people in, they'd be taking them out?

KOPPEL: Exactly. Frank Taylor, the assistant secretary for diplomatic security, told me -- he said, were this an embassy anywhere else in the world -- and certainly we have seen this since 9/11, since -- in fact, 1998, since the East Africa bombings that you've had the threat level raised at various embassies around the world and various consulates around the world. And there are 250 of them, and in many instances, you have dependents, you have sometimes even the nonessential personnel, who are ordered to leave the embassy. And Frank Taylor said, were this anywhere else, they would be telling people to get out of Iraq. But because it is such an important posting, they are looking for volunteers. And all of these men and women -- 550, have been through the course so far -- have volunteered to go, to leave, in some instances, their children, their wives or husbands behind, to volunteer for at least six months. And so they believe very strongly in their core that they're -- they're there to try to help, in some instances build nascent democracy, to help audit some of the $16 billion that U.S. taxpayers are paying to help reconstruct Iraq, to follow the oil money, or just to help, you know, with consular affairs, people who want visas, people who want passports, any mundane issues that would go on in embassies around the world that are taking place in obviously extraordinary circumstances in Baghdad and throughout Iraq.

DOUGHERTY: So, Andrea, Baghdad now is the most dangerous posting?

And another quick question, what's this doing to people who thought they were getting into the State Department to wear pinstripe suits and high heels and be diplomats?

KOPPEL: Well, again, they're only looking for volunteers.

And I was actually struck personally by the enthusiasm. Each person that I spoke with -- and there were 19 people would went through the course the week that we followed them. All said that they were excited to go there. They were looking forward to going there.

There was one guy who had been there, I think, six or seven times already, and yet hadn't been through this course. So he wanted to go through it.

I don't think it is a surprise for any of these folks who sign up to go. They're looking at it in many instances as an adventure, as an opportunity to see something that they wouldn't otherwise get a chance to experience.

HINOJOSA: Incredible, Andrea, although I'm not going to be going on that train, I can tell you that.

Now just ahead, a special treat. We get to talk with Jill Dougherty about what it's like to be back in Russia, and suddenly back on the presidential campaign. We're on that story when we come back.

(COMMERCIAL BREAK)

HINOJOSA: Now if you're thinking that you usually see Jill Dougherty reporting from Russia, you're correct. She is our Moscow bureau chief. So pretty extraordinary to have her covering the presidential campaign.

DOUGHERTY: It's kind of like "Groundhog Day," I'd say, because I actually, as I mentioned, covered President Bush Senior, and then the first term of Bill Clinton, and now back for a brief one month here at the White House. And then back to Moscow.

KOPPEL: So Jill, I know you've only been back on this beat for a week, but how do you compare father with son? What are there -- how are their styles different or similar?

DOUGHERTY: Well, I think -- it's kind of a cultural difference, I think. With the -- with the Bush Senior I felt more kind of that Eastern influence. I guess a more -- the openness of parties. At that point, it was a very different political situation, so that you had more of a wider debate, I'd say, on many issues.

Right now, what I'm struck with coming back is the polarization, both -- into both camps. You know, Democrats, Republicans. And very strong rhetoric. It's really quite shocking when you come back from abroad. I knew it was happening. But when you see -- and I'm not talking just about the Bush campaign; I'm talking about the political situation in general. It is very emotional and very negative.

HINOJOSA: Now I'm wondering, Jill, you know, when you make these kinds of shifts from one continent to another, I know that one of those stories that I was recently impacted by that recently happened in Moscow was the murder of this 42-year-old journalist from Forbes.

Wondering how you feel as a journalist, were -- you know, sometimes you're in Moscow, and you -- I guess you have to watch your back. And now you're here covering a presidential campaign where you're entirely controlled.

DOUGHERTY: Right.

Well, I think if you look at the murder of Paul Klebnikov -- he was the editor Forbes magazine, the Russian edition of Forbes magazine -and he was shot by unknown people about a month ago. Really, a terrible situation, shot as he came out of the office, drive-by shooting and he died in the hospital. And the sad thing about that is nobody knows precisely why he was killed, and many people have severe doubts as to whether they will ever solve this.

Paul Klebnikov was an American, and he was first American to be killed under those circumstances. But I have to tell you, out in the Hintu land, out in the provinces in Russia, there are a lot of Russian journalists who are killed frequently or attacked for what they write. Anything that deals with personal -- personal issues of crime, corruption, and especially if you name names. It's very, very dangerous.

WILLIS: Jill, let's go to Putin's crackdown that appears to be going on, and that is even affecting our economy right now with the Russian oil company that hasn't been paying taxes, and now the government saying, "We're going to shut you down if you don't."

Gas prices, oil prices, in this country, through the roof. What's going on? Is there a widespread crackdown going on?

DOUGHERTY: You know, that's the real question about this: where are they going with this?

But essentially -- you know, you have two stories. You have Yukos oil company, the most progressive, Western-style oil company in Russia. And then you have the former head of Yukos, Mikhail Khodorkovsky. He was an opponent of President Putin, talked about building independent pipelines when the government controls all of them. And he was funding political parties in opposition to the Kremlin.

So the original feeling was, OK, the Kremlin goes after Khodorkovsky. They arrest him, they put him in jail and now he's undergoing a very, very long trial. But essentially, it's a one off. You know, you deal with Khodorkovsky, eliminate him, but Yukos oil company continues untouched.

Well, that's not what's happening. They are now going after Yukos big time and preparing to sell off a choice chunk of that oil company. And now investors are saying, Where are we going with this? You have to say it's definitely heading in the direction of more government control of these energy companies, no question about that.

KOPPEL: Jill, give us -- give us a feel for what the mood is like in -- amongst the Russian people right now. There have been surveys that have come out recently gauging the anti-Americanism within the Arab world and throughout the Middle East, which is at all- time highs.

