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CNN Wolf Blitzer Reports

Bush Nominates Alberto Gonzalez to AG Post; U.S. Troops Find Falluja Mostly Ghost Town

Aired November 10, 2004 - 17:00 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.

WOLF BLITZER, CNN ANCHOR: Happening now. President Bush taps his longtime confidant and White House counsel, Alberto Gonzalez, to replace John Ashcroft at the Justice Department. There is already controversy. Will his Senate confirmation be the president's first battle with Democrats in his second term?
Stand by for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Slaughterhouses. As troops fight their way through Falluja, they make grizzly discoveries. And terrorism hits home for Iraq's leader.

Funeral plans. Palestinians prepare to mourn their leader. Is peace possible after Arafat? We'll hear from a top Palestinian official.

Joining the jihad. Why would Westerners take up the terrorist cause?

Another day, another juror. And it is not just any juror. A stunning development in the Scott Peterson murder trial.

ANNOUNCER: This is WOLF BLITZER REPORTS for Wednesday, November 10, 2004.

(END VIDEOTAPE)

BLITZER: While fighting rages on, the battle of Falluja is moving into the so-called mopping up phase. But as insurgents are killed, captured or driven out, Iraqis say they have left behind some grim evidence of their presence in the city. We'll go to that urban battlefield in just a moment. But we begin our coverage with our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, U.S. commanders can caution that the fighting is not over in Falluja but they say the insurgents are surrounded and will certainly be defeated.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): If the insurgents had plan for the defense of Falluja, it quickly crumbled under the weight of U.S. artillery, air power and armor. Street fighting remains intense at times. UNIDENTIFIED MALE: We've taken fire from the mosque (UNINTELLIGIBLE)

UNIDENTIFIED MALE: The ones we can see, yes?

MCINTYRE: Mosques, used by insurgents as command posts, have come under heavy attack. But with most of Falluja resembling a ghost town, it is now growing more apparent that along with much of the population, many of the insurgents fled in advance of the assault. What is left appears to be a small number of desperate and disorganized remnants.

LT. GEN. JOHN SATTLER, U.S. MARINE CORPS: That they are not able to communicate to work out any coordination. They are now in small pockets, blind, moving throughout the city and we will continue to hunt them down and destroy them.

MCINTYRE: According to one Marine commander, insurgents have been pushed into a narrow strip along Falluja's main east-west highway. He estimated 70 percent of the city was under control of U.S. and Iraqi forces.

Mop-up operations are expected to last another day or two. U.S. casualties are still described as light with enemy dead put at more than 70 and some captured insurgents are said to be giving valuable information.

Videotape of a flag-raising by soldiers of Iraq's 1st brigade was replayed at a press briefing near Fallujah featuring both a U.S. and Iraqi general.

(END VIDEOTAPE)

MCINTYRE: Iraqi troops also report finding what they believe to be hostage slaughterhouses, places where kidnapped victims were beheaded. Among the evidence found there, CDs and black clothing similar to that worn by terrorists in hostage tapes -- Wolf.

BLITZER: Any indication who may have been slaughtered at those so-called slaughterhouses?

MCINTYRE: At this point we don't.

BLITZER: What about the whole nature of the battle for Falluja, are they saying a few more days, maybe a few more weeks, what about the occupation?

MCINTYRE: Well, the key emphasis now is setting the conditions to restore central services in the town and start rebuilding the town. They know that the key to the victory is to make sure that the residents of Falluja feel that things are getting back to normal and have some confidence in the Iraqi government and the Iraqi forces that will be left in charge there.

BLITZER: Jamie McIntyre, reporting for us at the Pentagon. Jamie, thanks very much. Let's go directly to the front lines now. CNN's Jane Arraf is embedded with U.S. Army troops in Falluja.

She filed this report.

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: There is still fighting in parts of Falluja but the military says they're making progress, doing search and attack operations in sectors of the city. The startling news, of course, from an Iraqi official that they seem to have found slaughterhouses for hostages.

Now very few details on this. He announced this at a news conference, saying that they have found CDs and lists of names. He did not go into details. And we're still trying to find out whether there was indeed evidence that hostages were killed there in Falluja.

The intimidation continues in other parts of the country. In Baghdad, Prime Minister Ayad Allawi's cousin, 75 years old, and other members of his family, kidnapped and threatened if Allawi does not live up to the kidnappers's demand.

Here in Falluja there is still sporadic fighting as we drove through the streets in the industrial section where Army soldiers are finding homemade bombs, fortified bunkers, and booby-trapped buildings. They kept receiving fire. The same situation in many parts of the city -- Wolf.

BLITZER: Jane, any new information on U.S. casualties?

ARRAF: Wolf, that information is quite hard to come by at the moment on the Army side. There have been two casualties on the Marine side. They describe their casualties as minimal. Given an operation of this size, part of the intent was that they wouldn't sustain a lot of casualties.

They went in with very heavy firepower. There have been some Iraqi casualties, at least four Iraqi security force members were killed in a gun fight yesterday. Others have died, as well. No word on that specific number. (UNINTELLIGIBLE) question as well, the number of civilian casualties, that is still to be determined -- Wolf.

BLITZER: Jane Arraf reporting for us. She's embedded with the U.S. army in Falluja. And as she reported, some of the relatives of Ayad Allawi have been kidnapped. Allawi himself has been the target of several recent assassination attempts. We spoke here in Washington in September.

(BEGIN VIDEO CLIP)

BLITZER: How worried are you about your own personal security?

AYAD ALLAWI, IRAQI INTERIM PRIME MINISTER: Well, I am worried, frankly. But you know, this is a job that has to be done. We're dedicated to our country. We know that we are winning. The attempts are because of the desperation of our enemies. We are winning. We'll continue to make headway. We'll continue to win. And we will bring democracy to Iraq and peace to the region and to the world.

(END VIDEO CLIP)

BLITZER: Almost everyone who knows Prime Minister Allawi says this is not a man who can easily be intimidated.

Just one day after we learned of John Ashcroft's resignation as attorney general, President Bush today named the White House counsel, his Texas confidant, Alberto Gonzalez as the successor. Our White House correspondent, Suzanne Malveaux, joining us now live with more -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, it really was a brief ceremony in the Roosevelt Room. Of course, these two men have known each other for the last 10 years or so. They go back to Texas.

But what is interesting is to talk to the political insiders, Bush advisers who say the thinking behind this appointment of course is they believe that the president in his second term could get as many as three shots at appointing Supreme Court justices. That Al Gonzalez was considered a possible but seen as too moderate for the conservative Republicans.

So the idea was to shift Gonzalez to the attorney general position and then basically at the time that the opening happens in the Supreme Court, to take advantage of what they are calling momentum, what they are calling the honeymoon period, what one adviser says is simply "kiss the conservatives" to go ahead and try to get your most controversial conservative one through the Supreme Court nomination process and at the same time allow Gonzalez to pursue legal issues as attorney general.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Serving as attorney general is one of the most challenging duties in our government. As the nation's chief law enforcement officer, Al will continue our administration's great progress in fighting crime, in strengthening the FBI, and improving our domestic efforts in the war on terror.

(END VIDEO CLIP)

MALVEAUX: Now despite the fact Republicans have a majority in the Senate, it certainly is not a shoo-in, Wolf. We have heard some congratulatory letters coming from Democrats. Senator Kennedy as well as Senator Patrick Leahy saying congratulations, though also warning them as well that they are worried about Gonzalez's record.

BLITZER: Suzanne Malveaux, thanks very much. Suzanne reporting from the White House. For more now on Alberto Gonzalez and what he's likely to face if confirmed as attorney general, we turn to our justice correspondent, Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, Alberto Gonzalez is viewed politically as more of a moderate, but policy-wise he will face many of the same problems as the current attorney general. (BEGIN VIDEOTAPE)

ARENA (voice-over): Unlike John Ashcroft, Alberto Gonzalez is clearly a close Bush confidant.

BRAD BERENSON, FMR. ASSOCIATE W.H. COUNSEL: He spent four years as counsel to the president in the White House, through a rather turbulent period, dealing on a daily basis with the most significant legal issues and law enforcement issues that come before the country.

ARENA: But it is his handling of those issues that has Gonzalez smack in the middle of the controversy over the administration's handling of the war on terror.

As White House counsel, he vetted some of the most important decisions, among them, dividing the legal line between interrogation and torture, and advising the president on the legal rights of enemy combatants, arguing they do not fall under the rules of the Geneva Conventions.

JEFF FOGEL, CTR. FOR CONSTITUTIONAL RIGHTS: He referred to the Geneva Convention as obsolete, he referred to the conditions that are required for the treatment of prisoners of war as "quaint" in the Geneva Convention. He's out of step with the rest of the world, and that's not a good thing for America.

