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Mysterious Ambush: American Dead on Afghanistan Border; Face- to-Face With Iran: Talks and Threats; Number Two at Justice Department Resigns

Aired May 14, 2007 - 17:00   ET


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM.
Happening now, "your soldiers are in our hands" -- that chilling message from Al Qaeda and its allies, even as a desperate, desperate search is underway for the three missing American troops.

The ultimate nightmare -- a nuclear device blows up in an American city, in this case Indianapolis. We're with the National Guard, training for the unthinkable.

And some students were hiding crying, begging for their lives.

What did teachers do to bring terror to a grade school camping trip?

I'm Wolf Blitzer.


Thousands of U.S. and Iraqi troops -- they're standing by right now. They're on the search. They're searching for three missing American soldiers. They were taken in a weekend ambush.

And a chilling communications today -- communicated, that is, today -- indicates the trail -- the trail may lead straight to Al Qaeda.

CNN's Hugh Riminton is in Baghdad -- Hugh.

HUGH RIMINTON, CNN CORRESPONDENT: Wolf, night has fallen here once again, as you can see. But that does not mean that the search is not continuing with full intensity for these three soldiers still missing after an ambush at Mahmoudiya, to the south of Baghdad.

Now, they do know who they are up against now. U.S. Major General William Caldwell saying their intelligence has satisfied them that this is Al Qaeda or an Al Qaeda affiliate. And an Al Qaeda based group, the Islamic State of Iraq, has released a statement through a Web site in which it taunts United States, saying: "Your search for your soldiers will exhaust you and bring you misery. Your soldiers are in our hands. If you want your soldiers' safety, you must call off this search." This coming from this Al Qaeda-linked Web site. Well, the U.S. Army says that they are getting cooperation from the Iraqi public. Tips from the public have led to operations against a number of targets, according to General William Caldwell.

However, they do know that this is going to be a tough task. The advice coming from experts being that Al Qaeda will not negotiate. They cannot be bought off. The only way to get these soldiers back alive will be to locate them and then somehow to recover them -- Wolf.

BLITZER: Hugh Riminton reporting for us.

Thank you, Hugh.

Two American soldiers are listed as missing/captured in Iraq -- Keith "Matt" Maupin, a 23-year-old, disappeared after a convoy attack back in April of 2004. Al Jazeera showed a video of Maupin being held captive and later said it had received another videotape from insurgents, who claim to have killed Maupin. But U.S. officials were unable to identify him.

Ahmed Al-Taayie, A 41-year-old Army Reservist, was kidnapped last October while serving as a translator. The U.S. military believes he was abducted during a visit to Iraqi family members. An unknown group later claimed to hold him.

Maybe the worst fear for many troops -- winding up in the hands of Al Qaeda or its allies.

CNN's Brian Todd has been looking in to this part of the story -- is there anything, Brian, that U.S. troops can do to prepare for this kind of nightmare?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, experts say the old training line for soldiers -- give only your name, rank and serial number -- hasn't applied for a long time. But even more techniques of captivity training are becoming outdated because now, captured Americans are often not in the hands of a standard army.


TODD (voice-over): Despite a sweeping manhunt, the prospects seem dire for three missing American soldiers, according to former servicemen who have been trained for captivity.

In the hands of their likely Al Qaeda captors...

MIKE RITZ, FORMER ARMY INTERROGATOR: They're not viewing, most likely, those soldiers as human beings and, therefore,

That's a very dangerous situation.

TODD: Former Army and Special Forces soldiers tell CNN the U.S. military has extensive training for capture situations. It's a course for elite combat units and pilots called SEAR... Survival, Evasion, Resistance and Escape.

Soldiers are dumped in a wilderness. Those who can't evade capture are taken to a mock POW camp, bound, hooded, roughed up, locked in small cages. And...

COL. PATRICK LANG (RET.), U.S. ARMY: And they took all your clothes away from and they hosed you down with cold water and used fire hoses on you and threw buckets of sand with ants in them on you. They hung people up by the thumbs for a while.

TODD: All designed to help withstand interrogation.

But what if your culprits are with Al Qaeda, who experts say want to use their prisoners to create terror and propaganda and are less interested in gathering intelligence?

There's little or no training for that, they say, because the assumption is you'll be killed.

But even in the hands of Al Qaeda, there could be one way out.

