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Special Event

Crisis in the Middle East; The USS Cole Attacked

Aired October 12, 2000 - 8:00 p.m. ET

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

ANNOUNCER: This is a CNN special report.

A day of violence in the Middle East: Without warning, a U.S. Navy destroyer comes under attack.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Everyone was at a high state of alert. This was a brief stop for fuel scheduled in a friendly port.

(END VIDEO CLIP)

ANNOUNCER: The USS Cole sustains major damage. Evidence points to a suicide bombing.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: We will find out who is responsible and hold them accountable.

(END VIDEO CLIP)

ANNOUNCER: The investigation of who might be behind this deadly attack is already under way.

In the same region, days of fighting become an all-out assault. Israel attacks targets on the West Bank and Gaza following the death of Israeli soldiers taken into custody by Palestinian police, then killed at the hands of a mob.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What the Israeli government did just now is tantamount to declaring an all-out war against the Palestinian population.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

EHUD BARAK, PRIME MINISTER OF ISRAEL: We responded in a very focused manner, a very clear signal that we will not have this kind of violence continue forever.

(END VIDEO CLIP)

ANNOUNCER: As prospects for peace fade, the U.S. calls for an end to the violence by both sides.

(BEGIN VIDEO CLIP)

CLINTON: The alternative to the peace process is now no longer merely hypothetical. It is unfolding today before our very eyes.

(END VIDEO CLIP)

ANNOUNCER: Now, a CNN special report: "Crisis in the Middle East" and "The USS Cole attacked."

Here's Joie Chen at CNN Center and Wolf Blitzer in Washington.

WOLF BLITZER, CNN ANCHOR: Good evening and welcome to our viewers from around the world. Jim is on assignment.

We replace our usual coverage to bring you an hour-long special on an extraordinary day in the Middle East. In the West Bank, the lynching of at least two Israeli soldiers by a Palestinian mob has had a chilling effect on the peace process and now both sides openly talk of war.

The attack triggered an Israeli response that reduced a number of Palestinian targets to smoldering ruins. Now, the world watches as the violence spirals out of control.

In Yemen, an explosion that has the hallmarks of a terrorist attack has crippled a guided missile destroyer and left six U.S. sailors dead and 11 missing. The USS Cole was making a refueling stop in Aden when a small boat came alongside the vessel and exploded, leaving a 20-by-40 foot hole on the port side.

CNN's Matthew Chance is en route to Yemen. We hope to hear from him within this newscast.

But we first go to the Pentagon, which has scrambled to respond to the suspected terrorist attack. To bring us up to date on developments out of the Defense Department, we have this report from CNN military affairs correspondent Jamie McIntyre.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT (voice-over): The blast that punched this 20-by-40 foot hole through the one-half-inch thick steel hull of the destroyer USS Cole was as unexpected as it was deadly.

WILLIAM COHEN, DEFENSE SECRETARY: According to an eyewitness account, the explosion occurred when a small boat that was participating in the mooring approached the USS Cole.

MCINTYRE: The American sailors caught in one of the main engine rooms and on the mess deck above it were killed by the powerful blast, and three dozen other sailors were wounded in what the Pentagon says appears to be a suicide-terrorist attack. According to Pentagon sources, in a routine maneuver, the small boat helped attach a mooring line to an offshore buoy.

But then, with the boat close by the warship, the two men aboard appeared to stand at attention, as the boat exploded without warning.

ADMIRAL VERNON CLARK, CHIEF OF NAVAL OPERATIONS: My view is that -- and the scenario that I've described to you -- is that it would be extraordinarily difficult to have ever observed in time to do anything about this kind of situation and to have stopped it.

MCINTYRE: The destroyer USS Cole was en route from the Mediterranean sea to the Persian Gulf to take part in enforcement of the oil embargo against Iraq. Because of the terrorist groups known to operate in Yemen, it used to be off-limits to U.S. ships. But the Cole, which left its home port in Norfolk, Virginia this summer, refueled there, in part, because of a U.S. policy aimed at improving relations with Yemen.

The warship was scheduled to be there for only four to six hours, meaning the attack had to be planned well ahead of time.

SEN. JOHN WARNER (R-VA), ARMED SERVICES CHAIRMAN: Given the magnitude of this blast, it couldn't have been put together in a garage overnight. Somebody had to do some careful planning to cause this much damage, this much loss of life and injury to our loved ones.

MCINTYRE: The Pentagon says it's premature to blame the attack on any particular group.

COHEN: If, however, we determine that terrorists attacked our ship and killed our sailors, then we will not rest until we have tracked down those who are responsible for this vicious and cowardly act.

(END VIDEOTAPE)

MCINTYRE: In response to the attack, the Pentagon has put all of its forces around the world on a higher state of alert. But until the U.S. completes its investigation, the Pentagon today could offer no assurances an attack like this couldn't happen again -- Wolf.

BLITZER: Jamie, on top of all of this, there are now some reports that Iraq is having some suspicious military maneuvers or troop movements. What are they saying at the Pentagon?

