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ANDERSON COOPER 360 DEGREES

Zarqawi Shows His Face; Pain at the Pump

Aired April 25, 2006 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: Good evening again, everyone.
A mass murderer speaks. Abu Musab al-Zarqawi, the man who has the blood of Americans on his hands, shows his face for the first time.

(BEGIN VIDEOTAPE)

ANNOUNCER: Terror tape -- the most wanted man in Iraq surfaces with a chilling new prediction.

"Keeping Them Honest" -- they make more than $111 billion in profits. So, why are we subsidizing oil companies with your tax dollars?

And the gruesome murder of a nun.

UNIDENTIFIED FEMALE: She was laid out on the floor very neatly. The afterthought is, why?

ANNOUNCER: Was it a ritual murder, and is this priest guilty? A dramatic day in court.

(END VIDEOTAPE)

ANNOUNCER: Across the country and around the world, this is ANDERSON COOPER 360.

Live from the CNN Broadcast Center in New York, here's Anderson Cooper.

COOPER: And good evening to you.

We have usually seen him hiding behind a mask while sawing through the throat of a still-living hostage. But, today, Abu Musab al-Zarqawi, the most wanted man in Iraq, took off that mask and came out of the shadows.

Tonight, we're covering all the angles.

Al-Zarqawi appears in this rare video posted on the Internet. He shows his face and proclaims his predictions about what will happen next in Iraq.

Tonight, expert analysis of the tape, the man, and his murderous message. The video also shows missiles being tested. On the tape, an insurgent tells al-Zarqawi one of the missiles can penetrate armor. Ahead, we will look at how real that threat may be. And we will take you back to al-Zarqawi's home, the place he was born, where his wife still lives, and examine what turned him into a killer.

We begin with the tape, the message.

Here's CNN's Nic Robertson.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): In a stunning departure from his usual super-secretive ways, Abu Musab al-Zarqawi is deliberately showing his face on video for the first time, revealing not just how he looks. Wearing what intelligence sources say is a suicide bomber's belt, Zarqawi also says he wants to lead Iraq's Sunni minority to victory by sharing leadership with the insurgency.

ABU MUSAB AL-ZARQAWI, AL QAEDA IN IRAQ (through translator): I bring you the good news of establishing the mujahedeen council in Iraq. It will be the nucleus of establishing an Islamic state where the word of God is the highest.

ROBERTSON: The new video is in contrast with Zarqawi's bloody atrocities in the past, seen here on a video of two years ago wearing a mask while beheading U.S. engineer Nick Berg. In the slickly- produced new video, al Qaeda's leader in Iraq echoes his boss, Osama bin Laden, calling U.S. troops in Iraq Zionist crusaders and accusing President Bush of lying to Americans.

AL-ZARQAWI (through translator): Every time the mujahedeen strike, it makes you lie more and more, claiming that everything is under control, but your lies are exposed to everyone, far and near.

ROBERTSON: But Zarqawi, seen here firing a heavy machine gun on what is almost a political-campaign-type video, is aiming his message mostly at Iraq's Sunnis, threatening them not to join Iraq's new security forces and telling them victory over the U.S. is close at hand.

AL-ZARQAWI (through translator): By God, these are the last moments before the crusaders announce their defeat in the land of the two rivers.

ROBERTSON: Using images of himself, getting updates on the fighting, he is, incredibly, for jihadis, at least, projecting a more acceptable image, yet also making it clear he's still the boss. He is also seen watching a video of a crude missile being tested, appropriately named Qaeda 1, reasserting his goal while fomenting civil war.

AL-ZARQAWI (through translator): We believe that any government which is formed in Iraq now, whether by Shiites or the liberal Zionist Kurds or those who are dubbed Sunnis, would only be a stooge.

ROBERTSON: Intelligence experts and tribal leaders have been saying for months Zarqawi wants to legitimize himself among Iraq's Sunnis.

(END VIDEOTAPE)

COOPER: And Nic Robertson joins me now, along with CNN terrorism analyst Peter Bergen.

Nic, Zarqawi is taking a risk by showing his face here. We have only had sort of grainy images of him before. What is so important that he would -- that he would make this move?

ROBERTSON: He wants to set himself up as a leader of the Sunnis. That appears to be what he's trying to do here.

And he obviously feels comfortable about his security in Iraq. His survival up until now appeared to have depended on him using disguises, according to intelligence officials, even at one time, apparently falling into U.S. captivity and being released, because they didn't realize who he was. Now he's blown that cover.

COOPER: Peter, were you surprised that he would come out in a video like this?

PETER BERGEN, CNN TERRORISM ANALYST: Yes, mildly, but I don't think -- you know, I mean, there have been a lot of pictures of Zarqawi circulating in the past. And CNN has acquired some during the war in Iraq.

So, he was taking a risk, but not a huge risk, because those pictures are relatively contemporary that we have already seen. So, I think it was a calculated risk that he felt was worth doing.

COOPER: And, Peter, who is the audience for this tape?

BERGEN: Well, I guess it's -- I mean, al Qaeda and its affiliates around the world, the insurgency in Iraq, us. I mean, everybody, basically. Obviously, by putting it on the Internet, you're getting the widest possible distribution.