RITZ: Always appear disoriented, tired, sick unhealthy. Appear in a state less than they truly are in hopes that their captors will underestimate them and perhaps they will leave them alone for a second or they will overlook something or they won't expect the -- the soldier to grab a weapon.


TODD: But experts say the best advice against this enemy -- don't get captured. If it looks like that's inevitable, fight to the death -- Wolf.

BLITZER: Brian Todd watching the story for us.

And we're going to stay on top of it, obviously, as new developments unfold.

Moving on to some other news we're watching closer to home, it was the most expensive merger in auto history. Now, DaimlerChrysler is shifting into reverse, selling its Chrysler unit to a private U.S. firm for a fraction of what it paid.

CNN's Ali Velshi is outside Detroit -- Ali?

ALI VELSHI, CNN CORRESPONDENT: Wolf, for more than nine years they tried to make this work.

but being owned by the German company, the American carmaker kept losing market share.

So now, Chrysler is coming home.


DIETER ZETSCHE, DAIMLERCHRYSLER CEO: With this transaction, we have created the right conditions for a new start for Daimler and Chrysler. VELSHI (voice-over): New starts don't come cheap. Bowing to pressure from shareholders, Germany's DaimlerChrysler is selling its America unit back to Americans for $7.4 billion.

The buyer is private equity firm, Cerberus Capital Management.

Former U.S. Treasury Secretary John Snow is the chairman.

It's a first for a U.S. carmaker to be owned by a company that's not listed on the stock exchange. Firms like Cerberus choose their investors and don't have to answer to shareholders, like the one who strong-armed this sale.


UNIDENTIFIED MALE: Sometimes companies can do better outside of the requirements of quarterly analysts' reports.


VELSHI: The new U.S. company, Chrysler Holding, will keep its CEO. And no layoffs were announced in connection with this sale, although Chrysler did announce plans to cut 13,000 jobs earlier this year.

The United Autoworkers union is behind the move. But to some industry watchers, all of this is noise.

"Consumer Reports" Michael Quincy says it doesn't matter who owns Chrysler.

MICHAEL QUINCY, "CONSUMER REPORTS": It's all about product. And in the last few years, Chrysler has put out some pretty mediocre product -- kind of lousy interior, cheap, noisy engines. The product has got to get better before the consumer is really going to care who owns who.

VELSHI: Cerberus seems to be piecing together all the parts of a major car company. It already owns a controlling stake in GMAC, General Motors' finance arm, and it's in talks to invest in Delphi, the world's biggest parts supplier, also once owned by G.M.


VELSHI: Now, Wolf, the last few years haven't been all bad for Chrysler. In fact, take the Grand Caravan, for instance, the granddaddy of minivans. Chrysler leads in this category. And it does in other categories, as well.

So all of this back office stuff aside, what remains to be seen is whether under new leadership Chrysler can actually succeed -- Wolf.

BLITZER: Ali Velshi reporting for us.

Thank you, Ali. Chrysler has been, as Ali just reported, stuck in a bit of a rut. Of its 24, vehicle types, all but seven are utility vehicles. Under the Chrysler logo, the company is still known for its minivans, a market it basically created back in the early '80s.

The Dodge brand is a leader in pickup trucks, including the Dakota and full size Ram.

Jeep, on the other hand, builds what is known only as SUVs, including the classic Wrangler.

Big news involving Chrysler today.

Jack Cafferty is joining us from New York once again with The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: You know, it will be interesting to see if Chrysler, as a privately held company, can avoid some of the pressures that come every 90 days with publicly traded firms, when they have to answer to Wall Street and Wall Street's expectations with those quarterly earnings reports. The industry will be watching closely to see, as a privately held company, what changes accrue, as a result, at Chrysler.

When it comes to Senator Hillary Clinton's campaign for president, so far, her husband's contributions have been mostly as a behind the scenes guy.

That might not be the case for much longer, though.

The "Times," the "New York Times" reports former President Bill Clinton is eventually going to go public for his wife in a big way: "Clinton advisers can already imagine a point in 2008 when Mr. Clinton has his own campaign plane, press corps and schedule of events in crucial states, while Mrs. Clinton is barnstorming in others."

The former president recently filmed a five minute video all about Hillary's life, full of praise for her -- old pictures of when she was grad student and stuff like that.

He's been doing some serious fundraising, too. At times, he can bring in $100,000 to $200,000 in an evening.

As the chairman of the Kentucky Democratic Party puts it: "Bill is the great security blanket for her campaign. Democrats listen to him with intensity. He can assure her and her staff that he can get her message out."