MCINTYRE: Well, as if the Pentagon didn't have enough to worry about today, today we learn that U.S. intelligence has reported that over the last day or so some -- an Iraqi army division of the Hammurabi Division of the Republican Guard, some of the troops that the most loyal to Saddam Hussein and are usually based around Baghdad, began to move west sort of toward Jordan and Syria.

Now, that sounds somewhat alarming, but the analysis here at the Pentagon is that it appears to be a show of force by Saddam Hussein, a show of solidarity with Arabs who are engaged in the dispute with Israel. There's no logistical trail that would indicate that these troops are actually in any sort of a combat posture, and there's no indication that the troops were, for instance, moving against the Kurds in the North.

Nevertheless, a movement of an Iraqi division of about 11,000 troops along with their tanks heading toward the west, that's something the Pentagon is keeping a close eye on.

BLITZER: All right, Jamie McIntyre at the Pentagon, thank you -- Joie.

JOIE CHEN, CNN ANCHOR: Wolf, for more insight on today's attack against the USS Cole and the potential U.S. responses, we're joined by former National Security Council staff member Daniel Benjamin. He was most recently the coordinator of the U.S. counterterrorism policy. Today, he is with the U.S. Institute of Peace in Washington.

Dan, we want to talk first about who might be behind this. There has been to this point no legitimate claim of responsibility for the attack. Can you help us understand who might be behind it?

DANIEL BENJAMIN, FORMER DIRECTOR OF COUNTERTERRORISM, NATIONAL SECURITY COUNCIL: Joie, that, of course, is the question everyone is going to want to answer. I think first there needs to be a cautionary note. The investigative and intelligence work that will go into ascertaining who is responsible for this could go on for a very long time. It's very important not to get carried away with speculation.

CHEN: But I think there are plenty of people out there who might wonder, for example, if this has the fingerprints of Osama bin Laden on it?

BENJAMIN: Yes, well, there are going to be a couple of groups, of categories of terrorists who are going to be scrutinized in particular in the days ahead. The first group will be the Jihadists, the radical Islamic terrorists affiliated with bin Laden, based in the terrorist camps in Afghanistan.

As the State Department pointed out in its annual report, there are plenty of operatives from these groups in Yemen. They belong to groups like the Al-Qa'ida (ph), which answers directly to bin Laden, and the Egyptian Islamic Jihad.

There's also going to be a lot of scrutiny, I believe, of the rejectionist Palestinian groups, such as Hamas and the Palestinian Islamic Jihad. They also have representation in Yemen, and there have been indications that they have been cooperating more and more with the Jihadists out of Afghanistan, that they are finding common cause to derail the peace process.

I think the timing suggests that that's one area that's going to get a lot of scrutiny.

CHEN: Would you say that in looking at it from your view do you see the fingerprints of one group over another more likely to be on this? BENJAMIN: Well, as I said, I don't want to get carried away with speculation. There are some clear aspects of this attack, however. It was clearly very well-planned. They used an enormous amount of explosives. They were out to cause a lot of death.

And this is the hallmark of terrorists today who tend to be more interested in large-scale carnage and have a religious agenda. That has been the trend that we have seen over the last few years.

It is consistent with the agenda of pushing the United States or trying to intimidate the United States to leave the Gulf region. That has certainly been an explicit goal of bin Laden and his associates. But I think we're going to have to wait and see until more of the investigative and intelligence work has been done.

CHEN: Earlier in Jamie McIntyre's report, we heard the use of the word "plan." I mean, obviously, this is not a spontaneous event. It is something that somebody put some thought into. Was there also reason for the United States, should intelligence have been aware of something possibly happening in Aden?

BENJAMIN: Well, I certainly wouldn't want to second-guess U.S. intelligence. In the last few years, the CIA, the NSA, and the other parts of the intelligence community have ramped up their capabilities enormously. At the same time, there's been an extraordinary increase in the amount of threat material that is out there.

I think that the important thing to keep in mind here is that we're in an era where we're defending all the time everywhere. We saw in East Africa that terrorists can hit us very far from their traditional theaters of operation. And I think that we have to keep in mind that it's very difficult to keep our defenses at the very highest pitch all the time and to defend everywhere.

Remember, this is an operation, this is a game in which we can score many successes, as we have against the new transnational terrorists, and all they have to do is score once, and it looks very bad.

CHEN: As you talk about keeping eyes out all over the place, Jamie McIntyre also reported intelligence signs of Iraqi troop movements under way today. Can you comment on how that might play?

BENJAMIN: Well, one of the things that the government is going to be doing in the next few days and weeks is looking at all of the state sponsors of terrorism, those who have a history of trying to harm U.S. interests through terror. Iraq is one of those countries. Iraq's capabilities in this regard have been greatly diminished over the years, and so it's relatively unlikely that they were able to pull this off.

That will certainly be something that the administration will look at very closely. My own guess is that the deployments that the Iraqis are having are largely being done to gather some attention while the peace process is in such -- such dire straits. Several days ago, Saddam Hussein made a remark about wanting a parcel of territory near Israel and he would eliminate Zionism. So he's clearly using this as a moment for grand political theater.

