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Your World Today

Suicide Bombing Rocks Tel Aviv; Watchdog Group Reports Iran Expanding Nuclear Facilities; Plans Stagnant for New Iraq Government; McClellan Fields Questions From White House

Aired April 17, 2006 - 12:00   ET

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

JIM CLANCY, CNN ANCHOR: New attack, same place. A suicide bomber striking in Tel Aviv in the very same restaurant that was attacked just three months age.
HALA GORANI, CNN ANCHOR: Tussle over tunnels. From high in the sky, some clues to what Iran has been doing far below ground near its nuclear plants.

CLANCY: And in Eastern Europe, rising water, empty homes. How many are fleeing as the Danube surges? And many more could follow.

It is 7:00 p.m. in Tel Aviv, 7:30 in the evening in Tehran. I'm Jim Clancy.

GORANI: I'm Hala Gorani. Welcome to our viewers throughout the world and the United States. This is YOUR WORLD TODAY.

CLANCY: We begin a report with the first suicide bombing in Israel since Hamas took over the Palestinian Authority. A man blew himself up outside a Tel Aviv sandwich shop.

GORANI: He killed eight people and wounded dozens more. As Paula Hancocks reports, reaction from Palestinian leaders underscores the gulf between the old and the new guard.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT: A suicide bombing in Tel Aviv has rocked Israel in the midst of the passing of a holiday. The bomb went off at a fast food restaurant on a busy street at the old central bus station. A police commander said the bomber scuffled with a security guard outside the restaurant, trying to push himself inside. He then blew himself up.

The Palestinian militant group Islamic Jihad claimed responsibility for the bombing, coming just one day after the group had pledged to carry out more attacks.

ISLAMIC JIHAD MEMBER (through translator): We claim full responsibility, and we tell our enemy that there is no security for you in the land of Palestine, only when Palestinian aspirations are met.

HANCOCKS: It's the first suicide bombing in Israel since the Hamas-led government assumed power of the Palestinian Authority 2 1/2 weeks ago. It also came shortly before a swearing-in ceremony in Jerusalem for the new Israeli parliament.

YOSSI BEILIN, ISRAELI PARLIAMENTARIAN: It reminds us that we have not solved the problem and that we're in the midst of a very deep crisis while Hamas is leading the Palestinian Authority. No negotiations.

HANCOCKS: Hamas calls the suicide bombing a legitimate response to what it calls Israeli aggression.

SAMI ABU ZUHRI, HAMAS SPOKESMAN (through translator): The Israeli occupation bears responsibility for the continuation of its aggression. Our people are in a state of self-defense, and they have every right to use all means to defend themselves, using all the means available.

HANCOCKS: Saeb Erakat of the rival Fatah Party condemned the attack in the name of the Palestinian Authority's president.

SAEB ERAKAT, PALESTINIAN PRESIDENTIAL ADVISER: Such attacks harms Palestinian interests, and we call upon all Palestinians to abide by the cessation of violence (INAUDIBLE)

HANCOCKS: The restaurant was the target of a previous suicide bombing last January. Fifteen people were injured in that blast. Israeli Prime Minister Ehud Olmert says the Israeli government is now considering how to respond to the latest bombing.

Paula Hancocks, CNN, London.

(END VIDEOTAPE)

CLANCY: The bombing follows a series of recent Israeli shelling attacks on Gaza in retaliation for missile attacks by the Palestinians. Israel says the strikes and barrages targeted militants, but civilians were also among the casualties. Both sides claim the right of self-defense, fueling the cycle of violence. Israel says its attacks were necessary to stop Palestinian militants from firing rockets at Israeli civilians.

GORANI: Hamas now leads the new government in the Palestinian territories, and much money has been suspended to that government from Europe and the U.S. Now Qatar is pledging $50 million to that Palestinian Authority to help fill those gaps left by aid cuts from Western countries.

A day earlier, Iran made the same pledge. Iran's president, Mahmoud Ahmadinejad, called for other Islamic nations to give money, as he met Hamas political leaders, Khaled Meshal, in Iran. The United States, European Union and Israel call Hamas a terrorist organization and have cut direct funding to the government.

Hamas has refused to recognize the Jewish state's right to exist. The Palestinian Authority faces an economic crisis because of those Western aid cuts and because Israel has halted the transfer of taxes and fees that it collects for the Palestinians. CLANCY: Now to the Iran nuclear dispute. The influential former president Hashemi Rafsanjani says Tehran is going to continue enriching uranium. Rafsanjani says Iran's neighbors have nothing to fear from its nuclear program, which he says is bound by the Nuclear Non-Proliferation Treaty and supervised by the United Nations nuclear monitoring agency. In 2003, the IAEA criticized Iran for concealing 18 years of atomic experiments.