On the other hand, there's the potential down side of his stepped up involvement in the senator's campaign -- you know, his impeachment, Monica Lewinsky.

Friends also say that they have learned the mistakes of his first run for the White House and have avoided that two for one bargain deal.

Remember that, when he was running the first time?

Here's the question -- how big a role should former President Bill Clinton play in his wife's presidential campaign?

E-mail your thoughts to or go to

Bubba is going to be back on the bus.


And I suppose, Jack, a lot of Democrats are going to say he should play a very big role.

But, then again, a lot of Republicans are probably saying he should play a very big role, but they have different -- they have different things in mind as far as what that role will achieve.

CAFFERTY: Well, there's great disaffection, along with great affection, for the former president and his wife, too. He is, according to the polls, a kind of a divisive figure. So you either love or you hate her. A lot of people say we've had enough Clintons and Bushes to last several generations, but we'll see.

BLITZER: We'll see what our viewers think.

Jack, thank you.

Still ahead, a near disaster at sea. A cruise ship runs aground off Alaska. Passengers forced to abandon ship in the middle of the night. Details of the dramatic rescue. That's coming up.

Also, a massive wildfire threatening homes, forcing residents to flee.

Will the wind turn the blaze into an inferno?

We're going to take you to the fire lines.

Plus, preparing for the unthinkable -- what if terrorists detonate a nuclear bomb on U.S. soil?

We're going to show you what the U.S. military is now doing to prepare for that worst case scenario.

Stay with us.



BLITZER: A near disaster at sea for more than 200 passengers on a U.S. cruise ship that ran aground off the southeast coast of Alaska. It happened in the middle of the night, forcing frightened passengers to abandon ship as the vessel started taking on water.

Let's get to CNN's Dan Simon.

He's watching this unfold from our San Francisco bureau -- first of all, Dan what's happening right now?

DAN SIMON, CNN CORRESPONDENT: Well, Wolf, all the passengers are now safely back on land, back in the town of Juneau. The same goes for the ship. As investigators try to figure out what went wrong.


SIMON (voice-over): Few vacations offer more breathtaking views than an Alaskan cruise. This one was abruptly cut short after suddenly running aground.

One by one, all of the passengers, more than 200 were, evacuated from the ship, Empress of the North.

The Coast Guard and dozens of volunteers helping with the evacuation.

The ship was on its third day of a week's voyage in Alaska. Authorities say just before 2:00 a.m. local time, it ran aground off the southwestern short of Juneau in the icy strait.

The ship took on water and began listing, or leaning, at a six degree angle.

ANNE MARIE RICARD, MAJESTIC AMERICA SPOKESWOMAN: It's premature to comment on -- on what happened right now. She's heading back to Juneau, and they will be taking a look at her when she's in the marine facility.

SIMON: The seas, however, don't seem to be a factor. They were reportedly calm.

The ship has had other problems since its maiden voyage in 2003. In fact, this incident was the fourth time it's run aground or hit something, including this mishap last year on the Columbia River between Oregon and Washington State.

It's operated by the Majestic America Line. The Empress of the North was specially especially built for the Alaskan cruise business. The company says its unique design is a throwback to the stately night boats of the 1800s -- its paddle wheel four stories high. The ship has 112 staterooms.

Prices for the week range from $2,400 a person to more than $5,000.


SIMON: The ship was able to sail back to Juneau on its own.

An NTSB team son its way out there to investigate how this mishap happened.

As for the passengers, the cruise line says it's taking care of those folks, that they are going to make arrangements.

But the bottom line, Wolf, everyone is safe and I'm sure they'll have a story or two to tell their friends back home about their wonderful Alaskan cruise -- Wolf.

BLITZER: Has Majestic America -- has the line said anything about compensating these passengers?

Obviously their vacations have been disrupted.

SIMON: Yes. Right now, they're working to get everyone back home and they say they're going to offer them a complimentary cruise that they can take sometime in the future -- Wolf.

BLITZER: All right, we'll see if they want to take them up on that.


BLITZER: Some of them might be reluctant after that experience.

All right, thanks very much, Dan, for that.

In North-Central Florida right now, they're standing by for more evacuations. A giant wildfire there threatening homes, covering large areas with choking smoke. It's closed schools and roads.

We're watching the story very closely.

CNN's John Zarrella is in Lake City Florida with the latest -- John?