CHEN: Daniel Benjamin, we appreciate your insight. Daniel Benjamin is with the U.S. Institute of Peace.

Also on the possibility of connections to Iraq, Yemen has been building close ties with that longtime U.S. adversary for years. It has to do in part, as Daniel Benjamin noted, with their location in the Middle East and with associations with bordering countries. But an alliance potentially could pose a threat to the United States.

CNN's Mike Boettcher on that.

(BEGIN VIDEOTAPE)

MIKE BOETTCHER, CNN CORRESPONDENT (voice-over): Located on the strategic southern tip of the Arabian Peninsula, Yemen has often been the object of courtship by the world's stronger powers. Both the United States and Russia have recently stepped up their attempts to win influence there.

During the Cold War era, Yemen was split in two. South Yemen was supported by the Soviet Union; North Yemen, by Western powers. They were united nine years ago, but the hangover from those days still lingers.

John Bolton is a former U.S. assistant secretary of state who is familiar with the region.

JOHN BOLTON, FORMER U.S. ASSISTANT SECRETARY OF STATE: During the Cold War at different points, the two halves of what is now the united Yemen were on different sides of the Cold War. And that's one of the reasons why even after the Cold War the country has still been a conduit for terrorists and other unhelpful elements.

BOETTCHER: In recent months, Yemen has had another suitor: Saddam Hussein. According to international experts who monitor the region, Yemen, which has an ongoing, bitter border dispute with Saudi Arabia, has had increasing contacts with Iraq, the bitter enemy of Saudi Arabia. During the Gulf War, Yemen served on the U.N. Security Council, where it openly questioned resolutions against Iraq.

BOLTON: It served as a surrogate for Iraq in a lot of the critical votes there. Yemen has long had difficulties with its neighbor, Saudi Arabia, which of course was directly threatened by Iraq, and in that part of the world the old saying "The enemy of my enemy is my friend" really rings true.

BOETTCHER (on camera): No intelligence analysts we spoke to believe the present government of Yemen would actively support a terrorist attack on the United States, but they say the country does make an easy and logical base of operations for organizations bent on attacking U.S. interests.

Mike Boettcher, CNN, Atlanta.

(END VIDEOTAPE)

CHEN: Indeed, the president of Yemen today suggested that the explosion might have caused by a mechanical problem on board the USS Cole, but he says if it was a terrorist attack, his country will pursue and punish anyone found responsible -- Wolf.

BLITZER: Joie, here in Washington, President Clinton made a quick return to the White House from New York, and he spent the day huddled with advisers and making phone calls to world leaders.

More now from CNN senior White House correspondent John King.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT (voice-over): One aide called it a double dose of despair from the Middle East; another, one of Mr. Clinton's most frustrating and disappointing days as president.

First: the deadly and apparently terrorist attack on a U.S. naval destroyer during a refueling stop in Yemen.

CLINTON: If their intention was to deter us from our mission of promoting peace and security in the Middle East, they will fail utterly.

KING: The Pentagon ordered ships in the region to sea. The State Department put embassies on high alert and warned Americans about the risk of travel to the volatile region.

Then, horrifying scenes of new violence in the Middle East, Israeli soldiers murdered by a Palestinian mob. The president called for an end to the bloodshed, calm and then a return to the bargaining table.

CLINTON: I call on both sides to undertake a cease-fire immediately and immediately to condemn all acts of violence.

KING: The Palestinians labeled the Israeli retaliation an act of war, and Israel's prime minister angrily called for the White House to take sides and publicly rebuke the Palestinian leader, Yasser Arafat.

EHUD BARAK, PRIME MINISTER OF ISRAEL: We expect the American administration to tell loud and clear the American people and the leadership of the world who failed to move forward in order to put an end to the bloodshed in the Middle East.

KING: Mr. Clinton watched from the Oval Office, where he was busy with another day of feverish telephone diplomacy. There were three conversations with Mr. Arafat, and urgent appeals to Mr. Barak, Egyptian President Hosni Mubarak and King Abdullah of Jordan.

Mr. Clinton's high hopes of July have given way to profound frustration and disappointment.

(END VIDEOTAPE)

KING: But the White House does report a few hopeful nuggets tonight. For the first time, senior administration officials say, fellow Arab leaders, including President Mubarak and King Abdullah, have agreed to help the president in pressuring Mr. Arafat. And there's renewed talk of an emergency Mideast summit. But first, says one senior White House official, the violence must stop, and he said, "We must break the psychology of anger that has replaced the psychology of peacemaking."

And one last development: The president is scheduled to attend Democratic fund-raisers here in Washington tonight and then travel on a domestic political trip tomorrow. He canceled both of those stops, staying here instead at the White House, where he continues to work the phones this evening -- Wolf.

BLITZER: John, despite those rays of hope that are out, is there still a widespread fear at the White House, elsewhere in Washington that as bad as the situation in the Middle East right now, it could still get a whole lot worse very quickly?