If you put it on Al-Jazeera, actually, Al-Jazeera will only take very small portions of it, and very small portions of it will end up on CNN. In this case, this whole tape is out there, all half-an-hour of it, and it's available to anybody who wants to see it.

COOPER: Nic, what do you know about those missiles?

ROBERTSON: This is the first time we have heard -- we have heard them discussed, the first time we have seen them.

We have seen other jihadi videos where they have fired missiles at weapons -- missiles at aircraft, supposedly bringing down, at helicopters and at airplanes, but this is the first time we have seen something and been told, this is a new device. This one can fly apparently many, many miles -- Anderson.

COOPER: You know, Peter, what's amazing, too, when you look at the Zarqawi tape is how much it looks like bin Laden tapes that we have seen in the past, I mean, from the gun being right behind him, to, you know, him walking along, surrounded by bodyguards.

I mean, you interviewed bin Laden. Does it strike you that this is kind of the same iconography?

BERGEN: I think so.

But what -- what is also interesting is that, you know, if it was just trying to set himself up as a sort of parallel, you know, leader to bin Laden, this tape actually kind of goes against that, because he mentions bin Laden in very glowing terms. He introduces a couple of clips from bin Laden on the tape, and also from Ayman Al-Zawahri -- al-Zawahri.

And, so, he makes it, I think, fairly clear on the tape that he regards himself as still part of the larger al Qaeda organization.

COOPER: Peter, he also, though, disses any Sunni who is involved in the political process in Iraq currently.

BERGEN: Yes. And, of course, the tape appears to have been made the same day that the political process had made a big step forward with the selection of the new prime minister.

COOPER: Nic, what do -- what does it tell you that he can turn a tape, A, that quickly and seem to be able to -- to walk around, you know, at least in -- in this tape, relatively freely?

ROBERTSON: You know, the intelligence assessments have been that Zarqawi is able to get around Iraq, that he has disguises.

So, perhaps it's no surprise that we see him coming out in the open and doing that. I -- I think the very fact that -- that he's willing to do that shows just how comfortable he's feeling at this particular time -- Anderson.

COOPER: Peter Bergen, does he have -- I mean, is this in some ways also a -- a recruitment pitch, a pitch for more money, I mean, to backers to show that he's invigorated, to show that he's still out there and still, you know, holding meetings?

BERGEN: I guess so, yes. I think all these tapes are. They have several, you know, fund-raising, propaganda, recruitment, all the above, proof of life. So, I think these tapes have, you know, multiple purposes.

And it is interesting, as we're watching this videotape, the extent to which this does really mimic some of the bin Laden footage, as you mentioned earlier in the program, Anderson.

COOPER: Yes. I mean, it's -- it's so -- I mean, the images are -- you know, you put them side by side, they're -- they're almost identical in some ways.

You know, Nic, there's talk on this tape that some of the recent attacks that these guys have staged are response to visits by Condoleezza Rice, by British Foreign Secretary Jack Straw. Is this the first time that we have heard that they are attacking as direct retaliation to visits by Western dignitaries?

ROBERTSON: It is. It definitely is the first time we have heard this sort of thing.

What Zarqawi is doing on this tape is, he's playing to -- playing to Sunni fears. In the western part of Iraq, in the tribal part of Iraq, a lot of the tribal leaders there living in exile will tell you now that the U.S. mishandled the tribes, removed the leadership, created a power vacuum, if you will, that Zarqawi has come in and exploited that, and making people live in fear.

And that's what we're seeing here. He's telling people explicitly, don't join the security forces. He's -- he's telling them that the new government in Iraq will be Shia dominated, that: You will be the losers.

So, there's a very strong message here for the Sunnis in this western part of Iraq -- Anderson.

COOPER: Well, of course, he -- he is not Iraqi. He's from Jordan.

Later on, in the next hour on 360, Nic Robertson is going to take you back to actually show you his hometown, show you where his wife still lives. It's a fascinating journey.

Nic, good to have you now.

And, Peter Bergen, thanks as well.

On now to the White House and breaking news -- three Republican sources now tell CNN that FOX News anchor and political analyst Tony Snow has formally accepted the position of White House press secretary. He is going to replace Scott McClellan. It is a story we broke first here on 360 last night.

The White House plans to make the announcement, we are told, tomorrow morning. Sources say that Snow sought and received assurances that he would be an active participant in major policy debates and that he would have significant say in the hiring of deputies within the press and communications departments. So, again, that announcement supposedly going to be made tomorrow morning by the White House.

To say that Tony Snow has a tough job ahead of him doesn't really begin to tell the story. President Bush's popularity, we all know, is at a record low. From Iraq, to immigration, to the skyrocketing price of gas, his second term is skidding in a spin. Fair or not, those higher gas prices are a big reason Mr. Bush's poll numbers have slipped. Today, he offered a plan to help stem the outrage.

CNN's Suzanne Malveaux was listening.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): As gas prices go up, the president's approval numbers go down. But don't blame him.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And the prices that people are paying at the gas pumps reflect our addiction to oil.