What is it like in Russia?

DOUGHERTY: Well, remember Russia, of course, opposed the war in Iraq.

But you'd have to say -- that continues. People think it was a mistake, et cetera. But there is grave concern about terrorism, because Russians have been the objects of terrorism. People have blown -- suicide bombers on the streets of Moscow blowing themselves up. So they're quite frightened too about that issue.

WILLIS: Jill, thanks so much. We're back ON THE STORY after this.

(BEGIN VIDEOTAPE)

ANNOUNCER: Wrestling isn't a male-only sport this Olympic season. An Athens-bound woman takes to the mat. Tela O'Donnell -- what's her story? More when we come back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Tela O'Donnell -- what's her story? The 22 year old is one of four U.S. athletes in the first-ever woman's wrestling competition at this year's Summer Olympic Games.

TELA O'DONNELL, OLYMPIC ATHLETE: I think when people first (UNINTELLIGIBLE), I think they think that wrestlers might be kind of, like, just brutish, kind of mannish girls. ANNOUNCER: Born and raised in Alaska, O'Donnell made a name for herself in school as a member of the boy's wrestling team. She says taking up the sport was a way to improve herself, not a venue to compete with others. O'Donnell takes to the Athens mat August 22.

(END VIDEOTAPE)

WILLIS: 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 actor Tom Cruise and singer Carly Simon.

At 12:00 noon Eastern, 9:00 am Pacific, "CNN LIVE SATURDAY."

And 1:00 p.m., 10:00 a.m. Pacific, CNN's "IN THE MONEY."

Coming up next, a check of what's in the news now.

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Aired August 7, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: U.S. forces battle Shiite militiamen in Najaf for a third straight day. Sporadic explosions and gunfire echoed through that city today after intense fighting on Thursday and Friday. At least two Marines were killed yesterday in fighting there. And in Baghdad, an insurgent attack killed a U.S. soldier.
Meanwhile, back here in U.S., President Bush taking a break from the re-election campaign today. Mr. Bush is at the family compound in Kennebunkport, Maine, where he will attend the wedding of his nephew.

And Senator John Kerry and his running mate, John Edwards, are heading west today aboard their campaign train. And they've talking about the nation's economy and yesterday's bleak jobs report, among other things. The Democratic candidates have stops scheduled today in Colorado and New Mexico.

Another day of hearings on the prisoner-abuse scandal in Iraq under way this morning. An investigator's testified Private Lynndie England described the leash as an intimidation device. Now, a photo shows England holding a leash attached to a naked prisoner. England is accused of abusing prisoners in Iraq, and that hearing will determine if she should face a court martial.

Keeping you informed, CNN, the most trusted name in news. I'm Catherine Callaway in Atlanta. ON THE STORY begins right now.

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week.

I'm Maria Hinojosa, ON THE STORY of the largest gathering of journalists of color and the push for more diversity in newsrooms.

DEBORAH FEYERICK, CNN CORRESPONDENT: I'm Deborah Feyerick, ON THE STORY of fresh terror alerts for New York, Washington, and allegations that the threats are being hyped for political gain.

GERRI WILLIS, CNNfn CORRESPONDENT: And I'm Gerri Willis, ON THE STORY of disappointing new job numbers, Wall Street's reaction and concerns that the economy may be losing momentum.

JILL DOUGHTERY, CNN MOSCOW BUREAU CHIEF: I'm Jill Dougherty in Kennebunkport, Maine, ON THE STORY -- President Bush and Senator John Kerry battling it out over the war on terror, and who is more fit to be commander in chief. ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: And I'm Andrea Koppel, ON THE STORY of unprecedented challenges for American diplomats headed to Iraq and new tactics for keeping them safe in what they say is the world's most dangerous post.

We'll also talk about a study that says shopping at Wal-Mart is costing you more than you think.

Please e-mail us at ONTHESTORY@cnn.com.

Now to Deborah Feyerick and the terror alerts.

(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: The terrorists wish to make Americans that live in freedom live in fear. And just by showing up at work, you have made a powerful statement that they will not succeed.

(END VIDEO CLIP)

FEYERICK: That was Homeland Security Secretary Tom Ridge, giving a pep talk to workers, as well as CEOs at Citigroup in New York this week. That's after the government raised the terror-threat level for New York City; Newark, New Jersey; and Washington, D.C. Intelligence suggesting that financial institutions may be likely targets.

The alerts were barely issued before questions were raised about the motivation behind them. Some people saying that it's for political gain.

DOUGHERTY: Deborah, I have a question for you: why, right now? Why these terror alerts right now?

FEYERICK: Well, what's interesting about this is that for the first time, intelligence investigators got their hands on a computer, belonging to an al-Qaeda suspect. And they really think that this guy was very much sort of undervalued within the whole regime. That being that he was the one who was sending coded messages across the world, to different people, different contacts, who are intent on carrying out certain attacks.

This is really the first time that intelligence authorities have their hands on something concrete. And that's why they're going out and investigating all these different leads. And that's why they sort of alerted everyone that these are potential targets, because they're seeing them for the first time.

Financial groups always knew they might be targeted. But now they have names like Citigroup, Prudential, the World Bank in Washington, as well as the International Monetary Fund.

So it was a pretty big deal, a pretty big get for the CIA.

HINOJOSA: So, Deb, talk to me about what was happening on the streets of New York. I wasn't there on Monday, but what was -- I mean, were people just in a state of panic in these places? Tell me about the street.

FEYERICK: It's not that they're under panic -- or it's not that they're panicking. I think, really, what's going on there is that whenever these alerts go out, you see a lot of heavy armed guards, people walking past, you know, police holding submachine guns and these semiautomatics.