KING: That fear does exist indeed, Wolf. Go back through the cycle of the Middle East peace negotiations predating this president, but especially in the 7 1/2 years he has focused on this crisis, and it has been a roller-coaster ride, as one senior official put it today. The assassination of Yitzhak Rabin. They thought they had a deal, they were on the verge of a deal in July and it broke down again. They thought in the 36 hours heading up to this morning that the situation on the ground had improved and there was talk of a major U.S. diplomatic mission.

So the White House watching tonight, encouraged that Prime Minister Barak said that the retaliation was through and that he would now be watching the Palestinians. But behind the scenes here, they're quite nervous tonight.

Again, they are encouraged, though. They say for the first time the Arab leaders seem to understand that the situation was spiraling out of control, and they are coming to the president's aid, White House officials say, in trying now to get Mr. Arafat to come out and publicly condemn the violence.

BLITZER: OK, John King, at the White House, thank you -- Joie.

CHEN: Wolf, we have more now on the deepening crisis between the Israelis and Palestinians. Israeli helicopters attacked Palestinian police targets in the West Bank towns of Jericho and Nablus overnight. Earlier, it was Ramallah and Gaza that took the brunt of Israeli military retaliation.

CNN's Ben Wedeman with the story.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN CORRESPONDENT (voice-over): An Israeli helicopter fires a missile into the Palestinian town of Ramallah: more proof -- as if more proof was needed -- the Middle East peace process may be in its death throes.

The attack was Prime Minister Ehud Barak's response to the killing -- "lynching" as Israeli officials call it -- of Israeli soldiers by a Palestinian crowd. According to Israel, the soldiers strayed into Ramallah by mistake. Palestinian police suspected they were undercover agents and arrested them, but could not defend them against the crowd.

Wherever the truth lies, there's no doubt about what happened next. The streets emptied. Israeli Merkava battle tanks moved into firing positions while more armor deployed in the hills above Ramallah. Helicopters hovered menacingly over the outskirts of town. And then the attack began, hitting the police station where the killings took place.

Israel also targeted Palestinian radio, which was knocked off the air. The Israeli general in charge of the West Bank made no apologies.

BRIG. GEN. BENNY GANZ, ISRAELI ARMY: And there was a very severe case this morning on these murders of our soldiers. As far as I'm concerned now, I will do my best to control the area and to get ready to whatever option will come in the future.

WEDEMAN: Panicked residents fought to put out the fires. Palestinian Council member Hanan Ashrawi described by phone the scene in Ramallah during the attack.

HANAN ASHRAWI, PALESTINIAN COUNCIL MEMBER: We have no electricity. I'm sorry, but we are trying very hard to stay calm. The situation here is very, very critical. It's very dangerous.

WEDEMAN: Dozens were wounded as Israel launched a similar assault on targets in Gaza.

Israel described the attacks as limited, but the injuries done to the peace process by the killing of the Israeli soldiers and by Israel's response may be fatal.

Ben Wedeman, CNN, Ramallah, on the West Bank.

(END VIDEOTAPE)

CHEN: Next up here, how we got to this point: The incident that sparked what's now been two weeks of violence.

(BEGIN VIDEO CLIP)

BARAK: The Sharon visit is the excuse, not the reason.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

BARAK: It's the same determination...

(END VIDEO CLIP)

CHEN: Christiane Amanpour's interview with Ehud Barak. She joins us live from Jerusalem. And we'll get reaction from Palestinian negotiator Saeb Erakat.

And the men who want to be president react to the dual crises. You are watching a CNN Special Report.

(COMMERCIAL BREAK)

CHEN: What happened in the Middle East today led the region's leaders to ponder the dangerous questions of an escalating crisis: has the other side lost its willingness to be a partner for peace? Does the other side mean war?

A rapid unraveling of the fragile ties to hope that began just two weeks ago, when a right-wing Israeli opposition leader traveled to Jerusalem, and to a place both revered and contested by that city's competing faiths.

(BEGIN VIDEOTAPE)

CHEN (voice-over): Thursday, September 28th. Whatever his intention, it's clear that Ariel Sharon's arrival at the shrine in the old city marks the start of this wave of violence. The holy site is known to Jews as the Temple Mount, and to Muslims as Noble Sanctuary, Al-Haram Al-Sharif.

(BEGIN VIDEO CLIP)

ARIEL SHARON, ISRAELI LIKUD PARTY LEADER: I come here with a message of peace. I believe that we can live together with the Palestinians.

(END VIDEO CLIP)

CHEN: Sharon, who said he carried a message of peace, arrives surrounded by the guns of Israeli police. Angry Palestinians riot. Israeli police open fire.

Friday, September 29th, the riots spread. Young Palestinians throw rocks at praying Jews. Israelis fire at the stone throwers. Six Palestinians die, nearly 200 are injured.

Saturday, September 30th. This searing image draws international outcry, 12-year-old Mohammed Aldura hides with his father behind a concrete barrier, trying to avoid the gunfire of Israeli soldiers. The boy is shot dead, his father is one of the hundreds hurt.

Sunday, October 1st. An agreed-to cease-fire breaks down almost as soon as it is called. Twelve people die, including an Israeli border guard who bleeds to death as Palestinian gunmen keep help away.

