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CNN LATE EDITION WITH WOLF BLITZER

Interview With Zalmay Khalilzad; Interview With Howard Dean

Aired March 12, 2006 - 11:00   ET

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


WOLF BLITZER, HOST: This is "Late Edition," the last word in Sunday talk.
(BEGIN VIDEO CLIP)

DONALD RUMSFELD, U.S. SECRETARY OF DEFENSE: The plan is to prevent a civil war.

(END VIDEO CLIP)

BLITZER: Sectarian violence grows alongside Iraq's insurgency. Can the country survive the double threat?

We'll ask the U.S. ambassador to Iraq, Zalmay Khalilzad.

Plus, insight on Iraq, the war on terror and more from two former vice presidential candidates, Republican Jack Kemp and Democrat John Edwards.

And Democratic National Committee Chairman Howard Dead outlines his party's plan for winning back the majority in Congress.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm concerned about a broader message this issue could send to our friends and allies around the world.

(END VIDEO CLIP)

BLITZER: A political firestorm kills a Dubai company's deal to manage U.S. ports. How will it impact Arab allies in the war on terror?

We'll talk to the two top members of the Senate Armed Services Committee, Republican Chairman John Warner and Democrat Carl Levin.

Highlights of my exclusive firsthand look at the company and the ports at the center of the storm.

And a unique visit to Dubai, the city of gold -- by air, land, and sea.

ANNOUNCER: Live from CNN in Washington, this is "Late Edition" with Wolf Blitzer.

BLITZER: It's 11:00 a.m. in Washington, 8:00 a.m. in Los Angeles, 7:00 p.m. in Baghdad, 8:00 p.m. in Dubai.

Wherever you're watching from around the world, thanks very much for joining us for "Late Edition."

We'll get to my exclusive interview with the United States ambassador to Iraq, Zalmay Khalilzad, in just a moment.

First, though, let's get a quick check of what's in the news right now.

(NEWS BREAK)

BLITZER: Thanks very much, Fred.

Let's go to Iraq right now. As if the insurgency isn't a big enough challenge for U.S. forces and the country's struggling government, there's also now the problem of escalating sectarian violence among Shiite and Sunni Muslims.

Joining us now live from Baghdad is the United States ambassador to Iraq, Zalmay Khalilzad.

Mr. Ambassador, thanks very much for joining us. I know you've just emerged -- only within the past several moments -- from emergency meetings with top Iraqi leaders.

What, if anything, did you accomplish?

ZALMAY KHALILZAD, U.S. AMBASSADOR TO IRAQ: Well, first of all, it's good to be with you.

The meeting was a very positive step. It was a good day today in Baghdad. The leaders decided to bring forward the opening of the assembly -- now, rather than on the 19th, the assembly would be opened on the 16th.

And, two, there was an agreement among the leaders to meet continuously as of the day after tomorrow, 10:00 o'clock, until there is an agreement on the government -- including the prime minister and the process for decision-making by the new government.

And lastly, which was very important, there was agreement by all the leaders of the factions that there is no red line in terms of the inclusion of any faction in the formation of the government.

And I think this was important. The leaders rose to the occasion. This indicates they are taking the problems of the country seriously.

BLITZER: I know that one of the major issues is who's going to be the prime minister of Iraq under this new government -- and Ibrahim al-Jaafari, the interim prime minister, I take it, did not participate in these high-level discussions you just completed?

What does that mean, if anything, about his future as the prime minister of Iraq? KHALILZAD: Well, the reason he did not participate is that he's not the leader of the faction that he's a part of. Abdel Aziz Hakim is the leader of that faction, the United Iraqi Alliance, and he was there.

And also there was principal deputy speaker Mr. Shahristani, representing the alliance. There were two representatives from each of the major groups, and those two represented the alliance.

With regard to Mr. Jaafari's future, I think there was a good discussion that there needs to be a broadly acceptable nominee for the prime minister.

And the Shia alliance indicated flexibility -- there has to be a broad agreement, someone who can bring the country together, someone who's effective in leading Iraq.

But obviously the issue was not decided on as to who. This will be, of course, one of the key issues that, in the coming days, the Iraqi political leaders will have to decide on.

BLITZER: Well, you're leaving open the possibility that, even though in a narrow vote he emerged as the candidate of the Shiite faction, Ibrahim al-Jaafari, he still might not be the next prime minister.

I want you to listen to what Adnan Pachachi, one of the Sunni leaders with whom you met today -- I want you to listen to what he told me on "Late Edition" last Sunday.

He said this, and I'll read it to you: "This is not a personal matter, but we feel that in order to have a government of national unity, the prime minister has to be acceptable to all the components of this government and he should not be a controversial figure, which unfortunately Dr. Jaafari is."

Bottom line: Is it possible that the Shiite leadership, the Shiite political faction, will now have a change of heart and nominate someone else like Adel Abdel-Mehdi to be the next prime minister?

KHALILZAD: Everyone agrees that the prime minister has to be someone that can bring the country together, someone who is competent in terms of dealing with the problems of Iraq -- and that the person has to be from the largest bloc, and that is the UIA, the Shia alliance.

And as I said before, this is an issue that will have to come up in the coming days and be agreed to. There was a lot of flexibility on all sides. I think I would leave it at that at the present time.

BLITZER: All right. You're leaving it a little bit ambiguous, which clearly is what the parties want.

Bottom line: How much longer do you think it will take for a new government to be formed? KHALILZAD: It's very important to remember, Wolf, that this decision, the formation of a government of national unity, is an extremely important decision that the Iraqis face. If they make the right decision, forming a national unity government, competent ministers, a good process for decision-making with a good program governing from the center, it will put Iraq on the right trajectory. It will be a major step forward for Iraq.

So given the toughness of the situation, of the decisions that they have to make, it's still going to take a bit of time. But I have urged them -- and they understand that they need to move as quickly as possible. But I do not want to give you a date or how many days it will take.

We'll work with them to do it as quickly as possible. They understand that it's an urgent situation.

BLITZER: Let me read to you from what Lieutenant General Michael Maples, the director of the U.S. Pentagon's Defense Intelligence Agency, testified before Congress at the end of February. He said this, he said:

"Sunni Arab elites have little cause to support the rebuilding of Iraq. Many Sunni leaders view the current political solutions as predicated on a perpetual minority status in a Shia-Kurd dominated government."

Are you convinced, Mr. Ambassador -- and no one is closer to the negotiations right now than you are -- that Iraqi Sunnis, who did dominate the political structure under Saddam Hussein, will participate fully in this new government of national unity, as you call it?

KHALILZAD: Well, absolutely. It's very important that they participate, and I believe they will.

The Sunnis did not participate in the first elections that took place in Iraq over a year ago. They did participate in the last election on December 15th. That was a major positive development.

Now the next step is to have them -- along with the Shias and Kurds -- participate in a national unity government and to, as I said, have a program for governing from the center.

The terrorists would like to provoke a sectarian war. The appropriate answer to that is a government of national unity with a good program, good ministers, and a good process for decision-making.

That's what's needed and that's what we're working for.

BLITZER: Let me read to you, Mr. Ambassador, from an article in today's New York Times entitled the juggler -- that's a reference to you, as the headline calls it.

"The Shiite religious parties who dominate Iraq's government have now grown tired of hearing the ambassador tell them that they must share power with Sunni Arab leaders, whom they view as terrorists. Some Shiite leaders even say they suspect the ambassador of betraying them in his recent criticisms of Shiite militia tactics. They interpreted those comments as a shift from democratic idealism to a cold concern with the balance of power."

I wonder if you'd want to react those words that were reported in today's New York Times.

KHALILZAD: Well, it is true that I have been speaking repeatedly privately and publicly with them with regard to the need for a government of national unity and with regard to a program and with regard to the ministers being competent and broadly accepted. I hope they have not grown tired of me, but they agree with me when I talk with them that they need that.

Sometimes, of course, they'd rather I not say some of those things that I say publicly but speak to them privately. But I have told them that I'm going to be frank with them, both publicly and privately, in terms of what I see the situation to be.

We are very much committed to defeating terrorists here. We are very much committed to building a democratic state in Iraq that's successful. And for all communities, including the Shias, to have the appropriate place, their rights respected and protected.

And I believe they understand where I'm coming from and what I am pushing for, and I understand them. I think we'll work together and achieve a government of national unity. That's what's necessary. And we're on the right track.

BLITZER: As you know, Mr. Ambassador, a lot of American analysts are worried that the big winner in Iraq might be its neighbor Iran. I know you've been authorized to hold talks with Iranian diplomats. Have you held such talks, whether in Iraq or outside of Iraq?

