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On the Story

Bush, Blair Together on Iraq but Apart on Africa; Heavily Armed Suspected Murderer Allowed to Cross U.S.-Canadian Border

Aired June 12, 2005 - 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.


BETTY NGUYEN, CNN ANCHOR: Well, good morning. I'm Betty Nguyen at the CNN Center in Atlanta. ON THE STORY begins in just a moment after this check of our top stories today.
The Gulf Coast is breathing a sigh of relief after getting a lashing from Tropical Storm Arlene. No severe damage has been reported, but forecasters say the remnants of Arlene could still bring torrential rain and flooding as it moves northward. We'll have a live report from Pensacola Beach. That is straight ahead.

In Wisconsin, a tornado is blamed for some $3 million in damages. Look at this. Officials say the twister touched down yesterday in Hammond, creating a 100-foot wide, two-mile long swathe on the ground. No reports of injuries, but 22 homes were damaged.

It seems Britain had doubts about the Iraq war before ever agreeing to be part of the invasion. "The Washington Post" quotes a briefing paper prepared for Prime Minister Tony Blair before the war. It says the U.S. military had given "little thought to the aftermath and how to shape it."

I'm Betty Nguyen at the CNN Center. More headlines at the bottom of the hour.

ON THE STORY begins right now.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week from Tropical Storm Arlene to the missing teenage girl in Aruba. I'm Suzanne Malveaux, on the story of President Bush and British Prime Minister Tony Blair, together on Iraq, but apart this week on Africa.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: I'm Jeanne Meserve, on the story of how an odd-looking, wild-talking, heavily- armed man talked his way across the U.S.-Canada border and what that says about homeland security.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: I'm Elizabeth Cohen, on the story of how two sisters took the initiative and made sure they would both be mothers and part of medical history.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, on the story of how General Motors will hopes big layoffs will bring back big profits. Also coming up, the latest on the missing Alabama girl in the Caribbean.

And how safe is the milk supply? Why a new research paper was called a blueprint for terrorism.

At the end of hour, our "What's Her Story?" segment, the life of Anne Bancroft.

E-mail us at ONTHESTORY@cnn.com.

We'll check on the first big storm of the hurricane season in a moment, but first, the latest on the missing girl in Aruba.

MALVEAUX: The tragedy in Aruba. Eighteen-year-old Natalee Holloway has been missing for almost two weeks. She was on a senior class trip from Birmingham, Alabama.

CNN supervising producer Kim Segal is part of our team covering the story in Aruba.

Now Kim, tell us, what is the latest? I know there's been a lot of conflicting and confusing reports about where we are in this investigation.

KIM SEGAL, CNN PRODUCER: Well, tonight will be two weeks since the disappearance of Natalee Holloway, and there's still no trace of her. Meanwhile, five people are held in custody right now, two of which are security guards who claim they've never seen Natalee. But the other three are the three boys she was last seen with the night she left her hotel.

One of those boys, a senior police official told CNN, has "confessed" or given sort of a confession. That is all we know in the investigation right now.

MESERVE: Kim, what about the evidence? Is there a body? Are they still looking for one?

SEGAL: No. I mean, the Aruban authorities here on the island searched every inch of this island. They are no longer still looking.

Obviously, investigators are -- are getting tips every day. They're following up on every tip. And meanwhile, the tourists here are meeting every day at 10:00 a.m. in a local hotel to go out and do their own search. But so far, no clue and no trace of Natalee.

COHEN: Kim, tell us about who she was with at the time that she apparently was taken. There were chaperones in her group, correct?

SEGAL: Yes. There were chaperones, but you've got to remember, she's an 18-year-old girl. There were a lot of kids here.

She was out in a bar, where the legal drinking age here in Aruba is 18. She apparently had met these three boys the night before in the casino at their hotel. She saw them again at the bar that night, and we are told she got in the car with them, and that was the last time she was seen.

HAYS: What are people there saying about this? Certainly, in the latest news reports, one of the young men allegedly saying that something bad happened to her. You say the whole island has been searched.

What do the people there think happened? What are they saying?

SEGAL: It's such a small island, and I think the people here are just so shocked something like this would happen, because these kinds of crimes do not happen to tourists. That's why this is a main destination for American tourists, because it is so safe.

But there's all kinds of rumors, especially the local folks. They don't want to believe anything bad has happened to her or anything bad would be done to her by somebody who is actually a resident of this island. They know how important tourism is here.

MALVEAUX: And Kim, it's kind of confusing, because I know there's a difference in the legal system there and the United States. But essentially, you have five people there in custody? Have they been arrested? Have they been charged? Do we each know if this is a homicide?

SEGAL: See, that's the problem, because right away people think when somebody's in custody in this story that there's a charge against them. That's not how it works here in Aruba.

In Aruba, all they need is a reasonable suspicion that somebody may be involved in a crime. They can pick them up, they hold them for 48 hours. They get six hours to interrogate the person without a lawyer present, and then if they want to hold them any longer they go in front of a judge and say, now we have some probable cause. And most of it has been witness testimony, no direct evidence, but they're holding all these people, five more -- or, I'm sorry, eight more days because a judge thought there was probable cause to do so.

MALVEAUX: Well, Kim, thank you very much for you and for all our team in Aruba. We'll be watching for developments in that story, of course.

And now back to another big story, a big storm named Arlene.

SEGAL: No problem.

MALVEAUX: Now, she's the first-named storm of the hurricane season, Arlene. The Gulf Coast battened down, and people in Alabama and Florida began thinking Arlene looked a lot about like a dangerous storm called Ivan that killed dozens of people last year.

CNN National Correspondent Susan Candiotti is in Pensacola, Florida.

Susan, tell us, what is the latest? It looks like you weathered that storm. SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, let's give some credit first to the local headline writer and go to the local newspaper here, "The Daily News." And the headline is: "Area Lucks Out." So there you have it.

Certainly, a lot of nerves were rattled when they got news that Tropical Storm Arlene was approaching because of what happened last fall with Hurricane Ivan, that devastated this area. Fifty people died in the entire region due to that strong hurricane.

So people were -- were nervous when they got word that Arlene was heading this way. But they did pay attention to the warnings, and they did prepare.

If you went to some area gas stations, you couldn't find any because obviously people topped off their tanks. They bought bottled water, they bought the batteries. But in the end, it wasn't much to Tropical Storm Arlene. It fizzled.

They had very little rain, a very dry storm. In fact, they'll probably get more rain here during a typical summertime storm.

MESERVE: Susan, I have read some press that people in Florida actually prepared much better for this storm than they did for any last year, that they apparently have learned some lessons after the battering they took last year. Did you see evidence of that?

CANDIOTTI: Oh, yes, I did. People knew to pay attention to the warnings because of what they go through here every hurricane season, but in particular because of what happened with Hurricane Ivan. And the fact of the matter is, this area is still recovering from that very serious storm.

We understand that there are 10,000 roof permits still out. So that many homes and/or businesses still haven't made all of their repairs yet. So the thought of this storm approaching was just, you know, too much for some people.

On the other hand, they're also used to this kind of thing. So a lot of people told us, "Look, it's a tropical storm. It's not a hurricane. We're not going to freak out over this."

MALVEAUX: Well, thank you very much, Susan, on the story in Pensacola Beach. It looks like a beautiful day.

And, of course, we are bound for Iraq next. That is where CNN's Jane Arraf is near the Syrian border. She's back on the story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF (voice-over): At another house, the soldiers burst in to find Rahma (ph) and her five sons. "You terrified us! What is this?" she shouts at the captain. "If you came in nicely, we'd say, 'welcome,' and give you water and cold drinks." The captain apologizes.

(END VIDEO CLIP)

MALVEAUX: Well, the captain apologizes, but he and his men face the same minute-to-minute dilemma: how to protect themselves, fight the insurgents and still win the support of the Iraqis. Our Jane Arraf is on the story in northwestern Iraq, on the phone.

Jane, who do the Iraqis trust?

I'm sorry. We seem to have lost Jane there, a technical difficulty. Hopefully we'll get back to her.

Of course, in the meantime, we want to go to our Elizabeth Cohen. She is going to be bringing us a number of stories, medical stories.

Elizabeth, are you there?

COHEN: I'm right here. It's a lot easier -- it's a lot easier to reach Atlanta than Iraq, I think.

MALVEAUX: Absolutely. Elizabeth, tell us, what are you working on?

COHEN: A really terrific story this week, Suzanne. It's about identical twins Melanie and Stephanie. And Stephanie was -- was infertile.

She couldn't have children. She had tried IVF twice. The reason she couldn't have children -- you see the twins there -- the reason she couldn't have children is she went through menopause at age 14, and doctors don't know why. But her sister was fertile, and so they found a way, they found a doctor in St. Louis, and they did an ovarian transplant.

They took some of Melanie's healthy ovarian tissue and transplanted it to her sister. And now, about a year later, we have a baby, Anna Grace.

MESERVE: Elizabeth, can you tell us a little bit more about the procedure and exactly what it entailed?