A U.S.-based nuclear watchdog group reports Iran is expanding those nuclear facilities and has one buried underground. The Institute for Science and International Security relied on commercial satellite imagery for its report. David Ensor joins us now from Washington with more on that -- David?

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Jim, as you say, there are more indications -- two types -- that Iran is advancing as quickly as it can with nuclear technology. First, claims from President Mahmoud Ahmadinejad that Iran is presently conducting research on a more sophisticated type of centrifuge for enriching uranium. And then, as you mentioned, satellite photos from a watchdog group showing Iran hard at work in nuclear sites.

The group, the Institute for Science and International Security, made public new commercial satellite photos -- this one, for example -- of the nuclear facilities near Isfahan, and it shows that Iran has built another tunnel entrance, one of several, leading to underground facilities, suggesting that those facilities are probably being expanded.

Clearly, much of Iran's nuclear program is designed to withstand conventional aerial bombardment and to be conducted away from the prying eyes of American and European spy satellites.

The ISIS also released a series of photos from 2002 up to 2006 of the facility near Natanz. And they show two massive, subterranean halls being built, and then buried with earth and concrete. Experts believe the two halls will be filled one day with thousands of centrifuges for enriching uranium.

Here are the pictures of Natanz, and you see how it progresses. First, they dig it; then, they build the facilities; and then gradually they cover it over. The experts estimate those halls are now 26 feet or eight meters underground.

Now, as I said, President Ahmadinejad has jangled nerves at the International Atomic Energy Agency with his statement that his nation is researching what is called P-2 technology. The P-2s can enrich uranium much more quickly than P-1s. U.S. officials have said that P- 2 blueprints were given to Iran by the Pakistani black market ring headed by A.Q. Khan years ago.

But what's not clear is how far along Iran may be on this technology. Do they have a sample centrifuge from which to make copies? Are they capable of building one from just a blueprint? So there's much discussion about that today among scientists and intelligence officers -- Jim? CLANCY: As Iran goes forward here, how much of a focus is there going to be on spy satellites, intelligence gathering, to really track this nuclear program? How much can they learn about it? Are they at a disadvantage?

ENSOR: Well, clearly you can only see just so much from space and from the air, so U.S. and other intelligence agencies are seeking to do what they can on the ground, as well.

Obviously, this is a target that U.S. intelligence has long had in its sights. So I think one can assume that there are human intelligence sources that have been recruited and are helping.

There are also dissident Iranian groups that, from time to time, make assertion about this program, and one of them actually was the first to publicly identify it. So those are obviously carefully parsed by intelligence agencies around the world, as well. You're going to see a lot of attention paid to this, Jim.

CLANCY: All right, David Ensor reporting to us there from Washington. Thank you, David.

ENSOR: Thank you.

GORANI: To ignore or to engage? In Washington, members of both major political parties say the U.S. needs to pursue direct talks with Tehran. Influential Republican Senator Richard Lugar noted Iran's strategic ties with other countries and its role in global energy production.

(BEGIN VIDEO CLIP)

SEN. RICHARD LUGAR (R-IN), FOREIGN RELATIONS COMMITTEE CHAIRMAN: I think that would be useful, and I think, furthermore, direct talks with Russia and with China, with regard to their activities in the Security Council, with other members of council. I mentioned earlier tidying up the situations in Afghanistan, Iraq, thinking through energy developments long before we get to a crucial moments in Iran.

The Iranians are a part of the energy picture. Clearly, their ties with India and with China, quite apart from others, are really critical to all of the above. We need to talk about that.

(END VIDEO CLIP)

GORANI: Well, a prominent Democrat, Senator Christopher Dodd, agrees, saying Washington depends too much on Europe when it comes to diplomatic initiatives with Iran. He said, quote, "I happen to believe you need direct talks. It doesn't mean you agree with them," unquote.

CLANCY: Iran's pursuit of its nuclear program continues to fuel a lot of fear that the U.S. might take military action against the OPEC nation. That is pushing oil prices again near record levels. Crude now trading at $69.95 a barrel in New York City; that's less than a dollar away from its record high, $70.85 a barrel, that was reached nearly eight months ago after Hurricane Katrina battered the oil infrastructure on the U.S. Gulf Coast.

GORANI: The high price of oil is the topic of our question today.

CLANCY: And we're asking you this: How is the rising price of oil and gasoline, of course, affecting your lifestyle? E-mail us your thoughts.

GORANI: YWT@cnn.com. Include your name, where you're writing from. We'll read a selection of those e-mails a bit later this hour.

CLANCY: All right, turning now to Europe, where the worst may be yet to come along the Danube River. Forecasters are predicting more rain for countries already struggling to cope with the flooding there. Serbia, Romania, Bulgaria, all of those countries appear to be the hardest hit right now. Chris Burns has more details of those water- logged states.