And there's a sense of nervousness. It's not the most comforting thing to walk past these guys, and yet it's better to have them than not have them.

People went to work, as they normally do. But there's a greater sense that, certainly during the Republican National Convention, people will be staying home. They just don't want to take the chance.

WILLIS: Hey Deb, I live in New York. There's a lot of nervousness, certainly, as you get on subway and go elsewhere.

But I also want to ask you about this idea that these warnings -- some people criticizing the government, saying, Hey, you know, they were made a long time ago. It's nothing to worry about.

What do you make of that?

FEYERICK: The government was really on the defensive, and that's why they sent Tom Ridge to the Citigroup building, to send the message that, in fact, no, we have this information. We would be derelict if we didn't share that information. And that was really the sentiment of many politicians and also, the New York City police chief.

You know, they -- yes, the surveillance was done three or four years ago. But let's look back at the time line. The World Trade Center was attacked three years ago. So, for example, if you have intelligence -- and not that any indication has come out that, in fact, the World Trade Center was on that computer -- but, for example if four years ago we knew that the World Bank was going to be attacked or if we knew four years ago that the trade centers were going to be attacked, that's a pretty big deal.

Is it old? Is it dated? Perhaps. But the terrorists go back to the targets that they're interested in, just the way they hit the trade center not once but, obviously, twice.

KOPPEL: Deb, I know from watching some of your reports this week and Kelli Arena's report, one of the main questions you guys kept raising in your scripts was the idea that there was no idea when this attack might take place.

So how long can they keep this orange level threat alert on?

FEYERICK: Good question, Andrea, because the orange level alert is not only tiring for police -- because they're doing 12-hour shifts. But it's also very tiring for the public at large. Not that there's a great sense of malaise, that, Oh, again, this is happening. But, you know how -- how long can you really be on edge, that "when is the attack coming?" Is it going to be tomorrow? Is it going to be the next day?

And I did speak to one law enforcement source who said, you know, that's the problem. There is no time line. Americans are simply going to have to get used to the fact that we live in a time of great uncertainty. And you're going to have to get comfortable with that uncertainty, because there's no way around this.

DOUGHERTY: And Deborah, this is Jill. Is there a concern that people will be so, you know, inundated with these attacks and then finally feel that there is a political component and they shouldn't pay as much attention as they perhaps should?

FEYERICK: Well, see, very interesting, because Howard Dean came out very strongly saying that this was politically motivated. And he said, you know, it's George Bush who made this a political issue by saying that he is the wartime president. Well, if you're going to say you're a wartime president, then you better be able to buffer those attacks when people say, you know, is this real, is this not real?

So it's going to be a big issue, and we're going to see a lot more of it also coming out, certainly, in the weeks leading up to the election.

HINOJOSA: But Deb, you know, also some interesting criticism of Tom Ridge. On Sunday, when he made this announcement, people are saying, Why didn't he give the context then? Why didn't he say, Look, this is information that we got four years ago, so let's put this in the sense of context. Because then that came out later and then that raised the question of, like, So why are you telling us now?

So anything on that?

FEYERICK: Well, that's one of the reasons that -- that he was out there on Tuesday.

It's very dangerous when you only give select information. You may remember Jose Padilla, the enemy combatant. Well, when John Ashcroft came out with that statement about the fact he was going to detonate the dirty bomb, that he was, you know, "this close" to carrying it out, and then all of a sudden there was a lot of back- tracking.

You've got to be honest with the American public. If you're going to tell them what you have, be honest about it. And I think that -- that sort of in retrospect, looking at -- just from speaking to a number of people this week, yes, when Tom Ridge came out with the announcement on Sunday, he took it up to this level I think without sort of the context, without the foundation, without the explanation. And I think that's what had people very concerned and very worried and second-guessing. Certainly, nobody likes to be second second-guessed. But when you give one piece of information without giving the other piece of information, there's no way you can't raise eyebrows.

WILLIS: Deb, thanks so much for that.

The question now is whether the latest employment figures will push the economy past terrorism as the deciding issue in this year's presidential campaign.

I'm ON THE STORY with that in just two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GREG MANKIW, BUSH ECONOMIC ADVISER: The economy is creating jobs, it's moving forward, but not at a rapid enough pace. The president has said many times that he won't be satisfied until every American who wants a job can find a job.

(END VIDEO CLIP)

WILLIS: That was President Bush's top economic adviser, Greg Mankiw, trying to put the best face possible on a dismal jobs report. A paltry 32,000 jobs created in July. Now that's far short of what economists were expecting; they expected 200,000 jobs. Add that to an employment rate virtually unchanged -- you can see guys, it's just a confusing situation all around.

KOPPEL: So obviously, it was a surprise to have the jobs rate be so low. What -- what's behind that?

WILLIS: Well, you know, it wasn't just the economists who were surprised. It was the journalists, too.

We were getting word from the White House that they would have people available to talk so everybody sort of naturally assumed that the report was going to be really, really good. As it turned out, job growth -- and that's what they mean when they say payrolls -- dismal disappointment. And the economists were saying they didn't get it right. They, in fact, missed it by a factor of 10 because it's a really volatile number anyway; it changes dramatically.

But I got to tell you, they went back and looked at June, revised that number down as well. So you've got to think at this point that the concerns people have out there about jobs may not be misplaced. Their anxiety is real.

FEYERICK: Gerri, you've got oil rising, you've got the threat of terrorism, you have the Iraq war -- what do the executives on Wall Street think about the economy and about the direction it's going in? Because the economy's going to be a huge issue come election time.

WILLIS: Oh, you bet.

I think that Wall Street -- you saw the stock market sell off. Each of the markets now, they are at lows for the year. There's a lot of concern, a lot of worry.