Monday, October 2nd, the heaviest day of fighting. Israeli helicopters fire at apartments in Gaza City where the army says there are snipers. Nineteen people die, and Israeli Arabs join the Palestinians in protest.

Wednesday, October 4th, Prime Minister Barak and Palestinian leader Arafat meet U.S. Secretary of State Albright and the French president, Jacques Chirac, in Paris. The Mid-East leaders order the military forces away from flash points, but the clashes continue and seven more die.

Thursday, October 5th, the fourth cease-fire in a week crumbles soon after it is announced, and both leaders raise doubts about the peace process.

(BEGIN VIDEO CLIP)

YASSER ARAFAT, PALESTINIAN AUTHORITY PRESIDENT: He is insisting to refuse the resolutions. He is insisting not to implement accurately and honestly what had been agreed upon, and what had been signed.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

BARAK (through translator): We continue to turn every stone on the way to peace and we try to stop the violence. I'm not sure after this we have a partner for peace.

(END VIDEO CLIP)

Friday, October 6th, Palestinians hoist a flag over a Jerusalem shrine and Israeli troops respond by storming it.

Saturday, October 7th, the clashes reach Israel's border with Lebanon. In a lightning raid, members of the militant group Hezbollah capture three Israeli soldiers. While in the West Bank, after the Israeli army leaves Joseph's Tomb, Palestinian demonstrators storm in. With the violence spinning further out of control, the Israeli prime minister issues an ultimatum to Arafat: end the violence in 48 hours or else.

(BEGIN VIDEO CLIP)

BARAK (through translator): We will consider this to be tantamount to a putting an end to the political track by Arafat, and we will instruct the security forces to use every resource available to them to put an end to the violence.

(END VIDEO CLIP)

Monday, October 9th, on Yom Kippur, the holiest day of the year for Jews, clashes continue. By sundown, amid anxiety about what will happen if Barak's ultimatum is not met, the deadline is extended.

Tuesday and Wednesday of this week, the 10th and 11th, international diplomats continue to shuttle through the region, pressing for an end to the violence. But tensions ratchet down only a notch, and the Middle East powder-keg stood at the edge of being out of control.

(END VIDEOTAPE)

CHEN: That brings us up to today and the dramatic events we saw earlier in Ben Wedeman's report. It is now very late at night, after 2 a.m. in the region, and tension remains high.

CNN Chief International Correspondent Christiane Amanpour joins us now from Jerusalem -- Christiane.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Joie, there was more action on the West Bank after the events of today. Israeli helicopters and other military equipment in action against Jericho, and also according to an Arab mayor of Hebron, also in action there.

I spoke to the Israeli Prime Minister Ehud Barak this evening after he had said this was just a limited action. He was unapologetic. He vowed to continue, as he said, to defend Israel.

He also expressed exasperation or frustration with the Americans, and he called on the Americans, on President Clinton, to tell the world that the Israelis had done their best and that it was Arafat who was not willing to go the whole way towards peace.

(BEGIN VIDEOTAPE)

AMANPOUR: Prime Minister Barak, you have just finished saying that this was a limited action, that you did not target Palestinian Authority President Yasser Arafat. But you have never -- Israel has never taken this extensive action against the Palestinians. How do you expect them to react?

EHUD BARAK, PRIME MINISTER OF ISRAEL: I expect them to put an end to violence that they have initiated and are responsible for. We have this morning -- we had a lynch of three Israeli reservist soldiers who -- people came from their home --and were lynched, then mutilated and burned. It's something that no government on Earth could accept, and Israel is ready to look open-eyed at the situation.

Understand that we are living in the Middle East, not in North America and not the Midwest, and this is a place where you cannot expect anyone to respect you, you cannot expect your own people to trust you, if you cannot respond to such an event. And we responded in a very focused manner, very clear signal that we will not have this kind of violence continue forever.

AMANPOUR: Your own intelligence organization, security organization, has said that it was an intelligence failure to allow Ariel Sharon to go to the holy site. Nobody predicted the kind of outrage that it would cause. They also say that they believe the violence was sparked when Israelis killed seven demonstrators the day after that on the mount. Isn't it time to stop saying, "You did it, you did it," and stop this and get back into a peace mode?

BARAK: First of all, the Sharon visit is the excuse, not the reason. The day before this, there was an explosive charge near petrol (UNINTELLIGIBLE) in Gaza Strip that killed one of our soldiers.

I don't want to go into this pointing of fingers, but let me tell you, when Chairman Arafat releases the prominent terrorists of Hamas and Islamic Jihad into the streets, these very days, then he invites last week the leadership of Hamas and Islamic Jihad to a meeting of his cabinet, it is the equivalent of a green light to terror to open, maybe closing his eyes, maybe even encouraging them.

It makes him, not just the Hamas and Islamic Jihad, responsible for the following terrorist attacks that might easily come.

We have to be able to make it clear. It's like you have lost today at the near Aden port four sailors and some, maybe 12, that disappeared. When you try to ask yourself, what's that, is it something offensive that the vessel had done? It's nonsense. Butchering is the intention of terrorists, to take the life of Americans since you are standing firm for freedom and against terror. And that's exactly what the world expects the leaders of the free world to do.