KHALILZAD: No. We have not had any meetings with them yet. There's still discussions about modalities. The offer is still on the table. With regard to the Iranian policy, we have concerns with regard to their support for some of the militias and some of the extremist groups.

We want good relations between Iraq and all its neighbors, and at the same time we do not want any of its neighbors to dominate Iraq. And that's our policy with regard to Iran as well. We have not sought to impose our differences with Iran on Iraq, but at the same time we are concerned about aspects of Iranian policy which supports extremists and interferes in the development of a successful democratic Iraq.

BLITZER: Do you know, Mr. Ambassador, who killed the American peace activist, the Quaker activist, Tom Fox?

KHALILZAD: Well, the terrorists did. And the Iraqis found his body in western Baghdad. And I'm very sorry about that. Tom was a good man. He came here to work with Iraqis for peace and reconciliation. The terrorists want nothing good, and they go after innocent people. They cannot confront our forces or Iraqi forces directly. So they want to make life difficult by provoking sectarian war and carrying the murder of people like Mr. Fox, Tom Fox.

BLITZER: Mr. Ambassador, thanks very much for joining us on this very, very hectic, busy day for you. We appreciate it. Good luck to you. Be careful over there. Stay safe. And we'll have you back here on CNN. The ambassador of the United States to Iraq, Zalmay Khalilzad joining us from Baghdad.

Just ahead, debating a troops timetable. Can the U.S. afford to set a deadline for withdrawal from Iraq? We'll get the views of two former U.S. Vice presidential candidates, Jack Kemp and John Edwards. They're standing by live.

Then, the Democratic party chairman Howard Dean. I'll ask him how his party claims to reclaim the balance of power on Capitol Hill in this year's midterm elections in the United States.

And later, my exclusive view of Dubai and the company at the center of the ports controversy. "Late Edition" continues right after this.

(COMMERCIAL BREAK)

BLITZER: Our web question of the week asks this: Did Congress overreact to the United Arab Emirates ports deal? You can cast your vote. Go to cnn.com/lateedition. We'll have the results at the end of this program.

Straight ahead, defiant words from Iran. We'll talk with former vice presidential candidates Jack Kemp and John Edwards about how the U.S. should respond. You're watching "Late Edition, " the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: Joining us now to talk about where the U.S. mission in Iraq is headed, as well as the week's other key developments, are two special guests. In Orlando, Florida the former Republican vice presidential candidate and U.S. congressman, Secretary Jack Kemp. And in his home state of North Carolina, the former Democratic vice presidential candidate and U.S. Senator John Edwards. Gentlemen, good to have both of you with us. And Secretary Kemp, I'll start with you. You just heard the ambassador say this has been a good day in Iraq as far as trying to bring together a government of national unity. But God knows there have been a lot of bad days. Is the country, in your opinion, heading toward civil war or genuine democracy?

JACK KEMP, FORMER VICE PRESIDENTIAL NOMINEE: Well, probably some form of democratic development if we do the right thing. The ambassador is doing a fabulous job. He's a wonderful human being, and he's exerting all his diplomatic skills in trying to get a government of national unity. We have to be of help. I think one or two ways we could be of help is number one, announce unambiguously that the United States is not there to keep bases in Iraq. And number two, I think by the year 2009 or the end of 2008, we've got to say to the Arab world and to Iraqis, we are going to be out. We are going to set a deadline, and then seal off the borders of Syria and Iran, make the job easier of keeping insurgents out.

BLITZER: So basically, let me just be precise. You're saying there should be a timetable for a U.S. withdrawal?

KEMP: A date certain. But more importantly, we have to make an unambiguous announcement that we're not there for bases or oil. We're going to be not keeping any bases in the Iraqi nation.

BLITZER: Senator Edwards, are you closer to your fellow Democrat John Murtha, Democratic senator from Pennsylvania, who wants a phased withdrawal over the, shall we say, the next six months, a redeployment of troops outside of Iraq? Or closer to Joe Lieberman, who himself was a former Democratic vice presidential candidate who basically takes a much more hard-line stance?

JOHN EDWARDS, FORMER VICE PRESIDENTIAL NOMINEE: Let me speak for myself. What I believe, and I just listened to the ambassador, what I believe is that it's absolutely critical that we reduce the size of the American presence there.

That's a judgment that has to be made. My judgment is the number of troops that we have in Iraq now, the footprint, so to speak, that we have there, is doing more harm than good, for some of the reasons that Jack just talked about.

You know, we've got to make it clear we're going to let the Iraqis govern themselves, we're going to let them provide their own security and that we're not there for oil.

In order to accomplish that, we need a substantial reduction in our troop presence. I have, for months, said we ought to take it down at least by 40,000 troops.

So I think that's the first and most important step to sending the right signal to both Iraq and to the Arab world.

And if I can add one last thing, you know, the one thing that's clear about this is, and I think the ambassador believes this, too, is ultimately we can't do this for the Iraqis.

They have to do it for themselves. They have to decide whether they're going to have a representative government, whether they're going to do the work to make sure that Iraq can be secured.

This is going to ultimately have to be their job, not our job.

BLITZER: There are some, though, who maintain, though, Senator Edwards, that the only thing standing in the way of a civil war is that U.S. military presence. If the U.S. were to significantly reduce that presence, then who knows what might happen.

Are you concerned about the ramifications of that kind of troop withdrawal that you're talking about?

EDWARDS: I think it's the right thing to do under the circumstances. I think we actually have a low-level civil war going on right now. The question is whether it's going to transition into a full-blown civil war.

Well, the key to that is not us. The key to that is the Iraqis, whether they're going to have a representative government, whether they're going to step to the plate and help provide security for their own country.

I'm not saying we pull everybody out immediately, but we have to have a serious and substantial reduction so that this transition is occurring. They've got to do this for themselves, ultimately.

BLITZER: Secretary Kemp, let's talk about the Dubai ports deal collapse. How much damage, in your opinion -- and you've been a student of this area for some time -- how much damage, if any, has there been to the U.S. strategic interests in that part of the world given the close relationship between the UAE and the U.S.?

KEMP: Well, first of all, let me congratulate you, Wolf, for going to Dubai and interviewing Sheikha Lubna. She did an outstanding job of speaking for the United Arab Emirates government.

And they are an ally. And this is a betrayal of a friend. We need friends in the Middle East. It's tough for Arab nations to be friendly to the United States.

And after 9/11, they were forced to make a choice. They made a choice. And I was pleased to hear Sheikh Maktoum suggest that they want continued good relations with the United States.

Just think, there are naval ships in Dubai ports right now, managed, controlled and securitized by Dubai Ports World.

Our Air Force is using air bases in UAE, serviced, managed and securitized by Dubai Ports World.

So they've been an ally. They will continue to be an ally. But this, in my opinion, is a betrayal of a friend and is a sad day for the United States, acting so small, to not even let the president have a full 45 days to give the American people the facts.

BLITZER: And I just want to be precise on this point because you're very outspoken on this issue, Secretary Kemp. You're speaking, not as someone who has been hired by the UAE or one of Dubai Ports World.

KEMP: No.

BLITZER: You have no financial stakes in this.

KEMP: Absolutely not. I've done business in the Middle East, both in Israel and in the UAE, or in Egypt, at least, in the past. But I have no current contract. If I were allowed to do business again, I'd be honored to do so. These are friends. This is a globalization. Tom Friedman is right. The world is becoming flatter. And this is an area of the world right below Pakistan, right below Iran, right near Saudi Arabia and Iraq which has decided to be an ally of the puts United States.

So I think -- I use the word betrayal. I think it is a betrayal of a good friend and good ally. And I'm glad to see they're going to continue to be good friends and allies of the United States in the future.

BLITZER: Senator Edwards, are you on the same page as Jack Kemp?

EDWARDS: No. No, Jack and I have become very good friends and I have enormous affection for him and professional respect for him because we've done all this work on Russia which I assume we're going to talk about in just a minute.

On this subject, we don't agree. I think it's very important to recognize that our relationship with the UAE is a very positive relationship.

What they've done in the war on terror has been enormously helpful to us. I don't think we should discriminate against anybody.

I just think there's a threshold question for America and that question is who is going to provide for the security and for the operation of our ports. And my own view is that both the security and the operation of ports here in this country should be provided by American companies.

BLITZER: Senator Edwards, let's talk about Russia because you and Jack Kemp have been involved in this committee from the Council on Foreign Relations, taking a look at the U.S.-Russian relationship.

Are you confident, Senator Edwards, that Vladimir Putin, the president of Russia, is democratic -- small "D" -- and is in charge of a country that's moving in the right direction as opposed to the wrong direction?

EDWARDS: No, I'm not at all confident that Vladimir Putin is a democrat -- small "D."

My view is that -- and we talk about this in the report -- two things have happened under Putin, one positive and one negative.