COHEN: Right. In the beginning, when you hear "ovarian transplant," you might think they just took out one woman's ovary and gave it to the other woman, but that's actually not how it worked.

The way that it worked is doctors went in and they took Melanie's ovary. And so you see right there, they just took some tissue from it, sort of the coating. That's where the eggs are. And they put it on to her sister's ovary.

So they took the tissue from one ovary and they took a third of that tissue and put it on her sister's right ovary. The second third went on to her sister's left ovary, and the final third actually went into the freezer in case either woman needs it in the future. And once she had -- once the infertile sister had that healthy ovarian tissue, within a couple of months she had a regular, normal period, and she got pregnant quite quickly.

And she got pregnant the natural way, the good old-fashioned way. There was no IVF, there was no drugs.

HAYS: And this is so amazing, because going through, you know, premature menopause at age 14, this young woman seemed doomed to a life of infertility. And you mentioned she had tried the IVF. What about other women, particularly women who don't have twin sisters, identical twin sisters who could so readily get this tissue and have their body accept it?

COHEN: Right. That's the big question, because, of course, most infertile women don't have an identical twin sister who they can get this kind of help from.

The doctor, Dr. Silber from St. Louis, says that he thinks that in the future this will be possible. The trick is, is that if you're getting this ovarian tissue from someone who is not your identical twin, you would have to take anti-rejection drugs.

And so you would have to get pregnant and be pregnant, stay pregnant on anti-rejection drugs. That's not an ideal way to get through a pregnancy, but women who, for example, have had kidney transplants, they've done it. They've stayed pregnant on anti- rejection drugs that suppress the immune system and it's worked out fine. So it's conceivable, no pun intended, that this could work for women who are not identical twins.

MALVEAUX: And Elizabeth, you know why I love this story? It's because I'm a twin myself, and so we often think about, well, what can science do, what does it mean?

But what's really unique about this story is these twins were very proactive. I mean, they were really a part of making sure that one was helping the other. They went to the doctor, and they were really quite a part of this breakthrough.

COHEN: That's right. They actually sought him out.

After the rounds of IVF failed twice, they went on the Internet from their home in Muscle Shoals, Alabama, and they found Dr. Silber. And what they found is that they found that he had done -- and I won't go into the details of this unless you really want me to -- testicular transplants. And they thought, well, if they can do testicular transplants for men, why couldn't he do ovarian transplants for women?

Well, it worked, and she got pregnant. And when Stephanie Yarber got that phone call that she was pregnant, here's what happened...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: She started screaming on the phone she was so excited. And everybody in the bank started screaming. And before you knew it, the whole town of Muscle Shoals, Alabama, was screaming.

(END VIDEO CLIP) COHEN: So as you can imagine, there's now a very happy doctor, a happy mommy, and a happy aunt.

MESERVE: Was it was exceptionally emotional, Elizabeth? You cover a lot of these medical stories where a lot of emotion is involved. But did this one have a special punch/

COHEN: Oh, this did. I mean, we heard that the mother, Stephanie Yarber, was crying in the delivery room. Her sister, Melanie Morgan, was crying in the delivery room. That everyone was crying, because, of course, this is -- as any infertile couple knows, when you have a baby after years of trying, it's always special. And then it's extra special that these two women actually sought out that doctor to help them, that they -- they were really responsible in many ways for this pregnancy.

HAYS: Well, Elizabeth Cohen, thank you for that. From medical miracles to the tough work rooting out insurgents in northwestern Iraq, we're making another attempt to get our Jane Arraf on the story in just a moment.

(COMMERCIAL BREAK)

MALVEAUX: We are actually trying to get in touch with our own Jane Arraf. She is in a critical position.

She is in northwestern Iraq really, really near the Syrian border. We are going to go ahead and try to bring her later in the program. We understand -- we heard her over the break saying that she is actually in a sandstorm. That's the reason why we can't seem to reach her. We keep getting in and out on the phone.

But in the meantime, let's go ahead and talk about the state of the economy. And, of course, joining us, the expert on the economy, Kathleen.

Bring us up to date.

HAYS: Well, you know, I -- and I think that one of the big stories that really got a lot of people going this week, not just in the stock market, but I think also for Americans, for consumers, for workers, is the story of GM. And GM's been in trouble for a while. You know, this storied old company.

Remember they used to say, what's good for GM, good for America. Well, if that's the case, we all better be worried right now because it's having so many difficulties.

The worst first quarterly loss ever. They lost over a billion dollars in the first quarter. Their debt has been downgraded to junk status.

So beginning to fight back, continue what they've been doing for a while, getting rid of workers to cut costs. Earlier in the week, Rick Wagoner, who's the CEO, said, "We're going to get rid of 25,000 workers." That's about 14 percent of the workforce, North American workforce of 111,000, I believe...

MESERVE: It sounds like a huge number, but put it in perspective for us.

HAYS: Well, you know, that's one of the reasons why some of the analysts, Jeanne, were a little bit disappointed, because if you're really going to cut costs -- and this is what they're up against, they have to cut costs and get more competitive with their big competitors, which are the Japanese automakers.

They're losing about 8,000 workers a year anyway. Apparently, they would have lost about 22,000 by 2008 just with early retirement and attrition. So this isn't a bold move yet. Health care costs is one of the things they really have to get their arms around.

MESERVE: We now have Jane Arraf back with us from the Iraq- Syrian border, I believe.

Jane, are you there on the phone?

ARRAF: I am.

MESERVE: Great.

ARRAF: I am.

MESERVE: Did the sandstorm settle down?

ARRAF: I was in the middle of a sandstorm here, as if things weren't odd enough. But yes, I am here. Can you hear me?

MESERVE: We can. Now, tell us exactly what you're doing up there in that border area.

ARRAF: It is -- I cannot tell you how fascinating it is out here. It's a place that not a lot of people get to.

It takes up fully one-third of Iraq, not too far from the Syrian border. And it's a huge expanse of desert where there are very few troops.

(INAUDIBLE) what is a major operation to crack down on insurgents in Tal Afar. And I have to tell you, one of the most interesting (INAUDIBLE) things, the hospital patients are afraid to go to (INAUDIBLE). There are a few Iraqi soldiers working with the Americans. A lot of talent is here, as they like to say.

COHEN: (INAUDIBLE) the insurgents. How do you know if they've been successful? How do you measure that kind of success?

ARRAF: Sorry, can you repeat that?

COHEN: Sure.

COHEN: U.S. Forces have said that they've been successful in these raids against the insurgents. How do you measure success? How do you know if you've gotten the insurgents or not, that they might just come back a few days later?

ARRAF: That's the key question, because they are coming back. This has been a pattern that we've seen over and over in this region.

In this part of northwestern Iraq, they had 400 U.S. troops in the area up until last month, when they poured in more than 3,000 more. And while those troops were gone, the feeling is that the insurgents came back in.

Now, they're coming in across the border, but they're also a lot of Iraqis who are making this possible. And this is such a huge (INAUDIBLE), that every time it seems like (INAUDIBLE) they've cracked down on insurgents in one town and they move on to another town, people...

HAYS: Jane...

ARRAF: It's not entirely clear how it's going to play out.

HAYS: Jane, in terms of what you're seeing there, we showed a clip of the family that was startled by the soldiers and the soldiers had to apologize. That's so kind of poignant. But also a hospital you've reported on where people are afraid to go.

ARRAF: So much wind noise here. I'm going to have to ask you to repeat that.

HAYS: The hospital, Jane, tell us about the hospital where there's only two people because the people there won't go because they're afraid of the insurgents.

ARRAF: That's one of the more heartbreaking things I've seen. There was a 4-month-old girl there who was very, very ill because her parents had been afraid to bring her to the hospital.

There was only two other patients. And this was in a hospital with 200 beds, the only functioning hospital. In fact, they told me when women -- when pregnant women are about to give birth, the week before their due date they will be driven down what is considered a very dangerous road to a hospital an hour away. (INAUDIBLE) after the (INAUDIBLE) taken back by insurgents by U.S. and Iraqi forces.

HAYS: All right. Jane Arraf, thank you so much, braving a sandstorm, braving insurgents.

Our Jane Arraf there every day bringing us the story.

Thank you so much, Jane.

We're going to go next to the economy. More on GM.

And coming up as well, how a suspicious man, later a double murder suspect, was allowed across the U.S.-Canada border.

We'll talk about how friends and allies can differ when it comes to war, peace and Africa. And at the end of hour, our "What's Her Story?" segment on Anne Bancroft.

That's all coming up, all ON THE STORY. Plus, a check of what's making news right now.

(COMMERCIAL BREAK)

NGUYEN: Good morning. I'm Betty Nguyen at the CNN Center in Atlanta.

ON THE STORY continues in just a moment. But first, here are the headlines right "Now in the News."

A French journalist held hostage in Iraq for the last five months is free. She and her Iraqi interpreter were released earlier today, but there's no word yet on their conditions or how they gained their freedom.

In Iran, four separate bombings have killed at least eight people and wounded nearly two dozen others, or dozens of others. The bombings exploded near government buildings in southern Iran. Authorities are still trying to determine who planted those bombs.