AMANPOUR: But don't you think what you've just done plays into the hands of that very activity? Don't you think that it just encourages the push toward the extremist side?

BARAK: I tell you, to bury more (ph) Israel does not encourage them. There is no -- we are living in a neighborhood which is somewhat different from the neighborhood you are living in. It's not North America; it's not Western Europe. This is a place where there is no mercy for the weak -- you can see it in the lynched soldiers -- and no second opportunity for those who cannot defend themselves.

Israel is determined to defend itself. We have no hostile intention against anyone around us. We were ready to go further than any previous government in Israel, be it Netanyahu or Shamir or even Rabin and Peres, in contemplating ideas that will put an end to it. But if we won't find a partner with the same determination and clarity of objective, we will fight to defend ourself and our right to live in freedom in this part of the world.

AMANPOUR: You keep saying that nobody has ever offered such a great peace agreement as you have. What have you offered them? Nobody has said it publicly. We've heard leaks. We've heard things from the Americans.

BARAK: You are not Palestinian, you are not the negotiator. Arafat knows it. All his group knows it. President Clinton knows it. And we know it.

So we expect that if Arafat fails to take the ideas raised by President Clinton -- which are far-reaching, beyond what we can follow, but we were ready to go there and negotiate and contemplate them -- if Arafat will kind of, will be unworthy, will refuse to take them as basis...

I would expect the American president, the American administration to look in the eyes of the American people and tell them, "We have tried our best. The Israelis were ready. Arafat was not." It's something that I believe we deserve after going together with United States seven years, taking them as the honest brokers drafted by both sides. And we really expect it to happen in the very near future. Whether he goes to the table or -- we expect the American administration to tell loud and clear the American people and the leadership of the world: Who failed to move forward in order to put an end to the bloodshed in the Middle East?

AMANPOUR: There's so much anger. Do you really think there is room to restart the peace negotiations?

BARAK: Yes. There will always be room. We will never lose hope of peace. The Palestinian people is going to be our neighbor forever, we will make peace with them. Leadership can change its mind, leadership can open its eye, leadership can even be replaced. And we might lose trust and hope of this present leadership, but we will never lose the hope of having peace with our Palestinian neighbor, the same people who are innocently pushed or incited to go into these demonstrations.

(END VIDEOTAPE)

AMANPOUR: Joining us now from his home in Jericho on the West Bank is the Chief Palestinian Negotiator Saeb Erakat. Mr. Erakat, thank you for joining us this late at night. You heard Ehud Barak say that today's action was a limited action, but there was more activity even near your home this evening.

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: Yes, Christiane, there were many activities. There were choppers that hit the town of Jericho 25 minutes after you interviewed Barak, after he told you it was stopped. I was watching you and then I heard 1500 meters from my home, the choppers firing at the electricity station and the police training center, and to be honest with you, just watching Mr. Barak speaking the way he speaks tonight, it's a train gone without brakes. This man is not the partner we knew.

I think he is practicing his exit strategy from the peace process. I think when he speaks of Mr. Sharon and the Israeli settlers, the Israel Partners for peace and embraces them as the partners for peace, I think the end game became very clear.

The world may try to get us to see each other. And we may at one point see each other. But I think with such mentality Barak tonight reflected to my memory Milosevic and I see in the West Bank and Gaza another Kosovo. I'm afraid that the wars did not happen.

AMANPOUR: Mr. Erakat, what have you just said is that you think that there is no more prospect of peace, and earlier this evening, Prime Minister Barak said that he felt Yasser Arafat's face quote, "Was turned away from peace." I mean, are you both saying that this is the end?

ERAKAT: Well, Christiane, I like to remind you that during Camp David, maximum efforts were exerted by both sides, and then at one point Mr. Barak was depressed for three days. He locked himself in a room and would not let anyone to see him. And at that moment I realized that this man is not going to be able to pay the price for peace.

And ever since he came outside I have held 37 sessions with my Israeli colleagues, I was in Mr. Barak's home just three days before Sharon stormed and permission to go to Haram Sharif and I asked my Israeli colleague whether he was having an exit strategy from the peace process, his policy of noncompliance with agreements signed, his continuation of the activities departure from (UNINTELLIGIBLE) and then Sharon's visit and then the massacres that were committed against the Palestinian people.

And in Paris, we missed him last week. I really appeal to the prime minister. I appeal to him as a father to allow international commission of inquirers to come to the entrance of our towns and refugee camps and villages and to stand in the way, but unfortunately he refused. I asked him what do you have to hide? Today, I knew exactly what he was hiding. The man has made up his mind.

He going to be tomorrow with Sharon in the same cabinet. Sharon is the death kiss to the peace process. I believe that all people of goodwill are watching what is happening now and they know deep inside their hearts that what the missiles and the choppers and the guns today. There was a silence the voice of the people of peace on both sides and to raise the language of the man speaks of this language tonight that we're not living in North America, that we are not living in the Midwest. That mercy to the weak.