The positive is the economy has changed dramatically in a good direction. They're much more stable financially. They've had GDP growth, by the end of this year, of about 65 percent during the time Putin's been in power, contrasted with about a 40 percent contraction during the time that Yeltsin was in power.

So, on the economic side, they've done some very good things, propped up, of course, in part by oil and natural gas prices. But that's not all of it. They've done more than that. But, on the democratic side, which way is Russia moving? They clearly are moving in the wrong direction, across the waterfront, everything from the suppression of opposition political parties to taking over the mass media to going after the oligarchs, getting rid of the direct election of governors.

So, basically, they've got divergent tracks right now. Economically, they're doing some good under Putin. On the democratic side, no one in Russia -- we were there a little while ago -- no one even argues that they're a democracy. And, for America, if I can step back for just a second, for America this is important because it has to do with whether we have a real partnership with Russia or whether we have just selected items on which we can work with them on, for example, Iran, which is enormously important.

But the issue for America over the long term, Wolf, is whether we're going to live in a world where the great powers work together on the issues that face the world, everything from terrorism to proliferation to AIDS or whether we're only going to be able to work on selected things.

And it's a huge issue. That's why our relationship with Russia matters.

BLITZER: Secretary Kemp, as you know, the G8 is supposed to have their summit in St. Petersburg, Russia this coming summer in July.

In your report, you speak about an informal probation of Russia's involvement in the G-8, the world's largest industrialized democracies. Should this G-8 summit go forward in Russia this summer?

KEMP: I believe it should. And I agree with John that the G-8 summit -- this is the 31st anniversary of these summits that began at Rambouillet, France with Giscard d'Estaing and Gerald Ford in 1975.

It was G-6, then G-7 and now G-8. So John is right. We need Russia's cooperation on everything from Iran to energy security. And I believe that that partnership, or selective partnership, is extremely important.

And the G-8 is a good time to make a broader agenda at the G-8 in St. Petersburg, where it's not just energy security, education and HIV/AIDS. It's also, stop bullying your neighbors, lift the pressure up from Latvia, Georgia and Ukraine and make sure that they cooperate on Iran.

So, as far as I'm concerned, we really need more of an economic agenda -- get them into the WTO, begin the negotiations for a free trade agreement because, then, my study of history has convinced me, Wolf, since the end of World War II, it's been economic liberalization leading to political liberalization.

So whether or not he's a Jeffersonian Democrat or not right now is, I think, beside the point. We need their cooperation and we've got to bring them into this flattening world a la Tom Friedman. BLITZER: Two former U.S. vice presidential nominees joining us: Jack Kemp and John Edwards. To both of you, thanks very much for joining us.

KEMP: Thank you, Wolf.

EDWARDS; Thanks, Wolf.

BLITZER: And coming up: while polls show Republicans vulnerable leading up to November's congressional elections, do Democrats have a unified message to win over voters?

We'll speak with the party chairman, Howard Dean, the chairman of the DNC. He's standing by to join us live.

But up next, a quick check of what's in the news right now, including the latest testimony in the trial of Saddam Hussein. Stay with "Late Edition."

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Welcome back to "Late Edition." I'm Wolf Blitzer in Washington.

From the ports deal collapse to Iraq to the Hurricane Katrina response, lots of bad news for Republicans -- appearing to give the Democrats their best chance in years for regaining a majority in the U.S. Congress.

But the party is finding that's easier said than done.

Joining us here in Washington is the Democratic National Committee chairman, Howard Dean.

Governor Dean, welcome to "Late Edition."

HOWARD DEAN, DNC CHAIRMAN: Thanks for having me on, Wolf.

BLITZER: You just heard the ambassador, Zalmay Khalilzad, say that this has been a good day in trying to form a new government of national unity in Iraq. A recent Washington Post/ABC News poll asked if Democrats in Congress have a clear plan for Iraq.

Seventy percent said they do not have a clear plan. Only 24 percent said they have a plan.

The Democrats seem to be all over the place.

DEAN: Well, certainly wouldn't say we're all over the place. The resolution that was passed by the Senate was originally a Democratic resolution, which said: This will be a year of transition, that we will -- in fact, there was a letter to the president from Senator Levin, who I think will be on this show a little bit later, Senator Collins, and Senator Reed, Jack Reed, saying that it's time for the Iraqis to get their house in order and we have to make clear that we're not going to be there forever and we need to make this the transition year.

So I do think that we do have a plan. We are much more united than we appear in the newspapers.

And I think -- as often happens -- small differences of opinion get blown up as newspaper articles.

BLITZER: Is this going to be the big issue -- Iraq -- this upcoming mid-term election year?

DEAN: I think big issues will be security, the desire for a change, and honesty and openness in government. I think we win on all three of those.

I think the people of this country have lost confidence in the president's ability to defend us, principally because he hasn't been very truthful with the American people.

BLITZER: And specifically on which he hasn't been truthful, are you saying he lied to the American people?

DEAN: I'm saying that he misled us not just on Iraq and not just on Katrina, but he misled us on issues -- for example, how much the drug benefit for Medicare was going to cost and then what a mess that was going to be; misled us on the fact that he said he was going to fire anyone who leaked information, and Karl Rove still has a security clearance today.

You know, this is not an administration that's been terribly truthful to the American people -- and I think the American people realize that now.

So what we offer is real reform. You can see the Republicans in the Senate have now backed off any kind of lobbying reform. Well, we still think that you shouldn't take private jet flights, you shouldn't take free lunches -- and we ought to change the conference committee routine so you can't stick things, like the Republicans stuck in before Christmas, $20 billion giveaways to HMOs and oil companies.

Those are fundamental ethics reforms that ought to be made. I don't care if the Abramoff scandals have faded into the background because of all this other business; we need to make those changes.

We need real openness and honesty in government again.

BLITZER: So what I hear you saying is that you really feel the Democrats could take over control -- at least of the House, but maybe the Senate this year -- is that what you're saying?

DEAN: Yes. If we are relentless about the same message in 435 districts. I make no bones about this. I look at Newt Gingrich as the model for how to do this.

BLITZER: What he did in '94. DEAN: Yes. I certainly don't agree with much of his political views, but I certainly think his strategy was excellent.

Give a consistent message about what Democrats want: honesty and openness in government, American jobs that will stay in America using energy independence as a new industry to create those jobs, a strong national defense based on telling the truth to the American people and our soldiers. Those are the kinds of things where we can really make difference -- health care...

BLITZER: It sounds, Governor...

DEAN: ... a health care system that works for everybody. Those things we've all agreed on -- governors, senators, congressmen, mayors have all agreed on those things.

BLITZER: It sounds like you want to have a contract for America the way that Newt Gingrich had his contract for America?

DEAN: Well, if we do, we certainly won't call it that. But there are some fundamental things...

BLITZER: Well, what are you guys thinking of calling it?

DEAN: Who knows? I mean, we haven't got to an agreement on that. I'm actually meeting with the leadership again this week to have further discussions.

But the agenda is very clear. Again: honesty and openness, security, jobs, health care, education, and retirement security.

BLITZER: Here's one of the biggest problems you have -- is money. And money in politics, as you well know -- as in a lot of other areas -- talks.

According to these Federal Election Commission statistics, the Republicans raised $103 million over the past year. Democrats have raised $50 million. That's a two to one advantage that they have.

DEAN: It's also not exactly accurate. If you throw in what the DCCC and the DSCC, the Senatorial Committee have raised...

BLITZER: Those are the Democratic House and Senate committees.

DEAN: ...and match us all together, it's not anything close to two to one. The DNC has had a record year. We raised 20 percent more money when we couldn't take soft money than has ever been raised in an off year before. We have now 200 organizers in every state in the country, which we've had now for several months, three years before the next presidential election. These folks for the first time are going to be able to help out in congressional elections.

BLITZER: But the Republicans still have a lot more money.

DEAN: Yeah, but, you know, if money won this election we'd have a Democrat in the White House right now. It's infrastructure that you have to have. We need to fight in every state and stop trying to think we're going to be a national party if we have an election in 18 states. We need to be in every state.

BLITZER: Speaking of infrastructure, and there's a lot that goes into winning elections, there was a little bit of a stir this week. Harold Ickes, a top adviser to Hillary Clinton and to Bill Clinton, he was a former White House deputy chief of staff under Bill Clinton, let me read to you what The Washington Post wrote on Wednesday: "Ickes and others involved in the effort acknowledge that their activities are in part a vote of no confidence that the DNC under Chairman Howard Dean is ready to compete with Republicans on the technological front." What he's trying to do, and our Mary Snow reported it this week as well, is he's trying to create some new computer statistics, some new technology to help someone like Hillary or someone else move down the road in 2008 to get the kind of advantage they need to recapture the White House.