(BEGIN VIDEOTAPE)

CHRIS BURNS, CNN CORRESPONDENT (voice-over): Andrea Bilitisch (ph) and thousands of others across the Balkans are fighting an often losing battle to save what little they have from the River Danube, swollen by heavy rains and melting snow. With sandbags and water pumps, Bilitisch (ph) and other villagers in Ritopek outside Belgrade face off with a river sometimes more than 10 meters, or 30 feet, deep and complain help is slow in coming.

UNIDENTIFIED MALE (through translator): Up until now, the state has practically forgotten us. All they did was bring a truckload of sand and dump it here.

BURNS: Thousands in Southeastern Europe have been evacuated from their homes; tens of thousands more are at risk. The Danube is the highest it's been in more than a century, causing havoc in Serbia, Bulgaria and Romania.

As flooding continues into a second week, defenses are becoming soaked through and are starting to weaken. One of the towns hardest hit, Smedervo (ph), east of Belgrade, where a 15th-century castle is barely visible above the floodwaters.

In Nicobuv (ph), Bulgaria, they're getting around the only way they can. Some 40 percent of this port is underwater.

UNIDENTIFIED MALE (through translator): The local people are used to these kind of calamities here. There was similar flooding in 1981.

BURNS: Similar flooding in the Balkans last summer left dozens of people dead and destroyed farmland and infrastructure. While most are sandbagging dikes, others are blowing some up. The Romanian government ordered it to cause the controlled flooding of farmland to prevent the Danube from engulfing more towns downstream.

A dam collapsed in southern Romania, forcing hundreds to be evacuated. Weather forecasters predict rain through the week and that Europe's longest river is likely to rise further in some areas, putting more towns at risk from here to the Black Sea.

Chris Burns, CNN, Berlin.

(END VIDEOTAPE)

CLANCY: Now, you can find a photo gallery of the Danube flooding, plus the latest weather forecast, on our Web site. The address for that: CNN.com/international.

GORANI: A short break on YOUR WORLD TODAY. When we come back, violence and political wrangling in Iraq.

CLANCY: The Iraqi people are growing more and more impatient. It's all about what they do not have. We'll explain, in a moment.

(COMMERCIAL BREAK)

GORANI: CNN correspondent Arwa Damon and one of our CNN crews caught in the midst of a firefight there between U.S. Marines and insurgents in the city of Ramadi, west of Baghdad. Troops were guarding a main government building that harbors the governor's offices. The Marines say they killed a three-man insurgent team that was firing mortars, and a suicide car bomb exploded after Marines fired on it. No civilian and military casualties were reported -- Jim?

CLANCY: As the violence in Iraq rages on, the trial of Saddam Hussein resumed on Monday. The proceedings focusing now on attempts to prove the ousted Iraqi president signed documents implicating him in crimes against humanity. A criminal expert's report read in court said Hussein's signatures were on documents connecting him with the killing 148 Shia Muslims in 1982. The trial has been adjourned now until Wednesday so handwriting experts can have more time to authenticate those signatures.

GORANI: Meanwhile, many lawmakers in Iraq are wondering: Will he stay or will he go? The future of Iraq's prime minister is uncertain, as negotiations to form a new government seem to be going nowhere. As Aneesh Raman reports, there are increasing signs this stalemate, though, may end soon.

(BEGIN VIDEOTAPE)

ANEESH RAMAN, CNN CORRESPONDENT (voice-over): With a government yet to form, Iraqis are growing impatient. In the Shia town of Qoiter (ph), a town pierced by anger after a car bomb killed close to 30 on Wednesday. Just days ago, they honored the dead, a black banner for every person killed. And here they are asking: Where is our government?

"It's not just Shia or Sunni that are dying," says this man. "They are all Iraqis. Iraqis are dying for no reason while the politicians are worried only about their seats and who gets what." RAMAN: Iraq's parliament was to meet Monday. It didn't, because there is no agreement on who will be the country's prime minister. Ibrahim al-Jaafari, nominated weeks ago by the Shia alliance to keep his post, has been asked to step aside by Kurdish and Sunni politicians whose support is essential in forming a unity government.

But over the weekend, Jaafari told CNN he had no intention of doing that, and so the crisis continues while Iraqi impatience grows.

"The country needs a government, a serious government, which ends the peoples' suffering and injustice," says Muhammad. "It does not need postponement; enough is enough."

Iraqis went to the polls three times last year, with bigger turnouts in each election, heeding the politicians who told them it was their duty to vote. Now, they want the politicians to follow suit by doing their duty to govern.