In Aruba, three young men arrested Thursday in Natalee Holloway's disappearance remain in custody. A judge agreed yesterday to detain them for at least eight more days, but there are conflicting reports over what they have told investigators. Two men were detained earlier in the case. Holloway, a high school honor graduate from Alabama, has been missing for nearly two weeks, and so far no formal charges have been filed in that case.

I'm Betty Nguyen. More news at the top of the hour on "CNN LIVE SUNDAY" with Fredricka Whitfield. "ON THE STORY" continues right now.

COHEN: Welcome back to ON THE STORY. I'm Elizabeth Cohen, and we'll be talking to economics correspondent Kathleen Hays about General Motors.

Kathleen, as a medical correspondent I have this question for you. General Motors has blamed high health care costs as the major reason why they need to lay off 25,000 workers. They've been struggling with these costs for decades. Why haven't they come up with some sort of solution?

HAYS: It's certainly one of the biggest reasons they want to lay off workers. But remember, Elizabeth, it won't eliminate the health care costs, because they have to pay people if they take early retirement. Those health care costs go on and on, which is one of the reasons why they're such a big burden for GM. GM just feels that they have to get leaner and meaner, and that's one of the reasons for the layoffs.

But let's look at those health care costs. Health care costs for GE will be $5.5 billion this year. That's the equivalent of $1,500 for every car they produce. And again, it's not just for current workers, it's for retirees. It brings up a couple of points. Number one, the debate about a national health care system. There are more and more big companies like this who face this burden, and that makes it very tough to be competitive with companies, say, in Asia, where workers make a fraction of the wage our workers make here, and where they don't face these kinds of costs. It's a real big question as U.S. companies, the auto makers in particular try to compete in a global market that's getting tougher and tougher all the time.

MALVEAUX: So Kathleen, what kind of pressure does this put on other companies to actually outsource jobs, to look for other ways to provide for health care?

HAYS: Well, certainly, in terms of providing for health care, again, I think that one hopeful note for GM is that at the end of the week the United Auto Workers union were sort of leaking to the papers in Detroit that their locals are saying, OK, maybe we will consider taking a little bit more of the health care burden. We'll have our workers pay a little bit more of that monthly cost.

In terms of competing with the cheap suppliers, cheap manufacturers overseas, they're pressuring a lot of their -- the smaller companies in the Midwest that make all kinds of parts, or even big ones like Delphi, saying, hey, look, we can buy it this cheaply in China. You have got to find a way to do this, even if it means locating your plants now in China as well upon.

MESERVE: Meanwhile, a kind of surprising offer from the head of Toyota.

HAYS: Yes. Well, and of course, Toyota is the company that now threatens to overtake GM as the biggest auto maker in the world. They are more efficient by many measures. It takes Toyota on average about 27.9 hours to produce one car versus GM's 34 hours. But the chairman, the head of Toyota at week's end was saying, look, we are willing to raise our prices on our cars in the U.S. by 2 or 3 percent to help out this ailing U.S. auto industry. Call it enlightened self-interest, call it wanting to avoid a political backlash. This is a step that's been taken and we'll see if they'll follow up.

COHEN: Kathleen, Alan Greenspan spoke about the economy this week. What did he say?

HAYS: He said it's in good shape. No soft patch -- soft patches over. A little big over about inflation pressures creeping up. Companies who face things like rising energy costs wanting to pass those onto consumers, and guess what? We'll keep hiking interest rates.

I think what struck a lot of people is once again, he's wondering aloud about a housing bubble, saying, well, we don't have a national bubble, but there's froth, lots of little bubbles. He's also worried about a lot more risky mortgages.

So he's sending some kind of warning, even as he makes it clear, we're going to keep raising interest rates. I think some people think that may have some risks, particularly in what looks like a very hot, maybe overheated housing market.

MALVEAUX: But what does that mean when he says that froth, those tiny little bubbles? I mean, is he saying that we're going to see this burst any time soon, or it dissipates and it's no longer...

HAYS: Well, let's go to South Florida, let's go to California, let's go to areas where -- even, hey, Washington D.C., talk to anybody who's tried to buy a house lately. You know, prices are up 20, 30 percent for a couple of years in a row. How much more can they go?

But one of the great ironies right now and one of the things that makes you think the Fed doesn't have 100 percent control, they've risen interest rates eight times in the last year. The short-term rates have gone from 1 percent to 3 percent, but the long-term rate is falling, and that's pulling down mortgage rates. So every time the Fed is moving, ironically, they're not slowing down the economy. They are -- ironically having the opposite result of juicing up the housing market.

MESERVE: Well, what does that say? I mean, the Fed is supposed to have control.

HAYS: Yes.

MESERVE: It doesn't. What are the implications of this?

HAYS: Well, I think the implication is that I think some people would say that when they raise those short-term rates change, Jeanne -- and that's all they control -- because the market, this huge market of thousands of bond investors around the world control these longer rates, they're pushing up short-term rates. Those act with a lag. There's a minority on Wall Street who says the economy is slowing down. I think some would say the risk is maybe the Fed goes a little too far and gets a little more of a slowdown than the rest of us would like to see, and I would think in Washington, that could hit just about the time a lot of people here are gearing up for those Senate elections that could be very crucial as well.

MESERVE: OK, Kathleen. Thanks a lot for that. And from the economy to homeland security, and how did a man carrying weapons and later arrested for a double murder make it across the U.S.-Canadian board? I'm back on that story right after this.

ANNOUNCER: Jeanne Meserve is a correspondent in CNN's Washington Bureau. She joined CNN in 1993, and covers homeland security for the network. She's a former correspondent for ABC.

(COMMERCIAL BREAK)

MESERVE: Welcome back. I'm Jeanne Meserve. We're ON THE STORY and on the security watch. Stay tuned to CNN day and night for the most reliable news about your security.

Let me show you some of what we found out about just how easy it can be, even in the post-9/11 world, for someone to get across the U.S.-Canadian border, even someone with an odd appearance and lots of weapons. Here's a look.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): The man who showed up at the quiet border crossing at Calais, Maine on April 25th, 22-year-old Gregory Despres, was more than just unusual. Eddie Young was also trying to enter the U.S. that day.

EDDIE YOUNG: He was quite the funny-looking person. His eyes were wide open. His hair was all wet, and the mohawk, and the hair came down in the center of his face.

MESERVE: Even more unusual, what Despres was carrying. Court records show he had a homemade sword engraved with his name and a swastika, a hatchet, a knife, two homemade brass knuckles, pepper spray, zip cuffs, a flak jacket and a small chainsaw, spotted with what authorities say appeared to be blood.

(on camera): U.S. Customs and Border Protection held Despres here in Calais, Maine for two hours. They ran his name against criminal databases, talked to law enforcement on both sides of the border. Having found no outstanding warrants and having determined that he was a U.S. citizen, they let him into the country.

(voice-over): Customs and Border Protection would not talk on camera, but a spokeswoman tells CNN: "There was nothing that we could hold him for, and being a U.S. citizen, we couldn't force him to go back to Canada or anything like that."

(END VIDEOTAPE)

MESERVE: Now, we do have a little of additional information since we've filed that report. We've discovered that in fact a warrant had been issued for Gregory Despres before he came across the border into the U.S., while he was still at that border crossing at Calais, Maine. What isn't clear exactly is whether U.S. authorities at the time knew the warrant had been issued. It was a warrant for an assault charge.

HAYS: But his crime was an awful, bloody, mean crime.

MESERVE: A horrific murder in a town called Minto, New Brunswick, which is where Gregory Despres lived. The victims were his next-door neighbors, a man named Fred Fulton and his common-law wife, Verna Decarie. And Fulton, according to court records, had been decapitated; his head left in a pillowcase next to his body. There had been a struggle there, and there had been a longtime conflict between Gregory Despres and between this couple, so he immediately became a suspect in the case.

MALVEAUX: So what is the impact and fallout here? I mean, what are law enforcement officials saying in response to your story?

MESERVE: They are defending themselves and saying they did it by the book. They're saying that this young man had dual U.S.-Canadian citizenship, and because of that they could not bar him from entering the United States unless they had a warrant against him. If the warrant that had been issued on the assault charge, not the murder, but an assault charge had been known about at the border, it might have given them an excuse to hold him for another couple of hours, but it may never have given them a reason to send him back to Canada, because that was a misdemeanor offense. I'm told that it takes a felony to have an extradition take place back to Canada. He was a U.S. citizen; he was at that point on U.S. soil.

COHEN: Now, Jeanne, you mentioned that an assault warrant had been issued prior to his arriving at that border crossing. Had it been issued by U.S. authorities or by Canadian authorities?

MESERVE: No, by Canadian authorities. This is a rather complicated story, so excuse me if it takes a minute to explain it.

The murder victims, as I mentioned, lived next door to Gregory Despres. He had a longtime dispute with them. They'd been fighting for about two years. Some of the neighbors described how at one point Gregory Despres was so anxious to get under the skin of Fred Fulton that he took a powersaw and he taped the throttle open and then he hung the chainsaw over a tree between their houses, simply so the noise would irritate the next-door neighbor. At another point, he put static on his stereo system, turned it up full blast, just to irritate the guy.