JOHN ZARRELLA, CNN CORRESPONDENT: Wolf, all day today the concern has been for the increasing winds to cause some problems and perhaps allow the fire to jump the fire lines.

Well, that has happened now in one location.

Forestry officials just telling us a little while ago that in one spot on the western edge of the fire, it has jumped the line. They are throwing everything they have at it.

In fact, just a few moments ago, we saw some heavy equipment racing out, along with police cars, to guard that area out there. A possibility that more evacuations would be needed if, in fact, they can't stop it.

But they are telling us, forestry, that they are throwing everything they can at it. And that includes a lot of air assets that they weren't able to get up yesterday.

They've got recon planes flying, finding the hot spots. They've got the air tankers dropping fire retardant chemicals and helicopters dropping buckets of water, particularly on this one spot where it's jumped the fire line. They believe they can get it under control and won't need evacuations, but they're working it and hitting it very, very hard today.

Other than that, they are saying that they've got this fire about 50 percent controlled on the eastern side and the southern side. It's only the western edge of the fire that's causing the problems right now. And that's the way the wind is pushing -- Wolf.

BLITZER: All right, John.

Thanks very much.

They could really use some rain over there, as well.

Coming up, an American soldier killed in a mysterious ambush along the Afghan-Pakistani border.

Who's really behind the deadly attack?

Plus, bitter enemies about to talk face to face. We're going to show you what's bringing the U.S. and Iran together even as their war of words rages on.

Stay with us.


BLITZER: Let's check in with Brianna Keilar.

She's monitoring other stories incoming into THE SITUATION ROOM right now.

She's in for Carol Costello -- Brianna, what's going on right now?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, Wolf, American terror suspect Jose Padilla is finally getting his day in court.

His trial on charges of "conspiracy to support Jihad" is now underway in Miami.

Padilla was initially accused of plotting to detonate a dirty bomb and President Bush deemed him an enemy combatant. His trial is expected to last until August.

And some tough talk today directed towards Barack Obama, and it came from a fellow Democrat. Last week, the senator from Illinois went to Detroit to lay out his energy plan, which calls on American automakers to build more fuel-efficient vehicles.

Today, long time Michigan Congressman John Dingle fired back. Speaking in Detroit about climate change, Dingle said: "I admire Senator Obama's enthusiasm and his desire to focus on solutions. But with all due respect, as "The Sopranos" would say, I would not travel to Chicago for the purpose of teaching people how to butcher hogs." Dingle is the chairman of the House Energy and Communicate Committee and a longtime friend of the U.S. auto industry.

Health experts are worried about the latest statistics on mammograms. They show that fewer women are getting them. In 2,000, 70 percent of women over 40 said they had had a mammogram in the last two years. But by 2005, it was down to 66 percent of women over 40. Researchers say insurance issues and questions about the benefit to mammograms may be part of the reason. Still, they call the trend unusual and disconcerting.

Let's check the bottom line now. It's time to add your two cents, whether you want to or not. The cost of a first class stamp is $0.41 as of today, up from $0.39. But now you can also buy that so- called "forever" stamp, which does remain valid no matter how much rates increase.

And the bottom line on Wall Street -- a mixed day, with the Dow up about 20 points. But tech stocks took a hit today. That dragged down the NASDAQ. Both it and the S&P 500 were down slightly -- Wolf.

BLITZER: Brianna Keilar reporting.

And we're getting this important story coming into CNN right now.

The deputy attorney general of the United States, Paul McNulty, the number two man at the Justice Department, according to the Associated Press, will resign.

The A.P. quoting two Justice Department officials saying McNulty will step down. No explanation being given yet.

We're working to confirm this story, get specific information.

But as you know, he's been at the center of the uproar -- the storm over the firing of those eight federal U.S. attorneys -- the controversy involving their dismissal. He's been working with the attorney general, Alberto Gonzales, for some time right now.

But he, of course, would be the highest ranking official to step down if, in fact, the reason is the result of that uproar -- the controversy involving those eight U.S. attorneys who were forced out.

Once again, Paul McNulty, the number two man at Justice Department, the deputy attorney general, according to the Associated Press, has decided to resign.

We'll get more information and we'll bring it to you as it comes in, but this is a major development.

Coming up, bracing for a nuclear nightmare.

What if the next Al Qaeda attack is nuclear?