We're weak. We are the weak ones. We are a nation that don't have an army. We cannot defend ourselves with choppers and tanks against the unleashing of the mightiest army in the region and the fourth strongest army in the world. So does that mean if we don't go the way Mr. Barak wants us in the peace process, he'll fire at us. It means every time we oppose him or reject something he'll punish us by retaliating, by cutting electricity.

Christiane, if you seen my children tonight when they saw the fire and the guns and the missiles exploding, if you see their eyes and the fear, if you see the hearts of innocent civilians just watching and not knowing what's going around. Looking at me, and all their eyes were telling me, that is the peace you are bringing us? Are these your partners? I ask Mr. Barak, and I really, I never was so scared in my life, until I saw him in you're interview tonight, Christiane.

AMANPOUR: Mr. Erakat, passions and feelings are inflamed tonight like I've never heard them before here. What is the alternative? What if both sides turn away at this moment instead of taking this moment and trying to work through it?

ERAKAT: To be honest with you, Christiane, we all know, honestly. that as Palestinians and Israelis, and as he said, you know, we are neighbors. We're not going to vanish. We're not going to disappear. So by using the language of guns, missiles and tanks, I think as you told him tonight, he what given the room and the strength to the extremists on both sides. He's silencing the voices of moderation. He's shutting the hopes. He's killing the hope in the minds of even moderate Palestinians after they saw what happened to their towns and their villages (UNINTELLIGIBLE).

One day, Palestinians and Israelis will all know that we cannot play it in accordance with a zero-sum game. We're going to have to have two winners or two loser. Unfortunately, with the practices and policies of Mr. Barak, I'm afraid to tell you, Christiane, that if this man is not stopped, we're going to be losers.

We have no alternative but to continue with the peace process. But I believe after he told you tonight, Christiane, in your interview that Sharon will be his partner, after he said Sharon is a man of peace, after he said the settlers are people of peace, you know and I know that is senseless and baseless, and we know that the choice of Mr. Barak is that he's telling us: "I will not pay the price of peace; I will blame the Palestinians for it; I will intimidate the Palestinians. (UNINTELLIGIBLE) show them the tip of the iceberg if they dare declare their Palestinian state or if they do anything against Israelis."

So in such a language, I believe Mr. Barak turned the light off tonight. When it's going to be back on, I really honestly don't know. But I don't think this man, I don't think this man is the man I knew, is the man I sat with, and is the man that I wanted to make peace with. I don't think he's a partner anymore.

AMANPOUR: Can I ask you one final question? The prime minister, Barak, clearly said that he wanted the American administration, President Clinton, to tell the world that it was Arafat, not Barak, who wasn't going the whole way toward peace. What will happen if that happens?

ERAKAT: Well, I think he asked, Barak, President Clinton to do that in Camp David, and he said to him, I cannot go back home, I'm weakened, my government will be toppled, and he asked President Clinton to help him. But President Clinton from all people on Earth, even (UNINTELLIGIBLE) his heart and aside from the American politics and the complexities of the election, he knows very well that we came a long, long, long, long way.

The larger picture, Christiane, as you see the map of the West Bank and Gaza, it's only 22 percent of (UNINTELLIGIBLE) Palestine. We have accepted so many things. We have accepted a partnership with Israel. We have (UNINTELLIGIBLE) living in peace with Israel, security cooperation with Israel. And then at the end of the day, I'm afraid the man was seeking an exit strategy from the peace process since Camp David was over. He wanted to assign blame on us and finger-point at us.

I hope that I'm wrong, but I believe that we just gave tonight, to Barak yesterday, every excuse to extremists in Palestine and Israel that the next day will be theirs and not mine.

AMANPOUR: Saeb Erakat, chief Palestinian negotiator, thank you for joining us from Jericho.

Back to you, Wolf, in Atlanta.

BLITZER: Thank you, Christiane.

And next here, election 2000 turns to international affairs. From debate to reality, the men who would be president take on the day's developments in the Middle East.

(COMMERCIAL BREAK)

BLITZER: Today's events in the Middle East happened just hours after international affairs dominated much of last night's Bush-Gore presidential debate.

CNN's Jeanne Meserve reports today the Middle East met the campaign trail and both candidates were largely in agreement.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT (voice-over): In a high school gym in suburban Philadelphia, reverberations from the explosive events in the Middle East.

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: I do want us to have in a moment of silence for the United States military sailors who lost their lives on the USS Cole near Yemen.

Please, for a moment of silence.

May God bless them and their families.

MESERVE: In Milwaukee, Wisconsin, a different candidate, a similar scene.

AL GORE, VICE PRESIDENT OF THE UNITED STATES: I'd like to ask you to join me now in a moment of silence.

MESERVE: Bush said he wants America to speak with one voice at this time of crisis, and indeed the comments on Yemen from the two candidates were virtually interchangeable.

BUSH: There must be a consequence.

GORE: Any terrorist should know that whoever is responsible for something like this will be met with a full and forceful and effective retaliatory response from the United States of America.

MESERVE: On the escalation of violence in the West Bank, again, striking similarity in remarks.

GORE: I want to call on Chairman Arafat to issue instructions to those who have been perpetrating this violence to cease and desist.