MALVEAUX: That so-called addiction is fueling consumer frustration at the pumps and Republican fears that they will be paying for it in the midterm elections.

Facing increased political pressure to do something, President Bush unveiled his four-point plan. First, Mr. Bush ordered an investigation into whether energy companies are unfairly manipulating gas prices.

BUSH: The first thing to make sure that the American consumers are treated fairly at the gas pump.

MALVEAUX: While the administration was unable to cite any evidence of price-gouging now, it did investigate instances shortly after Hurricane Katrina, with mixed results.

DANIEL LASHOF, SCIENCE DIRECTOR, NATURAL RESOURCES DEFENSE COUNCIL CLIMATE CENTER: There was a lot of hand-wringing about price gouging at that time, and, again, after the hearings were over, everybody went back to business as usual.

MALVEAUX: Second, Mr. Bush pledged to boost the supply of U.S. crude oil and gasoline by temporarily suspending deposits into the country's Strategic Oil Reserve.

BUSH: So, by deferring deposits until the fall, we will leave a little more oil on the market. Every little bit helps.

MALVEAUX: But energy analysts say that's not likely to lower gas prices.

LASHOF: It is something within the president's jurisdiction, and I think it's largely symbolic.

MALVEAUX: The president also made another push to open up the Arctic National Wildlife Refuge to oil drilling.

Third, the president is promoting greater fuel efficiency by urging Congress to extend tax credits for all who purchase hybrid or clean-diesel vehicles.

BUSH: Ethanol is good for the whole country.

MALVEAUX: And, fourth, Mr. Bush is encouraging investment in alternative sources of energy, like ethanol, to wean Americans off of foreign oil. But that's considered a long ways off to resolving the pain at the pump.

LASHOF: I don't think there's anything in the president's plan that will have a short-term impact on gas prices.

MALVEAUX: What is not in the president's energy plan, moves to improve fuel efficiency standards for cars, more stringent environmental protections, and a comprehensive strategy for Americans to conserve.

LASHOF: Jimmy Carter definitely gave the wrong approach, when he indicated that what -- the primary mechanism to save oil was to sacrifice Americans' living standards. What we need to do is, as the president did say, embrace technology that can allow us to use energy much more efficiently.

MALVEAUX (on camera): The president said he expects oil companies to reinvest their big profits in research for alternative sources of energy, but he ruled out taxing those profits.

Suzanne Malveaux, CNN, the White House.

(END VIDEOTAPE)

COOPER: Well, about that Strategic Petroleum Reserve, President Bush says it is large enough to guard against a major supply disruption. In case you're wondering how big it is, here's the raw data.

According to the Energy Department, right now, there are 687.5 million barrels of oil in the reserve. Now, that's enough oil to replace imported petroleum for approximately 59 days, at the current rate of consumption.

The Energy Department says it's the world's largest government- owned emergency oil stockpile and that there is actually room for more. The underground storage sites along the Louisiana and Texas Gulf Coasts can hold up to 727 million barrels.

Well, gas prices are just one issue giving President Bush a headache now, illegal immigration certainly another. The president spoke out about it today, but a new CNN poll shows just how deeply divided Americans are on the issue. Coming up, see if your opinion matches what most Americans think.

Also ahead, a suspect in the Duke lacrosse rape case shows up in a Washington courtroom, not for the rape, but for an alleged gay bashing. Our cameras caught it all. We will tell you what happened.

And a priest on trial for the brutal murder of a nun -- testimony today in court revealed just how bizarre the killing really was. It almost seemed like a religious ritual. We will take you inside the courtroom -- all the angles next.

(COMMERCIAL BREAK)

COOPER: Well, today, President Bush met with senators, Republicans and Democrats, trying to hammer out an immigration reform bill. After the meeting, Senate majority leader Bill Frist expressed optimism that the bill could be passed by Memorial Day.

Now, President Bush wants it to have some form of a guest-worker program. But a new CNN poll reveals just how divided Americans are on this issue.

Here's senior political analyst Bill Schneider.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): The Bush administration is in dire straits. On immigration, President Bush is promoting a guest-worker plan.

BUSH: Doesn't it make sense to have a rational temporary-worker plan that says you don't need to sneak across the border?

SCHNEIDER: The public is unenthusiastic. Why?

BARRY CHISWICK, ECONOMIST, UNIVERSITY OF ILLINOIS: When the guest-worker period is over, how does one get them to leave the country?

SCHNEIDER: Even Republicans are unenthusiastic.

President Bush's biggest challenge is Iraq. He knows that.

BUSH: I fully understand the challenge I face, as the commander in chief, to describe to the American people why the sacrifice is worth it.

SCHNEIDER: The American people no longer believe it is. A majority say it was a mistake for the U.S. to send troops to Iraq. A new challenge has emerged in Iran.

If Iran refuses to shut down its nuclear program, only 13 percent of Americans favor immediate military action. An additional 30 percent say they would favor military action if diplomacy fails. Forty-six percent of the public does not want the U.S. to take military action against Iran, under any circumstances.