We're going to take you inside a major U.S. military drill. Plus, a new American casualty in the fight against Osama bin Laden. We're going have details of a mysterious ambush. What happened?

Stay with us.

Lots of news unfolding right here in THE SITUATION ROOM.


BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, much of Pakistan paralyzed by a massive strike. Cities across the country virtually shut down, as thousands of businesses close. It's part of the ongoing protests of the firing of Pakistan's top judge by the president, Pervez Musharraf. Dozens of people died in demonstrations over the weekend. We're watching this story.

Also, the cease-fire between rival Palestinian factions in Gaza collapsing only hours after taking effect. At least two people are dead, 10 wounded, in fighting between Hamas and Fatah militias.

And there's a growing refugee crisis in Syria right now, where about 1,000 Palestinians once seeking refuge in Iraq are facing worsening conditions in a desert camp now in Syria. U.N. officials say the intense heat and lack of water now causing deaths, even as more refugees are arriving. Nearly a million Iraqi refugees have fled to Syria. Another million or so have fled to Jordan over the past four years.

I'm Wolf Blitzer.


A mysterious ambush leaves an American dead on the Afghan- Pakistani border, even as coalition forces score a major success with the killing of a top Taliban commander.

Let's get to CNN's Pentagon correspondent, Barbara Starr -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, no one is sure who launched the deadly attack against U.S. troops.


STARR (voice over): It was on the Pakistani side of this remote border region that U.S. troops were ambushed just after leaving a security meeting with both Afghan and Pakistani military commanders. U.S. troops were suddenly fired on.

U.S. officials confirm that one American service member was killed and two wounded, as well as two civilians. The spokesman for the Afghan Defense Ministry said it was a Pakistani who fired on the U.S. soldiers, adding... GEN. ZAHIR AZIMI, AFGHAN DEFENSE MINISTRY SPOKESMAN (through translator): We're very sorry about this incident. We did not expect them to do such an act against they're guest, those whom they invited into their territory.

STARR: Pakistani officials say it was a man disguised as soldier.

Meanwhile, Afghan officials showed off the body of Mullah Dadullah Lang, the Taliban's brutal military commander, after he was killed in a raid led by U.S. troops in southern Afghanistan.

ASSADULLAH KHALID, KANDAHAR GOVERNOR: I told you this operation was based on formation, and he is the killer, which he killed a lot of Afghans, and he cut the head off a lot of Afghans. Police, soldiers and (INAUDIBLE), and many other innocent Muslim-Afghan people.

STARR: Dadullah is thought to be partly responsible for recent Iraq-style insurgent tactics in Afghanistan, including suicide attacks and roadside bombs. It's not clear who may replace him.

PETER BERGEN, CNN TERRORISM ANALYST: It's going to be tough for them to find a military commander of this guy's stature, to use -- if that's the appropriate word. Mullah Omar, the leader, is not a military commander. They've lost a couple of other key commanders in the past year or so. So I don't think there's going to be anybody who will immediately step into his place.


STARR: It's doubtful Dadullah's death will make an immediate difference. U.S. commanders say that there are still al Qaeda and Taliban training camps running at full speed across the border in Pakistan, sending militants into Afghanistan to launch more attacks -- Wolf.

BLITZER: All right, Barbara. Thanks.

Barbara Starr at the Pentagon.

Some state governors already saying they simply don't have the resources to cope with tornadoes or floods, but what about a nuclear strike? The National Guard is trying to plan for a worst-case scenario.

Let's go live to our senior Pentagon correspondent, Jamie McIntyre.

Jamie, what's this all about?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, you know the National Guard are the first military responders. And while the Army says it's handling the current equipment shortage by sharing from state to state, there's still real concern about what happens if worst comes to worst.



MCINTYRE (voice over): It's the ultimate nightmare depicted in the movie "The Sum of All Fears," a terrorist nuclear device detonated in a major American city. In the exercise now under way, that city is Indianapolis, hypothetically destroyed by a 10-kiloton blast.

Miles to the south, away from the hot zone of Indiana's capital, National Guard troops and civilian first responders struggle to pull mock survivors from radioactive rubble and simulate the decontamination process in a portable shower tent.

(on camera): General, can you ever really be prepared for something on the scale of a nuclear bomb going off?

GEN. GENE RENUART, U.S. NORTHERN COMMANDER: Well, Jamie, it is -- the magnitude of that, of the after-effect of it, really is so significant, that I'm not sure that any state or single agency can be in a position where they can say, we've got it all covered.