"We feel really let down, having cast our votes and elected the representatives," says Assam. "While they delay and delay, the situation in the country is getting worse and worse. More and more Iraqis throughout the country are now simply fed up."

Because of that, pressure is mounting by the day on Jaafari to step aside, and there are now suggestions he could soon do just that, giving someone else from his party the chance to form a unity government, which is, by virtually all accounts, the only way to bring stability to Iraq.

Aneesh Raman, CNN, Baghdad.

(END VIDEOTAPE)

CLANCY: Still ahead on YOUR WORLD TODAY, a royal mess.

GORANI: As the king of Nepal tries to sort it out, are pro- democracy responding? A report from Katmandu, just ahead.

(COMMERCIAL BREAK)

DARYN KAGAN, CNN ANCHOR: I'm Daryn Kagan at CNN Center in Atlanta. More of YOUR WORLD TODAY in just a few minutes. First, though, some stories making headlines here in the U.S.

A verdict reached in the racketeering and fraud trial of former Illinois Governor George Ryan. Just a short time ago, jurors announced they have reached a decision. There's no word on when the verdict will be announced. Prosecutors say Ryan steered state business to a Chicago businessman and was rewarded with luxury vacations and other valuables.

The suspect in the gruesome killing of a 10-year-old Oklahoma girl heads to court in a couple of hours. Authorities plan to charge Kevin Underwood with first-degree murder, and they'll seek the death penalty in the case. The town of Purcell, Oklahoma, is shocked by the killing of Jamie Rose Bolin. She was a neighbor of the suspect. Police say the girl was killed as part of a plan that involved mutilation and cannibalism.

This could be a crucial day in the Duke rape investigation. A grand jury is hearing the prosecution's side of the case this morning, and criminal charges could be filed. As you know, the case involves an African-American dancer who claims she was raped by three white members of Duke University's lacrosse team. DNA results showed no link to any of the 46 players tested. Defense lawyers say there was no rape, but the D.A. does say he doesn't need DNA evidence to move forward with that case.

Attorneys for confessed Al Qaeda conspirator Zacarias Moussaoui focused on Moussaoui's fractured childhood. It's all an effort to save his life. In court this morning, a social worker testified Moussaoui spent six years in and out of orphanages, comes from a broken home, and has a family history of violence and mental illness. Moussaoui faces the death sentence in connection to the 9/11 terrorist attacks. Jury deliberations are expected to begin this week.

And a man suspected of murders and two registered sex offenders in Maine takes his own life on a bus in Boston. According to Boston police, 20-year-old Canadian Stephen Marshall shot himself on a city bus as police were closing in. The suicide ended a multi-state manhunt prompted by the murders of two men who lived 25 miles apart. Following the murders, Maine shut down its sex offender Web site, which lists pictures, names and addresses of registered sex offenders.

In Illinois, the terrifying power of nature caught on tape.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Oh, look, the house! Oh, my gosh! The house just went! The farm's going! The farm's going!

(END VIDEO CLIP)

KAGAN: Funnel clouds and hailstorms swept across Wheeler and other parts of Illinois on Easter Sunday. At least one home was destroyed. So far, no reports of any serious injuries.

Chad Myers is watching weather across the country.

CHAD MYERS, CNN METEOROLOGIST: In fact, 21 different reports of tornado damage in Illinois yesterday. And the storm is still going. The energy of the storm still making its way now across the Appalachians. Could be some severe weather into the Carolinas today, all the way back down to the low current of South Carolina.

Back into North Dakota and South Dakota, the potential for severe weather today, but a much larger potential tomorrow, all the way through the plains, even, really, the potential for a tornado outbreak tomorrow, with a lot of twisting in the atmosphere. That twist could make the storms to twist, and, when they do, tornadoes can fall out the bottom.

KAGAN: Chad, thank you. The tax man cometh, at least for most Americans. Since April 15th fell on a Saturday this year, the traditional deadline was moved to today. Even more time is allowed for filers who live in the northeastern states that celebrate Patriots Day. The list: Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont and the Direct of Columbia. Their deadline is tomorrow. Areas impacted by Hurricane Katrina have until August 28th to file without a penalty.

(BEGIN VIDEO CLIP)

LAURA BUSH, FIRST LADY OF THE UNITED STATES: The president and I wish everyone very good luck on the egg roll. I know you want to get started, so here comes the president to blow the whistle to get the eggs rolling.

(END VIDEO CLIP)

KAGAN: Kind of a soggy day, as the first lady and the president kicked off the annual White House Easter Egg Roll. In addition to the little children trying to find the eggs, there was an added ingredient this year: Gay and lesbian parents and their children. Critics accused them of playing politics at the event.

"LIVE FROM" comes your way at the top of the hour. And YOUR WORLD TODAY continues after a quick break. I'm Daryn Kagan.