There was a family gathering at the Fulton house at one point. Some of this kind of stuff was happening. Fulton and Fulton's grandson got very upset with Despres. That was an encounter afterwards. Despres was accused of trying to threaten the grandson, in that case, and wield a knife. It was on those charges that he was being brought up. Investigators theorized that what happened is just hours before he was to be sentenced in that case, he went into the Fulton house, and the theory is that he then murdered the two people there.

HAYS: Still frightening that someone who had just committed a horrible murder with all these weapons hanging off his body couldn't be stopped.

MESERVE: But they didn't know he committed a murder. What is actually pretty amazing about this story is that immediately he became a suspect. A BOLO was sent out both in Canada and the United States. They realized he'd crossed the border, and a very alert police dispatcher saw this BOLO. And this kid had a Massachusetts driver's license. She looked at it, she said, that doesn't look quite right. So she did some research, and realized it was missing a letter. And when she discovered that, she ran a search, discovered it was linked to a marina in Mattapoisett, Massachusetts, where this kid had once worked. Authorities there were alerted. The police drew up a wanted poster. A police officer had just delivered those posters to the adjacent town was driving back into Mattapoisett and sees somebody on the side of the road, and says, hey, that looks like Gregory Despres. Calls up, drives up, starts interviewing this kid through the window, realizes he has the wanted posters sitting face-up on the seat...

UNIDENTIFIED FEMALE: Oh, my goodness. MESERVE: ... flips them over. The kid actually identified himself as Gregory Despres from Canada. The officer turns around, the officer gets some reinforcements. They make the arrest.

HAYS: OK. So great police work and some very good luck, but another frightening story that you covered this week. But it is your beat. You're watching security for us.

MESERVE: Yeah.

HAYS: Milk. I'm a great milk drinker. I don't want to think that terrorists are lurking in the carton in the fridge.

MESERVE: Well, I don't think they are lurking in the carton in the fridge. You're OK there.

What this all stemmed from was a report, a study done by a Stanford University researcher, and his findings were that it would not be that difficult for terrorists with very, very concentrated doses of botulinum toxin to poison the milk supply, and a fairly large portion of the milk supply, because of the way this is processed.

This paper was going to be published by the National Academy of Sciences. They put it up on a password-protected part of their Web site so journalists could read the article before the actual publication. Health and Human Services got wind of this article. They contacted the National Academy, they said, please don't publish, this is a road map to terrorism because it is so detailed. The National Academy is now deciding what they're going to do. No decision yet.

MALVEAUX: And is there any concern, though, that there is perhaps if you clamped down on information, you don't put it out there, that this is really going to discourage scientists and other people from coming forward, saying, look, you know, we have a warning here, but then it never gets to the public.

MESERVE: It's a very difficult balance to strike. It's the same balance we all struggle with every day. How much information do you report and at a certain point are you giving ideas to people who don't need anymore ideas?

Scientists say, this is how we communicate. We publish. This is how information gets out there. We collaborate and how we solve problems. So it is a very thorny issue, hence the delay in the National Academy reaching a decision about exactly what to do. They met with government officials last week to talk to them, but clearly, there are a lot of internal discussions within the scientific community about how far they should and could go.

MALVEAUX: Of course, another thorny issue, not only homeland security, but also diplomacy. President Bush was forced to take his eye off the domestic scene this week. I am back on that story after this.

(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)

BUSH: South Korea and the United States share the same goal, and that is a Korean Peninsula without a nuclear weapon.

(END VIDEO CLIP)

MALVEAUX: President Bush on Friday with his South Korean counterpart signaling a united front against North Korea and its nuclear weapons. The nagging questions, but will pictures like this out of the Oval Office have some sort of impact, and when will North Korea return to the negotiating table?

Welcome back. I'm Suzanne Malveaux, and we're on that story.

COHEN: Suzanne, there was a lot of subtext in the president's speech that he delivered, even the way he said the Korean leader's name was considered important. Were there some signals going out here?

MALVEAUX: Well, absolutely. What's very interesting is that you hear some of the same language and even the same tone, but if you take a second look and dissect this somewhat, you can hear the administration's strategy changing somewhat in its tone. President Bush, for quite a while, has been calling the leader of North Korea, Kim Jong Il, he's been calling him a tyrant. He says that he has been a bad leader. There's been a lot of inflammatory language really on both sides here between these two. Kim Jong Il using that as one of the reasons to say, hey, look, we're not coming back to these six- party talks; we don't believe that you're acting in good faith.

There is very much a debate in the administration as to whether or not the Bush administration and even the president has struck the right tone in dealing with Kim Jong Il. We heard President Bush this week not once, but twice refer to him as Mr. Kim Jong Il, and that is a very important sign, at least for the North Koreans, of some sense of respect, of giving that leader his dignity. And as you know, Elizabeth, a lot of this is about saving face before they actually come back and say, we're willing to give up something. What can you give us in return?

HAYS: Well, and those -- people have been pushing on the Bush administration to be saying that the insistence that the North Koreans start moving in the direction the U.S. wants them to go before the U.S. puts any carrot on the table has been wrong. The insistence on multilateral talks rather than dealing directly with the North Koreans; they've been criticized on this as well.

Behind the scenes, what has been happening?

MALVEAUX: Sure.

HAYS: Because we see -- if we see the softening on the surface, we can only imagine that behind the scenes, they are starting to change their strategy. MALVEAUX: And what was really interesting this week is that the administration allowed itself to basically present mixed signals. On the one hand, you had this senior Defense Department official saying, look, two weeks, we give it two weeks, and we're going to bring it back to the United Nation Security Council, perhaps actually facing sanctions. That is something that North Korea says is tantamount to declaring war.

Secretary Rice immediately comes out the day after, saying, look, we don't have a timetable here, and we're still working on the diplomatic front. So you've got these public statements, mixed signals, behind the scenes, you know, out there it's good cop/bad cop. Behind the scenes, a real debate that is taking place within the administration.

What was important this week, however, was the fact that North Korea did come forward -- this was in the beginning of the week -- and said, we are ready to return to the six-party talks. Did not say, we're going to give a timetable or we're even definitively going to be there. The administration still very -- has a lot of questions, whether or not they can even believe what that regime is telling them.

MESERVE: Well, dealing with North Korea is particularly problematic, isn't it, because the regime is so unpredictable, and in fact, in a way, that's sort of their trump card, that they are so unpredictable and they can hold everybody in suspense.

MALVEAUX: And it's one of the reasons why if you listen to President Bush, he is so vague. He is so vague in what he says, because on the one hand, I said, look, I put an offer out there a year ago, saying dismantle, prove it, you're going to start dismantling your weapons program, and then we'll begin to offer some of those economic incentives, energy and so forth that others are talking about. But he intentionally doesn't really give the specifics, because they don't believe what North Korea is saying, and you brought up a very good point before, which is that is part of the problem. The president receives a lot of criticism, because people within the administration and within the six-party talks say, you are not spelling out what the North Koreans need to hear for them to come back.

COHEN: Tony Blair was in town. A lot of talk about Africa. Tell us about that.

MALVEAUX: Well, it was really kind of amazing because you had a lot of different dances that were going on at the same time here. On the one hand, you have this announcement that comes out later from the G-8, the foreign ministers out of London, saying $40 billion of debt forgiveness for the poorest nations. At the same time, you have this whole idea about whether or not you contribute more aid to Africa. Blair was in town with Bush this week, and behind the scenes he was pushing and pushing to double the amount of aid for Africa in 10 years. The Bush administration, the president saying no go, we're not going to do that at this time. We want to make sure that our money is going to the right places. A much, smaller, modest offer that the two leaders decided that they would go forward to, a face-saving measure for both of those.

HAYS: A quick question. Is this how you're -- well, we're going to not save the quick question until later...

MALVEAUX: OK.

HAYS: ... after the show, because we are going to be ON THE STORY right after this.

ANNOUNCER: Saying goodbye to a stage and screen star. "What's Her Story?" More when we return.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

DUSTIN HOFFMAN, ACTOR: Mrs. Robinson, you're trying to seduce me. Aren't you?

ANNOUNCER: Anne Bancroft, what's her story? The legendary actress best known for her role as Mrs. Robinson in "The Graduate" died this week after battling uterine cancer.

Born in the Bronx to Italian immigrant parents, she studied at New York's Academy of Dramatic Arts, and eventually moved to Hollywood, where she adopted her stage name. She won an Oscar and a Tony Award for her role as Helen Keller's teacher, Anne Sullivan, in "The Miracle Worker." To prepare for the role, Bancroft covered her eyes with tape, and learned sign language.

She also starred in several movies with her husband of 41 years, funny man Mel Brooks. Bancroft was 73 years old.

(END VIDEOTAPE)

MALVEAUX: Well, thanks to my colleagues and thank you for watching ON THE STORY. We'll be back next week, and at 12:00 eastern, 9:00 a.m. Pacific, "LATE EDITION" with Wolf Blitzer. Among Wolf's guests are U.S. Senators Chuck Hagel and Dianne Feinstein.