And most of the worry focuses on this: if consumers become anxious, depressed, they're going to stop spending. That could hurt corporate earnings. And despite the fact that we had seen something of a rebound in the bottom line for corporate America, that could be in jeopardy. Now, I did want to mention consumer's bottom lines here because it's so important. It's being affected not just by the fact that the market's going down, hurting their 401(k)s. Jobs are an issue.

But oil prices here are spiking. I'm sure you've seen these numbers -- we could through $50 a barrel on oil this week -- that's the fear in the marketplace out there. And everybody is watching and wondering.

DOUGHERTY: Gerri, this is Jill again. The -- getting back to the political component on this, the Bush campaign has been talking about the fact that overall, the trend is in the right direction. This may be a temporary dip, et cetera.

But is this a blip or is this, would you say, like, more longterm?

WILLIS: Well, we thought it was a blip last month, quite frankly. Jobs report not exciting then either. But now you've got a second month of this.

And there are other numbers coming out as well. Layoffs out. A report just this week: one in five Americans who were laid off in the last three years, they're still looking for work. Of those who were re-employed, they're making less than they did before.

I think people who are experienced out there thought, you know, at the end of the day, when the economy picks up, I'm going to be employed. And it's not happening. I think people out there have questions.

Another report, interesting, from Berkeley, about Wal-Mart. This is the country's biggest employer, and in the state of California, the taxpayers there sponsor Wal-Mart employees with all kinds of benefits, especially health care, to tune of $86 million a year. So you've got to wonder: is the quality of jobs exactly what we want to be seeing?

HINOJOSA: All right. So Gerri, let's talk about the political spin. Who's doing what, who's saying what, who's happy, who's not so happy with these numbers?

WILLIS: Hey, it was all about spin Friday. Everybody was out, trying to put their spin on these numbers. The Democrats saying, you know, this is a disappointing number, the economy's not coming back. The Republicans saying, these numbers are being completely misread.

Every economic piece of information that comes out now is part of the political debate and I think we're just going to continue this for four weeks to come.

HINOJOSA: But interesting that you say what's interesting, is that these economists -- they're not Democrats. They're not hoping to help John Kerry or President Bush. I mean, they're just numbers people and they're not -- they're not understanding.

WILLIS: Well, I think what's interesting is the president trying to put the spin on these numbers, especially the jobless data. That, you know, you're just not looking at the right number, you should be looking at something else.

But, you know, it's -- the markets at the end of the day, who are saying the most important number is jobs creation, payroll -- and they're just trying to gauge what the economy's doing. They don't have a political ax to grind in this case.

KOPPEL: So -- so what can they do. I mean, in terms of -- obviously, this had an impact on the market on Friday. It closed down quite a bit.

WILLIS: Right.

KOPPEL: What can economists do? Are there any other indicators that they could be looking for to gauge? Obviously, the Bush administration, the Kerry team, looking to see how this is going to play out in November.

WILLIS: Well, I think we're all looking at every piece of data that comes out. And, right now, frankly there is just one silver lining for consumers, and it's mortgage rates. Expectations that rates here are going to come down again. And you know the impact more broadly on the economy when that happens. People refinance. They take out home equity loans, lines of credit. They spend money, upgrading their houses or buying new ones. And you find that the economy typically picks up.

But I think the back beat -- the question that people are asking now is, When is corporate America going to step up? Consumers may be tapped out here. We're seeing consumer-confidence levels fall. Retail sales at some institutions in the last month fell as well. When does corporate America step up with the kind of hiring, consistent hiring that would make good on the president's promise of creating millions of jobs before the end of the year?

FEYERICK: Gerri, when you look at the economy, and take it back sort of four years ago -- and this is sort of asking you a broad question here. That is, when you looked at the economy four years ago, when it seemed so strong, and now what we're hearing is, you know, we're getting better, we're getting stronger.

How do you describe it to people who obviously are -- see their bills going up? What has happened in the last four years? Are we better? Are we worse? Are we going up? Are we going down? Because there's so many numbers.

WILLIS: Right.

FEYERICK: What is happening?

WILLIS: Deb, that's a really interesting question because some of the numbers we have even now, if you really put them in context, are not that bad.

The jobless rate right now, 5.5 percent. That's full employment in many economies. Most people wouldn't be upset about this.

But there is such a back beat, a drum beat of information out there about some people not being able to get jobs, particularly experienced workers. And I think people are fearful, particularly with terrorism in the background, oil prices moving higher, that things could fall apart.

I even heard someone ask a question this week about double-dip. Could we get a double-dip recession here, could we go back down?

HINOJOSA: OK, double-dip -- a new term for me at least, because I'm not an economist.

But anyway, from concerns over the economy to questions about racial diversity in journalism. I'm on that story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We have been averaging up to 30 percent now of all applicants being minorities. We want to do even better. We want minorities in the State Department. We want to see more and more minority ambassadors, minority political counselors, minorities at every level. Because in order for us to live our value system for real, and to show the rest of the world what America is all about and what America looks like, I want my department to look like America.

(END VIDEO CLIP)

HINOJOSA: So progress has been made, but there's still a long way to go. That's according to Secretary of State Colin Powell about the number of people of color working in the foreign service.

Now Secretary Powell made those remarks at this week's unity convention here in Washington, a gathering of nearly 8,000 Latino Asian American, African-American and Native American journalists. The conference also heard from President Bush and his Democratic challenger, John Kerry.

WILLIS: Maria, I just am so interested in this meeting because it sounds like it was, A, a lot of fun and, B, really interesting to see the reactions of journalists in this setting.

Tell me, though, when you're in the newsroom, how does it look today? Is it more diverse or no?