DEAN: We looked at what they're doing. It's a fine thing for outside -- for in terms of outside organizations. But the Democratic National Committee has to be the one that develops the voter file to be used by Democratic candidates. That's the law. We now have, based on what my predecessor did in terms of gathering information, we now have a technological platform that will do that.

BLITZER: But he says the database isn't good enough, and that's why he wants to create another one. We're talking about Harold Ickes.

DEAN: The database is very, very good. I brought my own technological people from my campaign to do it. And one thing, you may or may not have liked what I did in the campaign, but nobody argues with the technical skills of my folks.

And we brought them in. They're creating what needs to be done, and we'll have that ready, not just for senators and Congressmen. It has to be ready for mayors, for city councilors, for state representatives. You can't win the presidency unless you can start doing what we're now doing in places like Mississippi and Alabama and Missouri and Utah. We're now starting to win races on the ground.

BLITZER: So is Harold Ickes wrong?

DEAN: I would disagree with Harold. He's a friend of mine, but I wouldn't agree with him on this one.

BLITZER: So they're just basically wasting money. They could use the DNC for their purposes.

DEAN: I wouldn't say he was wasting money. He may want to do this for his own purpose, but it won't basically help candidates. They have to rely on hard money. It can't help federal candidates.

BLITZER: Is Hillary Clinton too liberal to win the presidency?

DEAN: You know, I don't discuss 2008 at all because I have to be the referee in this one. Hillary Clinton is running for the United States Senate. She's done a terrific job in New York. And I think she'll sit down and decide what her options are afterwards, but right now she's very focused on New York City and we don't know for sure...

BLITZER: New York state.

DEAN: Excuse me. Well, New York state and New York City. And we have no idea if she's going to run or not. And I know everyone in Washington thinks, oh, Hillary's going to run, Hillary's going to run. I know Hillary Clinton very well. She's a very smart person. She'll figure out what's best for her and what's best for New York and make sure that New Yorkers are well taken care of no matter what she does in her future.

BLITZER: I'll just put it up on the screen. Our latest CNN/USA Today/Gallup poll among registered Democrats has her as the choice for 2008 39 percent, John Kerry at 15, Al Gore at 13, John Edwards at 12, Mark Warner and Joe Biden at 5. At least at this early stage, that could simply be name recognition.

DEAN: We all know that whatever happens today may have absolutely no relevance whatsoever in what's going to happen in November of 2008. We have to focus on 2006, Wolf. We really do. I believe that we can take back the House and the Senate.

You know, America really wants a change, and the bottom line in this next election, do you want more of the same or do you want a change? And the Democrats can represent the things that people really want changed: honesty and openness in government, real security changes, a health care system that works for everybody. Those are fundamental things that people want to see done differently.

BLITZER: I've spoken to a lot of Democrats, and you speak to a lot more than I do. They are really sensing that they could win in this November, given all the problems the Republicans have had, the president, the White House, Katrina, Iraq, Scooter Libby, the vice president's former chief of staff, the vice president shooting his friend in the face in that hunting accident, the warrantless wiretaps, the Dubai ports deal.

So much negative stuff for the Republicans. If the Democrats don't take advantage of this, as one person said to me, there's going to be all hell to pay.

DEAN: Well, first of all, I'd prefer not to look at it as taking advantage of Republican weaknesses. After all, what's really at stake here is the future of the country. This country's become much weaker under President Bush, not just security and the outsourcing of our ports operations and all that, but the deficits. We're about to vote next week on a new debt ceiling. I think the Democrats are going to vote no. And thank God. Somebody has to be fiscally responsible in this country.

And the Republicans have lost the mantle of fiscal responsibility. Democrats are the only party in the last 40 years who have run a surplus under Bill Clinton. We've got to return us to the basics, return this country to the basics, where we're focused. You know, the president talks about homeland security. Well, homeland security means hometown security. And the Republicans have forgotten about ordinary people in the streets of America.

BLITZER: Let me get your reaction to this proposal. As you know, for years the Iowa caucus was first going forward with the presidential nominee, followed by the first primary in New Hampshire. There's now a recommendation out there that after the Iowa caucus there be two other caucuses in other states that may be more diverse than Iowa or New Hampshire before there's the first primary in New Hampshire. Is this a good idea?

DEAN: Well, it's certainly a good idea to have more geographic diversity and more ethnic diversity in the Democratic nominating process. After all, we are the most diverse party, certainly in this country, and probably the most diverse party on the face of the earth in terms of the different kinds of people who keep us in power. And who we need to put us back in power.

So I'm very supportive of this notion that diversity, both geographic and ethnic, in the prewindow.

We are committed to leaving Iowa first as the first caucus in the country and New Hampshire as the first primary in the country.

BLITZER: But do you support adding two caucuses between those two events?

DEAN: Well, I'm not going to -- you know, there's some wriggle room. The only commitment I'm going to make to you right now is there will be earlier events, and there will be some events, or at least one event in between Iowa and New Hampshire, and there will be before the window somewhere between four and six events, including Iowa and New Hampshire. That's what the commission recommended. I haven't had a chance to sit down with the rules committee. But we will have diversity in the prewindow.

BLITZER: Howard Dean is the chairman of the Democratic Party. Thanks for joining us.

DEAN: Thanks, Wolf.

BLITZER: And coming up next, in case you missed it, "Late Edition's" highlights from the other Sunday morning talk shows here in the United States. But first this.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Gordon Parks. What's his story? The legendary photographer, poet and filmmaker died Tuesday at his home in New York. Parks, the son of a Kansas dirt farmer, is credited for opening doors for African Americans in the arts. Parks began his career as the first black photographer in the government Office of War Information, and later became the first black photographer at both Vogue and Life magazines, where he worked for 20 years.

In 1969 he became Hollywood's first black filmmaker to direct a major studio movie, "The Learning Tree," and went on to direct "Shaft," featuring the first black action hero onscreen. Parks was 93.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: And now in case you missed it, let's check some of the highlights from the other Sunday morning talk shows here in the United States.

On ABC's "This Week," Senate Majority Leader Bill Frist blasted plans by Democratic Senator Russ Feingold to introduce a resolution to censure President Bush for warrantless wiretapping.

(BEGIN VIDEO CLIP)

U.S. SENATOR BILL FRIST (R-TN): The signal that it sends, that there is in any way a lack of support for our commander in chief -- who is leading us with a bold vision in a way that we know is making our homeland safer -- is wrong.

(END VIDEO CLIP)

BLITZER: On NBC's "Meet the Press," Democratic Senator Joe Biden said time is running out for the U.S. military presence in Iraq to be effective.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOSEPH BIDEN (D-DE): If they don't have a constitution in place by this summer that is viewed as a uniting document where everybody signs onto it, it's game over.

Now, how you pull them out, where you pull them to, whether you have them over the rise, and whether you have a containment policy that secures the region in a different way -- that's a whole different question.

But status quo, the way it is now, is over.

(END VIDEO CLIP)

BLITZER: On CBS's "Face the Nation," Democratic Senator Barack Obama went one step further.

(BEGIN VIDEO CLIP)

U.S. SENATOR BARACK OBAMA (D-IL): This year should be the year in which we start withdrawing our troops. I think the footprint that we have on the ground is actually exacerbating some of the tensions.

My view -- and I always thought that this enterprise was poorly thought out -- but I also felt that, once we were there, we should try to make the best of a bad situation.

(END VIDEO CLIP) BLITZER: On Fox News Sunday, the Republican chairman of the House Armed Services Committee, Duncan Hunter, defended the widespread opposition in Congress to the foreign government ownership of U.S. ports.

(BEGIN VIDEO CLIP)

U.S. REPRESENTATIVE DUNCAN HUNTER (R-CA): You couldn't open a hamburger stand in Dubai, because Americans can't own anything.

All we're asking to foreclose to foreign ownership is a tiny percentage of that vast array of economic opportunities. Let's let people buy apartments in Chicago or farmland in Iowa, but they can't own and operate port operations.

(END VIDEO CLIP)

BLITZER: Highlights from the other Sunday morning talk shows here on "Late Edition," the last word in Sunday talk.

Don't forget our Web question of the week. You can vote right now. There it is: Did Congress overreact to the United Arab Emirates ports deal?

We'll have the results in our next hour. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Just ahead, the Senate Intelligence Committee member, Saxby Chambliss -- he's in Dubai right now. We're going to talk about where things stand after the ports deal collapsed.

And the two top members of the Senate Armed Services Committee, John Warner and Carl Levin -- they're standing by live to talk about the potential impact in the war on terror, Iraq, Dubai, much more.

All "Late Edition" -- coming up at the top of the hour.