Straight ahead, a check on what's making news right now.

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


Aired June 12, 2005 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: Well, good morning. I'm Betty Nguyen at the CNN Center in Atlanta. ON THE STORY begins in just a moment after this check of our top stories today.
The Gulf Coast is breathing a sigh of relief after getting a lashing from Tropical Storm Arlene. No severe damage has been reported, but forecasters say the remnants of Arlene could still bring torrential rain and flooding as it moves northward. We'll have a live report from Pensacola Beach. That is straight ahead.

In Wisconsin, a tornado is blamed for some $3 million in damages. Look at this. Officials say the twister touched down yesterday in Hammond, creating a 100-foot wide, two-mile long swathe on the ground. No reports of injuries, but 22 homes were damaged.

It seems Britain had doubts about the Iraq war before ever agreeing to be part of the invasion. "The Washington Post" quotes a briefing paper prepared for Prime Minister Tony Blair before the war. It says the U.S. military had given "little thought to the aftermath and how to shape it."

I'm Betty Nguyen at the CNN Center. More headlines at the bottom of the hour.

ON THE STORY begins right now.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week from Tropical Storm Arlene to the missing teenage girl in Aruba. I'm Suzanne Malveaux, on the story of President Bush and British Prime Minister Tony Blair, together on Iraq, but apart this week on Africa.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: I'm Jeanne Meserve, on the story of how an odd-looking, wild-talking, heavily- armed man talked his way across the U.S.-Canada border and what that says about homeland security.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: I'm Elizabeth Cohen, on the story of how two sisters took the initiative and made sure they would both be mothers and part of medical history.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, on the story of how General Motors will hopes big layoffs will bring back big profits. Also coming up, the latest on the missing Alabama girl in the Caribbean.

And how safe is the milk supply? Why a new research paper was called a blueprint for terrorism.

At the end of hour, our "What's Her Story?" segment, the life of Anne Bancroft.

E-mail us at ONTHESTORY@cnn.com.

We'll check on the first big storm of the hurricane season in a moment, but first, the latest on the missing girl in Aruba.

MALVEAUX: The tragedy in Aruba. Eighteen-year-old Natalee Holloway has been missing for almost two weeks. She was on a senior class trip from Birmingham, Alabama.

CNN supervising producer Kim Segal is part of our team covering the story in Aruba.

Now Kim, tell us, what is the latest? I know there's been a lot of conflicting and confusing reports about where we are in this investigation.

KIM SEGAL, CNN PRODUCER: Well, tonight will be two weeks since the disappearance of Natalee Holloway, and there's still no trace of her. Meanwhile, five people are held in custody right now, two of which are security guards who claim they've never seen Natalee. But the other three are the three boys she was last seen with the night she left her hotel.

One of those boys, a senior police official told CNN, has "confessed" or given sort of a confession. That is all we know in the investigation right now.

MESERVE: Kim, what about the evidence? Is there a body? Are they still looking for one?

SEGAL: No. I mean, the Aruban authorities here on the island searched every inch of this island. They are no longer still looking.

Obviously, investigators are -- are getting tips every day. They're following up on every tip. And meanwhile, the tourists here are meeting every day at 10:00 a.m. in a local hotel to go out and do their own search. But so far, no clue and no trace of Natalee.

COHEN: Kim, tell us about who she was with at the time that she apparently was taken. There were chaperones in her group, correct?

SEGAL: Yes. There were chaperones, but you've got to remember, she's an 18-year-old girl. There were a lot of kids here.

She was out in a bar, where the legal drinking age here in Aruba is 18. She apparently had met these three boys the night before in the casino at their hotel. She saw them again at the bar that night, and we are told she got in the car with them, and that was the last time she was seen.

HAYS: What are people there saying about this? Certainly, in the latest news reports, one of the young men allegedly saying that something bad happened to her. You say the whole island has been searched.

What do the people there think happened? What are they saying?

SEGAL: It's such a small island, and I think the people here are just so shocked something like this would happen, because these kinds of crimes do not happen to tourists. That's why this is a main destination for American tourists, because it is so safe.

But there's all kinds of rumors, especially the local folks. They don't want to believe anything bad has happened to her or anything bad would be done to her by somebody who is actually a resident of this island. They know how important tourism is here.

MALVEAUX: And Kim, it's kind of confusing, because I know there's a difference in the legal system there and the United States. But essentially, you have five people there in custody? Have they been arrested? Have they been charged? Do we each know if this is a homicide?

SEGAL: See, that's the problem, because right away people think when somebody's in custody in this story that there's a charge against them. That's not how it works here in Aruba.

In Aruba, all they need is a reasonable suspicion that somebody may be involved in a crime. They can pick them up, they hold them for 48 hours. They get six hours to interrogate the person without a lawyer present, and then if they want to hold them any longer they go in front of a judge and say, now we have some probable cause. And most of it has been witness testimony, no direct evidence, but they're holding all these people, five more -- or, I'm sorry, eight more days because a judge thought there was probable cause to do so.

MALVEAUX: Well, Kim, thank you very much for you and for all our team in Aruba. We'll be watching for developments in that story, of course.

And now back to another big story, a big storm named Arlene.

SEGAL: No problem.

MALVEAUX: Now, she's the first-named storm of the hurricane season, Arlene. The Gulf Coast battened down, and people in Alabama and Florida began thinking Arlene looked a lot about like a dangerous storm called Ivan that killed dozens of people last year.

CNN National Correspondent Susan Candiotti is in Pensacola, Florida.

Susan, tell us, what is the latest? It looks like you weathered that storm. SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, let's give some credit first to the local headline writer and go to the local newspaper here, "The Daily News." And the headline is: "Area Lucks Out." So there you have it.

Certainly, a lot of nerves were rattled when they got news that Tropical Storm Arlene was approaching because of what happened last fall with Hurricane Ivan, that devastated this area. Fifty people died in the entire region due to that strong hurricane.

So people were -- were nervous when they got word that Arlene was heading this way. But they did pay attention to the warnings, and they did prepare.

If you went to some area gas stations, you couldn't find any because obviously people topped off their tanks. They bought bottled water, they bought the batteries. But in the end, it wasn't much to Tropical Storm Arlene. It fizzled.

They had very little rain, a very dry storm. In fact, they'll probably get more rain here during a typical summertime storm.

MESERVE: Susan, I have read some press that people in Florida actually prepared much better for this storm than they did for any last year, that they apparently have learned some lessons after the battering they took last year. Did you see evidence of that?

CANDIOTTI: Oh, yes, I did. People knew to pay attention to the warnings because of what they go through here every hurricane season, but in particular because of what happened with Hurricane Ivan. And the fact of the matter is, this area is still recovering from that very serious storm.

We understand that there are 10,000 roof permits still out. So that many homes and/or businesses still haven't made all of their repairs yet. So the thought of this storm approaching was just, you know, too much for some people.

On the other hand, they're also used to this kind of thing. So a lot of people told us, "Look, it's a tropical storm. It's not a hurricane. We're not going to freak out over this."

MALVEAUX: Well, thank you very much, Susan, on the story in Pensacola Beach. It looks like a beautiful day.

And, of course, we are bound for Iraq next. That is where CNN's Jane Arraf is near the Syrian border. She's back on the story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF (voice-over): At another house, the soldiers burst in to find Rahma (ph) and her five sons. "You terrified us! What is this?" she shouts at the captain. "If you came in nicely, we'd say, 'welcome,' and give you water and cold drinks." The captain apologizes.

(END VIDEO CLIP)

MALVEAUX: Well, the captain apologizes, but he and his men face the same minute-to-minute dilemma: how to protect themselves, fight the insurgents and still win the support of the Iraqis. Our Jane Arraf is on the story in northwestern Iraq, on the phone.

Jane, who do the Iraqis trust?

I'm sorry. We seem to have lost Jane there, a technical difficulty. Hopefully we'll get back to her.

Of course, in the meantime, we want to go to our Elizabeth Cohen. She is going to be bringing us a number of stories, medical stories.

Elizabeth, are you there?

COHEN: I'm right here. It's a lot easier -- it's a lot easier to reach Atlanta than Iraq, I think.

MALVEAUX: Absolutely. Elizabeth, tell us, what are you working on?

COHEN: A really terrific story this week, Suzanne. It's about identical twins Melanie and Stephanie. And Stephanie was -- was infertile.

She couldn't have children. She had tried IVF twice. The reason she couldn't have children -- you see the twins there -- the reason she couldn't have children is she went through menopause at age 14, and doctors don't know why. But her sister was fertile, and so they found a way, they found a doctor in St. Louis, and they did an ovarian transplant.

They took some of Melanie's healthy ovarian tissue and transplanted it to her sister. And now, about a year later, we have a baby, Anna Grace.

MESERVE: Elizabeth, can you tell us a little bit more about the procedure and exactly what it entailed?

COHEN: Right. In the beginning, when you hear "ovarian transplant," you might think they just took out one woman's ovary and gave it to the other woman, but that's actually not how it worked.