HINOJOSA: Compared to 40 years ago, it's absolutely more diverse. Compared to the representation of America as a whole, not a lot.

I think a lot of these journalists -- and you're talking about high-powered journalists all the way to entry level, young people just coming out of college, thinking that they want to get into this business. You get different opinions. Many of the people who have been around say, you know what? We've made progress, but it just doesn't -- we don't feel it in our newsrooms, we're not feeling that -- that these journalists are able to change the story selection. It's about hiring, but it's also about story selection, what gets on the air. What stories finally make it out there?

A lot of the young journalists, though, feeling really enthused. And you have to kind of balance both of these. You know, the older journalists wanting to make sure that these younger journalists feel like there's a place for them, and yet know that they're going to meet a lot of these barriers.

KOPPEL: So what do...

DOUGHERTY: Maria...

KOPPEL: ...experienced journalists like yourself tell the younger journalists? And I know that you're involved in mentoring. How do you both kind nurture that enthusiasm, yet at the same time not dampen it?

HINOJOSA: You know what I tell them, Andrea? I tell them if journalism is something that you're doing because it means something to you, like it does to me, then you need to know that that passion that you have -- you have to hold on to it -- but you're going to confront struggles, because you are a minority within the newsroom. So be prepared for that.

I think that -- you know, I didn't have that. I was the first Latina hired at National Public Radio, the first Latina here at CNN. So I didn't have anyone to kind of give me that perspective. So I just tell them, look, Be prepared, stick to your guns, find your voice, which is actually what Dick Parsons, when he addressed a group there, said. Stick to voice, remain true to it and -- and be prepared for a long haul.

But you know what? We all do in our professional careers. We just got to be real about it.

DOUGHERTY: Maria, some people have made a bit about the fact that some of the journalists at least applauded when Kerry was there and they were a bit colder when the president was there. And they would say it just proves that the media are really liberal.

What do you say to that?

HINOJOSA: Well, I have to say, when Senator Kerry walked out on stage and -- about half of the room stood up and applauded even before he had said a word -- and I'm sitting there with my arms crossed because I just -- for me, that's what I do. I don't applaud for any politicians anywhere at anytime.

I felt uncomfortable, and I raised that to a lot of the people who I was with in the convention. There were other people who said, Listen, you need to understand though. When you're -- when you have presidential candidates or the president addressing the ASNI conference or RTNDA -- these are professional journalism conferences around the country -- the same thing happens. They stand up and they applaud.

Was there more of an enthusiasm for Senator Kerry? Absolutely. I think that President Bush got a more tepid response and he got more -- he got more difficult questions, edgier questions, because he's the president.

FEYERICK: You mentioned stories before, Maria. What stories do people feel just are not being covered?

HINOJOSA: Oh, Deb -- I mean, that's huge. It's -- you know, on the local level, there are reporters who say, you know, I want to cover a particular communities, or cover particular stories of people who we don't usually see. I moderated a big opening-session panel where it was a discussion of entertainment. How come hip-hop is still not -- even though it's part of the mainstream culture, it's not so much of what we cover. A lot of complaints around that.

I think that when you have journalists who care about these issues and they feel like it's kind of glossed over, we have to remember -- look, who are the people who are making the main decisions about all of the journalism that we hear, see and consume? It's pretty much a very small, monolithic group that is not very diverse.

And we're all affected by that. All of us as journalists, all of us as consumers, get less information as a result, and that's just bad.

FEYERICK: You know, and just a follow-up question: what is it -- what about the audience? Because we talk about the people sort of at the top of the spectrum, who are sort of making the decisions. But also, there's an audience. There's a market.

Where does that come into play, for example? Are the decisions being made because those kinds of stories don't sell? Or what's the issue?

HINOJOSA: You know what? I think -- and this is where I come at in terms of issues of diversity in journalism -- when you have the most diverse newsroom that you possibly can, we are giving the best kind of journalism that we can possibly give. And yes, they should absolutely be looking at markets. But you know what? Power doesn't change easily. People don't give up power. And if you have people who don't have the experience of a diverse reality, then they can't understand what makes a good story or what's an important story for an different community.

I just feel like eventually things are going to become more inclusive. But we're not quite there yet. But we've certainly made a lot of progress.

KOPPEL: OK, but what I want to know is: who is doing it well? There have to be some examples out there that all of us can learn from. How are they doing it well and who? HINOJOSA: Well I'll tell you -- I mean, even at CNN, we had a reception last night and to look around the room that we were all in, all of the journalists of color, CNN has made tremendous movement forward. It wouldn't have been the same five years ago. So I think I hold up CNN as an example.

There are a lot of people look at USA Today, say that they've done a good job, Gannett in general has done a good job. Less so in terms of the networks.

Now interestingly, the networks will not give numbers. They will not say how many people of color they employ. So it's hard to tell.

You know, I think that we can't make a broad generalization. It's something that we should all be aware of, though, because again, we're all consuming this information. We're all the better of it if we get more information, and worse off if we don't have this kind of diversity in our newsrooms.

DOUGHERTY: OK, so we're going to thank Deborah Feyerick for being with us and move on from the fight for a more diverse newsroom to the presidential campaign trail.

I'm ON THE STORY of President Bush and Senator John Kerry's tug- of-war for swing-state voters after a break.

But first, a check of the latest news.

CALLAWAY: Hello, everyone. I'm Catherine Callaway. On -- in the news now:

President Bush is taking a break from the re-election campaign today. He is at the family compound in Kennebunkport, Maine, where he will attend the wedding of his nephew.

John Kerry says the economy shifted into reverse. Kerry cited the July employment report as proof that President Bush isn't doing his job when it comes to creating jobs. The Kerry-Edwards whistle-stop campaign chugs through Colorado and New Mexico today.