That number rises to 60 percent among people who think the Iraq war was a mistake. Iraq limits President Bush's options in Iran, politically, as well as militarily. Some retired generals have called on Secretary of Defense Donald Rumsfeld to resign over what they regard as his failed leadership in Iraq. A plurality of Americans agree. Barely more than a third of the public voices confidence in President Bush's secretary of defense.

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, tough numbers there.

Harvard University professor and former White House adviser David Gergen joins us now from Boston.

David, good to see you.

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: Thank you. COOPER: I mean, Iraq, immigration, investigations, tough poll numbers all around for this president. What do you think is his biggest challenge right now?

GERGEN: Well, I think they are tough poll numbers, Anderson. But, on one issue, there's actually some daylight for the president. And that is on the issue of immigration.

If you look at the CNN poll, what you do find is that the McCain- Kennedy approach, which is to say, if people have been here more than five years, then they should be allowed to apply for American citizenship, the public actually favors that. If people have been here less than five years, then the American public would say, then they ought to be -- we ought to find a way for them to be heading back.

But that's what the -- essentially, what the kind of McCain- Kennedy bipartisan approach is in the Senate that got a fair number of votes. I think there's room there for the president. Even in this otherwise bleak poll, even in a poll which shows his own popularity down to 32 percent, I think there is some room there for finding a way to say, if you have been here long enough, then we're really going to work to find a way to make -- get -- get to citizenship. If you haven't been here very long, then let's work for a way to get you back.

COOPER: A -- a lot of people have talked about a crisis in credibility. And -- and I don't know if it's just die-hard Democrats, but it seems, from some of these poll numbers, to have crossed over, at least, into some people who had voted for -- for the president.

That seems -- I mean, if -- if -- if they lack credibility in a lot of people's eyes, in a plurality's eyes, that seems particularly dangerous, because it makes any kind of forward motion, any kind of step, whether it's intelligence on Iran or pronouncements about Iraq, suspect.

GERGEN: That, I really agree with, Anderson, and on the notion, for example -- you know, last night, we were talking about a Josh Bolten plan reported by "TIME" magazine to, among other things, scare people on Iran.

And now we see today, you know, the more you scare people on Iran, the more it drives up oil prices, because there's all this speculation about what this can do on oil. So, you know, they have got to be very careful what they say these days. Their credibility is down. And we all know that the trust that people have in this president was his ace card.

That was the strongest thing he had going for him, that people, whether they agree or disagree with him, people in the early days saw George W. Bush as a straight-shooter. The fact that he's lost much of his credibility is, I think, the biggest over -- barrier he has to overcome to get back and become an effective president again.

COOPER: And -- and, I mean, you look at this -- the CNN poll, 26 percent of Americans believe the U.S. is winning in Iraq.

GERGEN: Yes.

COOPER: That's down from 40 percent in December, which is a huge drop in -- in those numbers.

GERGEN: Right.

COOPER: I mean, is -- is there a way to somehow improve the perception on Iraq, or even the -- the -- the response to it, if things on the ground don't get better?

GERGEN: No. I don't think you can do that.

I mean, look, even his former number two in the State Department under Colin Powell, Mr. Armitage, has told "The Financial Times," things are going really badly in Iraq. That's what the American people are saying. And I think one of the interesting things about this poll is just how much common sense the American people once again demonstrate in these polls, is, when they look at the headlines, they see what's happening, and they talk to the boys who are coming back, the women who are coming back, and they say, you know, we're not winning this; we are not losing it; we just don't know who's ahead.

I mean, what this poll shows, the majority of people aren't sure who's winning. And I think that -- I think that's exactly where some of our most important generals on the ground is. They're not quite sure either. Well, you keep on hearing that from people inside the military, that nobody can give you a hard answer about whether this -- we're going to win it or not.

As much spin as the Bush administration likes to put on its public pronouncements, the insiders are saying, you know, we're not quite sure.

COOPER: Well, but that -- that is the spin coming from certainly Don Rumsfeld at the Pentagon, who is saying, look...

GERGEN: That's right.

COOPER: ... you know, the media's not telling you the full story. It's sort of a blame-the-media approach. Does that work?

GERGEN: Well, no, it does not.

I think, under these circumstances, when you lose your credibility, you know, when you beat up on the media, then, you -- you know, the 26 percent who still believe you're credible, it works with them. But it doesn't -- well, it doesn't work with the rest. That's why, if Tony Snow is coming in, he's got a big job ahead.

COOPER: Well, we are going to talk more in the next hour on 360. David Gergen, talk to you soon. Thanks.

GERGEN: OK. Thank you. COOPER: Coming up, find out how just much of your tax dollars are subsidizing the oil industry. That's right. You're not just paying at the pump. You're paying in other ways as well, through your taxes. We are "Keeping Them Honest."

But, first, Erica Hill from Headline News joins us with some of the stories we're following -- Erica.

ERICA HILL, HEADLINE NEWS CORRESPONDENT: Hey, Anderson.

A 23-year-old California man has been convicted in federal court of supporting terrorists. A jury found Hamid Hayat guilty because he attended an al Qaeda training camp in Pakistan. The verdict came just hours after another jury could not reach a decision over the defendant's father, who is facing the same charges. Hayat could be sent to prison for up to 39 years.