The way that it worked is doctors went in and they took Melanie's ovary. And so you see right there, they just took some tissue from it, sort of the coating. That's where the eggs are. And they put it on to her sister's ovary.

So they took the tissue from one ovary and they took a third of that tissue and put it on her sister's right ovary. The second third went on to her sister's left ovary, and the final third actually went into the freezer in case either woman needs it in the future. And once she had -- once the infertile sister had that healthy ovarian tissue, within a couple of months she had a regular, normal period, and she got pregnant quite quickly.

And she got pregnant the natural way, the good old-fashioned way. There was no IVF, there was no drugs.

HAYS: And this is so amazing, because going through, you know, premature menopause at age 14, this young woman seemed doomed to a life of infertility. And you mentioned she had tried the IVF. What about other women, particularly women who don't have twin sisters, identical twin sisters who could so readily get this tissue and have their body accept it?

COHEN: Right. That's the big question, because, of course, most infertile women don't have an identical twin sister who they can get this kind of help from.

The doctor, Dr. Silber from St. Louis, says that he thinks that in the future this will be possible. The trick is, is that if you're getting this ovarian tissue from someone who is not your identical twin, you would have to take anti-rejection drugs.

And so you would have to get pregnant and be pregnant, stay pregnant on anti-rejection drugs. That's not an ideal way to get through a pregnancy, but women who, for example, have had kidney transplants, they've done it. They've stayed pregnant on anti- rejection drugs that suppress the immune system and it's worked out fine. So it's conceivable, no pun intended, that this could work for women who are not identical twins.

MALVEAUX: And Elizabeth, you know why I love this story? It's because I'm a twin myself, and so we often think about, well, what can science do, what does it mean?

But what's really unique about this story is these twins were very proactive. I mean, they were really a part of making sure that one was helping the other. They went to the doctor, and they were really quite a part of this breakthrough.

COHEN: That's right. They actually sought him out.

After the rounds of IVF failed twice, they went on the Internet from their home in Muscle Shoals, Alabama, and they found Dr. Silber. And what they found is that they found that he had done -- and I won't go into the details of this unless you really want me to -- testicular transplants. And they thought, well, if they can do testicular transplants for men, why couldn't he do ovarian transplants for women?

Well, it worked, and she got pregnant. And when Stephanie Yarber got that phone call that she was pregnant, here's what happened...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: She started screaming on the phone she was so excited. And everybody in the bank started screaming. And before you knew it, the whole town of Muscle Shoals, Alabama, was screaming.

(END VIDEO CLIP) COHEN: So as you can imagine, there's now a very happy doctor, a happy mommy, and a happy aunt.

MESERVE: Was it was exceptionally emotional, Elizabeth? You cover a lot of these medical stories where a lot of emotion is involved. But did this one have a special punch/

COHEN: Oh, this did. I mean, we heard that the mother, Stephanie Yarber, was crying in the delivery room. Her sister, Melanie Morgan, was crying in the delivery room. That everyone was crying, because, of course, this is -- as any infertile couple knows, when you have a baby after years of trying, it's always special. And then it's extra special that these two women actually sought out that doctor to help them, that they -- they were really responsible in many ways for this pregnancy.

HAYS: Well, Elizabeth Cohen, thank you for that. From medical miracles to the tough work rooting out insurgents in northwestern Iraq, we're making another attempt to get our Jane Arraf on the story in just a moment.

(COMMERCIAL BREAK)

MALVEAUX: We are actually trying to get in touch with our own Jane Arraf. She is in a critical position.

She is in northwestern Iraq really, really near the Syrian border. We are going to go ahead and try to bring her later in the program. We understand -- we heard her over the break saying that she is actually in a sandstorm. That's the reason why we can't seem to reach her. We keep getting in and out on the phone.

But in the meantime, let's go ahead and talk about the state of the economy. And, of course, joining us, the expert on the economy, Kathleen.

Bring us up to date.

HAYS: Well, you know, I -- and I think that one of the big stories that really got a lot of people going this week, not just in the stock market, but I think also for Americans, for consumers, for workers, is the story of GM. And GM's been in trouble for a while. You know, this storied old company.

Remember they used to say, what's good for GM, good for America. Well, if that's the case, we all better be worried right now because it's having so many difficulties.

The worst first quarterly loss ever. They lost over a billion dollars in the first quarter. Their debt has been downgraded to junk status.

So beginning to fight back, continue what they've been doing for a while, getting rid of workers to cut costs. Earlier in the week, Rick Wagoner, who's the CEO, said, "We're going to get rid of 25,000 workers." That's about 14 percent of the workforce, North American workforce of 111,000, I believe...

MESERVE: It sounds like a huge number, but put it in perspective for us.

HAYS: Well, you know, that's one of the reasons why some of the analysts, Jeanne, were a little bit disappointed, because if you're really going to cut costs -- and this is what they're up against, they have to cut costs and get more competitive with their big competitors, which are the Japanese automakers.

They're losing about 8,000 workers a year anyway. Apparently, they would have lost about 22,000 by 2008 just with early retirement and attrition. So this isn't a bold move yet. Health care costs is one of the things they really have to get their arms around.

MESERVE: We now have Jane Arraf back with us from the Iraq- Syrian border, I believe.

Jane, are you there on the phone?

ARRAF: I am.

MESERVE: Great.

ARRAF: I am.

MESERVE: Did the sandstorm settle down?

ARRAF: I was in the middle of a sandstorm here, as if things weren't odd enough. But yes, I am here. Can you hear me?

MESERVE: We can. Now, tell us exactly what you're doing up there in that border area.

ARRAF: It is -- I cannot tell you how fascinating it is out here. It's a place that not a lot of people get to.

It takes up fully one-third of Iraq, not too far from the Syrian border. And it's a huge expanse of desert where there are very few troops.

(INAUDIBLE) what is a major operation to crack down on insurgents in Tal Afar. And I have to tell you, one of the most interesting (INAUDIBLE) things, the hospital patients are afraid to go to (INAUDIBLE). There are a few Iraqi soldiers working with the Americans. A lot of talent is here, as they like to say.

COHEN: (INAUDIBLE) the insurgents. How do you know if they've been successful? How do you measure that kind of success?

ARRAF: Sorry, can you repeat that?

COHEN: Sure.

COHEN: U.S. Forces have said that they've been successful in these raids against the insurgents. How do you measure success? How do you know if you've gotten the insurgents or not, that they might just come back a few days later?

ARRAF: That's the key question, because they are coming back. This has been a pattern that we've seen over and over in this region.

In this part of northwestern Iraq, they had 400 U.S. troops in the area up until last month, when they poured in more than 3,000 more. And while those troops were gone, the feeling is that the insurgents came back in.

Now, they're coming in across the border, but they're also a lot of Iraqis who are making this possible. And this is such a huge (INAUDIBLE), that every time it seems like (INAUDIBLE) they've cracked down on insurgents in one town and they move on to another town, people...

HAYS: Jane...

ARRAF: It's not entirely clear how it's going to play out.

HAYS: Jane, in terms of what you're seeing there, we showed a clip of the family that was startled by the soldiers and the soldiers had to apologize. That's so kind of poignant. But also a hospital you've reported on where people are afraid to go.

ARRAF: So much wind noise here. I'm going to have to ask you to repeat that.

HAYS: The hospital, Jane, tell us about the hospital where there's only two people because the people there won't go because they're afraid of the insurgents.

ARRAF: That's one of the more heartbreaking things I've seen. There was a 4-month-old girl there who was very, very ill because her parents had been afraid to bring her to the hospital.

There was only two other patients. And this was in a hospital with 200 beds, the only functioning hospital. In fact, they told me when women -- when pregnant women are about to give birth, the week before their due date they will be driven down what is considered a very dangerous road to a hospital an hour away. (INAUDIBLE) after the (INAUDIBLE) taken back by insurgents by U.S. and Iraqi forces.

HAYS: All right. Jane Arraf, thank you so much, braving a sandstorm, braving insurgents.

Our Jane Arraf there every day bringing us the story.

Thank you so much, Jane.

We're going to go next to the economy. More on GM.

And coming up as well, how a suspicious man, later a double murder suspect, was allowed across the U.S.-Canada border.

We'll talk about how friends and allies can differ when it comes to war, peace and Africa. And at the end of hour, our "What's Her Story?" segment on Anne Bancroft.

That's all coming up, all ON THE STORY. Plus, a check of what's making news right now.

(COMMERCIAL BREAK)

NGUYEN: Good morning. I'm Betty Nguyen at the CNN Center in Atlanta.

ON THE STORY continues in just a moment. But first, here are the headlines right "Now in the News."

A French journalist held hostage in Iraq for the last five months is free. She and her Iraqi interpreter were released earlier today, but there's no word yet on their conditions or how they gained their freedom.

In Iran, four separate bombings have killed at least eight people and wounded nearly two dozen others, or dozens of others. The bombings exploded near government buildings in southern Iran. Authorities are still trying to determine who planted those bombs.