ARENA: If confirmed he'll head a department with some very politically charged operations under way. There is the Halliburton probe and the investigation into who leaked the name of a covert CIA operative.

ALBERTO GONZALES, ATTORNEY GENERAL NOMINEE: As a former judge, I know well that some government positions require a special level of trust and integrity. The American people expect and deserve a Department of Justice guided by the rule of law.

ARENA: Known more as a Bush loyalist than a conservative, Gonzales has drawn criticism even from Republicans but they refuse to speak on the record. They say the White House will be able to control Gonzales. But the line at the Justice Department is at times fuzzy as the attorney general is called upon to do the president's bidding. For example Gonzalez would have to work to win renewal of some portions of the Patriot Act and help push through judicial nominations.

(END VIDEOTAPE)

ARENA: Overriding all of this is the war on terror and preventing future attacks. John Ashcroft said that the job was both rewarding and depleting. Gonzales may soon know firsthand exactly how he feels -- Wolf.

BLITZER: One of the toughest jobs in Washington. Thank you very much, Kelli. Kelli covers the Justice Department for us.

And to our viewers here is your chance to weigh in on this story. Our web question of the day is this. Is Alberto Gonzales a good choice for attorney general? You can vote. Go to CNN.com/wolf. We'll have the results for you later in this broadcast.

As their longtime leader lies in a deep coma Palestinian officials are making plans for a funeral and for a new era after Yasser Arafat. CNN's John Vause is live in the West Bank city of Ramallah. He's joining us now. John, what's the latest?

JOHN VAUSE, CNN CORRESPONDENT: Wolf, for almost two weeks now Palestinians have watched as Yasser Arafat's health went from serious to critical and now officials say he may be in the final stages before he succumbs to a mystery illness.

(BEGIN VIDEOTAPE)

(voice-over): When a senior Islamic cleric arrived at Yasser Arafat's hospital many thought this would finally be it. They were wrong.

UNIDENTIFIED MALE (through translator): He's alive and well. He's alive and well. Yes, he's sick and his situation is very critical but he's alive.

VAUSE: But a life support machine is all that is keeping Arafat alive and soon that will not be enough.

NABIL SHA'ATH, PALESTINIAN FOREIGN MINISTER: His liver is malfunctioning. His kidneys are malfunctioning. He has brain hemorrhage. And so there's many weakening factors. Life support can not really deal with all of these factors.

VAUSE: It could be hours doctors say, unlikely to be days. But given Arafat's religious beliefs, no one is willing to intervene.

UNIDENTIFIED MALE (through translator): In Islam the machines cannot be disconnected.

VAUSE: A few thousand marched in Bethlehem to show their support, and a few hundred gathered in Ramallah. Most Palestinians it seems believe their leader is already gone. The weeks of conflicting reports have left them accepting the inevitable. 10,000 posters of Arafat have already been printed are many like Hussein Al-Julani (ph) a store owner in Ramallah are just waiting for the official announcement.

UNIDENTIFIED MALE (through translator): Even if he doesn't die to be claiming to be dead means that now is the time to prepare for the funeral.

VAUSE: And after days of negotiations with the Israelis, Palestinian officials have decided Arafat's body will be flown to Egypt. Funeral services could be held at Cairo Airport.

UNIDENTIFIED MALE (through translator): It is something limited and in an official framework. VAUSE: Then a final helicopter flight back to Arafat's compound. The rubble and debris which marked the battles with Israeli troops, the crushed cars which were piled high, symbols of defiance which Arafat refused to remove now being cleared away making room for a mausoleum.

(END VIDEOTAPE)

(on camera): Palestinian officials, Ramallah will not be Arafat's final resting place. When there is peace with Israel and a Palestinian state, his body they say will be buried in their capital east Jerusalem. Until then he will remain here a mark of defiance, and remaining in his compound until his dream of a state of Palestine comes true -- Wolf.

BLITZER: Assessment, John, that the mood -- that the people, the Palestinians, that this will be peaceful in the coming days, or is there a potential for violence?

VAUSE: Well, it certainly will be peaceful in the days ahead. Certainly possibly the weeks ahead, as well. But one intelligence official from the Israeli side warned of deep chaos in the months ahead as Arafat's network of the cronies and bribes and all those people who he's been paying off to keep him in power, as that disintegrates, this Israeli intelligence official told me that he believes there's no way that this new leadership can keep that in check -- Wolf.

BLITZER: John Vause reporting for us. Thank you, John, very much. John is in Ramallah. And back from Yasser Arafat's bedside, top Palestinian officials are as John just reported making serious plans for a funeral and for a new era after Arafat. Earlier today the Palestinian foreign minister Nabil Sha'ath spoke with me from the West Bank city of Ramallah.

Unfortunately we're having some problem getting that tape. We'll fix it and we'll get to it as soon as we can.

New developments coming up after a short break in the Laci Peterson murder trial. Another juror has been dismissed. We're live from the California courthouse. That's coming up next.

And reorganizing U.S. intelligence. Why some say the problem with the way -- there's a way -- United States spies. The problem they say are the spies themselves.

Also, this.

(BEGIN VIDEO CLIP)

EVANDER HOLYFIELD, BOXER: My goal is to retire as undisputed heavyweight champion of the world.

(END VIDEO CLIP)

BLITZER: Evander Holyfield about to step back into the ring at age 42. The four-time heavyweight champion joins me along with promoter Don King. All that coming up this hour. Stay with us.

(COMMERCIAL BREAK)

BLITZER: President Bush who has kept Yasser Arafat at arm's length today said the emergence of a new Palestinian leader could mean new opportunities in the search for peace in the Middle East.

(BEGIN VIDEO CLIP)

BUSH: There will be an opening for peace when leadership of the Palestinian people steps forward and says, help us build a democratic and free society. And when that happens, and I believe it is going to happen, because I believe all people desire to live in freedom, the United States of America will be more than willing to help build the institutions necessary for a free society to emerge so that the Palestinians can have their own state. Division is two states, a Palestinian state and Israel living side by side in peace.

(END VIDEO CLIP)

BLITZER: Once Yasser Arafat dies, Palestinians will have a temporary president until elections are held, scheduled for 60 days later. But right now they're focused on the final hours of the man who has led them for decades. Joining us now on the phone from the West Bank town of Jericho is the Palestinian negotiator, Saeb Erakat.

Saeb, thanks very much for spending a few minutes with us. Walk us through what happens when Yasser Arafat dies.

SAEB ERAKAT, PALESTINIAN NEGOTIATOR: Wolf, today we had four meetings, one for the executive committee of the PLO, which is the highest executive body, and then the cabinet, the National Security Council and Fatah (ph) Central Committee.

What was decided was that as far as the laws are concerned we will stick to our basic law, the basic laws that defines (ph) that the worst happens then the speaker of our legislative (ph) council will be sworn in as temporary president. And he will immediately call the Palestinian for free and fair presidential elections within 60 days.

For President Bush (ph), once a new leadership, he has to facilitate for us to conduct and carry out our free and fair elections. Palestinians don't have tribal chiefs here and there. They need to elect their leader directly. And if President Bush wants to help, he needs to walk us through and help us in this endeavor to freely elect a new president within 60 days if the worst happens. That's the challenge.

We have to keep in mind that there are so many obstructions as far as Israeli occupation is concerned. But we can go back to the 1996 agreement with Israel and abide by it and carry out presidential elections as specified in that agreement (UNINTELLIGIBLE).

Secondly the PLO...

BLITZER: Are you hoping, Saeb Erakat, that the Bush administration sends a high level representative to the funeral?

ERAKAT: Well, it is up to them. I think it is appropriate. But that is up to them, especially that the lying in state will be held in Cairo. It's up to them. But this will be appropriate.

The second step, Wolf, will be the election of a new head of (UNINTELLIGIBLE) of the PLO. The PLO Executive Committee's internal regulations specifies that there has to be a nominee and then an election for it. And the National Security Council of the same and the cabinet would remain as it was.

But the key here is to go ahead with the presidential election within the 60-day time frame because I think if we do this, I think we're on the track of democracy, accountability, transparency, that's what the Palestinian people deserve. That's what we are intending to do.

Today the decision was we will not trash crack (ph) the basic law. The basic law sticks and we need to carry out these presidential elections within the 60-day timeline.

BLITZER: It sounds like a plan, Saeb Erakat, thanks so much for joining us, I know these are difficult, difficult hours for you and all of the Palestinian leadership.

What can the Democrats do to regain the White House? The last Democrat to call it home has some tough love advice for his party, that would be Bill Clinton. We'll tell you what he had to say.

Western jihadists, what drives the kid next door to sign up for holy war? Our Brian Todd standing by with information on that.