MCINTYRE (voice over): In fact, commanders say the point of the exercise is not to show how ready the U.S. is, but to practice coordination and pinpoint deficiencies.

(on camera): One of the things that a drill like this shows you, is that in a disaster on this scale, one of the prime things you need is earth-moving equipment. Things like bulldozer, backhoes, medical supplies, protective gear. All the things that currently are short in the National Guard inventory.

(voice over): With so much of the Army's equipment chewed up by the war in Iraq, the Pentagon says it will take more than $20 billion and five years just to get the Guard up to 75 percent of its authorized level. It just comes down to money.

(on camera): Can you fix this equipment shortage faster than the current plan?

RENUART: Equipment is the easiest problem to fix.


MCINTYRE: Wolf, one big factor in preparedness is advance notice. If it's a hurricane or a storm where they can prepare, that's one thing. They can move things from state to state. But if it's a no-notice event, like a terrorist attack, then they could lose time. And in the preparedness business, time equals lives -- Wolf.

BLITZER: You told us, Jamie, about a shortage of equipment. What about personnel in this sort of worst-case scenario?

MCINTYRE: Well, again, right now the Guard is in pretty good shape in terms of personnel. But, just to put a point on the scale here, they are -- there are Guard right now deployed in 25 states handling fires or floods or other disasters. So, it shows that already half the states have Guard units deployed. If there's a major disaster on top of that, you're going to feel the strain.

BLITZER: What a nightmare scenario that would be.

Jamie, thanks very much.

Up ahead, students in a school in Tennessee are warned that a gunman is on the loose, but it's a prank, and it's a prank done by teachers. We're going to have the reaction.

Also, the stage now set for talks between the U.S. and Iran. That's right, Iran. We'll talk about it with the former defense secretary, William Cohen.

What's behind the shift in U.S. policy?

Stay with us. You're in THE SITUATION ROOM.


BLITZER: In a very serious new exchange of rhetoric, luster threats from the very top. The United States and Iran are actually making plans right now to talk things over.

Let's go to our State Department correspondent, Zain Verjee.

Zain, update our viewers on what's going on.

ZAIN VERJEE, CNN STATE DEPT. CORRESPONDENT: Wolf, the U.S. and Iran met for just a few minutes on the sidelines of a conference in Egypt a couple of weeks ago. But now there are plans in the works for a real sit-down, a major turnaround in U.S. policy.

Old enemies are coming face to face in a few weeks. American diplomats agreed to meet with their Iranian counterparts in Baghdad. At issue, how to stop the bloodshed in Iraq and move the political process forward with Iran's help.

TOM CASEY, STATE DEPT. SPOKESMAN: They continue to say that they wish to be a positive force.

VERJEE: Even as both sides reach out, their fiery rhetoric continues.

Washington accuses Iran of fuelling sectarian warfare, supporting militias and supplying insurgents with explosives that kill U.S. troops. But on her way to Moscow, Secretary of State Condoleezza Rice says it's time to talk.

CASEY: We want to see whether the Iranians are willing to make any kind of change in their behavior.

VERJEE: While in the region, Vice President Dick Cheney lashed out at Iran.

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: We'll stand with others to prevent Iran from gaining nuclear weapons and dominating this region.

VERJEE: Iran's president, Mahmoud Ahmadinejad, punched back, hosting an anti-American rally in Dubai and saying if the U.S. attacks Iran, there will be "severe" retaliation and the U.S. would "repent".

In spite of tensions, it's Iraqi leaders who are pushing both sides to the table, hoping it could ease sectarian tensions.

AFSHIN MOLAVI, NEW AMERICA FOUNDATION: This could potentially be an important channel of dialogue. I don't see it as a channel that leads to a breakthrough that may lead to widespread -- you know, wide- ranging Iran-U.S. rapprochement.


VERJEE: The last time the U.S. and Iran tried to cooperate was after the invasion of Afghanistan, back in 2001. Those talks never really broke the ice, and expectations experts say are pretty low in a similar way of these talks -- Wolf.

BLITZER: All right, Zain.

Thank you.

Let's get some analysis now on what's going on.

Joining us, our world affairs analyst, the former defense secretary, William Cohen. He's chairman and CEO of The Cohen Group here in Washington.