The fiercest fighting in months is now raging in the Iraqi holy city of Najaf. Two U.S. Marines have been killed. And the Iraqis say hundreds of insurgents and civilians are also dead.

In the meantime, Iraq's interim leader announced about three hours ago that he has placed a 30-day amnesty into affect. It is aimed at people wanted for minor crimes.

Keeping you informed, CNN, the most trusted name in news.

I'm Catherine Callaway at the headquarters in Atlanta. ON THE STORY will be back in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: President Bush is just a few blocks from here. It occurred to me that he could come here for a great discussion about America's future if he were really willing to just turn the corner.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When it comes to fighting the threat of our world, when it comes to making America safer, when it comes to spreading peace, we're moving forward and we're not turning back.

(END VIDEO CLIP)

DOUGHERTY: So, President Bush and Senator Kerry -- neither man wants to cede an inch of ground when it come to getting the voters in those crucial swing states.

Both men were out this week in the Midwest campaigning very heavily. And in one particular Midwest city, Davenport, Iowa, it turned out that both men showed up, same date, same time, just down the street from each other.

Welcome back to ON THE STORY.

HINOJOSA: So, Jill, I know that when we were talking before, you said the debate was who made the reservations first?

So who made the reservations first? Was there ever a final outcome?

DOUGHERTY: You know, I don't think there really was, because they had both people apparently -- the campaigns both reached them pretty early. But that debate is still in progress.

But it was pretty striking, as we drove into the city. We passed the Kerry campaign spot and then we go down, right to the Bush campaign spot, on the Mississippi River. And you could walk there in five minutes.

KOPPEL: I know one of the press reports I read about the event -- or, about the day, Jill, mentioned that Senator Kerry was 50 minutes late show showing up for one of his events. And this was a big deal with the local anchors there.

You covered President Clinton, who was notorious for being late. How -- how do the two candidates compare with your experience covering the White House before?

DOUGHERTY: Well, you'd have to say -- if you compare President Bush to President Clinton, there is no comparison. President Bush is rigorously on time, as far as I can see. And President Clinton used to go on -- loved to talk to people, was notoriously late. Depends, I guess, on their style. For us, it's not particularly good because life is unpredictable.

WILLIS: Jill, talk to us a little bit about -- you know, there used to be a Rose Garden strategy in the summer. A sitting president did not go out and campaign. They stayed in Washington; they did the business of the country.

But boy, that's not what the president is doing.

DOUGHERTY: That's a very good point.

You know, this campaign has really begun early. It's very, very intense. And there is no Rose Garden strategy any more. They are really in the trenches.

This is a fight. It's a fight essentially on two issues -- terrorism, which you'd have to say is good for president Bush in the sense that the polls show he is still leading Kerry on that issue. But it's a very tricky issue, because if there is more terrorism, then that can have a bad effect on President Bush. So it kind of cuts both way.

And then you have the domestic economy, and that's where you have the president looking at some not-so-good news, trying to spin it in a positive direction and Kerry trying to show what would he do any better than Bush.

HINOJOSA: So Jill, what was -- because you're now back on this campaign trail, what's been the thing that you've just been totally surprised by?

DOUGHERTY: In terms of the way the campaign is run, I'd have to say I'm very surprised by the control as we -- of the media, as we go along the campaign trail. Very tight control of where cameras are placed, the access to the president. Sure, all of the candidates -- I'm sure the Kerry campaign and every other campaign has a stump speech and it's very controlled in that sense.

But going back to -- I covered President Bush's father and also the first Clinton one, in the presidency, and it is far more controlled. The media really are kept in line very carefully.

KOPPEL: Getting back, Jill, to your day in Iowa, did you get a feeling -- because obviously that's a very tight state, which is why both men were there. Did you get a sense as to which one may have made any headway there?

DOUGHERTY: You know, When you look at these numbers, they are so incredibly tight that a lot of times the difference is simply the margin of error in the polls. So to say that anybody is particularly leading in these swing states is very difficult.

I think you'd have to say that the strategy now seems to be President Bush, knowing that there -- he's got his people in his camp, Kerry has his people in his camp. And then for the people who are undecided, they may not be that happy with President Bush, but they're not in the Kerry camp yet.

So that's where they're going for, that's -- that's -- they're the people they're looking for. And interestingly, in the stump speech of the president this week, he introduced the phrase "look for discerning Democrats and wise independents." He was telling his voters get out there and talk to those people because that's the only hope that this campaign is going to budge in either direction.

WILLIS: Jill, so early for the fight to be this intensive. And just this week, the Swift Boat ad controversy surfacing here.

Give us the latest on that.

DOUGHERTY: Well, the Swift Boat controversy, as you know, is that ad -- an attack TV ad that was put together by an independent group, people who -- it was attacking Senator Kerry for his record in Vietnam, and specifically saying he lied about his record.

Now, the Bush campaign was asked about what they thought of that ad. And although they did not directly say that the ad should be pulled and they didn't criticize the ad per se, they said that ads like this are not good, should be eliminated, and they called upon the Kerry campaign to help them eliminate these ads.

Now, we should point out that the ads at this point are against Kerry, but the ads were used in the primary against Senator McCain, who was of course a Republican. McCain came out and actually defended Kerry and attacked those ads, and said no one should have that type of attack on them.

HINOJOSA: All right. So from attacks to something a little bit more personal, Jill -- there's a wedding going on where you are. I didn't know that George P. was getting married. What's up with that?

DOUGHERTY: Well, know you know, 28 years old.

You remember him. He is a very attractive son of Jed (sic) Bush, the governor of Florida. And some people have touted him as a possible candidate, maybe in the future. He seems to have all the characteristics that would lead to that.