Egyptian police have detained at least 10 people, including computer engineers, after yesterday's triple bombing at the Red Sea resort of Dahab. Now, at least 22 people were killed, 87 wounded, in the explosions. No one has claimed responsibility.

The developer of the World Trade Center site says he will agree with conditions to let the government take over building the Freedom Tower and another skyscraper. Negotiations about just what will replace the Twin Towers have been bogged down by disagreements between Larry Silverstein -- Silverstein -- and the Port Authority, which owns the land. A spokesman says that work can begin immediately if an agreement is reached.

In Des Moines, Iowa, the Westminster Kennel Club, it wasn't. But the judges at the Drake Relays at Drake University have their own standards. And, this year, they chose the English bulldog Hannah as the 27th annual "Beautiful Bulldog."

Now, for the next year, Hannah will serve not only as -- as the Relays' and also as Drake University's mascot.

(LAUGHTER)

HILL: Pretty impressive for Hannah.

COOPER: Yes. Amazing that they could keep the crown on -- on Hannah's rather large head.

HILL: Apparently, that was a little -- a little problem in the beginning.

(LAUGHTER)

HILL: But, as you saw there, they overcame it.

COOPER: They did.

(LAUGHTER)

HILL: She will be all right.

COOPER: Erica, thanks. See you again a little bit later.

Coming up ahead on 360, a horrific crime and a startling suspect, a priest, accused of killing this nun -- the trial is under way right now. Today, in court, prosecutors described the crime scene. That's the suspect right there. The nun was stabbed, the wounds on her body in the shape of a cross, her body found draped with an altar cloth? We will take you inside the courtroom.

Also, a Duke lacrosse player accused of rape in a courtroom in another alleged crime. Did they attack a man they thought was gay in Washington?

Plus, car thieves caught in the act, all because of bait cars. Take a look at that video. It's a police tactic you -- I mean, you just kind of have to see it. It's like a rat trap. Only, the rats are, well, alleged crooks -- when 360 continues.

(COMMERCIAL BREAK)

COOPER: Prices at the pump are high. So are big oil company profits. So, how come Uncle Sam is giving them huge federal subsidies, subsidies you're paying for? Tonight, we are "Keeping Them Honest" -- next.

(COMMERCIAL BREAK)

COOPER: Well, you all know that we're paying a lot at the pump, but did you also know that our government gives huge subsidies to oil companies, the same oil companies raking in record profits? And, of course, those subsidies, you and I are paying for them.

Tonight, John Roberts is "Keeping Them Honest."

(BEGIN VIDEOTAPE)

JOHN ROBERTS, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): It's difficult to pin down exactly how much taxpayers give to big oil, but one nonpartisan watchdog agency puts it this way.

KEITH ASHDOWN, VICE PRESIDENT OF POLICY, TAXPAYERS FOR COMMON SENSE: The oil industry gets about $3 billion a year in tax breaks, subsidies and spending from the federal government.

ROBERTS: For critics, it's like subsidizing fish to swim. Senator John Sununu is one of few Republicans who voted against last year's energy bill, because of its giveaways to the oil industry.

SEN. JOHN SUNUNU (R), NEW HAMPSHIRE: And we're not talking tens of millions of dollars. We're talking about hundreds of millions, and -- and, in some cases, over $1 billion, over a two- and three-year period.

ROBERTS: So, why does an industry raking in record profits need a handout? I hit the halls of Congress to find out -- first stop, Senate Energy Committee Chairman Pete Domenici, where support for subsidies was suddenly in short supply.

(on camera): People are asking, why should we be giving this industry any money?

SEN. PETE DOMENICI (R), NEW MEXICO: OK. So, I'm -- I'm not going to disagree with you. Maybe we should look -- go back and look and take them out.

ROBERTS: Are you suggesting, Senator Domenici, that with oil at $73 and something a barrel, gasoline at $3 a gallon, that it may be time to end the government handouts to the oil companies?

DOMENICI: I'm suggesting that there is no real reason to have any of them around, and we ought to take a look and get rid of them.

ROBERTS: What a difference nine months and 60 cents a gallon makes. Is everyone who's supported subsidies backtracking? How about Larry Craig, republican senator from Idaho?

SEN. LARRY CRAIG, (R) IDAHO: It isn't that we were wrong at the time we passed the bill, we were maximizing production in this country. But that doesn't mean that what we did a year ago is right today.

ROBERTS: Should the subsidies stay in place?

CRAIG: I'm going to look at them. I will vote probably to take some of them out.

ROBERTS: Perhaps it was President Bush coming out again today against subsidies that began to change minds.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Taxpayers don't need to be paying for certain of these expenses on behalf of the energy companies.

ROBERTS: And the Energy Department wanted to be sure consumers know that tax breaks were put there by congress, not the White House.

CLAY SELL, DEPUTY ENERGY SECRETARY: I can understand where consumers are upset. I'm upset.