And another surprise shake-up in the Scott Peterson murder trial. What it means for this closely watched case. Stay with us.

(COMMERCIAL BREAK)

BLITZER: It is back to square one for the jury in the Scott Peterson double murder trial. In another shocking dismissal today, the jury foreman was kicked off the panel. This is the second dismissal in two days. CNN's Rusty Dornin keeping track of all of these developments. She's joining us live from Redwood City -- Rusty.

RUSTY DORNIN, CNN CORRESPONDENT: And Wolf, legal experts say that it is very unusual to have two juror dismissals in two consecutive days. But that's exactly what happened. Very unexpected today. Juror No. 5, now identified as Gregory Jackson, he was the doctor and lawyer who was elected foreman the jury on the first day of deliberations and kicked off on the fifth day.

He is the one that had more than a dozen notebooks underneath his arm after taking meticulous notes throughout this five-month trial, heading off to the jury room with those. People thought he would be very cautious in his deliberations. Undisclosed the reason why the judge kicked him off. Now defense attorney Mark Geragos did object to his removal, of course, laying grounds for an appeal if Scott Peterson is convicted. Replacing him, alternate No. 3. He's a white man in his 50s who is retired.

Interestingly enough, he has some kind of a connection to Scott Peterson. He doesn't know him but his son-in-law once worked for Scott Peterson when Scott and Laci owned a restaurant in San Luis Obispo after they graduated from college. Apparently the son-in-law worked for him and then bought the restaurant although this man has never met Scott Peterson himself.

Another interesting development, juror No. 6, firefighter in his late 20s, he was the one that was elected foreman of this jury. And that really came as a shock to most of us who have seen him throughout the trial gazing off when testimony was going on. Didn't seem like he was paying a whole lot of attention at different times. Didn't take notes at all that I ever saw while I was in court. So he was sort of the last person we all thought would be elected foreman but that's the way it went.

At the end of the whole thing, though, the defense looked very happy about it. Mark Geragos smiling, putting his arm around Scott Peterson before they left the courtroom. But they are back to deliberations, back to square one, probably bringing these jurors up to speed fairly quickly so they can get back on with really deliberating this case -- Wolf.

BLITZER: How many more alternative jurors are there?

DORNIN: They have gone through half. There were six of them. They have gone through three. So there are three left.

BLITZER: Rusty Dornin, reporting for us in Redwood City, thanks very much. Battling into an insurgent hot zone and making a very grizzly discovery. Details about troop findings just ahead from Falluja. That's coming up.

BLITZER: And joining the jihad. Why would Westerners be drawn in to take up the terrorist cause?

Plus, when former President Bill Clinton speaks, Democrats listen. His recommendations for Democrats to get back on track. That's coming up.

(COMMERCIAL BREAK)

BLITZER: In Iraq, the battle of Fallujah continuing at this hour. As we reported, U.S. military officials say the push to retake the city from insurgents is going according to plan.

CNN's Karl Penhaul is in Falluja. He has a closer look at what's going on right now.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT: Evening, Wolf.

Over the last few moments, a press conference has just ended with Iraqi commanders on the ground and also U.S. commanders on the ground. Major General Jasim, he's the head of the Iraqi forces fighting for Falluja, he's told us that both his forces and U.S. forces on the ground there in the last few hours during house-to-house searches have found what he describes as slaughterhouses used to kill some of those foreign and Iraqi hostages that have been taken over the last months in the country.

In the discovery, he also says some of the black pajama-style uniforms have been found, along with many C.D.s recording some of those grisly beheadings and other killings, also, we also understand from Major General Jasim, a list of some of the victims. He didn't at this stage, though, disclose what names are on those lists and which international hostages may be on the lists and may have been beheaded in those houses.

Investigations, though, continuing there to look at the evidence that has been found. Of course, some of those beheadings have been linked to the al Zarqawi group in the past, but the word is from Major General Jasim that, at this stage, there has been no sign of Zarqawi in the city. He hasn't figured on the radars at this stage, but Major General Jasim went on to say that the fight for Falluja isn't only about hunting down Zarqawi, but getting rid of the insurgents from that city.

Now, also in this press conference, we heard from General Sattler. He's the commanding general of the 1st Marine Expeditionary Force. And he has told us, at this stage, that the insurgent fighters inside of Falluja no longer have communication among themselves or any coordination among themselves. He does say, though, that resistance is continuing, but he has described those as pockets of resistance.

In addition, he's categorized coalition casualties as light -- Wolf.

(END VIDEOTAPE)

BLITZER: CNN's Karl Penhaul reporting from Falluja -- thank you, Carl, very much.

What turns an American citizen into an al Qaeda terrorist? That question is being asked once again this week now that investigators have concluded that a speaker on a terror tape that surfaced only last month probably grew up in California. He wouldn't be the first Westerner to throw in with the Muslim militants.

Our Brian Todd has been looking into this question. He's joining us now with more -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, every so often, we see that image that goes against our stereotypes in the war on terror. And when you drill down, a fascinating portrait often emerges of the Westerner turned jihadist.

(BEGIN VIDEOTAPE)

TODD (voice-over): An ominous message in an accented, but American-sounding voice.

UNIDENTIFIED MALE: What took place on September 11 was but the opening salvo of the global war on America.

TODD: Among captured Taliban fighters in Afghanistan, a young Californian worlds away from home.

JOHN WALKER LINDH, AMERICAN: My heart became attached to them.

TODD: What makes young Westerners like John Walker Lindh gravitate toward jihad or this man, now believed by U.S. intelligence to be an al Qaeda associate named Adam Gadahn of Riverside County, California.

PETER BERGEN, CNN TERRORISM ANALYST: Clearly, Gadahn is not somebody that is sort of a low-level player.

TODD: Two former CIA officers who specialize in the psychological study of terrorists give a word of caution. Don't think there's a central profile for the Westerner turned terrorist. But they do offer a few scenarios.

In the cases of Gadahn, Walker Lindh and Australian David Hicks, now detained at Guantanamo, teenage rebellion against authority was likely compounded, say these experts, by isolation or other social trouble and a need for an alternative hero.

DR. JERROLD POST, FORMER CIA PROFILER: There's a great tendency among youth to idealize. And while we may see an Osama bin as perpetrating evil and unthinkable violence, such figures can hold an attractiveness to youth in this period of transition.

TODD: And the attraction is mutual.

JOHN ASHCROFT, ATTORNEY GENERAL: Our intelligence confirms al Qaeda is seeking recruits who can portray themselves as Europeans.

TODD: Europeans like Richard Reid. He fits other characteristics that these experts point to, petty criminals or kids involved in alcohol or drugs looking for a way out.

POST: The structure is very much what they're attracted to and there are multiple reasons that structure can be attractive for someone who is feeling psychologically in a state of chaos and not knowing who he or she is, where they are going.

(END VIDEOTAPE)

TODD: In that regard, say the experts, young wayward Westerners share something with their Middle Eastern counterparts who join extremists groups, a sense of meaning and belonging that many of them had never felt -- Wolf.

BLITZER: Brian Todd, very interesting. Thanks very much.

The 9/11 Commission report was very clear on the issue of U.S. intelligence. Major reform is indeed critically needed. Now the U.S. Congress is about to undertake that task, their continuing efforts to come up with reform.

But as our national security correspondent David Ensor reports, the called-for changes may be the wrong ones.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): Reorganizing U.S. intelligence, as Congress is trying to do, will not fix what is wrong at the CIA, according to some knowledgeable analysts.

ROBERT BAER, FORMER CIA OFFICER: It is like rearranging the deck chairs on the Titanic. Putting another layer of bureaucracy is not going to do it.

RICHARD RUSSELL, FORMER CIA ANALYST: There's a lot of discussion over reorganizing the intelligence community, but there's no discussion about how we go about doing human intelligence operations. There's none whatsoever.

ENSOR: And that, say many experts, is where the real problem lies. Though the U.S. has the best spy satellites and eavesdropping technology, they say it is never been very effective at the traditional game of human espionage.

RUSSELL: It's a standard mantra. We're not very good at it. We're not very good at it. It is about time we got good at it.

ENSOR: For years, most CIA officers overseas have been undercover as diplomats. Critics say many more of them should impersonate businessmen instead. They argue, the CIA should also take more risks in who it hires, for example, among Arab Americans whose relatives may be under the control of other governments.

BAER: There's a lot of people that want to get into the CIA that can't now because of relatives that live overseas or one reason or another, because we still have the old Cold War rules and regulations to join. You have got to get rid of those, at least to a certain level. You obviously have to have a part of the CIA which is immune from being penetrated.

ENSOR: These critics argue, too, that the CIA should put more effort into soliciting and exploiting walk-ins, defectors, whether they be al Qaeda members or Iranian scientists.