So they're having a marriage here, a wedding in Kennebunkport at the presidential compound. And there are a number of people obviously here, happy about that. By the way, he's marrying a Texas lawyer, a young Texas lawyer.

KOPPEL: But of course.

Well, from weddings and the presidential campaign, to the new Iraq and the unique way American diplomats are preparing to work there. I am on that story just ahead.

(BEGIN VIDEOTAPE)

ANNOUNCER: Andrea Koppel is CNN's State Department correspondent. She joined CNN in 1993. She's a former CNN Beijing bureau chief and Tokyo correspondent.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FRANK TAYLOR, ASSISTANT SECRETARY OF STATE FOR DIPLOMATIC SECURITY: It's our feeling that if we were asking people to go into challenging situations, we had to make sure they had the skills that we thought they might need to -- if there was a problem, to survive and come home alive.

(END VIDEO CLIP)

KOPPEL: That's the Assistant Secretary of State for Security -- for Diplomatic Security Frank Taylor, saying a new but very dangerous landscape in Iraq requires a different approach for preparing Americans heading for a different type of duty at the U.S. embassy there. For this group, basic survival skills are paramount.

Welcome back to ON THE STORY.

This is a program that's been in place, that the State Department's been running, really, for years. But now, only since December, has it been mandatory for all American diplomats. And they'll ultimately be about 1,000 who are going to Iraq. It's -- began in December.

DOUGHERTY: Exactly.

You know (UNINTELLIGIBLE), Andrea this reminds me very much of the combat-zone or conflict-zone training that journalists are having for areas like the Mid East and Afghanistan, Iraq, et cetera.

But getting -- getting back to the issue of Baghdad, what kind of State Department employees are actually sent there? Who ends up there?

KOPPEL" Well, in fact, most of them are from the State Department. Most of them are diplomats who, in some instances, have been behind a desk for much of their career, or been posted to some post like in Moscow, where you usually are.

But some of them are actually coming from other federal agencies, from the FAA, from the IRS. I met one guy who was an auditor for the U.S. Air Force in Ohio, and they've decided that they want to do this for a variety of different reasons. Some of them -- one guy was 59 years old. He said this is probably the last real challenge, the last real adventure that he would have in his career.

Others are doing it -- one woman 42-year-old Nancy Pillin (ph), who usually is in protocol at the State Department, said that she's been a Bush supporter for so many years she wants to go and put a good face on the American effort in Iraq and that's why she's going.

HINOJOSA: So, like, totally willing to say, I'm going to risk my life, I'm going to learn how to shoot -- I mean, you were saying that they're not just shooting, you know, 8 mm glocks or 9 mm glocks -- you know how much I know about military -- but that they're prepared to say, OK, I'm going to go into this intensive training, knowing that I'm putting my life on the line, because I want to make a political statement?

KOPPEL: Right. I mean, some of them say that they don't really believe a lot of reports that they've been hearing coming out of Iraq and they don't necessarily think it is quite as bad and quite as dangerous as some of us have been reporting.

That said, they also recognize the importance of knowing -- they're not going to be carrying these weapons. They learned how to shoot four different types of weapon, including an AK-47. This is part of the classroom training that you're seeing right here. But they learned to shoot four different types of weapons, not because they're going to be carrying them, but in the event that one of the diplomatic security officers that's with them or one of the U.S. Army or military officials there -- if their weapons get knocked out of their hands, if they get injured or killed themselves, that these young men and women would be able to either disarm the weapon so that it doesn't fire indiscriminately, or that they would be able to pick it up and protect themselves to save their life.

Part of the classroom -- actually, what you're seeing right there is a car that's going to -- that's going to explode. They had about a dozen different types of improvised explosive devices that went off. And the point of that was showing that car exploded from just one stick of dynamite. And I was standing in the little structure that they had folks in that was protected. It has Plexiglas so that there so there wouldn't be flying glad or anything that would hurt you. And I actually found myself jolted from the explosion. And you -- we were protected. I knew we wouldn't be hurt.

But the point is to prepare people for the eventuality that they will have an explosion go off. They're going to be in the Green Zone. You hear the rockets flying throughout the night, throughout the day, and so that they won't be quite as startled once they're in that environment.

WILLIS: Well, Andrea, isn't it also the case though -- this is going to be largest embassy anywhere, right? And weren't you also told that if the situation were as dangerous somewhere else, they wouldn't be sending people in, they'd be taking them out?

KOPPEL: Exactly. Frank Taylor, the assistant secretary for diplomatic security, told me -- he said, were this an embassy anywhere else in the world -- and certainly we have seen this since 9/11, since -- in fact, 1998, since the East Africa bombings that you've had the threat level raised at various embassies around the world and various consulates around the world. And there are 250 of them, and in many instances, you have dependents, you have sometimes even the nonessential personnel, who are ordered to leave the embassy. And Frank Taylor said, were this anywhere else, they would be telling people to get out of Iraq. But because it is such an important posting, they are looking for volunteers. And all of these men and women -- 550, have been through the course so far -- have volunteered to go, to leave, in some instances, their children, their wives or husbands behind, to volunteer for at least six months. And so they believe very strongly in their core that they're -- they're there to try to help, in some instances build nascent democracy, to help audit some of the $16 billion that U.S. taxpayers are paying to help reconstruct Iraq, to follow the oil money, or just to help, you know, with consular affairs, people who want visas, people who want passports, any mundane issues that would go on in embassies around the world that are taking place in obviously extraordinary circumstances in Baghdad and throughout Iraq.

DOUGHERTY: So, Andrea, Baghdad now is the most dangerous posting?

And another quick question, what's this doing to people who thought they were getting into the State Department to wear pinstripe suits and high heels and be diplomats?