ROBERTS: The oil industry found very few friends on Capitol Hill today. About the closest they came was in the great state of Texas, where the house energy committee chairman said he wouldn't support a wholesale rollback of tax breaks. But --

REP. JOE BARTON, (R) TEXAS: I would look at it and see if there's something that is patently not needed, sure. But --

ROBERTS: Because forgive me if I'm wrong, but weren't you a supporter of those subsidies?

BARTON: I think the energy bill that we passed is a good piece of legislation. ROBERTS: Which is a Washington way of saying, yes, he did support those tax breaks. But while congress now has subsidies in its sights, there's still bucket loads of money going out the door to the oil companies. Even President Bush is proposing a rollback of only $2 billion over ten years, which according to watchdog groups would still leave the oil industry with almost $30 billion in its pocket. John Roberts, CNN, Washington.

(END VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR: A lot of money.

Speaking out, friends of one of the Duke lacrosse players accused of raping a stripper say police have the wrong man. Take a look.

(BEGIN VIDEO CLIP)

I don't think he did it. From the get-go, from the start since the allegations came out, I never wanted to believe it because, I mean, I like Duke. I'm a fan of the school, but I'm also a fan of, you know, Collin, I knew him on a little person level. It's just not right.

(END VIDEO CLIP)

COOPER: So who is this guy, Collin Finnerty? We'll look into the background of one of the defendants and how another allegation against him, an alleged gay bashing, may come back to haunt him. He was in court in Washington, we'll show you what happened.

Also, unholy act, a priest, that priest, accused of stabbing a nun to death in what appeared to be a ritual killing. Today the prosecution used a mannequin in the courtroom to reenact the brutal crime. We'll have the latest from the court when "360" continues.

(COMMERCIAL BREAK)

COOPER: Well, tonight new information in the rape case that has rocked Duke University. Today the D.A. filed a criminal charge against another Duke lacrosse player, not Collin Finnerty or Reade Seligmann who have already been charged. This new charge against a third player who was at the party is a misdemeanor for violating probation for a previous run-in with the law. But the big story today was what happened in another courtroom in another state. Collin Finnerty faces charges for another alleged crime. CNN's Jason Carroll has that.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT: He is one of two Duke University lacrosse players charged with sexually assaulting a young woman. But the trouble Collin Finnerty faced in a Washington, D.C. courtroom today, was entirely different. The 19-year-old is charged in an assault stemming from a fight outside a bar involving Finnerty and another man months ago. The man alleges Finnerty used gay slurs. Finnerty and his attorney deny that. STEVEN J. MCCOOL, ATTORNEY FOR COLLIN FINNERTY: This incident has been grossly mischaracterized. This is not and has not been charged as a bias-related allegation.

CARROLL: Finnerty had previously pleaded guilty to assault and agreed to perform 25 hours of community service. He also agreed to stay out of trouble during his six months' probation. But because of the Duke case, D.C. Judge John Bailey, revoked Finnerty's plea agreement, and set a trial date on the assault charge for July 10th. Both the Duke and D.C. cases come as a surprise to those who know Finnerty. He attended Chaminade High School in Long Island, New York, a private catholic school for boys. Arthur Conte, a student there, remembers him as a gifted lacrosse player and a good person.

ARTHUR CONTE, FRIEND: I don't think he did it. From the get-go, from the start, since the allegations came out, I never wanted to believe it because, I mean, I like Duke. I'm a fan of the school. But I'm also a fan of Collin. I knew him on a little personal level. It's just not right. If he's innocent, then something's wrong.

CARROLL: Finnerty comes from this upscale neighborhood in Garden City, New York. A place where lacrosse nets in yards are common. His parents donated money to help Duke University renovate an off campus home into a Catholic student center. It's just a few blocks from the house where an exotic dancer says Finnerty, Reade Seligmann, and a third player raped her during a party. Finnerty's high school coach says he was the model athlete and student.

JACK MORAN, FINNERTY'S HIGH SCHOOL COACH: He was a very good student. And he was never in any trouble here. He was a good teammate. He was -- fit in type of kid on the field.

CARROLL: Here at Duke, students have hung "innocent" signs at the dorm where Finnerty and Reade Seligmann live. Support for the two players who now find themselves with far more attention and far more trouble than they probably ever expected.

(END VIDEOTAPE)

COOPER: That was Jason Carroll reporting from Durham.

Coming up, another courtroom another case that has shocked even hardened veterans. A priest accused of killing a nun. The crime was brutal, sadistic and filled with religious iconography. We'll take you inside the courtroom for details.

Plus --

(BEGIN VIDEO CLIP)

Just because we don't meet your definition of a family doesn't make us any less of a family. We've been together for 13 years, raising three kids together.

(END VIDEO CLIP) COOPER: Well they're not married, and the trouble is they live in a town that really, really frowns if you're unmarried with kids. So their days could be numbered. Will they have to move out if they're not married? More when "360" continues.

(COMMERCIAL BREAK)

COOPER: Well, tonight a nifty new way to stop car thieves cold. They're called bait cars, and they actually trap car thieves inside the cars that they were hoping to steal. Take a look at this.

(BEGIN VIDEO CLIP)

REPORTER: There's nothing quite like that moment when the thieves realize they've been caught red-handed.