In Aruba, three young men arrested Thursday in Natalee Holloway's disappearance remain in custody. A judge agreed yesterday to detain them for at least eight more days, but there are conflicting reports over what they have told investigators. Two men were detained earlier in the case. Holloway, a high school honor graduate from Alabama, has been missing for nearly two weeks, and so far no formal charges have been filed in that case.

I'm Betty Nguyen. More news at the top of the hour on "CNN LIVE SUNDAY" with Fredricka Whitfield. "ON THE STORY" continues right now.

COHEN: Welcome back to ON THE STORY. I'm Elizabeth Cohen, and we'll be talking to economics correspondent Kathleen Hays about General Motors.

Kathleen, as a medical correspondent I have this question for you. General Motors has blamed high health care costs as the major reason why they need to lay off 25,000 workers. They've been struggling with these costs for decades. Why haven't they come up with some sort of solution?

HAYS: It's certainly one of the biggest reasons they want to lay off workers. But remember, Elizabeth, it won't eliminate the health care costs, because they have to pay people if they take early retirement. Those health care costs go on and on, which is one of the reasons why they're such a big burden for GM. GM just feels that they have to get leaner and meaner, and that's one of the reasons for the layoffs.

But let's look at those health care costs. Health care costs for GE will be $5.5 billion this year. That's the equivalent of $1,500 for every car they produce. And again, it's not just for current workers, it's for retirees. It brings up a couple of points. Number one, the debate about a national health care system. There are more and more big companies like this who face this burden, and that makes it very tough to be competitive with companies, say, in Asia, where workers make a fraction of the wage our workers make here, and where they don't face these kinds of costs. It's a real big question as U.S. companies, the auto makers in particular try to compete in a global market that's getting tougher and tougher all the time.

MALVEAUX: So Kathleen, what kind of pressure does this put on other companies to actually outsource jobs, to look for other ways to provide for health care?

HAYS: Well, certainly, in terms of providing for health care, again, I think that one hopeful note for GM is that at the end of the week the United Auto Workers union were sort of leaking to the papers in Detroit that their locals are saying, OK, maybe we will consider taking a little bit more of the health care burden. We'll have our workers pay a little bit more of that monthly cost.

In terms of competing with the cheap suppliers, cheap manufacturers overseas, they're pressuring a lot of their -- the smaller companies in the Midwest that make all kinds of parts, or even big ones like Delphi, saying, hey, look, we can buy it this cheaply in China. You have got to find a way to do this, even if it means locating your plants now in China as well upon.

MESERVE: Meanwhile, a kind of surprising offer from the head of Toyota.

HAYS: Yes. Well, and of course, Toyota is the company that now threatens to overtake GM as the biggest auto maker in the world. They are more efficient by many measures. It takes Toyota on average about 27.9 hours to produce one car versus GM's 34 hours. But the chairman, the head of Toyota at week's end was saying, look, we are willing to raise our prices on our cars in the U.S. by 2 or 3 percent to help out this ailing U.S. auto industry. Call it enlightened self-interest, call it wanting to avoid a political backlash. This is a step that's been taken and we'll see if they'll follow up.

COHEN: Kathleen, Alan Greenspan spoke about the economy this week. What did he say?

HAYS: He said it's in good shape. No soft patch -- soft patches over. A little big over about inflation pressures creeping up. Companies who face things like rising energy costs wanting to pass those onto consumers, and guess what? We'll keep hiking interest rates.

I think what struck a lot of people is once again, he's wondering aloud about a housing bubble, saying, well, we don't have a national bubble, but there's froth, lots of little bubbles. He's also worried about a lot more risky mortgages.

So he's sending some kind of warning, even as he makes it clear, we're going to keep raising interest rates. I think some people think that may have some risks, particularly in what looks like a very hot, maybe overheated housing market.

MALVEAUX: But what does that mean when he says that froth, those tiny little bubbles? I mean, is he saying that we're going to see this burst any time soon, or it dissipates and it's no longer...

HAYS: Well, let's go to South Florida, let's go to California, let's go to areas where -- even, hey, Washington D.C., talk to anybody who's tried to buy a house lately. You know, prices are up 20, 30 percent for a couple of years in a row. How much more can they go?

But one of the great ironies right now and one of the things that makes you think the Fed doesn't have 100 percent control, they've risen interest rates eight times in the last year. The short-term rates have gone from 1 percent to 3 percent, but the long-term rate is falling, and that's pulling down mortgage rates. So every time the Fed is moving, ironically, they're not slowing down the economy. They are -- ironically having the opposite result of juicing up the housing market.

MESERVE: Well, what does that say? I mean, the Fed is supposed to have control.

HAYS: Yes.

MESERVE: It doesn't. What are the implications of this?

HAYS: Well, I think the implication is that I think some people would say that when they raise those short-term rates change, Jeanne -- and that's all they control -- because the market, this huge market of thousands of bond investors around the world control these longer rates, they're pushing up short-term rates. Those act with a lag. There's a minority on Wall Street who says the economy is slowing down. I think some would say the risk is maybe the Fed goes a little too far and gets a little more of a slowdown than the rest of us would like to see, and I would think in Washington, that could hit just about the time a lot of people here are gearing up for those Senate elections that could be very crucial as well.

MESERVE: OK, Kathleen. Thanks a lot for that. And from the economy to homeland security, and how did a man carrying weapons and later arrested for a double murder make it across the U.S.-Canadian board? I'm back on that story right after this.

ANNOUNCER: Jeanne Meserve is a correspondent in CNN's Washington Bureau. She joined CNN in 1993, and covers homeland security for the network. She's a former correspondent for ABC.

(COMMERCIAL BREAK)

MESERVE: Welcome back. I'm Jeanne Meserve. We're ON THE STORY and on the security watch. Stay tuned to CNN day and night for the most reliable news about your security.

Let me show you some of what we found out about just how easy it can be, even in the post-9/11 world, for someone to get across the U.S.-Canadian border, even someone with an odd appearance and lots of weapons. Here's a look.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): The man who showed up at the quiet border crossing at Calais, Maine on April 25th, 22-year-old Gregory Despres, was more than just unusual. Eddie Young was also trying to enter the U.S. that day.

EDDIE YOUNG: He was quite the funny-looking person. His eyes were wide open. His hair was all wet, and the mohawk, and the hair came down in the center of his face.

MESERVE: Even more unusual, what Despres was carrying. Court records show he had a homemade sword engraved with his name and a swastika, a hatchet, a knife, two homemade brass knuckles, pepper spray, zip cuffs, a flak jacket and a small chainsaw, spotted with what authorities say appeared to be blood.

(on camera): U.S. Customs and Border Protection held Despres here in Calais, Maine for two hours. They ran his name against criminal databases, talked to law enforcement on both sides of the border. Having found no outstanding warrants and having determined that he was a U.S. citizen, they let him into the country.

(voice-over): Customs and Border Protection would not talk on camera, but a spokeswoman tells CNN: "There was nothing that we could hold him for, and being a U.S. citizen, we couldn't force him to go back to Canada or anything like that."

(END VIDEOTAPE)

MESERVE: Now, we do have a little of additional information since we've filed that report. We've discovered that in fact a warrant had been issued for Gregory Despres before he came across the border into the U.S., while he was still at that border crossing at Calais, Maine. What isn't clear exactly is whether U.S. authorities at the time knew the warrant had been issued. It was a warrant for an assault charge.

HAYS: But his crime was an awful, bloody, mean crime.

MESERVE: A horrific murder in a town called Minto, New Brunswick, which is where Gregory Despres lived. The victims were his next-door neighbors, a man named Fred Fulton and his common-law wife, Verna Decarie. And Fulton, according to court records, had been decapitated; his head left in a pillowcase next to his body. There had been a struggle there, and there had been a longtime conflict between Gregory Despres and between this couple, so he immediately became a suspect in the case.

MALVEAUX: So what is the impact and fallout here? I mean, what are law enforcement officials saying in response to your story?

MESERVE: They are defending themselves and saying they did it by the book. They're saying that this young man had dual U.S.-Canadian citizenship, and because of that they could not bar him from entering the United States unless they had a warrant against him. If the warrant that had been issued on the assault charge, not the murder, but an assault charge had been known about at the border, it might have given them an excuse to hold him for another couple of hours, but it may never have given them a reason to send him back to Canada, because that was a misdemeanor offense. I'm told that it takes a felony to have an extradition take place back to Canada. He was a U.S. citizen; he was at that point on U.S. soil.

COHEN: Now, Jeanne, you mentioned that an assault warrant had been issued prior to his arriving at that border crossing. Had it been issued by U.S. authorities or by Canadian authorities?

MESERVE: No, by Canadian authorities. This is a rather complicated story, so excuse me if it takes a minute to explain it.

The murder victims, as I mentioned, lived next door to Gregory Despres. He had a longtime dispute with them. They'd been fighting for about two years. Some of the neighbors described how at one point Gregory Despres was so anxious to get under the skin of Fred Fulton that he took a powersaw and he taped the throttle open and then he hung the chainsaw over a tree between their houses, simply so the noise would irritate the next-door neighbor. At another point, he put static on his stereo system, turned it up full blast, just to irritate the guy.