RUSSELL: I think the best sources of information you get are from defections. They offer you a one-time shot of what's happening, but a one-time shot is better than no sources at all.

ENSOR: For his part, the man who until recently ran America's spies, James Pavitt, insists, without going into details, that the CIA is already doing much of what the critics advocate. But he warns against expecting too much.

JAMES PAVITT, FORMER CIA DIRECTOR OF OPERATIONS: Human intelligence is a very difficult undertaking. There is no perfection in my business. If we're 40 to 50 percent of the time, we're doing very, very well. You're dealing with human beings. You're getting into somebody's head.

ENSOR (on camera): The kinds of changes that knowledgeable critics are talking about are not the sorts of things that Congress can mandate. It will now mostly be up to Porter Goss, the new CIA director, to try to build on the nation's talent at the world's second oldest profession.

David Ensor, CNN, Washington.

(END VIDEOTAPE)

BLITZER: Despite continuing concerns about homeland security, homeland security officials are lowering an orange alert that had been in effect at some Eastern financial institutions for the past three months.

Institutions in New Jersey, New York and right here in Washington will return to the so-called yellow alert status, the same level in effect everywhere else around the country. New York City has remained at that higher status since 9/11 and will continue to remain at that alert level, the orange level, as opposed to the yellow level, for some time, according to New York City personnel.

Four-time heavyweight champion of the world Evander Holyfield is stepping back into the ring. He'll join me live to talk about his upcoming fight.

And the last Democrat to live in the White House give us some advice of his own about his party. We'll hear what Bill Clinton has to say.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Now that the presidential election is over, many people are offering Democrats advice on what went wrong. Some of that advice is coming from the most recent Democrat to live in the White House.

(BEGIN VIDEOTAPE)

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I can't run for anything. The good news is, I can say whatever I think.

BLITZER (voice-over): Bill Clinton jokes that since he's not the president anymore, nobody listens to him. But since he's the only Democrat who has been elected president in the past quarter-century, many Democrats are willing to listen when Clinton talks about how to win. Speaking at Hamilton College in Upstate New York, Clinton congratulated President Bush and the Republicans on what he called a brilliant campaign. He said many voters decided against changing leaders in the midst of terrorism threats and the war in Iraq. But there were other factors, too.

CLINTON: There was an astonishing turnout among evangelical Christians, who said they were voting on the basis of moral values.

BLITZER: Clinton said no party has a monopoly on morality or truth, but Democrats have to make that clear to the voters.

CLINTON: I do not believe that the Democrats can seek to be a truly national party -- they may win some more national elections, but we cannot be nationally competitive unless we feel comfortable talking about our convictions.

BLITZER: Clinton said that, during his eight years in office, he protected abortion rights, but also worked to promote alternatives to abortion. He also signed the Defense of Marriage Act, which stopped short of amending the Constitution, but preserved the right of every state to make its own decision on gay marriage.

CLINTON: I think that the current divisions are partly the fault of me, of the people in my party, for not engaging the Christian evangelical community in a serious discussion of what it would take to promote a real culture of life and what the best strategy for reducing abortions is or an open discussion of where we are on the issue of gays in America.

BLITZER: But, in the wake of John Kerry's defeat, Clinton also had words of reassurance for his fellow Democrats.

CLINTON: I'm old enough now and I've run enough times and I've governed enough, succeeded enough and failed enough, to know that there is a limit to how much any election can repeal the underlying tides of history.

(END VIDEOTAPE)

BLITZER: Clinton did not address speculation about his wife, Hillary Clinton, possibly running for president in 2008. He said only that he's proud of Senator Clinton and will do whatever he can to help to her.

Speaking out for the first time after giving birth, a 56-year-old woman tells her emotional story and shows off her two new babies. We'll show you what happened and we'll hear from her.

And could this be a comeback? I'll talk to Evander Holyfield and promoter Don King about the heavyweight's return to the ring. They're standing by live. Look at that flag. He's a proud American. We'll talk to him right after this.

(COMMERCIAL BREAK) BLITZER: This Saturday, a nationwide pay-per-view audience will watch what some hope will be an amazing comeback, but others see as an impossible dream. Four-time heavyweight champ Evander Holyfield is stepping back into the ring at the age of 42.

Careers highs include a surprise win over Mike Tyson in 1996. Controversy came the following ear, when Tyson bit off part of Holyfield's ear. And perhaps the deepest low was last year, when Evander Holyfield's corner called it quits in the ninth round unless a merciless beating he was then getting.

Evander Holyfield joining us now live from New York, along with Don King, promoter of the upcoming match.

Thanks for both of you for joining us.

Evander, let me ask you the blunt question everyone wants to know. Why are you doing this at the age of 42?

EVANDER HOLYFIELD, BOXER: My goal is to be the undisputed heavyweight champ of the world. And that hasn't changed since 1992, when I first lost my first undisputed title against Riddick Bowe.

BLITZER: You think you can win this Saturday night?

HOLYFIELD: I know I can win. I have paid the price that was necessary. And come on the 13th, people can judge it and see it for themselves.

BLITZER: Well, what happened the last time when you were beaten, beaten pretty badly, and your corner had to throw in the towel?

HOLYFIELD: Well, the corner didn't have to, but they did. But that's in the past. And, you know, I have made some adjustment from the past and here I am again today.

BLITZER: Don King, is this guy ready to come back?

DON KING, PROMOTER: Yes, he is. He's dedicated and committed. He's redoubled his efforts. He's out to prove to the world that he can be what he wants to be in this great nation called America. This is the -- once again, the five-time all -- undisputed champion.

BLITZER: Do you have any concern at all that you may be endangering him by letting him go back in the ring?

KING: No.

I sent him to the Cleveland Clinic, one of the greatest hospitals in the world. And they thoroughly examined him and gave him an A- plus, flying colors, that he was fit to fight. Based upon their advice and relying upon their greatness as a clinic and a hospital that knows how to treat human beings, I said, hey, if they say he's all right, who am I to deny him an opportunity in this great nation called America?

BLITZER: At 42 years old, Evander, what are you trying to prove?

HOLYFIELD: Well, my goal was to retire as the heavyweight champ of the world. I didn't choose my beginning, but I can choose my ending.

BLITZER: And that's it. It's as simple as that.

Don King, the last time we spoke, it was during the Republican Convention in New York. You came to the CNN Election Express diner, as you well remember. You were hoping for a President Bush reelection. You got it. How important is that to you?

KING: It is very important to America for a better America. And it is a very important thing.

And you have got to respect the unprecedented genius of Karl Rove and his political strategy in the campaign for the president. He picked Ed Gillespie, who I think is a great American, an American of faith, a man that is humble and compassionate, that reached out with sincerity to get the African-American vote and the Latino vote with myself. And I think that was an unprecedented move in doing so.

And we doubled the African-American vote, against insurmountable odds and difficulties. In fact, I might say that the Democratic Party is in shambles right now. And I think that you have a great opportunity for the Republican Party to move into a two-party system. And I think that what we did was to bring a two-party system back into play. Now we must work on it and nurture it with promises made, promises kept. And I think this is what George Walker Bush will do in leading America to a great new historic level of working together in the democratic process.

BLITZER: Are you a Democrat or Republican, Evander Holyfield?

HOLYFIELD: I'm neither one. I choose the guy that I think will represent America the best.

BLITZER: A simple man with a simple -- a few words, but important words.

Thanks to you to both of you for joining us, Don King, Evander Holyfield.

KING: Well, it's great to be with you.

BLITZER: We'll be watching the fight Saturday night. Thank you.

KING: Thank you.

Call your local provider and get it on pay-per-view or see it at Madison Square Garden live and in living color.

BLITZER: Don King, the promoter, as always, promoting.

KING: George Walker Bush, we have him back. It's four more years and we love it. BLITZER: OK. OK.

(LAUGHTER)

KING: Thank you, Karl Rove. Thank you, Ed Gillespie.

BLITZER: Thanks, Don King.

KING: And thank you, Wolf Blitzer.

BLITZER: All right.

A new mom at age 56, almost 57, we heard from her earlier today. If you stay with us, you'll hear what she had to say, pretty emotional.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Yesterday, we told you -- well, first, before we get to that, our Web question of the day: Is Alberto Gonzales a good choice for attorney general? Here are the results. Remember, it's not a scientific poll. Now we move on.

Yesterday, we told you about that 56-year-old New York City woman who gave birth to twins. Our picture of the day is the proof. Look at this.

(BEGIN VIDEO CLIP)

ALETA ST. JAMES, MOTHER: And part of it is, like, so emotional, because -- oh, goodness -- this is something that I really wanted.

(END VIDEO CLIP)

BLITZER: Meet Aleta St. James and her son, her daughter, Gian and Francesca. The twins arrived by Caesarean section yesterday. Congratulations, mother and kids.