The A.C. don't work. Wait a minute. Is this a camera? Look.

REPORTER: These cameras are used by dozens of police departments nationwide in vehicles known as bait cars.

(END VIDEO CLIP)

COOPER: It's an amazing tactic that seems to be working and may keep your car out of the hands of criminals. That's coming up in the next hour of "360."

In an Ohio courtroom, a startling trial is under way. A priest stands accused of killing a nun. Now the details are gruesome, certainly bizarre to say the least. With candles placed around the victim, signs that the murder was maybe part of a ritual of some sort. Today the prosecution used a mannequin to show exactly what the priest is accused of doing, allegedly did, to this elderly nun. CNN's Rick Sanchez has the latest from the courtroom.

(BEGIN VIDEOTAPE)

RICK SANCHEZ, CNN CORRESPONDENT: Did the priest do it? Did this professed man of God strangle --

DEAN MANDROS, PROSECUTOR: Choked her so hard that the blood vessels in her eyes burst.

SANCHEZ: Her body surrounded by candles and draped with an altar cloth. She was stabbed 31 times, then according to police, posed in a ritualistic manner. Her undergarments pulled down making it appear as if she was sexually assaulted, but police have ruled that out. Nine of the stab wounds were cut in the shape of upside down crosses.

VOICE OF DET. TERRY COUSINO, TOLEDO POLICE: It's approximately this position, which would make the cross upside down across her chest.

SANCHEZ: Father Gerald Robinson was the chaplain at Mercy Hospital in Toledo, Ohio. Sister Margaret Pall was the murdered nun, found by other nuns. MANDROS: What was your impression when you first saw sister Margaret Ann Pall on the floor?

SISTER PHYLLIS GEROLD, PRESIDENT, MERCY HOSPITAL: The horror -- I think it was the weirdness of it.

SANCHEZ: Also weird by today's standards is that in a crime scene so bloody, with the body handled so extensively, there would be no DNA evidence. The reason? Back in 1980 when this murder occurred, DNA wasn't even collected.

ALAN KONOP, DEFENSE ATTORNEY: To your knowledge, was a confirming DNA test attempted?

No.

SANCHEZ: In court today, police presented a key piece of evidence, a letter opener, they say belongs to Robinson. They testified that its shape matches the shape of her stab wounds. But with no DNA, on the stand, police were not able to say for sure that her blood is on the letter opener.

KONOP: You cannot say that it was blood. You can only say that it possibly is blood, correct?

That's correct.

SANCHEZ: Medical examiners exhumed the victim's body from this cemetery to reexamine wounds like the upside down cross. Said to be a mockery, a rejection of Jesus. Could a priest be capable of such an ungodly act? Robinson's attorney is betting a jury will answer no. Which may be why, in court today he referred to his client this way.

KONOP: This priest is on trial --

PROSECUTOR: Objection, your honor.

SANCHEZ: 26 years ago, Father Gerald Robinson preceded over Sister Pall's funeral as a reverend. Today he stands trial for murder as her accused killer, all the while saying he is not guilty of this cardinal sin. Rick Sanchez, CNN, Atlanta.

(END VIDEOTAPE)

COOPER: A town in Missouri has an ultimatum for some families, marry or move. This couple's not ready to tie the knot. For that the law says they may have to pack up and get out. That story coming up.

Also this.

(BEGIN VIDEO CLIP)

Can we talk to you about Abu Musab, your brother-in-law? Is that possible? You know nothing? You don't want to say?

(END VIDEO CLIP) COOPER: The brother-in-law of Abu Musab Al Zarqawi, Nic Robertson takes us back to the hometown of this mastermind, this terrorist mastermind killer. Who came out today of the shadows for the first time showing his face in a video.

And new pictures of China's first face transplant patient. A week and a half after the surgery, he is doing well. We'll show you exactly what his face looks like coming up next on "360."

(COMMERCIAL BREAK)

COOPER: You're about to meet a couple who say they found their dream house, the perfect place to raise their kids. It's affordable, there are good schools nearby. It's everything they've ever wanted, but there is a problem. The town is telling them that they can't stay. More to the point, they're going to have to move unless they get married. Here's CNN's Jonathan Freed.

(BEGIN VIDEOTAPE)

Good one.

JONATHAN FREED, CNN CORRESPONDENT: Do these people look like a family to you? That's Olivia Shelltrack, Fondrey Loving and their three children.

FONDREY LOVING, FIGHTING CITY ORDINANCE: That's my oldest daughter Alexia's room.

OLIVIA SHELLTRACK, FIGHTING CITY ORDINANCE: My big old stereo. I love music.

LOVING: That's my son's room, Cortez.

CORTEZ: I get one of those teddy bears, and I could just shoot in the basket.

FREED: And daughter, Katerina.

KATERINA: This is my room.

FREED: The Shelltrack-Lovings moved to Black Jack, Missouri, a St. Louis Suburb, a couple of months ago.

LOVING: We came to St. Louis to have a good life and to start over.