(COMMERCIAL BREAK)

GORANI: Welcome back to YOUR WORLD TODAY. I'm Hala Gorani.

CLANCY: I'm Jim Clancy, and these are some of the stories that are making headlines around the world.

Islamic Jihad has claimed responsibility for the suicide bombing in Tel Aviv, a bomber attacking a busy sandwich shop on Monday. There's word now that the bomber killed nine people and wounded dozens of others. This the first suicide attack in Israel since Hamas took over the Palestinian government. Hamas calls the blast a legitimate response to Israeli aggression. Israel says it will respond to in the way and manner required.

GORANI: Iran's former president Hashemi Rafsanjani says Tehran will not step back from its uranium enrichment program. Rafsanjani said Iran sees nuclear power as an asset for itself and also for the developing world and the pan-Muslim nations. Meanwhile, a U.S.-based nuclear watchdog group reports Iran is expanding its nuclear facilities and has buried one underground. The Institute for Science and International Security relied on commercial satellite imagery to make that claim. .

CLANCY: Floodwaters are displacing hundreds of people across Romania, Serbia and Bulgaria. Heavy rains and melting snows have swollen the Danube to its highest levels in more than a century. Some local officials are complaining of a lack of equipment and exhaustion among their volunteers. More rain is predicted for this week.

GORANI: More now on our top story, the suicide bombing in Tel Aviv that killed nine people during the Jewish holiday of Passover.

CNN producer Yoav Appel is on the scene and joins us now live. Yoav, what happened? Describe what happened and led to the deaths of nine people? Is that the final toll so far?

YOAV APPEL, CNN PRODUCER: That's right, Hala. Police and rescue services have almost finished clearing away the remnants of this grisly bombing that happened this afternoon.

Now, I spoke with one of five brothers who own this fast food restaurant behind me that was hit. He described how it was hit also three months ago and how two of his brothers who were wounded then were wounded again in this attack. Now, he told me how the bomber -- he saw the bomber grapple with the security guard at the entrance to the restaurant. In his words, he said, they committed suicide together.

A neighboring shopkeeper, covered in debris, described how he stood outside his shop when the blast occurred. The force of the blast blew him into the shop, him and another customer. They picked themselves up, he said, and went out to help treat the wounded. Now, the rescue services have almost finished here, clearing away the debris. And as has become customary, the traffic is already flowing through these narrow streets -- Hala.

GORANI: Tell us, what are authorities, Yoav, saying about the bomber?

APPEL: Well, authorities are saying the bomber was a young Palestinian from the West Bank City of Jenin. Somehow he managed to get through all the Israeli security apparatuses and make his way here into the heart of Tel Aviv to carry out the bombing.

GORANI: When you speak to the people there near the scene, those tell Tel Aviv residents who are looking on to that scene, what are they saying to you? What is their reaction?

APPEL: Well, a lot of these people here are afraid to talk to the press. Many of them are migrant workers who come here -- are living in this area. Others talk about how they're frightened, but want to continue on with their routine. This is a scene that they've seen around here, unfortunately, many times. This area has been hit a number of times and people have managed to keep on living with it.The brother that I spoke to who owns the restaurant told me they were planning on selling that restaurant.

GORANI: Yes, because it was targeted before. Yoav Appel, a CNN producer there on the scene of that suicide bombing in Tel Aviv. Thank you, Joav.

Jim.

CLANCY: Well, turning to news in the United States, it seems like U.S. Secretary of Defense Donald Rumsfeld is getting it from all sides. Six retiring generals are calling for his resignation. Democrats on Capitol Hill say it's time for a change at the top in the Pentagon. But President Bush is standing by his man.

Pentagon correspondent Barbara Starr joins us now.

Barbara, I understand the Pentagon is firing back in this and it even sent out a memo soliciting response?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Pretty much, Jim. You might think of it as a U.S. political boiler room option during an election. "Operation Defend Don Rumsfeld" is under way. There are TV appearances by retired generals, newspaper editorials.

And indeed, over the weekend, the Pentagon press office put out what it called facts sheet for retired military analysts who want to go on TV or write opinion pieces about what they said were the facts about how many times Rumsfeld has met with his commanders, all trying to diffuse the criticism that the secretary does not listen to his senior military staff and does not take their advice.

But this clearly is opening the door to an awful of conversation, once again, about the war and the criticism. Brigadier General, retired James "Spider" Marks was the intelligence chief, for example, for U.S. ground troops in the run-up to the war and in the ground combat phase. He spoke earlier this morning. He said he wouldn't call for Rumsfeld's resignation, but he also said that there really were some mistakes, that more ground troops were need. Have a listen to what he said.