KOPPEL: Well, again, they're only looking for volunteers.

And I was actually struck personally by the enthusiasm. Each person that I spoke with -- and there were 19 people would went through the course the week that we followed them. All said that they were excited to go there. They were looking forward to going there.

There was one guy who had been there, I think, six or seven times already, and yet hadn't been through this course. So he wanted to go through it.

I don't think it is a surprise for any of these folks who sign up to go. They're looking at it in many instances as an adventure, as an opportunity to see something that they wouldn't otherwise get a chance to experience.

HINOJOSA: Incredible, Andrea, although I'm not going to be going on that train, I can tell you that.

Now just ahead, a special treat. We get to talk with Jill Dougherty about what it's like to be back in Russia, and suddenly back on the presidential campaign. We're on that story when we come back.

(COMMERCIAL BREAK)

HINOJOSA: Now if you're thinking that you usually see Jill Dougherty reporting from Russia, you're correct. She is our Moscow bureau chief. So pretty extraordinary to have her covering the presidential campaign.

DOUGHERTY: It's kind of like "Groundhog Day," I'd say, because I actually, as I mentioned, covered President Bush Senior, and then the first term of Bill Clinton, and now back for a brief one month here at the White House. And then back to Moscow.

KOPPEL: So Jill, I know you've only been back on this beat for a week, but how do you compare father with son? What are there -- how are their styles different or similar?

DOUGHERTY: Well, I think -- it's kind of a cultural difference, I think. With the -- with the Bush Senior I felt more kind of that Eastern influence. I guess a more -- the openness of parties. At that point, it was a very different political situation, so that you had more of a wider debate, I'd say, on many issues.

Right now, what I'm struck with coming back is the polarization, both -- into both camps. You know, Democrats, Republicans. And very strong rhetoric. It's really quite shocking when you come back from abroad. I knew it was happening. But when you see -- and I'm not talking just about the Bush campaign; I'm talking about the political situation in general. It is very emotional and very negative.

HINOJOSA: Now I'm wondering, Jill, you know, when you make these kinds of shifts from one continent to another, I know that one of those stories that I was recently impacted by that recently happened in Moscow was the murder of this 42-year-old journalist from Forbes.

Wondering how you feel as a journalist, were -- you know, sometimes you're in Moscow, and you -- I guess you have to watch your back. And now you're here covering a presidential campaign where you're entirely controlled.

DOUGHERTY: Right.

Well, I think if you look at the murder of Paul Klebnikov -- he was the editor Forbes magazine, the Russian edition of Forbes magazine -and he was shot by unknown people about a month ago. Really, a terrible situation, shot as he came out of the office, drive-by shooting and he died in the hospital. And the sad thing about that is nobody knows precisely why he was killed, and many people have severe doubts as to whether they will ever solve this.

Paul Klebnikov was an American, and he was first American to be killed under those circumstances. But I have to tell you, out in the Hintu land, out in the provinces in Russia, there are a lot of Russian journalists who are killed frequently or attacked for what they write. Anything that deals with personal -- personal issues of crime, corruption, and especially if you name names. It's very, very dangerous.

WILLIS: Jill, let's go to Putin's crackdown that appears to be going on, and that is even affecting our economy right now with the Russian oil company that hasn't been paying taxes, and now the government saying, "We're going to shut you down if you don't."

Gas prices, oil prices, in this country, through the roof. What's going on? Is there a widespread crackdown going on?

DOUGHERTY: You know, that's the real question about this: where are they going with this?

But essentially -- you know, you have two stories. You have Yukos oil company, the most progressive, Western-style oil company in Russia. And then you have the former head of Yukos, Mikhail Khodorkovsky. He was an opponent of President Putin, talked about building independent pipelines when the government controls all of them. And he was funding political parties in opposition to the Kremlin.

So the original feeling was, OK, the Kremlin goes after Khodorkovsky. They arrest him, they put him in jail and now he's undergoing a very, very long trial. But essentially, it's a one off. You know, you deal with Khodorkovsky, eliminate him, but Yukos oil company continues untouched.

Well, that's not what's happening. They are now going after Yukos big time and preparing to sell off a choice chunk of that oil company. And now investors are saying, Where are we going with this? You have to say it's definitely heading in the direction of more government control of these energy companies, no question about that.

KOPPEL: Jill, give us -- give us a feel for what the mood is like in -- amongst the Russian people right now. There have been surveys that have come out recently gauging the anti-Americanism within the Arab world and throughout the Middle East, which is at all- time highs.

What is it like in Russia?

DOUGHERTY: Well, remember Russia, of course, opposed the war in Iraq.

But you'd have to say -- that continues. People think it was a mistake, et cetera. But there is grave concern about terrorism, because Russians have been the objects of terrorism. People have blown -- suicide bombers on the streets of Moscow blowing themselves up. So they're quite frightened too about that issue.

WILLIS: Jill, thanks so much. We're back ON THE STORY after this.

(BEGIN VIDEOTAPE)

ANNOUNCER: Wrestling isn't a male-only sport this Olympic season. An Athens-bound woman takes to the mat. Tela O'Donnell -- what's her story? More when we come back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Tela O'Donnell -- what's her story? The 22 year old is one of four U.S. athletes in the first-ever woman's wrestling competition at this year's Summer Olympic Games.

TELA O'DONNELL, OLYMPIC ATHLETE: I think when people first (UNINTELLIGIBLE), I think they think that wrestlers might be kind of, like, just brutish, kind of mannish girls. ANNOUNCER: Born and raised in Alaska, O'Donnell made a name for herself in school as a member of the boy's wrestling team. She says taking up the sport was a way to improve herself, not a venue to compete with others. O'Donnell takes to the Athens mat August 22.

(END VIDEOTAPE)

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

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