FREED: Olivia and Fondrey aren't married, and the children out of wedlock. When the family applied to the city of Black Jack for an occupancy permit, something every home here needs, they were told because there are more than three people in their house and not all related by blood or marriage, they don't fit Black Jack's definition of a family. Permit denied.

MAYOR NORMAN MCCOURT, BLACK JACK, MISSOURI: It's overcrowding because it's not a single family. It's a single-family residence. And you're not single family.

FREED: The city says the Shelltrack Lovings are caught up in an ordinance designed to keep out things like rooming houses. But when Olivia and Fondrey appealed to a city board for an exemption, what they heard sent chills down their spines.

NORMA MITCHELL, BLACK JACK BOARD OF ADJUSTMENT: I do not see her advantage of living with a man without a marriage license.

FREED: Olivia and Fondrey say they were given a clear message, get married or move.

SHELLTRACK: Just because we don't meet your definition of a family doesn't make us any less of a family. I mean, we've been together for 13 years, we're raising three kids together.

FREED: Has this situation forced you to feel like having to say you're planning to get married?

LOVING: No. Because the way I look at it is, when we're ready, we'll be ready.

FREED: There's no doubt in your mind this is about morality that it's not about overcrowding?

ANTHONY ROTHERT, ACLU: I have no doubt.

FREED: The ACLU showed CNN a letter it says it received from the same mayor in 1999 explaining why another family was being denied an occupancy permit at the time.

ROTHERT: While it would be naive to say we don't recognize that children are born out of wedlock frequently these days, we certainly don't believe that it's the type of environment in which children should be brought into this world.

FREED: The ACLU says that family chose to move.

SHELLTRACK: We love this house and we think it's worth fighting for, definitely.

FREED: The city's attorney told CNN its ordinance is within the law. Still, Black Jack is now admitting its 20-year-old ordinance may not be in step with the times. It may soften the wording in the coming weeks. If the ordinance isn't changed, the ACLU says it will sue, arguing the city is violating federal fair housing rules and the constitutional right to privacy. Jonathan Freed, CNN, Black Jack, Missouri.

(END VIDEOTAPE)

COOPER: Some new and amazing pictures of the face transplant patient in China coming up. But first, Erica Hill from "Headline News" has the business news we're following. Erica?

HILL: Hey Anderson, it's earning season. Mixed results today for Amazon.com. The only retailer's first quarter earnings fell 35 percent, compared to the same period a year ago. But sales were up 20 percent which met Wall Street expectations. The reason for the difference there, discount shipping and some new technology costs.

JetBlue also offering up a report card today with a loss of $32 million in the first quarter. But that is actually less than what was expected. So shares shot up 12 percent. High fuel costs have prompted the airline to scale back its growth plans.

And back on the stand in Houston, Texas, Enron founder Kenneth Lay. He told the jury today bad press and deceptions by Andrew Fastow, the company's former chief financial offer, and not fraud and conspiracy, led to Enron's collapse. The famous collapse of that.

COOPER: All right, Erica, thanks.

Time now for our shot or the shot, our favorite photo or piece of video of the day. The shot tonight are the new pictures of the world's second face transplant patient. The Chinese man underwent a partial face transplant. These are the pictures we are seeing. Doctors in China say he is recovering well. But they are concerned his body may reject the tissue that was given to him by a brain-dead patient. The donor's nose, lips and cheek were attached to the man after he was mauled by a bear. Last year, of course, a French woman became the first person in the world to have a partial face transplant. That's the shot.

Coming up tonight, our top story, Abu Musab Al Zarqawi, he's got a $25 million bounty on his head. This video has now surfaced on the internet, the first time he has shown his face intentionally. Al Qaeda's number one man in Iraq, how he got to be that way, and his deadly message today for the west.

And in scary echoes of the Columbine tragedy, police have uncovered more evidence of plots to shoot up schools. Look at why some police are stopping them now before the crimes take place.

And living proof of the old saying if something looks too good to be true, it probably is. The car thieves who succumb to the temptation of a hot ride, look at the guys right here, only to find technology putting the brakes on their criminal careers. Bait cars and how they're catching crooks when "360" continues.

(COMMERCIAL BREAK)

COOPER: Mounting pressure at the pump and polls. The president responds to the soaring gas prices with a pledge. Will it help Republicans come November, or is it too little, too late?

ANNOUNCER: Fighting the oil addiction. The president's solution to saving you money at the pump. Will it work?

Terror video from behind the shadows, the most wanted man in Iraq surfaces with new warnings and weapons against America.

School shocker. The alarming rise of Columbine-like plots, and the link they have to the Internet.

And taking the bait.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Is this a camera?

(END VIDEO CLIP)

ANNOUNCER: How police are making sure a car thieves' joy ride ends in jail. Across the country and around the world, this is ANDERSON COOPER 360 live from the CNN broadcast center in New York, here's Anderson Cooper.

COOPER: So facing a growing crisis and questions of credibility, the president finally stepped forward today with a plan to fight his most pressing problem of the moment perhaps, gas prices. The White House calls his strategy fair and focused. But the party that wants to replace him and the GOP in power blasted as another empty promise from a failed White House. The politics in a moment. First the facts. Here's CNN's Suzanne Malveaux.

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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