(COMMERCIAL BREAK)

BLITZER: This is "Late Edition," the last work in Sunday talk.

(BEGIN VIDEO CLIP)

BUSH: I'm committed to strengthening our relationship with the UAE and explaining why it's important to Congress and the American people.

(END VIDEO CLIP)

BLITZER: The plug is pulled on the Dubai ports deal. Is U.S. standing in the Arab world weakened? We'll ask the top two senators on the Armed Services Committee, Republican Chairman John Warner and Democrat Carl Levin.

Also, a conversation with Senate Intelligence Committee member Saxby Chambliss, who's on the ground in Dubai.

(BEGIN VIDEO CLIP)

(UNKNOWN): You just (INAUDIBLE) box and send it to a representative.

(END VIDEO CLIP)

BLITZER: Plus, highlights of my exclusive behind the scenes tour of the company in the eye of the storm: DP World.

And part Las Vegas, booming desert city; part Disneyworld, fantasy entertainment; part Riyadh, packed with mosques. A look inside diverse Dubai.

ANNOUNCER: Live from CNN in Washington, this is "Late Edition" with Wolf Blitzer.

BLITZER: Welcome back. We'll speak with Senators John Warner and Carl Levin in just a moment. First, though, let's get a quick check of what's in the news right now.

(NEWSBREAK)

BLITZER: Thanks, Fred.

Let's get the latest developments that we're following in Iraq right now, a deadly attack in Baghdad's Sadr City, occurring today just as the discovery of a security breach over at Baghdad's International airport and the resumption of the trial of Saddam Hussein. Our Aneesh Raman is in Baghdad. He's joining us now, live, with the latest details. Aneesh?

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, good afternoon. As Fredricka mentioned, at least 36 people killed, over 100 wounded, after three car bombs detonated at two marketplaces in Sadr city.

That is the most highly populated Shia area of the capital. It is also home to the country's second largest Shia militia, the Mehdi militia, who are loyal followers of Shia cleric Muqtada al-Sadr.

This attack has devastating potential for the sectarian strife here, given where it took place and the casualties that we are seeing here tonight.

Meantime, another security scare, this time at the Baghdad International Airport, a major security breach, taking place on Thursday. Royal Jordanian Airlines, the main airline that flies out of Baghdad to Amman, telling CNN today that, on Thursday, explosives were found, suspected explosives, in a cigarette box near a flight as it was about to leave for Amman.

Officials out of Amman are saying that they are still testing that material. But sources with Royal Jordanian in Baghdad confirmed to CNN that they were in fact explosives. Now, the U.S. embassy prompted this inquiry because a warning message went out today prohibited travel for U.S. governmental employees on commercial flights out of Baghdad until further notice, following this security breach.

All of this, as the trial of Saddam Hussein continued today, Saddam Hussein not in court. For the first time, the five-judge panel brought in the defendants one by one.

We heard from three today, former low-level Baath party members in the village of Dujail. They were essentially given time to testify, to question the evidence that has been presented, the witness testimony as well.

Court adjourned, set to resume tomorrow, Wolf. We expect to hear Saddam himself testify at some point early this week. Wolf?

BLITZER: What about the latest efforts -- we spoke with the U.S. ambassador to Iraq, Zalmay Khalilzad -- the latest efforts to try to get some sort of new government, a national unity government.

I heard him say, and each of our viewers who were listening on the first hour of "Late Edition" that they are still open to the possibility that Ibrahim Al-Jaafari, the interim prime minister might not, when all is said and done, be the next prime minister.

RAMAN: Well, in that exclusive interview with you, Zalmay Khalilzad, putting some diplomatic words on a tense situation.

Neither side seems willing to budge at the moment. The Kurdish, Sunni and secular blocks have said they don't want Ibrahim Al-Jaafari as prime minister.

The Shia, it seems now, are perhaps fudging a bit, saying they're open to other possibilities. But Jaafari himself, in earlier press statements, has shown no indication that he wants to step down.

In fact, he's said he thinks this pressure is personal and not meant for the unity government that everyone is seeking. Wolf?

BLITZER: Aneesh, thanks very much. Aneesh Raman, on the scene for us in Baghdad.

And joining us now to talk about the latest developments in Iraq, the possibility of civil war breaking out, as well as the collapse of the Dubai Ports deal and much more, two guests, the Republican chairman of the Senate Armed Services Committee, John Warner of Virginia and the panel's top Democrat, Carl Levin of Michigan.

Senators, thanks very much for joining us.

Are you hopeful, right now, based on what you heard from the ambassador here on "Late Edition" in the past hour, Senator Warner, that they can, the Iraqis, despite all this sectarian violence, put together a government of unity, including Shia, Sunni and Kurd?

SEN. JOHN WARNER (R), VIRGINIA: Bottom line, if that's not achieved, then you really have the risk of civil war breaking out.

So, I was encouraged by Ambassador Khalilzad's remarks. We have a high regard for him in the Congress. He's done an extraordinary job.

But remember, that's a sovereign nation. We liberated that country. It's a sovereign nation. And we can only do so much before it's perceived that we're trying to dictate how that government goes about its activities.

But Khalilzad is a master at that. And, in a balanced way, he is letting them know that it's just not unlimited, indefinite support by the United States.

We're there. We're backing them. We liberated them. And if they can pull together this government, there's a high probability they can achieve the fundamental goals of a democracy that the people of Iraq desire.

BLITZER: You wrote a letter, Senator Levin, this week, a letter to the president, together with some Republican and Democratic Senate colleagues.

Among other things, you wrote this.

You wrote: "The U.S. needs to make it clear to Iraqi leaders that a prompt political settlement is not only essential to them, it is a condition for our continued presence."

You're getting pretty close to Democratic Congressman John Murtha of Pennsylvania, who want a phased withdrawal over, shall we say, the next six months, a redeployment outside of Iraq.

SEN. CARL LEVIN (D), MICHIGAN: The letter that I wrote with Senator Collins and Senator Jack Reed was very clear, urging the president that, unless he makes it clear to the Iraqis that we're not there for an unlimited period of time, we're not there as long as they need us -- that's been the message of the administration so far -- we've got to change the course in Iraq with any possible means at our disposal.

And the one leverage point we've got is to let them know that, unless they reach a prompt, political settlement, which is the only way that the insurgency can be defeated and civil war can be avoided -- unless they have a prompt, political settlement that we, then, are going to have to withdraw our troops because there is no purpose then in our staying.

BLITZER: But the counter-argument is that this encourages the insurgents, the terrorists to just simply hold their fire, wait for the U.S. to pull out and then take over Iraq.

LEVIN: I think if you set a specific timetable, you could argue that. But that's not what we're doing. We're telling them, I hope, something we've not told them before, which is they've got to reach a prompt political settlement. There is no other way of defeating the insurgency. There's no other way of avoiding civil war.

BLITZER: Is Senator Levin on the right track, Senator Warner?

WARNER: Let me say that all of us want this government to come into place. But, as I opened up, it should be left to the man on the scene, not the Congress, to use that rhetoric which he feels can move forward the reconciliation of differences and, at the same time, not give any encouragement, that we just saw in your film clip, of Sadr City up in flames again.

Sadr is the most dangerous, perhaps, of all of them within the Shiite. And his militia, private militia, is a very significant force that could make a factor if they were unleashed into a civil war.

LEVIN: Wolf, the insurgents, the terrorists don't need any encouragement. They are on the road to try to promote a civil war.

The only way a civil war can be avoided -- and maybe it's unavoidable, but the only hope is if the leadership in Iraq quit feuding while Baghdad is burning.

And they've got to come to a political settlement or else, it seems to me, this thing is doomed. And the only leverage we've got to pressure them to a political settlement is to put our presence on the line.

The leaders want our continuing presence. They have an open- ended commitment to that. It is a mistake when the president says, you're there as long as you need us. That is a mistake. It's the wrong message.

WARNER: But I want to follow up. This week, some the most valuable testimony that came before the Congress came from General Abizaid.

And I know you and I, Carl, hold him in the highest degree of professionalism. He said that the problem today is the secular strife, at the rate at which it's growing.

That's more difficult than the insurgents coming in from other countries.

BLITZER: Here is precisely what he said, this week, General Abizaid.

Listen to this:

(BEGIN VIDEO CLIP)

GENERAL JOHN ABIZAID, COMMANDER, U.S. CENTRAL COMMAND: It's my belief that the security situation in the country, while changing in its nature from insurgency toward sectarian violence, is controllable by Iraqi security forces and multinational force.

(END VIDEO CLIP)

BLITZER: That seems to be a significant -- almost three years into this war, it's not only an insurgency that's undermining the U.S.-led effort, but now it's turning into what he calls sectarian violence.