(BEGIN VIDEO CLIP)

BRIG. GEN. JAMES MARKS, U.S. ARMY (RET.): Frankly, I think it's appropriate to make comments that provide some objective observations about the secretary. I mean, that's fair game. But to call for his resignation does nothing to move the challenges forward and to try to come up with a solution.

(END VIDEO CLIP)

STARR: So, again, the debate really on again all over Washington about the war, some of perceived or real mistakes that were made. And a lot of conversation about who will speak up next, especially in Congress -- Jim.

CLANCY: Well, there are also many military men that say that this kind of an approach is wrong. It may be an election year, but if there is any criticism, it should come from the ranks of those -- they should be brave enough, if you will, to stand up while they're in uniform, in service, with these criticisms.

STARR: Well, let's be clear. That kind of standing up is never going to appear in public, of course. Active duty military may not, under the rules and regulations of the U.S. military in the United States, may not speak against the commander in chief. They really have no choice except to support U.S. policy. Now, should they feel that they simply can't live with it, then their option is to fall on their sword, if you will, resign their commission and leave the service and retire so they do have the option of speaking publicly. By all accounts, none of these generals did that. They waited for retirement and waited until they were free of that obligation and then spoke up.

The question on the table remains, did anyone, while they were on active duty inside the war counsels, if you will, speak up to Secretary Rumsfeld, say what they thought, and was their advice taken?

CLANCY: All right. Barbara Starr reporting to us live there from the Pentagon. Thanks, Barbara.

Still ahead, record oil prices. Are they here to say?

GORANI: All right. We'll have analysis on that and how that might impact your budget, as well.

Also ahead, six months ago, a French woman received the world's first partial face transplant.

CLANCY: Now a Chinese man has undergone that same daunting procedure. We're going to bring you the latest on his progress.

(COMMERCIAL BREAK)

CLANCY: Welcome back to our viewers in the United State and around the world. Instability in the Middle East, worries about Iran's nuclear ambitions just two reasons behind the spike that we're seeing right now at oil prices. They're right at $70 a barrel. That could soon mean an unpleasant change for everyone, no matter where you live, at the gas pumps.

Joining us now with more in New York is Allen Wastler. He's the managing editor of CNNmoney.com.

Allan, so good to have you with us. How far is thing going to go?

ALLEN WASTLER, MANAGING EDITOR, CNN MONEY.COM: This could go pretty far, Jim. Keep in mind, this is all happening against a backdrop of very tight supply and demand in the oil market. There's only a million barrels per day slack in there, so anything that happens in the geopolitical arena affects how the market prices oil. Right now with Iran and it's nuclear capabilities being discussed, and a lot of speculation and saber rattling going on, that's making oil traders very nervous, driving the price up.

In addition, you have Nigeria. There's problems there. To a lesser degree, Chad. And ongoing tensions with other oil suppliers, like Venezuela, so the possibility of prices climbing even, dare I say, to $80 barrel, it's a possibility now.

CLANCY: All right. As we look at this, the cause behind this, some of it is political, like you've said. You've got India. You've got China. You've got huge populations in rapid development, and the competition for oil is going to only increase.

WASTLER: Agreed. As these economies get more and more robust, they're consuming more and more oil.

Keep in mind, though, the United States still consumes three times more oil than China does, so we're the big glutton in the mix here, and we're still consuming it up and down and sideways.

Also our peak driving season is about to begin. That puts more demand on oil, and you're seeing that in the markets already. There's worries about how much gasoline is available, and so you're in this vast worldwide competition between our consumers and consumers in China and in India. Everybody wants the oil, everybody wants and gas, and the prices are reflecting that.

CLANCY: All right, what is being done about all of this. The consumers themselves feel the pressure. How are they reacting, in the car market, for example?

WASTLER: Well, you know, that's where economists would say you have your best gauge against this. Consumers as prices go higher, they'll cut back using -- you know, more fuel-efficient cars is what they will want. They will steer away from the SUVs, away from the big trucks. That's going to affect the auto industry, which is already on the rocks. A lot of manufacturers have made big bets on SUVs in large car markets. You'll see those bets go off.

But you will see consumers pull back in other areas. You know, they may start consolidating shopping trips so they don't use so much gas. That means going more to the big box guys rather than to a lot of specialty retailers. You'll see a drawback there.

Also, keep in mind, the market, the stock market, is a key player in this. If oil prices go up, that tends to stop the old bull market rally. And if people start seeing those finances go down a little bit, they'll retrench their spending. So you'll see a ripple effect from the price of oil right across the economy.

CLANCY: All right, you know, people talk about the conspiracy theories between the oil industry and the automobile industry.

But the real question on many people's minds today, it's not a conspiracy at all; it's wondering are the alternative fuels going to come on line. When will thing ethanol, and you know, corn-produced, grain-produced fuels really play a role? And how about hydrogen?