"LOU DOBBS TONIGHT" starts 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 November 10, 2004 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Happening now. President Bush taps his longtime confidant and White House counsel, Alberto Gonzalez, to replace John Ashcroft at the Justice Department. There is already controversy. Will his Senate confirmation be the president's first battle with Democrats in his second term?
Stand by for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Slaughterhouses. As troops fight their way through Falluja, they make grizzly discoveries. And terrorism hits home for Iraq's leader.

Funeral plans. Palestinians prepare to mourn their leader. Is peace possible after Arafat? We'll hear from a top Palestinian official.

Joining the jihad. Why would Westerners take up the terrorist cause?

Another day, another juror. And it is not just any juror. A stunning development in the Scott Peterson murder trial.

ANNOUNCER: This is WOLF BLITZER REPORTS for Wednesday, November 10, 2004.

(END VIDEOTAPE)

BLITZER: While fighting rages on, the battle of Falluja is moving into the so-called mopping up phase. But as insurgents are killed, captured or driven out, Iraqis say they have left behind some grim evidence of their presence in the city. We'll go to that urban battlefield in just a moment. But we begin our coverage with our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, U.S. commanders can caution that the fighting is not over in Falluja but they say the insurgents are surrounded and will certainly be defeated.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): If the insurgents had plan for the defense of Falluja, it quickly crumbled under the weight of U.S. artillery, air power and armor. Street fighting remains intense at times. UNIDENTIFIED MALE: We've taken fire from the mosque (UNINTELLIGIBLE)

UNIDENTIFIED MALE: The ones we can see, yes?

MCINTYRE: Mosques, used by insurgents as command posts, have come under heavy attack. But with most of Falluja resembling a ghost town, it is now growing more apparent that along with much of the population, many of the insurgents fled in advance of the assault. What is left appears to be a small number of desperate and disorganized remnants.

LT. GEN. JOHN SATTLER, U.S. MARINE CORPS: That they are not able to communicate to work out any coordination. They are now in small pockets, blind, moving throughout the city and we will continue to hunt them down and destroy them.

MCINTYRE: According to one Marine commander, insurgents have been pushed into a narrow strip along Falluja's main east-west highway. He estimated 70 percent of the city was under control of U.S. and Iraqi forces.

Mop-up operations are expected to last another day or two. U.S. casualties are still described as light with enemy dead put at more than 70 and some captured insurgents are said to be giving valuable information.

Videotape of a flag-raising by soldiers of Iraq's 1st brigade was replayed at a press briefing near Fallujah featuring both a U.S. and Iraqi general.

(END VIDEOTAPE)

MCINTYRE: Iraqi troops also report finding what they believe to be hostage slaughterhouses, places where kidnapped victims were beheaded. Among the evidence found there, CDs and black clothing similar to that worn by terrorists in hostage tapes -- Wolf.

BLITZER: Any indication who may have been slaughtered at those so-called slaughterhouses?

MCINTYRE: At this point we don't.

BLITZER: What about the whole nature of the battle for Falluja, are they saying a few more days, maybe a few more weeks, what about the occupation?

MCINTYRE: Well, the key emphasis now is setting the conditions to restore central services in the town and start rebuilding the town. They know that the key to the victory is to make sure that the residents of Falluja feel that things are getting back to normal and have some confidence in the Iraqi government and the Iraqi forces that will be left in charge there.

BLITZER: Jamie McIntyre, reporting for us at the Pentagon. Jamie, thanks very much. Let's go directly to the front lines now. CNN's Jane Arraf is embedded with U.S. Army troops in Falluja.

She filed this report.

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: There is still fighting in parts of Falluja but the military says they're making progress, doing search and attack operations in sectors of the city. The startling news, of course, from an Iraqi official that they seem to have found slaughterhouses for hostages.

Now very few details on this. He announced this at a news conference, saying that they have found CDs and lists of names. He did not go into details. And we're still trying to find out whether there was indeed evidence that hostages were killed there in Falluja.

The intimidation continues in other parts of the country. In Baghdad, Prime Minister Ayad Allawi's cousin, 75 years old, and other members of his family, kidnapped and threatened if Allawi does not live up to the kidnappers's demand.

Here in Falluja there is still sporadic fighting as we drove through the streets in the industrial section where Army soldiers are finding homemade bombs, fortified bunkers, and booby-trapped buildings. They kept receiving fire. The same situation in many parts of the city -- Wolf.

BLITZER: Jane, any new information on U.S. casualties?

ARRAF: Wolf, that information is quite hard to come by at the moment on the Army side. There have been two casualties on the Marine side. They describe their casualties as minimal. Given an operation of this size, part of the intent was that they wouldn't sustain a lot of casualties.

They went in with very heavy firepower. There have been some Iraqi casualties, at least four Iraqi security force members were killed in a gun fight yesterday. Others have died, as well. No word on that specific number. (UNINTELLIGIBLE) question as well, the number of civilian casualties, that is still to be determined -- Wolf.

BLITZER: Jane Arraf reporting for us. She's embedded with the U.S. army in Falluja. And as she reported, some of the relatives of Ayad Allawi have been kidnapped. Allawi himself has been the target of several recent assassination attempts. We spoke here in Washington in September.

(BEGIN VIDEO CLIP)

BLITZER: How worried are you about your own personal security?

AYAD ALLAWI, IRAQI INTERIM PRIME MINISTER: Well, I am worried, frankly. But you know, this is a job that has to be done. We're dedicated to our country. We know that we are winning. The attempts are because of the desperation of our enemies. We are winning. We'll continue to make headway. We'll continue to win. And we will bring democracy to Iraq and peace to the region and to the world.

(END VIDEO CLIP)

BLITZER: Almost everyone who knows Prime Minister Allawi says this is not a man who can easily be intimidated.

Just one day after we learned of John Ashcroft's resignation as attorney general, President Bush today named the White House counsel, his Texas confidant, Alberto Gonzalez as the successor. Our White House correspondent, Suzanne Malveaux, joining us now live with more -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, it really was a brief ceremony in the Roosevelt Room. Of course, these two men have known each other for the last 10 years or so. They go back to Texas.

But what is interesting is to talk to the political insiders, Bush advisers who say the thinking behind this appointment of course is they believe that the president in his second term could get as many as three shots at appointing Supreme Court justices. That Al Gonzalez was considered a possible but seen as too moderate for the conservative Republicans.

So the idea was to shift Gonzalez to the attorney general position and then basically at the time that the opening happens in the Supreme Court, to take advantage of what they are calling momentum, what they are calling the honeymoon period, what one adviser says is simply "kiss the conservatives" to go ahead and try to get your most controversial conservative one through the Supreme Court nomination process and at the same time allow Gonzalez to pursue legal issues as attorney general.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Serving as attorney general is one of the most challenging duties in our government. As the nation's chief law enforcement officer, Al will continue our administration's great progress in fighting crime, in strengthening the FBI, and improving our domestic efforts in the war on terror.

(END VIDEO CLIP)

MALVEAUX: Now despite the fact Republicans have a majority in the Senate, it certainly is not a shoo-in, Wolf. We have heard some congratulatory letters coming from Democrats. Senator Kennedy as well as Senator Patrick Leahy saying congratulations, though also warning them as well that they are worried about Gonzalez's record.

BLITZER: Suzanne Malveaux, thanks very much. Suzanne reporting from the White House. For more now on Alberto Gonzalez and what he's likely to face if confirmed as attorney general, we turn to our justice correspondent, Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, Alberto Gonzalez is viewed politically as more of a moderate, but policy-wise he will face many of the same problems as the current attorney general. (BEGIN VIDEOTAPE)

ARENA (voice-over): Unlike John Ashcroft, Alberto Gonzalez is clearly a close Bush confidant.

BRAD BERENSON, FMR. ASSOCIATE W.H. COUNSEL: He spent four years as counsel to the president in the White House, through a rather turbulent period, dealing on a daily basis with the most significant legal issues and law enforcement issues that come before the country.

ARENA: But it is his handling of those issues that has Gonzalez smack in the middle of the controversy over the administration's handling of the war on terror.

As White House counsel, he vetted some of the most important decisions, among them, dividing the legal line between interrogation and torture, and advising the president on the legal rights of enemy combatants, arguing they do not fall under the rules of the Geneva Conventions.

JEFF FOGEL, CTR. FOR CONSTITUTIONAL RIGHTS: He referred to the Geneva Convention as obsolete, he referred to the conditions that are required for the treatment of prisoners of war as "quaint" in the Geneva Convention. He's out of step with the rest of the world, and that's not a good thing for America.

ARENA: If confirmed he'll head a department with some very politically charged operations under way. There is the Halliburton probe and the investigation into who leaked the name of a covert CIA operative.