Senator, that's not necessarily complete civil war, but it's moving towards that.

LEVIN: Well, it has the vestiges of civil war. It has the ingredients of civil war, and it's moving in that direction.

And when I met with General Abizaid this week, he told me that when he met with the president of Iraq, Mr. Talabani, that when Talabani came out and told the media that he was assured that we are there as long as the Iraqis want us there, that that was not what General Abizaid told Talabani.

And I pray it was not. He told them that too often.

BLITZER: Here's what a lot of Americans fear, Senator Warner, and you're sensitive to the concerns of your constituents in Virginia and Americans all over the country.

WARNER: Very much so.

BLITZER: There's 132,000 U.S. troops in Iraq right now. There are thousands of Americans who are civilians and people from all over the world who have been brought in.

If there is a civil war, how are they protected?

WARNER: You know, another very important part...

BLITZER: Did you get answers from...

WARNER: We did.

Another very important thing was Secretary Rumsfeld. I met with him early on Thursday morning -- with the chairman of Joint Chiefs and Abizaid in his office -- basically to bring to bear the military factor on the ports issue, which we'll cover.

But at that time, we discussed their testimony before the Appropriations Committee.

Rumsfeld pointed out, if civil war breaks out, then it will be the primary responsibility of the Iraqi forces, which we have trained and equipped, to put that down. The American forces...

BLITZER: But let me interrupt you, Senator...

(CROSSTALK)

WARNER: The American forces will be in support.

BLITZER: Now would you trust Iraqi forces to protect all those tens of thousands of Americans?

WARNER: I didn't go quite that far. I said it's their responsibility to put down the civil war and support the government.

The American forces are there, and my assumption -- although I have no specific knowledge -- is that part of their mission would be some support to the Iraqis fighting, but at the same time, try and give whatever measure of protection possible to the American people.

BLITZER: Senator, do you have confidence in those Iraqi forces to protect those Americans?

LEVIN: No, and we cannot protect them from themselves, Wolf. They're going to have to decide whether they want a nation, whether they want a civil war.

We can't write a constitution for them. We can't pick their government for them. But what we can do is let them know it's not an open-ended commitment.

If they don't want a nation, if they want a civil war, that's going to be their decision. Our decision is how long to stay and under what conditions.

BLITZER: Because there's still fear -- and we're going to take a break, Senator Warner, and get into the Dubai Ports deal -- there's still fear Iraq, when all is said and done, could crumble into a Shiite state, a Kurdish state and a Sunni state. And this integrity that the U.S. has been talking about, together with the Iraqi leaders, that may be wishful thinking.

LEVIN: Well, we're not there yet. The only hope of avoiding it is if the Iraqis make a political decision to come together, to unify. And we've got to put pressure on them to do that.

And the way to do that, again, if we let them know that our continuing presence upon their taking action.

BLITZER: All right, Senator...

WARNER: That action is also not just coming together and forming a government, but looking at refinements in the constitution...

LEVIN: I agree.

WARNER: ... and putting capable people in the ministries -- far more capable than those who worked in this present government in Iraq; to have integrity to run the ministries.

BLITZER: We'll take a break. But do you have confidence in Ibrahim al-Jaafari?

WARNER: I'm not in that position to make that statement.

BLITZER: Do you have confidence in him?

LEVIN: I think they are going to have to decide that question. We should not dominate.

WARNER: That's correct.

LEVIN: We should not dictate.

BLITZER: We'll leave it there. But we're going to take a quick break. We've got a lot more to talk about with the senators. I'll ask both Senators Warner and Levin about the ports deal collapse -- also, President Bush's warrantless wiretapping program: Is it legal?

Then, mending fences in the aftermath of that port deal collapse. We'll hear from the Senate Intelligence Committee member Saxby Chambliss. He's on the ground in Dubai right now.

Later, my exclusive look inside Dubai, at the height of the ports controversy. I was just there that week. I'll tell you what I saw.

"Late Edition" will continue right after this.

(COMMERCIAL BREAK)

BLITZER: There's still time for you to weigh in on our Web question of the week: Did Congress overreact to the United Arab Emirates ports deal?

You can cast your vote. Go to cnn.com/lateedition.

Straight ahead: Should the U.S. Congress censure President Bush for authorizing warrantless wiretaps? I'll as Senators John Warner and Carl Levin' they're standing now live.

You're watching "Late Edition," the last word in Sunday talk.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: In order to win the war on terror, we have got to strengthen our relationships and friendships with moderate, Arab countries in the Middle East.

UAE is a committed ally in the war on terror. They are a key partner for our military in a critical region.

(END VIDEO CLIP)

BLITZER: Welcome back to "Late Edition." We're talking with the two top members of the U.S. Senate Armed Services Committee, the Republican chairman, Senator Warner of Virginia and Democrat Carl Levin of Michigan.

Senator Warner, was it a mistake to kill this deal?

WARNER: Let me say that history will have to decide that. I went into this situation with a good deal of vigor, held the first briefing -- Carl was in attendance of our committee, so he could get the facts out.

So many people in the American public just did not have the benefit of the full factual picture of exactly what it was they were getting -- not buying the ports.

How many times did I see that incorrect statement?

We carefully tried -- I did and others -- to get the facts out. I can't what went on in the House of Representatives. But I think the Senate was quietly and reflectively looking at this situation.

UAE and the other moderate Gulf nations are absolutely critical for our national security.

BLITZER: So, you're not happy the way this...

WARNER: It's not a matter of being unhappy or happy. I'm concerned about the future war on terrorism and our ability to work with those valuable I'll allies for basing aircraft and so forth.

What we should have done is stayed on course with the 45 days and not tried to -- as they did on the floor of the Senate -- bring on this amendment, which will complicate immeasurably the pulling apart of these two companies.

The deal is over. We have the leader of the UAE, the prime minister, and indeed our government now working to pull it and get it off the books. And it looks like in every respect a total divestiture.

BLITZER: Total? In other words, there won't be any connection between the United Arab Emirates...

WARNER: That's my judgment.

BLITZER: ... and these six port operations.

WARNER: That's the goal. Now, we've got to wait and see how that's achieved. But I do not think Congress should take any more action on this ports issue. Put its attention on legislation to strengthen port security and to rewrite the CFIUS law.

BLITZER: As you know, Senator Levin, there are several pieces of legislation out there on the House side and the Senate side. They just want to make sure that there are no foreigners, whether from the United Arab Emirates or any other country, operating ports or critical infrastructure in the United States at a time when 75 to 80 percent of the port operations in this country are already being run by foreign operations.

LEVIN: I thought that it was a big mistake for the administration to proceed with this deal without going through that 45-day investigation, which our law requires. We got -- we're supposed to have checks and balances in this country. They haven't operated very well with this administration, to put it mildly. But here's an example. Where you've got a law which very clearly says that if security concerns are raised about a transfer such as this, just raised, that then there must be a formal investigation, a 45-day period, and a report to the president and to Congress. The administration tried to bypass that clear requirement because there clearly were security concerns raised here. Raised by the Coast Guard.

They may have resolved their concerns, but there were concerns. And by the 9-11 Commission, which was never consulted. The 9-11 Commission report laid out a series of...

BLITZER: I think that's fair, Senator Warner. The administration mishandled this operation.

WARNER: Well, I'm not sure you want to leap to that conclusion. In the first place, the CFIUS process...

BLITZER: Let me explain to our viewers, that's the Committee on Foreign Investments in the United States, an interagency panel, mid- level officials, basically concluded there were no...

WARNER: Handling hundreds of these cases.

BLITZER: ... national security concerns.

WARNER: Handling hundreds of these cases. Protecting the proprietary interests of companies who come here to try an work out deals. I went back over the weekend, I say to my good friend, and checked accurately what our administration did in this process.

They followed the same patterns that the first Bush administration did, the Clinton administration did and this administration. Been total consistency in the process. But I do believe we should have stayed with that 45 days and Congress should not come in now and try and vitiate this contract on its own.

BLITZER: It's over with now. I want both of you...

LEVIN: I hope it is, but the only way to stop this deal from going forward was for Congress to introduce this legislation. Remember, what the administration said is, they're going ahead. They're closing the deal, despite the Congressional interest.

BLITZER: Listen to what Senator Russ Feingold, Democrat of Wisconsin, said earlier today on ABC. Listen to this.

(BEGIN VIDEO CLIP)

FEINGOLD: What the president did, by consciously and intentionally violating the constitution and the laws of this country with this illegal wiretapping has to be answered. There can be debate about whether the law should be changed. There can be debate about how best to fight terrorism. We all believe that there should be wiretapping at appropriate cases. But the idea that the president can just make up a law in violation of his oath of office has to be answered.