WASTLER: Well, you know, everybody wants to see those technologies move forward. And actually part of the problem right now with gasoline supply, is they're starting to introduce new additives into the gasoline market, and refiners are have to make allowance for that. So we're having a trouble point making that switch.

But you have to put money behind all these technologies, and that's the question. Nobody wants to bet a whole lot of money until they see the payoff. Now a lot of people say, well, the government should fix, the government should put money into it. That means taxing.

CLANCY: All right, Allen Wastler, we have to leave it there. Thanks much for being with us -- Hala.

GORANI: All right, we're going to take you to the White House. The White House Press Secretary Scott McClellan is taking questions from reporters.

Let's listen in.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECY.: ... but can as well only do great harm to the interest of the Palestinian people and ensure its own further isolation.

We reiterate that the United States will have no contact with such a government and we call upon all states to demand that it abandon its support for terror.

And with that, I will be glad to go to your all's questions.

QUESTION: Scott, can you tell us a little bit...

(CROSSTALK)

QUESTION: Can you tell us about this morning's senior staff meeting? Were you surprised that Josh Bolten immediately signaled there will be more staff changes? And do you get the impression it's going to be a shake-up or cosmetic changes?

MCCLELLAN: Well, look, I mean, there are a lot of rumors that go around at this time, whenever there's a change in chief of staff at the White House, and I think that's what those are, just rumors and speculation.

I think what Josh was saying this morning -- well, first of all, let me back up. I mean, Josh has hit the ground running as chief of staff.

Last week he shadowed Andy Card in a lot of his meetings that he regularly participates in. And Josh, this morning, when he came in to senior staff, talked about how this is a challenging time period that he is coming into as chief of staff.

We remain in an engaged an ongoing global war or terrorism. There are a number of important priorities we're working to pursue on the behalf of the American people. The president outlined a number of those in his State of the Union address this year. So we have a very active and full agenda ahead of us for the remaining two and a half years or so of this administration.

And Josh, this morning, talked about how, over the next seven to 10 days, you know, he's continuing to look at some of process of the White House, meaning the meetings that take place. There are a lot of regularly scheduled meetings that take place and, for the next seven or 10 days or so, he's going to pretty much leave that structure in place as it has been operating.

But any time you have a new chief of staff coming in, you can expect that there will be some changes in some of the structure and personnel and other issues.

Now, what he said at the end of his remarks to senior staff was simply talking about, you know, "Look, we're in a transitional period, and I want to make sure I have a team in place that is with us for, at a minimum, the remainder of this year and, to some extent, beyond that."

And as you know, any White House goes through change. People decide to leave after they have served here for a while. It's hard work serving here at the White House.

And so he said to the senior staff -- and I think this will be passed on to others as well -- is that if you're thinking about leaving some time in the near future, now would be a good time to do it, because this is this transitional period.

So that's the way I would look at it.

QUESTION: And was this also affecting Cabinet posts, as well? Did you get the impression this was White House staff? Or when you say...

MCCLELLAN: Well, this morning, he was talking to the White House staff. I mean, I think you would expect that. This is his first full day -- first full weekday as chief of staff. Obviously, when you're chief of staff, you're 24/7, and he took over late Friday afternoon from Andy Card when Andy departed the White House and Josh was sworn in.

QUESTION: Can I clarify that point, though? When you say -- you've said repeatedly, "Josh has full authority, the president..."

MCCLELLAN: Absolutely.

QUESTION: Does that just cover staff? Does that cover Cabinet posts? Or the entire administration?

MCCLELLAN: Well, the president is going to be looking to Josh for his advice and counsel. And the president has given him the full authority to do what he needs to do and what he believes is in the best interest of this White House and this president.

We are all here to help the president advance his agenda. We have accomplished much over the last few years, and there's much that we want to get done in the years ahead.

You know, two and a half years is a relatively short period of time left for this president to get some things done. And there's a lot that he wants to get done in that remaining two and a half years.

QUESTION: Scott, you're one of the most visible members of the president's senior staff. Do you plan to stay on?

MCCLELLAN: Are you trying to tempt me here?

QUESTION: Not at all. MCCLELLAN: Look, I never speculate about personal matters.

QUESTION: Personnel or personal or both?

MCCLELLAN: Two years in this position is a very long time. I'm very mindful of that. But, look, I never get into any of that speculation.

QUESTION: Did anyone come forward and say they plan to...

MCCLELLAN: I don't think that was the purpose of the senior staff -- I mean, the purpose was for Josh to kind of lay out -- you know, we got a lot of priorities we want to get done. This is a time to re-energize and renew our commitments to help the president advance his agenda.