The vice president, Dick Cheney, goes aboard an aircraft career in the Persian Gulf, makes some very strong remarks about Iran. The Iranian president then shows up in the UAE, where Cheney himself had been only a few days earlier, says if the U.S. attacks, there will be severe retaliation. And then amidst all of this, there's words that there will be a high-level meeting in Baghdad.

What's going on?


On the one hand, Vice President Cheney is obviously sending a signal to all of the countries in the Gulf who are very, very worried that Iran is going to move forward with a nuclear weapons program. His signal to them is, we will not let that happen, and we're going to take measures to try and prevent that from taking place. So, he wants to reassure the Gulf states they should count on the U.S. support in the event that the Iranians continue to go forward.

On the other hand, Secretary Rice is saying that we're prepared to discuss at least Iraq in terms of whether we can help stabilize Iraq by working together. So, it's a message on the one hand there's an opportunity for cooperation. On the other, the fist of iron, so to speak, with Secretary Cheney (sic) -- Vice President Cheney.

BLITZER: Vice President Cheney. You know the way things work in Washington. Is it clear to you that Secretary Rice and Vice President Cheney are on the same page?

COHEN: Well, one can -- I assume that they are. And I assume that President Bush has to be coordinating this. He can't on the one hand have the vice president carrying out a separate policy from his secretary of state. So I assume that there is some coherency to this particular approach.

President Ahmadinejad, the Iranian president was in UAE, as your segment showed. But there, again, I think he's concerned about what's taking place in the UAE.

The UAE is strengthening its relationship with the United States. It is building up its defensive capabilities. The same thing is true with the Saudis.

So, I think that the Iranians are getting concerned now that all of the Gulf states are now starting to shore up their defenses because they're worried about Iranian expansionism.

BLITZER: You know, he sort of follows Cheney wherever he goes, Ahmadinejad. And in the United Arab Emirates, including in Dubai and Abu Dhabi -- this is a country that's very close to the United States -- he gets a -- he gets to meet with all the top leaders there, just as was the case when he was in Saudi Arabia and elsewhere, yet these same countries profess to be worried about an Iranian nuclear capability.

COHEN: Well, we're worried about an Iranian nuclear capability, and we're going to meet with the Iranians. So there's nothing wrong with the Saudis, the UAE and other countries meeting with the Iranians as long as the Iranians understand this is not any kind of a capitulation.

This is sending a signal that they're concerned about what Iran is doing. The United States is getting closer. We now have two carrier battle groups in the region.

We are determined to pursue sanctions in the United Nations Security Council. And there's an effort under way in Congress which I think is very important, and that is to shut down any investment of pension funds into Iran, some of which may be taking place today, to continue to squeeze Iran on the economic side, as pursue diplomacy on the other. So, I think it's a -- it's a good policy to pursue, and that is show that we're willing to talk, but also show that we're willing to back it up with some serious sanctions and more if necessary.

BLITZER: Secretary Cohen, thanks for coming in.

COHEN: A pleasure.


(COMMERCIAL BREAK) BLITZER: Let's get some more on that breaking story we've been following. The number two man at the Justice Department, the deputy attorney general, Paul McNulty, is resigning. Let's get some specific details from Kelli Arena, our justice correspondent.

Kelli, this comes as a bit of a surprise.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Paul McNulty -- we have a copy of his letter -- sent a letter to the attorney general saying, look, I've got college age kids. I've been working for the government for two decades. Basically, it's time to make some money, so I'm on my way out of here.

But of course, you k now, Wolf, a lot of background discussion over whether this was related to this whole U.S. attorney debacle. Paul McNulty got up there in front of Congress, testified that these U.S. attorneys were let go for performance reasons, not political reasons, then later had to correct that testimony.

McNulty claims that he was not informed properly, that no one was communicating with him. So that, of course, is going to be the talk in the town after -- after his departure.

BLITZER: And he himself is a former U.S. attorney himself.

ARENA: That's right.

BLITZER: What's the White House saying about all of this?

ARENA: The White House is saying, look, we don't think this is connected to this U.S. attorney issue. We're going to take him at his word. He says it's for personal reasons. Let it be.

Of course we heard from Chuck Schumer, as you know, the senator from New York who has been really spearheading this U.S. attorney issue on the Hill. And he says, isn't it ironic Paul McNulty, who leveled with Congress, is leaving, but Gonzales, who has been stonewalling us, has decided to stay?

BLITZER: All right. We'll stay on top of this story.

Paul McNulty, the number two man at the Justice Department, he's out.

We're watching this story closely.