(END VIDEO CLIP)

BLITZER: And he says he's going to introduce legislation tomorrow, a resolution to censure the president. Are you going to support him?

LEVIN: I think what the president did was wrong. I don't think that he could possibly use the authorization that we passed to authorize him to use force in Afghanistan is a basis for the wiretaps. I think that the law which we have on the books required him to go to the court to get these intercepts. But even though I think he was wrong, I would rather wait until the investigation is completed, which has now been started, by the intelligence committee, before I go beyond that.

WARNER: You know, you left out one thing on that little piece. He admitted he's running for president. And this was political grandstanding. And regrettably, because as the world watches, at the same time Congress is trying to sort through the important legislation, and I was among those, Carl, you know, that said we should legislate on this issue, bring clarity to it, so that the president is not perceived as breaking the law. I don't think he has.

But that was political grandstanding. And it tends to weaken our president. Whether you like him or not, he's the president for the next three years. Our economic trade abroad dependents on this, how the world views us, our security arrangements, diplomacy, all of it is dependent on an active, strong president. And to shoot out like that, is the worst type of political grandstanding.

LEVIN: I think criticism of the president is legitimate. It was bipartisan criticism of the president relative to the intercepts here. And so, I think we ought to welcome some checks and balances on the president. We ought to welcome some criticism, particularly where it is bipartisan. And on the use...

WARNER: Carl, I agree with you.

LEVIN: Well, wait a minute. On the use of these intercepts here, that involve American citizens, it seems to me that the criticism is highly appropriate, which was given on a bipartisan basis.

WARNER: I spoke out that we should proceed as a body to revise these laws so there is no a perception that this president or any future president would be breaking the law. But those presidents must act instantaneously in the security interests of this country. And it's hard today.

LEVIN: This was thought out. This wasn't instantaneous.

WARNER: I know, but this old statute is 30 years old. And since that time, there's been dramatic change in technology.

LEVIN: Well, then come to the Congress and ask for a change. WARNER: Fine, Carl, but at this time, don't do something like one of our colleagues did, jump up and call for this thing.

BLITZER: We'll leave it right there. Senator Warner, as usual, thanks very much. Senator Levin, thanks to you as well.

We have to take another quick break. When we return, the next step for the United States and the United Arab Emirates. How frayed is the relationship now that the Dubai ports deal has collapsed. I'll speak with U.S. Senator Saxby Chambliss. He's in Dubai right now. We'll get the latest from there.

Up next, though, a quick check of what's in the news right now, including deadly storms in the Midwestern united states. Stay with us.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Ann Richards, what's her story? The outspoken Texas politician announced this week she's battling cancer of the esophagus. Richards first grabbed the national spotlight with her keynote address at the 1988 Democratic National Convention.

She went on to serve as governor of Texas for four years before being defeated by then-Texas Rangers owner George W. Bush in 1995. Richards frequently speaks out about her struggle with osteoporosis, and now uses her experienced to consult women on the importance of leading a healthier lifestyle.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(NEWSBREAK)

(COMMERCIAL BREAK)

BLITZER: Welcome back. It's still unclear exactly what impact the ports deal collapse will have on the United States' long-time relationship with the United Arab Emirates and other Arab allies.

Just a short while ago, I spoke with the Republican Senator Saxby Chambliss of Georgia, a member of the Senate Intelligence Committee. He's in Dubai right now, part of a congressional delegation.

(BEGIN VIDEOTAPE)

BLITZER: Senator Chambliss, thanks for joining us. Welcome back to "Late Edition."

Did your fellow Republicans in the Senate and House do the right thing by killing this Dubai ports deal?

SEN. SAXBY CHAMBLISS (R), GEORGIA: Well, I'm not sure whether they did or not, Wolf. Obviously, the deal has been pulled at this point in time and that issue really is over with. We're going to continue down the road, I think, of reforming CFIUS, which I have supported from day one.

I came to Dubai to try to find out, really, what the facts are surrounding this deal. And, as I said, it's over with now. The leadership here has made a decision to transfer ownership of the management contract to a U.S. entity. And that will be done in due course.

But it's been an interesting day here in Dubai to learn about the country as well as to learn about the people that are involved in this issue.

BLITZER: Would you have been comfortable, knowing what you know now, having seen D.P. World in action at the ports in Dubai, letting this company operate, for example, the port in Savannah, Georgia?

CHAMBLISS: Well, the fact of the matter, Wolf, is that this particular company operates 51 ports around the world. I know what percentage of containers we examine in Savannah, and that's one of the key issues in the war on terrorism and making sure that we don't let either bad people or weapons that shouldn't come into the United States come into our country.

They actually examine a greater percentage of containers at the 51 installations run by the Dubai group.

So you know, it's one of those issues that, obviously, is very emotional, but I will say this. The individuals that run the Dubai ports are very professional. They are great partners of America in helping us fight to win the war on terrorism.

So I'm comfortable with the individuals that I've met and I'm comfortable with the fact that they operate a very professional organization.

BLITZER: It sounds as if, Senator, you would have, with hindsight, knowing what you know now, you would have allowed this deal to go forward.

CHAMBLISS: Well, I don't know because that's not why I came here. Initially, that's what we came here looking for, was to try to figure out whether or not we ought to support it or whether we ought to be in opposition to it.

But the fact that the deal was -- the decision was made to transfer the ownership of the management contract before we got here gave us a different light with which to look at the folks that are here and the operation that is here. And that's exactly what we've done.

So I am very comfortable, as I say, with the way in which they conduct themselves in the operation of the port facility here, which actually was run by a U.S. company from 1979 to 1989. That's something I didn't know.

Dubai is one of the best kept secrets in the world. And we came over here to find out the facts. And I've been very impressed with the facts that I have found since we've been here.

BLITZER: There's been some concern expressed over the past couple days since the deal collapsed that there could be some negative consequences for the U.S.

What's been the reaction in your talks with officials from the United Arab Emirates and from D.P. World? How angry are they toward the United States?

CHAMBLISS: Well, we've had some really good meetings. We've met with the custom folks. We've met with folks who run D.P. World as well as a good, long meeting with Prime Minister Muhammad bin-Rashid.

And we have received assurances from everybody that we have talked to that the strong relationship between the United States and UAE is going to continue. They have been great allies in the war on terrorism. They're going to continue to be great allies.

We are approaching the negotiations of a bilateral trade agreement. They're going to continue to look to the United States with great respect, and they're going to continue to move toward a positive trade agreement with the United States.

So I think, from the leadership standpoint, there's simply no question but what there has been no damage done.

What's been doing in the Arab world -- obviously, I'm sure our enemies will try to use it against us.

But what really makes me feel good about is that when we talk with the leadership here, they have been very positive. They understand that we're in political times in the United States.

A lot of the folks who are members of the cabinet, so to speak, as we would think, of the prime minister were educated in the United States.

So they understand the real world that we live in and they have accepted it. They have made the right decision, in my mind, and now they're ready to move forward. And I think we should be ready to move forward.

BLITZER: Senator Chambliss, have a safe trip over there. Thanks for joining us on "Late Edition."

CHAMBLISS: Thanks, Wolf. Always a pleasure to be with you.

(END VIDEOTAPE)

BLITZER: And a reminder for our North American viewers, right after "Late Edition," CNN reporters are "On the Story," including our White House correspondent Dana Bash on what happened behind the scenes as the ports showdown unfolded. You won't want to miss it.

Up next, though, something you'll see only here on CNN, my up close and personal look at Dubai, the story of this very diverse and vibrant Middle Eastern ally of the United States. But first this.

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(BEGIN VIDEO CLIP)

(UNKNOWN): The UAE has had a long, extensive history of cooperating with the U.S. on issues dealing with military intelligence cooperation, terrorism and so on since well before 9/11.

(END VIDEO CLIP)

BLITZER: Usabelo Taiba (ph), the national security adviser to a crown prince in the United Arab Emirates.

Welcome back to "Late Edition."

There were earlier problems but, since 9/11, the United States and the United Arab Emirates have established an incredibly close, strategic partnership on the war on terror.

I travelled to Dubai to get the full story. I had exclusive access to D.P. World, top company and government officials, the ports, and security operations.

It's something you'll see only on CNN.

Who is actually responsible for inspecting the millions of containers coming through these ports ever year? That job falls to Dubai customs. Here's how they do it.

It's state-of-the-art technology, designed to see through heavy metal containers. It can detect illegal drugs and contraband weapons and ammunition. It can detect chemicals and biological agents.

And, perhaps most important, it can detect nuclear equipment, as well.

So if there were, God forbid, a radiological bomb inside a container, they would be able to determine it -- they would see that?

AHMED BUTTI, DIRECTOR GENERAL, DUBAI CUSTOMS: Yes. Yes.