ALBERTO GONZALES, ATTORNEY GENERAL NOMINEE: As a former judge, I know well that some government positions require a special level of trust and integrity. The American people expect and deserve a Department of Justice guided by the rule of law.

ARENA: Known more as a Bush loyalist than a conservative, Gonzales has drawn criticism even from Republicans but they refuse to speak on the record. They say the White House will be able to control Gonzales. But the line at the Justice Department is at times fuzzy as the attorney general is called upon to do the president's bidding. For example Gonzalez would have to work to win renewal of some portions of the Patriot Act and help push through judicial nominations.

(END VIDEOTAPE)

ARENA: Overriding all of this is the war on terror and preventing future attacks. John Ashcroft said that the job was both rewarding and depleting. Gonzales may soon know firsthand exactly how he feels -- Wolf.

BLITZER: One of the toughest jobs in Washington. Thank you very much, Kelli. Kelli covers the Justice Department for us.

And to our viewers here is your chance to weigh in on this story. Our web question of the day is this. Is Alberto Gonzales a good choice for attorney general? You can vote. Go to CNN.com/wolf. We'll have the results for you later in this broadcast.

As their longtime leader lies in a deep coma Palestinian officials are making plans for a funeral and for a new era after Yasser Arafat. CNN's John Vause is live in the West Bank city of Ramallah. He's joining us now. John, what's the latest?

JOHN VAUSE, CNN CORRESPONDENT: Wolf, for almost two weeks now Palestinians have watched as Yasser Arafat's health went from serious to critical and now officials say he may be in the final stages before he succumbs to a mystery illness.

(BEGIN VIDEOTAPE)

(voice-over): When a senior Islamic cleric arrived at Yasser Arafat's hospital many thought this would finally be it. They were wrong.

UNIDENTIFIED MALE (through translator): He's alive and well. He's alive and well. Yes, he's sick and his situation is very critical but he's alive.

VAUSE: But a life support machine is all that is keeping Arafat alive and soon that will not be enough.

NABIL SHA'ATH, PALESTINIAN FOREIGN MINISTER: His liver is malfunctioning. His kidneys are malfunctioning. He has brain hemorrhage. And so there's many weakening factors. Life support can not really deal with all of these factors.

VAUSE: It could be hours doctors say, unlikely to be days. But given Arafat's religious beliefs, no one is willing to intervene.

UNIDENTIFIED MALE (through translator): In Islam the machines cannot be disconnected.

VAUSE: A few thousand marched in Bethlehem to show their support, and a few hundred gathered in Ramallah. Most Palestinians it seems believe their leader is already gone. The weeks of conflicting reports have left them accepting the inevitable. 10,000 posters of Arafat have already been printed are many like Hussein Al-Julani (ph) a store owner in Ramallah are just waiting for the official announcement.

UNIDENTIFIED MALE (through translator): Even if he doesn't die to be claiming to be dead means that now is the time to prepare for the funeral.

VAUSE: And after days of negotiations with the Israelis, Palestinian officials have decided Arafat's body will be flown to Egypt. Funeral services could be held at Cairo Airport.

UNIDENTIFIED MALE (through translator): It is something limited and in an official framework. VAUSE: Then a final helicopter flight back to Arafat's compound. The rubble and debris which marked the battles with Israeli troops, the crushed cars which were piled high, symbols of defiance which Arafat refused to remove now being cleared away making room for a mausoleum.

(END VIDEOTAPE)

(on camera): Palestinian officials, Ramallah will not be Arafat's final resting place. When there is peace with Israel and a Palestinian state, his body they say will be buried in their capital east Jerusalem. Until then he will remain here a mark of defiance, and remaining in his compound until his dream of a state of Palestine comes true -- Wolf.

BLITZER: Assessment, John, that the mood -- that the people, the Palestinians, that this will be peaceful in the coming days, or is there a potential for violence?

VAUSE: Well, it certainly will be peaceful in the days ahead. Certainly possibly the weeks ahead, as well. But one intelligence official from the Israeli side warned of deep chaos in the months ahead as Arafat's network of the cronies and bribes and all those people who he's been paying off to keep him in power, as that disintegrates, this Israeli intelligence official told me that he believes there's no way that this new leadership can keep that in check -- Wolf.

BLITZER: John Vause reporting for us. Thank you, John, very much. John is in Ramallah. And back from Yasser Arafat's bedside, top Palestinian officials are as John just reported making serious plans for a funeral and for a new era after Arafat. Earlier today the Palestinian foreign minister Nabil Sha'ath spoke with me from the West Bank city of Ramallah.

Unfortunately we're having some problem getting that tape. We'll fix it and we'll get to it as soon as we can.

New developments coming up after a short break in the Laci Peterson murder trial. Another juror has been dismissed. We're live from the California courthouse. That's coming up next.

And reorganizing U.S. intelligence. Why some say the problem with the way -- there's a way -- United States spies. The problem they say are the spies themselves.

Also, this.

(BEGIN VIDEO CLIP)

EVANDER HOLYFIELD, BOXER: My goal is to retire as undisputed heavyweight champion of the world.

(END VIDEO CLIP)

BLITZER: Evander Holyfield about to step back into the ring at age 42. The four-time heavyweight champion joins me along with promoter Don King. All that coming up this hour. Stay with us.

(COMMERCIAL BREAK)

BLITZER: President Bush who has kept Yasser Arafat at arm's length today said the emergence of a new Palestinian leader could mean new opportunities in the search for peace in the Middle East.

(BEGIN VIDEO CLIP)

BUSH: There will be an opening for peace when leadership of the Palestinian people steps forward and says, help us build a democratic and free society. And when that happens, and I believe it is going to happen, because I believe all people desire to live in freedom, the United States of America will be more than willing to help build the institutions necessary for a free society to emerge so that the Palestinians can have their own state. Division is two states, a Palestinian state and Israel living side by side in peace.

(END VIDEO CLIP)

BLITZER: Once Yasser Arafat dies, Palestinians will have a temporary president until elections are held, scheduled for 60 days later. But right now they're focused on the final hours of the man who has led them for decades. Joining us now on the phone from the West Bank town of Jericho is the Palestinian negotiator, Saeb Erakat.

Saeb, thanks very much for spending a few minutes with us. Walk us through what happens when Yasser Arafat dies.

SAEB ERAKAT, PALESTINIAN NEGOTIATOR: Wolf, today we had four meetings, one for the executive committee of the PLO, which is the highest executive body, and then the cabinet, the National Security Council and Fatah (ph) Central Committee.

What was decided was that as far as the laws are concerned we will stick to our basic law, the basic laws that defines (ph) that the worst happens then the speaker of our legislative (ph) council will be sworn in as temporary president. And he will immediately call the Palestinian for free and fair presidential elections within 60 days.

For President Bush (ph), once a new leadership, he has to facilitate for us to conduct and carry out our free and fair elections. Palestinians don't have tribal chiefs here and there. They need to elect their leader directly. And if President Bush wants to help, he needs to walk us through and help us in this endeavor to freely elect a new president within 60 days if the worst happens. That's the challenge.

We have to keep in mind that there are so many obstructions as far as Israeli occupation is concerned. But we can go back to the 1996 agreement with Israel and abide by it and carry out presidential elections as specified in that agreement (UNINTELLIGIBLE).

Secondly the PLO...

BLITZER: Are you hoping, Saeb Erakat, that the Bush administration sends a high level representative to the funeral?

ERAKAT: Well, it is up to them. I think it is appropriate. But that is up to them, especially that the lying in state will be held in Cairo. It's up to them. But this will be appropriate.

The second step, Wolf, will be the election of a new head of (UNINTELLIGIBLE) of the PLO. The PLO Executive Committee's internal regulations specifies that there has to be a nominee and then an election for it. And the National Security Council of the same and the cabinet would remain as it was.

But the key here is to go ahead with the presidential election within the 60-day time frame because I think if we do this, I think we're on the track of democracy, accountability, transparency, that's what the Palestinian people deserve. That's what we are intending to do.

Today the decision was we will not trash crack (ph) the basic law. The basic law sticks and we need to carry out these presidential elections within the 60-day timeline.

BLITZER: It sounds like a plan, Saeb Erakat, thanks so much for joining us, I know these are difficult, difficult hours for you and all of the Palestinian leadership.

What can the Democrats do to regain the White House? The last Democrat to call it home has some tough love advice for his party, that would be Bill Clinton. We'll tell you what he had to say.

Western jihadists, what drives the kid next door to sign up for holy war? Our Brian Todd standing by with information on that.

And another surprise shake-up in the Scott Peterson murder trial. What it means for this closely watched case. Stay with us.