A group of Tennessee teachers could be facing some serious trouble over a prank that many say showed extremely poor judgement, especially in the wake of the Virginia Tech massacre. They staged a mock attack on an elementary school bunch of students, telling them there was a gunman on the loose.

Let's get some specific details. Brianna Keilar is standing by.

What exactly did the teachers do, Brianna? BRIANNA KEILAR, CNN CORRESPONDENT: Well, Wolf, they terrified at least some of the kids on this trip, and now they are being reprimanded. A representative for the school tells CNN that staff members involved have received letters of discipline after pulling this so-called prank last week.


KEILAR (voice over): Thursday night, sixth graders on a class trip were packing up in their camp dorms, preparing to leave Fall Creek Falls State Park the next day, when teachers tell the kids to come back into the cafeteria.

DALTON BROWN, STUDENT: And tell us to "Get under the table. We have a code red." A code red is when there's a person in the area with a gun, knife or bomb.

KEILAR: A staff member tells them there are people in the park driveing around shooting guns. The students from Scales Elementary school take cover in the dark.

UNIDENTIFIED MALE: We thought it was actual gunmen in the area.

SHAY NAYLOR, STUDENT: There was a van there, and it had the lights flickering on and off and the horn beeping.

KEILAR: Another parent who asked that her name be withheld tells CNN a teacher or staff member wearing a dark, hooded sweatshirt pulled on an outside door of the cafeteria.

BRANDY COLE, PARENT: The kids were underneath tables crying and praying to God, and begging for their lives, thinking that they were going to die.

KEILAR: At this point the students are told it's just a prank. Their parents are outraged.

The school issued a press release saying, "Throughout the week the students had been anticipating a typical campfire prank from the teachers. The children knew that this was a traditional experience from hearing about previous excursions to the same location by former sixth graders."


KEILAR: A representative for the school admits the prank was inappropriate, but she says she's been told only a few of the kids were actually upset. Some of the parents that I've spoken to say the school is trying to minimize the effect on students -- Wolf.

BLITZER: Brianna Keilar reporting.

Coming up next, a carjacking caught on tape. You're not going to believe what the victim went through, who he is.


BLITZER: Let's check back with Brianna Keilar. She's monitoring some other stories incoming to THE SITUATION ROOM. She's in for Carol.


BLITZER: Jack Cafferty with us in New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: That is so lame, that stuff, the Christmas lights?

The question is: How big a role should former president Bill Clinton play in his wife's presidential campaign?

Lou in New York, "Zero. The last thing she needs to do is remind voters of their messy marriage."

Don in Tennessee, "Hillary should announce today, 'Bill will be my vice president.' Stickers here in Tennessee say 'Come on, November 2008. I miss Bill.'"

Mary in California, "Big. The woman has no charisma. And unfortunately, it looks as if she'll be the Democratic nominee for president. Giuliani or McCain or Thompson would be disasters, but unless the shallow-thinking public is seduced by Bill, Hillary hasn't got a chance."

Nick in Pennsylvania writes, "I Don't think he should play any role in her election campaign. She should be voted in or out based on what she brings to the table, not on who she knows. I guess this might be his way of saying he's sorry about what he did with Monica."

Archie in Ontario, "Bill should be restricted to being alongside Hillary at campaign speeches, smiling and nodding when required. This will show the American public what a nice, normal family unit they are. Oh, is my sarcasm showing?"

Yes, it is, Archie.

Chuck in McCaysville, Georgia, "What a shock! The only person who wants the White House and all the power that comes with it more than Hillary is Bill. He'll play a big a part as he has to. Remember of the two Clintons, Bill is the likeable one."

And Dave in Michigan City, Indiana, "Clinton has political savvy unlike any other candidate since Ronald Reagan, and before him, John Kennedy. Senator Clinton will use him, win the nomination, win the general election, and then toss him aside like a dirty towel in the shower room."

if you didn't see your e-mail here, you can go to We post more of them online, along with video clips of "The Cafferty File". I'm going to be a guest tomorrow morning, Wolf, with Lou Dobbs on Don Imus' old radio show on CBS. I expect to you set your alarm early and get up and listen to that.

BLITZER: You're going to be on. So am I.

CAFFERTY: Are you?

BLITZER: Yes. We'll both be on.

CAFFERTY: Not at the same time, I don't think.

BLITZER: Different times, Jack.


BLITZER: But let's go to Lou right now. He's in New York.


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