BLITZER: This handheld piece of equipment can detect radiation levels.

BUTTI: We have also the machine that will tell you that... Ahmed Butti is in charge of Dubai customs. During an exclusive, behind-the-scenes tour, he proudly showed off the technology -- the hardware and the software that are already used in Dubai.

We are in the process right now in working together with the Department of Energy, of establishing in all our gates, to put the radiation machine to detect that.

And we have a team from our inspectors -- already on the (inaudible) right now to be trained how to operate these machines. BLITZER: Here in Dubai, when it comes to security and checking what's inside of containers, they say they are not worried about politically incorrect ethnic profiling.

BUTTI: From certain countries, 100 percent sometimes. Some countries, no. Thirty percent. Some countries, 20 percent. It depends where it's coming from. It depends the companies.

BLITZER: How suspicious you are.

BUTTI: Absolutely.

BLITZER: He won't say which countries have everything inspected, through presumably this Iranian ship loaded with Iranian cargo -- which we drove by -- would be a prime target for a thorough inspection.

D.P. World CEO Mohammed Sharaf also gave us an exclusive look around the huge facility -- and he stressed his company's worldwide reputation for safety and security.

MOHAMMED SHARAF, CEO, D.P. WORLD: We have customers whose vessels call at our terminals, which costs hundreds of millions -- not only the vessel, the goods on them cost hundreds of million of dollars.

If they don't have any confidence in our operation, they could not bring their ship to our terminals. Each ship has up to 10,000 containers on them.

Can you imagine each container costs -- the value of each container is around $100,000. What's the value of the total ship? Would they bring their ship to our terminal if they didn't feel secure or safe?

BLITZER: In my three-day behind-the-scenes visit, I also had a chance to inspect the port operations from a tugboat ride in the harbor -- and it was very clear that the port operator, in this case D.P. World, can have a significant impact on security for good or for ill.

Up in the port control tower, I saw D.P. World employees who have advanced knowledge of ship itineraries, controlling which ships go to which berth, determining how fast ships are loaded and unloaded and directing giant cranes. One of D.P. World's biggest customers is the United States Navy. It makes over 500 port visits a year to Dubai.

I spoke with the Navy Captain Thomas Goodwin.

Explain the little operation you have got over here. How secure do you feel as we get a sense of the U.S. Navy presence that occasionally comes in here?

CAPTAIN THOMAS GOODWIN, U.S. NAVY: Well, Wolf, as you know, security is kind of a -- and a feeling of safety is kind of a relative thing.

If you look around here, pretty populated with U.S. Navy ships, Military Sealift Command ships -- I feel very safe here. I know the crews and the people who are stationed down here in the UAE feel very safe here as well.

BLITZER: How often do U.S. Navy vessels come to Dubai?

GOODWIN: On a daily basis, there is at least one U.S. ship in a port in the UAE -- and, oftentimes, more than that, as you can see in the port here behind me.

BLITZER: And they'll spend a day or two or three or whatever?

GOODWIN: Typically, a warship will come in here for four visits: re-provisioning of food and fuel, and they'll get back underway. Jebel Ali is where we're here now in the United Arab Emirates and the emirates of Dubai -- it seems to be at the top of the port visit request list for warships.

BLITZER: Can they accommodate carriers, too?

GOODWIN: They can accommodate a carrier here. As a matter of fact, it's probably the only other than -- well, it is the only port in the AOR that can accommodate a carrier.

BLITZER: Now, who provides the services? When a U.S. Navy vessel comes in here, Dubai Ports World -- I take it -- helps you guys as the port operator?

GOODWIN: In fact, it is. United Arab Emirates, it's Dubai Ports World -- they own the territory. This is their home territory. We work hand in glove with Dubai Ports World for services and to provide fuel, logistics, and everything that a warship or another logistics ship would need here. Absolutely.

BLITZER: How do they do? How's the receptivity? What kind of grade would you give them when you come here to Dubai?

GOODWIN: If I put them on a grading scale like you're back in college or something like that, I'd have to give them at least an A- plus.

BLITZER: Despite glowing assessments of the U.S.-UAE military relationship from top U.S. military commanders, the deal may have been doomed from the start in this post-9/11 era.

A Wall Street Journal article on Friday referred to my visit to the United Arab Emirates. It said this -- let me read it to you:

"A CNN report from Dubai showed articulate and Western-educated Dubai leaders offering assurance that they would strictly maintain security at any port facilities they operated in the United States.

"But aids to House Republican leaders reported that the sight of men in Arab dress saying they would handle port security only made the calls of complaint come faster."

Two of the 9/11 hijackers came from the United Arab Emirates, and the emirates was one of only three countries to have official relations with the Taliban regime in Afghanistan before 9/11.

In an exclusive interview, I asked the chairman of D.P. World, Sultan Ahmed Bin Sulayem, about that.

(BEGIN VIDEO CLIP)

SULTAN AHMED BIN SULAYEM, CHAIRMAN, D.P. WORLD: You've got 3 million people here. You can't really blame 3 million for the act of two.

I think there's a lot of changes in how to control transfers of money, how to declare it. We have signed the anti-money laundering. We apply the rules. I think the cooperation in that field is very strong between our country and the USA.

(END VIDEO CLIP)

BLITZER: The decision to pull out of the deal and transfer D.P. World's U.S. port operations to a U.S. entity was sudden.

All of the executives and government officials I spoke with -- who were there -- they expressed supreme confidence, at least before this deal collapsed, that the deal would absolutely go through.

They said they had no doubt. No doubt, they were stunned by the speedy collapse.

Still ahead, some extraordinary views of Dubai. We're going to show you why this city is called "the city of gold."

Is such a popular city a major tourist spot? The answer, yes. We're going to show you why. Snowing in Dubai. Plus, the results of our Web question of the week, "Did Congress overreact to the United Arab Emirates ports deal?"

We'll take a quick break. We'll be right back.

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BLITZER: It's fair to say that most Americans have learned a great deal about Dubai in recent weeks.

During my visit, I learned it's a very popular vacation destination in the Persian Gulf and a fascinating place. Here's a taste of extraordinary Dubai.

(BEGIN VIDEOTAPE)

BLITZER: (voice over) This is the Burj al-Arab Hotel in Dubai, arguably one of the manmade wonders of the world. It's the world's tallest hotel, complete with a helipad near the top. It's also one of the world's most expensive. LUC DELAFOSSE, HOTEL GENERAL MANAGER: We have a magnificent sell (ph), anyway, and the building itself soars at 321 meters. So you are in Suite 2008. That is actually one of our panoramic suites.

And the particularity of this suite category is this fantastic window, where you can actually really see Dubai, you know, at your feet. So it's made of the ground floor, where you have a bar area; you have a lounge area. We call it, actually, the majelice (ph), here for example, in this region. You have a dining room. You have two bedrooms. You have a bedroom on the ground floor. And you also have the master bedroom on the mezzanine level on the upper floor.

BLITZER: This suite is, per night, how much?

DELAFOSSE: I would say, in terms of dollars, you know, it would be something like $4,000 and $5,000.

BLITZER: A night?

DELAFOSSE: A night. We have a magnificent spa located on the 18th floor. Our, actually, commitment or mission is to be, clearly, the world's most luxurious hotel.

BLITZER: Not far from the hotel is this mall. What's extraordinary is what's inside. It's called "Ski Dubai."

It's hard to believe that we're right in the middle of the desert. Yes, we're in the desert. But these people are skiing. They're going on chair lifts. And there are ski slopes indoors.

It's the most bizarre scene, people from all over the world snowboarding and skiing downhill, and indoors.

The snow is manmade, as is the below-freezing temperature. But everything else is very real. Check it out.

Back outside, in the subtropical climate, a helicopter tour of Dubai reveals a booming desert city. One can't help but gasp at the pace of construction on both real desert land and manmade land.

This is Palm Island, where multimillion-dollar villas spread out across the Gulf. It's shaped like a date palm tree.

What's billed as the world's tallest building is now under construction. The Burj Dubai will be the centerpiece of a new development downtown.

Traffic jams here are a daily and expected occurrence in this growing city of 1.2 million people. There are lush golf courses. Tiger Woods was here recently for the Dubai Desert Classic.

Camel racing is popular but controversial because the jockeys are young children. Dubai is promising UNICEF it's banning underage jockeys. And get this -- robot jockeys are in development.

Dubai hosts more than 5 million visitors a year and wants to increase that number ten times, for the city that is rightly known as Vegas on the Gulf.

(END VIDEOTAPE)

BLITZER: Here are the results of our Web question of the week. Check it out. Remember, though, it's not a scientific poll.

And that's all the time we have for this "Late Edition." I'm Wolf Blitzer in Washington. Thanks very much for joining us.

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