And so that's the way he was looking at it, as a time to re- energize ourselves and to really refresh ourselves. This is a time for a little bit of a fresh start with a new chief of staff in place.

QUESTION: He had a couple of weeks, though, running up to taking over this job. Has he given a time frame for when he wants to have the team in place moving forward?

MCCLELLAN: Well, I think his impression he has left everybody with is the sooner the better to get that team in place, because you want to continue moving forward aggressively on the president's agenda.

And in his view, I think the best way to do that is to get that team in place as soon as possible, recognizing that sometimes it takes a little bit of time.

So you always have -- and I talked about this earlier with you all -- you always have to balance some of the continuity with change, and I think he's very mindful of that.

QUESTION: Scott, going to the generals who have been speaking out, you have -- I know the Pentagon put out a paper saying there are 8,000 living retired or active-duty generals. There are only two who have been on the ground in Iraq as division commanders and retired since then, and they have spoken out.

They have told the president they don't think Donald Rumsfeld should stay. And yet the president, despite what these commanders on the ground who have the experience there, who came out and made these comments, the president said he wanted Don Rumsfeld to stay.

Is he telling those generals they're wrong? And why wouldn't he want to...

MCCLELLAN: No. What the president did on Friday was make a strong statement reiterating his full support for Secretary Rumsfeld. He talked about how Secretary Rumsfeld's energetic and steady leadership is exactly what is needed at this time. And there have been a number of generals that I think you've heard from expressing very similar views, generals that have worked very closely with Secretary Rumsfeld.

General Myers has spoken about his deep trust for Secretary Rumsfeld and his leadership and his deep respect for his leadership.

General Franks, who was head of Central Command during the lead- up into Iraq and for a time period thereafter, has spoken out in strong support of Secretary Rumsfeld.

General DeLong -- so you've had a number of people who've talked about it.

In fact, you had several generals who signed a piece in The Wall Street Journal this morning talking about how military leaders have been very involved, to an unprecedented degree, in their words, in every decision-making process. And they went on to express their strong support for Secretary Rumsfeld's leadership.

So I wouldn't look at it in the terms you described it in your question.

QUESTION: Well, General Franks and General Myers, it seems, were criticized or, obviously in on the planning, that particularly General Newbold in his piece in Time magazine was -- without naming them, was probably criticizing as well and talking about those in uniform who didn't come forward.

So, in a sense, aren't they defending themselves as well?

MCCLELLAN: Well, I can go and name -- I mean, I just named several others that are speaking out about their support for Secretary Rumsfeld. So I think you ought to look to what those generals are saying.

But the president, I think, made an important point in his statement; I did, as well. The president has tasked Secretary Rumsfeld and our military commanders with some difficult challenges...

GORANI: White House Press Secretary Scott McClellan there reiterating the president's support for Donald Rumsfeld as six retired generals have called for him to step down. Also saying no contact with the Hamas-led government is the policy of the United States.

Discussing some potential staff changes as a new chief of staff, Josh Bolten starts his first day on the job at the White House. We will have a lot more on YOUR WOULD TODAY after a short break. Stay with us.

(COMMERCIAL BREAK)

GORANI: It is time for us to open our inbox.

CLANCY: That's right, we have been asking you for your thoughts about the price of oil. GORANI: Our question, how is the rising price of oil affecting your lifestyle? Here is how some of you replied to this question.

Thomas from Canada says, "the price of oil affects me directly since I am disabled. Most of my parts for my scooter are plastic and other materials from it are all made from oil."

CLANCY: Charles from California had this to say. "It isn't affecting me much. I converted to solar power five years ago and all my household electrical needs are run on solar energy." There's a guy that's ahead of the curve.

GORANI: Absolutely. A viewer in Nigeria, oil-rich Nigeria, tells us, "The price of oil is causing excruciating poverty. All proceeds go to extending the present regimes tenure, which is unconstitutional and morally dangerous."

CLANCY: I'm not sure that analysis is politically correct.

Finally, Terry from North Carolina tells us this, "I ride more and I write more. OPEC doesn't like my bicycle, the party in power doesn't like my emails." Mixing in a little politics today.

GORANI: A nice sampling of opinions from our viewers. This will do it for this edition of YOUR WORLD TODAY on CNN International. For our viewers in the United States, I'm Hala Gorani.

CLANCY: I'm Jim Clancy. We're going to leave you now with some pictures from this morning's Easter egg roll as it's called. It's not an Easter egg hunt. It took place at the White House. There is the eggs on the starting mark.

GORANI: Roll them.

CLANCY: There's a rabbit ready to go.

GORANI: The celebration dates back to the 19th century, apparently.

CLANCY: For our viewers in the United States anywhere around the world stay tuned. There's more news ahead on CNN.

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