(COMMERCIAL BREAK)

BLITZER: It is back to square one for the jury in the Scott Peterson double murder trial. In another shocking dismissal today, the jury foreman was kicked off the panel. This is the second dismissal in two days. CNN's Rusty Dornin keeping track of all of these developments. She's joining us live from Redwood City -- Rusty.

RUSTY DORNIN, CNN CORRESPONDENT: And Wolf, legal experts say that it is very unusual to have two juror dismissals in two consecutive days. But that's exactly what happened. Very unexpected today. Juror No. 5, now identified as Gregory Jackson, he was the doctor and lawyer who was elected foreman the jury on the first day of deliberations and kicked off on the fifth day.

He is the one that had more than a dozen notebooks underneath his arm after taking meticulous notes throughout this five-month trial, heading off to the jury room with those. People thought he would be very cautious in his deliberations. Undisclosed the reason why the judge kicked him off. Now defense attorney Mark Geragos did object to his removal, of course, laying grounds for an appeal if Scott Peterson is convicted. Replacing him, alternate No. 3. He's a white man in his 50s who is retired.

Interestingly enough, he has some kind of a connection to Scott Peterson. He doesn't know him but his son-in-law once worked for Scott Peterson when Scott and Laci owned a restaurant in San Luis Obispo after they graduated from college. Apparently the son-in-law worked for him and then bought the restaurant although this man has never met Scott Peterson himself.

Another interesting development, juror No. 6, firefighter in his late 20s, he was the one that was elected foreman of this jury. And that really came as a shock to most of us who have seen him throughout the trial gazing off when testimony was going on. Didn't seem like he was paying a whole lot of attention at different times. Didn't take notes at all that I ever saw while I was in court. So he was sort of the last person we all thought would be elected foreman but that's the way it went.

At the end of the whole thing, though, the defense looked very happy about it. Mark Geragos smiling, putting his arm around Scott Peterson before they left the courtroom. But they are back to deliberations, back to square one, probably bringing these jurors up to speed fairly quickly so they can get back on with really deliberating this case -- Wolf.

BLITZER: How many more alternative jurors are there?

DORNIN: They have gone through half. There were six of them. They have gone through three. So there are three left.

BLITZER: Rusty Dornin, reporting for us in Redwood City, thanks very much. Battling into an insurgent hot zone and making a very grizzly discovery. Details about troop findings just ahead from Falluja. That's coming up.

BLITZER: And joining the jihad. Why would Westerners be drawn in to take up the terrorist cause?

Plus, when former President Bill Clinton speaks, Democrats listen. His recommendations for Democrats to get back on track. That's coming up.

(COMMERCIAL BREAK)

BLITZER: In Iraq, the battle of Fallujah continuing at this hour. As we reported, U.S. military officials say the push to retake the city from insurgents is going according to plan.

CNN's Karl Penhaul is in Falluja. He has a closer look at what's going on right now.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT: Evening, Wolf.

Over the last few moments, a press conference has just ended with Iraqi commanders on the ground and also U.S. commanders on the ground. Major General Jasim, he's the head of the Iraqi forces fighting for Falluja, he's told us that both his forces and U.S. forces on the ground there in the last few hours during house-to-house searches have found what he describes as slaughterhouses used to kill some of those foreign and Iraqi hostages that have been taken over the last months in the country.

In the discovery, he also says some of the black pajama-style uniforms have been found, along with many C.D.s recording some of those grisly beheadings and other killings, also, we also understand from Major General Jasim, a list of some of the victims. He didn't at this stage, though, disclose what names are on those lists and which international hostages may be on the lists and may have been beheaded in those houses.

Investigations, though, continuing there to look at the evidence that has been found. Of course, some of those beheadings have been linked to the al Zarqawi group in the past, but the word is from Major General Jasim that, at this stage, there has been no sign of Zarqawi in the city. He hasn't figured on the radars at this stage, but Major General Jasim went on to say that the fight for Falluja isn't only about hunting down Zarqawi, but getting rid of the insurgents from that city.

Now, also in this press conference, we heard from General Sattler. He's the commanding general of the 1st Marine Expeditionary Force. And he has told us, at this stage, that the insurgent fighters inside of Falluja no longer have communication among themselves or any coordination among themselves. He does say, though, that resistance is continuing, but he has described those as pockets of resistance.

In addition, he's categorized coalition casualties as light -- Wolf.

(END VIDEOTAPE)

BLITZER: CNN's Karl Penhaul reporting from Falluja -- thank you, Carl, very much.

What turns an American citizen into an al Qaeda terrorist? That question is being asked once again this week now that investigators have concluded that a speaker on a terror tape that surfaced only last month probably grew up in California. He wouldn't be the first Westerner to throw in with the Muslim militants.

Our Brian Todd has been looking into this question. He's joining us now with more -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, every so often, we see that image that goes against our stereotypes in the war on terror. And when you drill down, a fascinating portrait often emerges of the Westerner turned jihadist.

(BEGIN VIDEOTAPE)

TODD (voice-over): An ominous message in an accented, but American-sounding voice.

UNIDENTIFIED MALE: What took place on September 11 was but the opening salvo of the global war on America.

TODD: Among captured Taliban fighters in Afghanistan, a young Californian worlds away from home.

JOHN WALKER LINDH, AMERICAN: My heart became attached to them.

TODD: What makes young Westerners like John Walker Lindh gravitate toward jihad or this man, now believed by U.S. intelligence to be an al Qaeda associate named Adam Gadahn of Riverside County, California.

PETER BERGEN, CNN TERRORISM ANALYST: Clearly, Gadahn is not somebody that is sort of a low-level player.

TODD: Two former CIA officers who specialize in the psychological study of terrorists give a word of caution. Don't think there's a central profile for the Westerner turned terrorist. But they do offer a few scenarios.

In the cases of Gadahn, Walker Lindh and Australian David Hicks, now detained at Guantanamo, teenage rebellion against authority was likely compounded, say these experts, by isolation or other social trouble and a need for an alternative hero.

DR. JERROLD POST, FORMER CIA PROFILER: There's a great tendency among youth to idealize. And while we may see an Osama bin as perpetrating evil and unthinkable violence, such figures can hold an attractiveness to youth in this period of transition.

TODD: And the attraction is mutual.

JOHN ASHCROFT, ATTORNEY GENERAL: Our intelligence confirms al Qaeda is seeking recruits who can portray themselves as Europeans.

TODD: Europeans like Richard Reid. He fits other characteristics that these experts point to, petty criminals or kids involved in alcohol or drugs looking for a way out.

POST: The structure is very much what they're attracted to and there are multiple reasons that structure can be attractive for someone who is feeling psychologically in a state of chaos and not knowing who he or she is, where they are going.

(END VIDEOTAPE)

TODD: In that regard, say the experts, young wayward Westerners share something with their Middle Eastern counterparts who join extremists groups, a sense of meaning and belonging that many of them had never felt -- Wolf.

BLITZER: Brian Todd, very interesting. Thanks very much.

The 9/11 Commission report was very clear on the issue of U.S. intelligence. Major reform is indeed critically needed. Now the U.S. Congress is about to undertake that task, their continuing efforts to come up with reform.

But as our national security correspondent David Ensor reports, the called-for changes may be the wrong ones.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): Reorganizing U.S. intelligence, as Congress is trying to do, will not fix what is wrong at the CIA, according to some knowledgeable analysts.

ROBERT BAER, FORMER CIA OFFICER: It is like rearranging the deck chairs on the Titanic. Putting another layer of bureaucracy is not going to do it.

RICHARD RUSSELL, FORMER CIA ANALYST: There's a lot of discussion over reorganizing the intelligence community, but there's no discussion about how we go about doing human intelligence operations. There's none whatsoever.

ENSOR: And that, say many experts, is where the real problem lies. Though the U.S. has the best spy satellites and eavesdropping technology, they say it is never been very effective at the traditional game of human espionage.

RUSSELL: It's a standard mantra. We're not very good at it. We're not very good at it. It is about time we got good at it.

ENSOR: For years, most CIA officers overseas have been undercover as diplomats. Critics say many more of them should impersonate businessmen instead. They argue, the CIA should also take more risks in who it hires, for example, among Arab Americans whose relatives may be under the control of other governments.

BAER: There's a lot of people that want to get into the CIA that can't now because of relatives that live overseas or one reason or another, because we still have the old Cold War rules and regulations to join. You have got to get rid of those, at least to a certain level. You obviously have to have a part of the CIA which is immune from being penetrated.

ENSOR: These critics argue, too, that the CIA should put more effort into soliciting and exploiting walk-ins, defectors, whether they be al Qaeda members or Iranian scientists.

RUSSELL: I think the best sources of information you get are from defections. They offer you a one-time shot of what's happening, but a one-time shot is better than no sources at all.