There was a family gathering at the Fulton house at one point. Some of this kind of stuff was happening. Fulton and Fulton's grandson got very upset with Despres. That was an encounter afterwards. Despres was accused of trying to threaten the grandson, in that case, and wield a knife. It was on those charges that he was being brought up. Investigators theorized that what happened is just hours before he was to be sentenced in that case, he went into the Fulton house, and the theory is that he then murdered the two people there.

HAYS: Still frightening that someone who had just committed a horrible murder with all these weapons hanging off his body couldn't be stopped.

MESERVE: But they didn't know he committed a murder. What is actually pretty amazing about this story is that immediately he became a suspect. A BOLO was sent out both in Canada and the United States. They realized he'd crossed the border, and a very alert police dispatcher saw this BOLO. And this kid had a Massachusetts driver's license. She looked at it, she said, that doesn't look quite right. So she did some research, and realized it was missing a letter. And when she discovered that, she ran a search, discovered it was linked to a marina in Mattapoisett, Massachusetts, where this kid had once worked. Authorities there were alerted. The police drew up a wanted poster. A police officer had just delivered those posters to the adjacent town was driving back into Mattapoisett and sees somebody on the side of the road, and says, hey, that looks like Gregory Despres. Calls up, drives up, starts interviewing this kid through the window, realizes he has the wanted posters sitting face-up on the seat...

UNIDENTIFIED FEMALE: Oh, my goodness. MESERVE: ... flips them over. The kid actually identified himself as Gregory Despres from Canada. The officer turns around, the officer gets some reinforcements. They make the arrest.

HAYS: OK. So great police work and some very good luck, but another frightening story that you covered this week. But it is your beat. You're watching security for us.

MESERVE: Yeah.

HAYS: Milk. I'm a great milk drinker. I don't want to think that terrorists are lurking in the carton in the fridge.

MESERVE: Well, I don't think they are lurking in the carton in the fridge. You're OK there.

What this all stemmed from was a report, a study done by a Stanford University researcher, and his findings were that it would not be that difficult for terrorists with very, very concentrated doses of botulinum toxin to poison the milk supply, and a fairly large portion of the milk supply, because of the way this is processed.

This paper was going to be published by the National Academy of Sciences. They put it up on a password-protected part of their Web site so journalists could read the article before the actual publication. Health and Human Services got wind of this article. They contacted the National Academy, they said, please don't publish, this is a road map to terrorism because it is so detailed. The National Academy is now deciding what they're going to do. No decision yet.

MALVEAUX: And is there any concern, though, that there is perhaps if you clamped down on information, you don't put it out there, that this is really going to discourage scientists and other people from coming forward, saying, look, you know, we have a warning here, but then it never gets to the public.

MESERVE: It's a very difficult balance to strike. It's the same balance we all struggle with every day. How much information do you report and at a certain point are you giving ideas to people who don't need anymore ideas?

Scientists say, this is how we communicate. We publish. This is how information gets out there. We collaborate and how we solve problems. So it is a very thorny issue, hence the delay in the National Academy reaching a decision about exactly what to do. They met with government officials last week to talk to them, but clearly, there are a lot of internal discussions within the scientific community about how far they should and could go.

MALVEAUX: Of course, another thorny issue, not only homeland security, but also diplomacy. President Bush was forced to take his eye off the domestic scene this week. I am back on that story after this.

(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)

BUSH: South Korea and the United States share the same goal, and that is a Korean Peninsula without a nuclear weapon.

(END VIDEO CLIP)

MALVEAUX: President Bush on Friday with his South Korean counterpart signaling a united front against North Korea and its nuclear weapons. The nagging questions, but will pictures like this out of the Oval Office have some sort of impact, and when will North Korea return to the negotiating table?

Welcome back. I'm Suzanne Malveaux, and we're on that story.

COHEN: Suzanne, there was a lot of subtext in the president's speech that he delivered, even the way he said the Korean leader's name was considered important. Were there some signals going out here?

MALVEAUX: Well, absolutely. What's very interesting is that you hear some of the same language and even the same tone, but if you take a second look and dissect this somewhat, you can hear the administration's strategy changing somewhat in its tone. President Bush, for quite a while, has been calling the leader of North Korea, Kim Jong Il, he's been calling him a tyrant. He says that he has been a bad leader. There's been a lot of inflammatory language really on both sides here between these two. Kim Jong Il using that as one of the reasons to say, hey, look, we're not coming back to these six- party talks; we don't believe that you're acting in good faith.

There is very much a debate in the administration as to whether or not the Bush administration and even the president has struck the right tone in dealing with Kim Jong Il. We heard President Bush this week not once, but twice refer to him as Mr. Kim Jong Il, and that is a very important sign, at least for the North Koreans, of some sense of respect, of giving that leader his dignity. And as you know, Elizabeth, a lot of this is about saving face before they actually come back and say, we're willing to give up something. What can you give us in return?

HAYS: Well, and those -- people have been pushing on the Bush administration to be saying that the insistence that the North Koreans start moving in the direction the U.S. wants them to go before the U.S. puts any carrot on the table has been wrong. The insistence on multilateral talks rather than dealing directly with the North Koreans; they've been criticized on this as well.

Behind the scenes, what has been happening?

MALVEAUX: Sure.

HAYS: Because we see -- if we see the softening on the surface, we can only imagine that behind the scenes, they are starting to change their strategy. MALVEAUX: And what was really interesting this week is that the administration allowed itself to basically present mixed signals. On the one hand, you had this senior Defense Department official saying, look, two weeks, we give it two weeks, and we're going to bring it back to the United Nation Security Council, perhaps actually facing sanctions. That is something that North Korea says is tantamount to declaring war.

Secretary Rice immediately comes out the day after, saying, look, we don't have a timetable here, and we're still working on the diplomatic front. So you've got these public statements, mixed signals, behind the scenes, you know, out there it's good cop/bad cop. Behind the scenes, a real debate that is taking place within the administration.

What was important this week, however, was the fact that North Korea did come forward -- this was in the beginning of the week -- and said, we are ready to return to the six-party talks. Did not say, we're going to give a timetable or we're even definitively going to be there. The administration still very -- has a lot of questions, whether or not they can even believe what that regime is telling them.

MESERVE: Well, dealing with North Korea is particularly problematic, isn't it, because the regime is so unpredictable, and in fact, in a way, that's sort of their trump card, that they are so unpredictable and they can hold everybody in suspense.

MALVEAUX: And it's one of the reasons why if you listen to President Bush, he is so vague. He is so vague in what he says, because on the one hand, I said, look, I put an offer out there a year ago, saying dismantle, prove it, you're going to start dismantling your weapons program, and then we'll begin to offer some of those economic incentives, energy and so forth that others are talking about. But he intentionally doesn't really give the specifics, because they don't believe what North Korea is saying, and you brought up a very good point before, which is that is part of the problem. The president receives a lot of criticism, because people within the administration and within the six-party talks say, you are not spelling out what the North Koreans need to hear for them to come back.

COHEN: Tony Blair was in town. A lot of talk about Africa. Tell us about that.

MALVEAUX: Well, it was really kind of amazing because you had a lot of different dances that were going on at the same time here. On the one hand, you have this announcement that comes out later from the G-8, the foreign ministers out of London, saying $40 billion of debt forgiveness for the poorest nations. At the same time, you have this whole idea about whether or not you contribute more aid to Africa. Blair was in town with Bush this week, and behind the scenes he was pushing and pushing to double the amount of aid for Africa in 10 years. The Bush administration, the president saying no go, we're not going to do that at this time. We want to make sure that our money is going to the right places. A much, smaller, modest offer that the two leaders decided that they would go forward to, a face-saving measure for both of those.

HAYS: A quick question. Is this how you're -- well, we're going to not save the quick question until later...

MALVEAUX: OK.

HAYS: ... after the show, because we are going to be ON THE STORY right after this.

ANNOUNCER: Saying goodbye to a stage and screen star. "What's Her Story?" More when we return.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

DUSTIN HOFFMAN, ACTOR: Mrs. Robinson, you're trying to seduce me. Aren't you?

ANNOUNCER: Anne Bancroft, what's her story? The legendary actress best known for her role as Mrs. Robinson in "The Graduate" died this week after battling uterine cancer.

Born in the Bronx to Italian immigrant parents, she studied at New York's Academy of Dramatic Arts, and eventually moved to Hollywood, where she adopted her stage name. She won an Oscar and a Tony Award for her role as Helen Keller's teacher, Anne Sullivan, in "The Miracle Worker." To prepare for the role, Bancroft covered her eyes with tape, and learned sign language.

She also starred in several movies with her husband of 41 years, funny man Mel Brooks. Bancroft was 73 years old.

(END VIDEOTAPE)

MALVEAUX: Well, thanks to my colleagues and thank you for watching ON THE STORY. We'll be back next week, and at 12:00 eastern, 9:00 a.m. Pacific, "LATE EDITION" with Wolf Blitzer. Among Wolf's guests are U.S. Senators Chuck Hagel and Dianne Feinstein.

Straight ahead, a check on what's making news right now.

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