BUSH: Chairman Arafat must stand up and call upon the people he represents to put down their rocks and arms. MESERVE: Bush does not want Arafat to believe postponing peace might mean a better deal under a Bush administration. Gore abandoned much of the day's campaign schedule to return to Washington for Middle East briefings. Bush continued campaigning after what many said was a strong showing on international policy issues in last night's debate.

LAWRENCE KORB, FORMER ASSISTANT SECRETARY OF STATE: There's no doubt about the fact that given these events and the fact that the president was not able to close the deal at Camp David, does put the administration on the defense, and it's much like President Reagan was able to criticize President Carter for the hostage situation.

MESERVE (on camera): But for the time being at least, Bush shows no inclination to do that: not wanting, an aide said, to throw fuel on the fire.

Jeanne Meserve, CNN, Langhorne, Pennsylvania.

(END VIDEOTAPE)

CHEN: Next up here, investment fears at home and abroad as Middle East tensions take a toll on Wall Street. We'll assess the damage when this special report continues.

(COMMERCIAL BREAK)

CHEN: A look now at how investors reacted to the news of the day. There was a lot for Wall Street to digest. The violence in the Middle East helped send crude oil prices to $36 a barrel, that's close to a 10-year high.

Those rising oil prices sparked inflation fears about higher gas prices which combined with earnings warnings to send the major market sharply lower. The Dow fell almost 380 points, more than 3 1/2 percent to close at 10034. Much of that decline followed an earnings warning from Home Depot, which lost 28 percent of its value.

On the Nasdaq, an ugly day as well. The composite index dropped about 94 points to close at 3074. That is the Nasdaq's worst close of the year. Some of the decline was blamed on more worries about growth at the Internet portal Yahoo! -- Wolf

BLITZER: Joie, up next, an update on our top story: the attack on the USS Cole. We'll talk with a former U.S. naval commander who knows the region well. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Recapping our top story, a U.S. naval destroyer was the target of an apparent terrorist attack. The USS Cole was preparing to dock at a port in Yemen when a small boat pulled up alongside the vessel and exploded. The blast ripped a massive hole in the ship's hull, killing at least six sailors, and wounding dozens more. Eleven crew members are still missing.

For more insight now on the attack on the USS Cole we're joined by Admiral Doug Katz, former commander of the Fifth Fleet. Admiral Katz is familiar with the refueling port in Yemen. Tell us, Admiral Katz, how dangerous, with hindsight, was it for USS Cole to go into Yemen?

RET. ADMIRAL DOUG KATZ, FORMER COMMANDER, U.S. FIFTH FLEET: Well, it's been going on now for over a year, I think, almost two years. We had not, during my time there, used Yemen, but in an effort I'm sure to gain better relations with them, we started using it. There are other unsettled areas in the Middle East and the Red Sea and Yemen was chosen and has no problems refueling there in, like I said, last year, year-and-a-half.

BLITZER: Well, that little boat, when it came up to the USS Cole, and obviously the crew members allowed it to approach, is that standard operating procedure in a port like that for that kind of situation developed? It must have been a very well-organized attack.

KATZ: Well, as a matter of fact, when you're mooring to a buoy as Cole was, that's exactly the way it's done. Small boat usually comes up to assist you in tying up to the mooring buoy. And in this case, there was no warning, no forewarning and it's regrettable in a terrible tragedy.

BLITZER: So what happens to the USS Cole? Can that ship stay afloat?

KATZ: Oh, absolutely. The damage control teams went to work immediately. They dewatered a lot of spaces. She's, as I understand it, stable now. There are some major problems needless to say, still those missing men and spaces they haven't gotten to. So she can stay afloat. That's what damage control is all about and some very hard- working people on that ship who have worked so hard to do that.

BLITZER: Do you have any doubt that this was terrorist attack, admiral?

KATZ: In my personal opinion, I think it was. It was too well- orchestrated to be otherwise.

BLITZER: And if you had to speculate, guess who might have been responsible, knowing the region, knowing the players as well as you do, what would you conclude?

KATZ: I would -- it'd be very difficult for me to say, particularly since I've been out of the area for the last three years. You can always speculate, but whoever it is, I know that our government, the president said it, secretary of defense will take every precaution from now on over there, but more importantly we'll go after those who are responsible and I hope read them the letter of the law.

BLITZER: And at this point, all of those ports are basically off-limits, at least for the time being, in that part of the world?

KATZ: Well, the Fifth Fleet has gotten underway as precaution only. They're, of course, much safer at sea until we -- until our intelligence system and the central command have a chance to figure out who might be responsible and stabilize the situation and then, of course, bring the ships back.

BLITZER: Admiral Doug Katz, thank you so much for joining us for our special report -- Joie.

CHEN: Wolf, that is our special report to this point. More from Christiane Amanpour's interview with Ehud Barak one hour from now in another special report. I'm Joie Chen at CNN Center in Atlanta.

BLITZER: And I'm Wolf Blitzer in Washington. Coverage of the crisis in the Middle East and the attack on the USS Cole continues next with "Larry King Live." And stay with CNN for late-breaking developments.

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

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