ENSOR: For his part, the man who until recently ran America's spies, James Pavitt, insists, without going into details, that the CIA is already doing much of what the critics advocate. But he warns against expecting too much.

JAMES PAVITT, FORMER CIA DIRECTOR OF OPERATIONS: Human intelligence is a very difficult undertaking. There is no perfection in my business. If we're 40 to 50 percent of the time, we're doing very, very well. You're dealing with human beings. You're getting into somebody's head.

ENSOR (on camera): The kinds of changes that knowledgeable critics are talking about are not the sorts of things that Congress can mandate. It will now mostly be up to Porter Goss, the new CIA director, to try to build on the nation's talent at the world's second oldest profession.

David Ensor, CNN, Washington.

(END VIDEOTAPE)

BLITZER: Despite continuing concerns about homeland security, homeland security officials are lowering an orange alert that had been in effect at some Eastern financial institutions for the past three months.

Institutions in New Jersey, New York and right here in Washington will return to the so-called yellow alert status, the same level in effect everywhere else around the country. New York City has remained at that higher status since 9/11 and will continue to remain at that alert level, the orange level, as opposed to the yellow level, for some time, according to New York City personnel.

Four-time heavyweight champion of the world Evander Holyfield is stepping back into the ring. He'll join me live to talk about his upcoming fight.

And the last Democrat to live in the White House give us some advice of his own about his party. We'll hear what Bill Clinton has to say.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Now that the presidential election is over, many people are offering Democrats advice on what went wrong. Some of that advice is coming from the most recent Democrat to live in the White House.

(BEGIN VIDEOTAPE)

WILLIAM J. CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I can't run for anything. The good news is, I can say whatever I think.

BLITZER (voice-over): Bill Clinton jokes that since he's not the president anymore, nobody listens to him. But since he's the only Democrat who has been elected president in the past quarter-century, many Democrats are willing to listen when Clinton talks about how to win. Speaking at Hamilton College in Upstate New York, Clinton congratulated President Bush and the Republicans on what he called a brilliant campaign. He said many voters decided against changing leaders in the midst of terrorism threats and the war in Iraq. But there were other factors, too.

CLINTON: There was an astonishing turnout among evangelical Christians, who said they were voting on the basis of moral values.

BLITZER: Clinton said no party has a monopoly on morality or truth, but Democrats have to make that clear to the voters.

CLINTON: I do not believe that the Democrats can seek to be a truly national party -- they may win some more national elections, but we cannot be nationally competitive unless we feel comfortable talking about our convictions.

BLITZER: Clinton said that, during his eight years in office, he protected abortion rights, but also worked to promote alternatives to abortion. He also signed the Defense of Marriage Act, which stopped short of amending the Constitution, but preserved the right of every state to make its own decision on gay marriage.

CLINTON: I think that the current divisions are partly the fault of me, of the people in my party, for not engaging the Christian evangelical community in a serious discussion of what it would take to promote a real culture of life and what the best strategy for reducing abortions is or an open discussion of where we are on the issue of gays in America.

BLITZER: But, in the wake of John Kerry's defeat, Clinton also had words of reassurance for his fellow Democrats.

CLINTON: I'm old enough now and I've run enough times and I've governed enough, succeeded enough and failed enough, to know that there is a limit to how much any election can repeal the underlying tides of history.

(END VIDEOTAPE)

BLITZER: Clinton did not address speculation about his wife, Hillary Clinton, possibly running for president in 2008. He said only that he's proud of Senator Clinton and will do whatever he can to help to her.

Speaking out for the first time after giving birth, a 56-year-old woman tells her emotional story and shows off her two new babies. We'll show you what happened and we'll hear from her.

And could this be a comeback? I'll talk to Evander Holyfield and promoter Don King about the heavyweight's return to the ring. They're standing by live. Look at that flag. He's a proud American. We'll talk to him right after this.

(COMMERCIAL BREAK) BLITZER: This Saturday, a nationwide pay-per-view audience will watch what some hope will be an amazing comeback, but others see as an impossible dream. Four-time heavyweight champ Evander Holyfield is stepping back into the ring at the age of 42.

Careers highs include a surprise win over Mike Tyson in 1996. Controversy came the following ear, when Tyson bit off part of Holyfield's ear. And perhaps the deepest low was last year, when Evander Holyfield's corner called it quits in the ninth round unless a merciless beating he was then getting.

Evander Holyfield joining us now live from New York, along with Don King, promoter of the upcoming match.

Thanks for both of you for joining us.

Evander, let me ask you the blunt question everyone wants to know. Why are you doing this at the age of 42?

EVANDER HOLYFIELD, BOXER: My goal is to be the undisputed heavyweight champ of the world. And that hasn't changed since 1992, when I first lost my first undisputed title against Riddick Bowe.

BLITZER: You think you can win this Saturday night?

HOLYFIELD: I know I can win. I have paid the price that was necessary. And come on the 13th, people can judge it and see it for themselves.

BLITZER: Well, what happened the last time when you were beaten, beaten pretty badly, and your corner had to throw in the towel?

HOLYFIELD: Well, the corner didn't have to, but they did. But that's in the past. And, you know, I have made some adjustment from the past and here I am again today.

BLITZER: Don King, is this guy ready to come back?

DON KING, PROMOTER: Yes, he is. He's dedicated and committed. He's redoubled his efforts. He's out to prove to the world that he can be what he wants to be in this great nation called America. This is the -- once again, the five-time all -- undisputed champion.

BLITZER: Do you have any concern at all that you may be endangering him by letting him go back in the ring?

KING: No.

I sent him to the Cleveland Clinic, one of the greatest hospitals in the world. And they thoroughly examined him and gave him an A- plus, flying colors, that he was fit to fight. Based upon their advice and relying upon their greatness as a clinic and a hospital that knows how to treat human beings, I said, hey, if they say he's all right, who am I to deny him an opportunity in this great nation called America?

BLITZER: At 42 years old, Evander, what are you trying to prove?

HOLYFIELD: Well, my goal was to retire as the heavyweight champ of the world. I didn't choose my beginning, but I can choose my ending.

BLITZER: And that's it. It's as simple as that.

Don King, the last time we spoke, it was during the Republican Convention in New York. You came to the CNN Election Express diner, as you well remember. You were hoping for a President Bush reelection. You got it. How important is that to you?

KING: It is very important to America for a better America. And it is a very important thing.

And you have got to respect the unprecedented genius of Karl Rove and his political strategy in the campaign for the president. He picked Ed Gillespie, who I think is a great American, an American of faith, a man that is humble and compassionate, that reached out with sincerity to get the African-American vote and the Latino vote with myself. And I think that was an unprecedented move in doing so.

And we doubled the African-American vote, against insurmountable odds and difficulties. In fact, I might say that the Democratic Party is in shambles right now. And I think that you have a great opportunity for the Republican Party to move into a two-party system. And I think that what we did was to bring a two-party system back into play. Now we must work on it and nurture it with promises made, promises kept. And I think this is what George Walker Bush will do in leading America to a great new historic level of working together in the democratic process.

BLITZER: Are you a Democrat or Republican, Evander Holyfield?

HOLYFIELD: I'm neither one. I choose the guy that I think will represent America the best.

BLITZER: A simple man with a simple -- a few words, but important words.

Thanks to you to both of you for joining us, Don King, Evander Holyfield.

KING: Well, it's great to be with you.

BLITZER: We'll be watching the fight Saturday night. Thank you.

KING: Thank you.

Call your local provider and get it on pay-per-view or see it at Madison Square Garden live and in living color.

BLITZER: Don King, the promoter, as always, promoting.

KING: George Walker Bush, we have him back. It's four more years and we love it. BLITZER: OK. OK.

(LAUGHTER)

KING: Thank you, Karl Rove. Thank you, Ed Gillespie.

BLITZER: Thanks, Don King.

KING: And thank you, Wolf Blitzer.

BLITZER: All right.

A new mom at age 56, almost 57, we heard from her earlier today. If you stay with us, you'll hear what she had to say, pretty emotional.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Yesterday, we told you -- well, first, before we get to that, our Web question of the day: Is Alberto Gonzales a good choice for attorney general? Here are the results. Remember, it's not a scientific poll. Now we move on.

Yesterday, we told you about that 56-year-old New York City woman who gave birth to twins. Our picture of the day is the proof. Look at this.

(BEGIN VIDEO CLIP)

ALETA ST. JAMES, MOTHER: And part of it is, like, so emotional, because -- oh, goodness -- this is something that I really wanted.

(END VIDEO CLIP)

BLITZER: Meet Aleta St. James and her son, her daughter, Gian and Francesca. The twins arrived by Caesarean section yesterday. Congratulations, mother and kids.

"LOU DOBBS TONIGHT" starts right now.

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