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Putin Visits Bush Compound in Kennebunkport; Hezbollah in Iraq

Aired July 2, 2007 - 17:00   ET

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


SUZANNE MALVEAUX, HOST: You're in THE SITUATION ROOM.
Happening now, a summit surprise as President Bush and Russian President Vladimir Putin go head to head over U.S. plans for a missile defense system in Moscow's backyard.

Also, American suspicions confirmed Hezbollah in Iraq leading attacks on U.S. troops. We'll show you new evidence resulting from a critical arrest.

And First Lady Laura Bush steps into the fray over AIDS and prevention and abstinence. I caught up with her in Africa for a one on one interview.

Wolf Blitzer is off today.

I'm Suzanne Malveaux and you're in THE SITUATION ROOM.

A summit surprise for President Bush, fishing with Russian President Vladimir Putin at a summit in Maine.

The top item on the agenda, U.S. plans for a missile defense system based in Eastern Europe, plans that chilled relations between the U.S. and Russia.

CNN White House correspondent Ed Henry joining us live from Kennebunkport.

So how did things go Ed?

Did it help smooth over the relationship a little bit?

There's been a lot of anticipation.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Suzanne, there was no major breakthrough. But the White House does feel they moved the ball forward a little bit, at least, on missile defense. And, also, they feel that they accomplished the goal of using the casual atmosphere here to warm up some of those chilly relations.

(BEGIN VIDEO TAPE)

HENRY: (voice over): After more than an hour of fishing near the Bush family compound, Vladimir Putin was the only president to catch anything a 30 inch striped bass.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: It's a fine catch.

HENRY: But President Bush reeled in a surprise a promise from Putin for enhanced cooperation on a controversial U.S. missile defense shield in Europe.

PRES. VLADIMIR PUTIN, RUSSIA (THROUGH TRANSLATOR): We do support the idea of the continued consultations on this score. At the same time, we do believe that the number of the parties to this consultation could be expanded through the European countries who are interested in resolving the issue.

HENRY: Mr. Bush called the proposal to work through NATO and set up an information sharing center in Moscow sincere and innovative. But he would not budge on basing the radar and missiles with two European allies.

BUSH: I think that the Czech Republic and Poland need to be an integral part of a system.

HENRY: Putin also stuck to his guns, saying he wants the system based in Azerbaijan and southern Russia, on his turf and terms.

There were other impasses, like Putin not supporting tough new sanctions against Iran to stop its nuclear enrichment program and no progress on independence for Kosovo.

But both leaders, eager to tamp down talk of a new cold war, put on happy face at the end of two days of talks.

BUSH: Do I trust him?

Yes, I trust him.

Do I like everything he says, no?

And I suspect he doesn't like everything I say.

HENRY: Former President Bush, host of the so-called Lobster Summit, looked on glowingly as the two leaders addressed reporters. And Putin even tried to deflect credit for hooking the bass, saying it was a team effort, and spoke of a new partnership.

PUTIN: The relations between our two countries would be raised to an entirely new level.

(END VIDEO TAPE)

HENRY: There are questions now, though, whether this is a stalling tactic by Putin and whether bringing more people to the table will just drag this process out. But White House officials say they feel that bringing more people to the table ultimately will make sure this proposal is more sound and has more widespread support around the world -- Suzanne.

MALVEAUX: And, Ed, you and I watching these two leaders, the body language there, it does seem like they're a little more comfortable with each other at this time, at this summit.

I want to turn the corner real quick. I understand that the president put out a phone call to the British prime minister about the terror plot.

What is the latest on that?

HENRY: Well, you're right, Suzanne.

The president actually is now actually back at the White House. And aboard Air Force One on the way home, he did reach out to British Prime Minister Gordon Brown for the first time since those terror incidents.

He praised Mr. Brown for his performance so far, offered more cooperation, as well.

We're told by a White House official that Mr. Brown responded that he believes the British public will not be intimidated -- Suzanne.

MALVEAUX: OK.

Ed Henry, thank you so much.

Good to see you.

The terror threat in Britain right now at the highest level -- critical -- as new details emerge about those attempted attacks in London and Glasgow. Sources tell CNN investigators are focusing foreign born doctors, including an Iraqi and a Jordanian. And we're getting word of an eighth arrest in this case.

Let's go straight to our CNN international correspondent, Nic Robertson, live in Glasgow -- Nic, what do we know about the doctors?

NIC ROBERTSON, CNN CORRESPONDENT: Well, Suzanne, one of those doctors, the Iraqi doctor, was one of the attackers at Glasgow Airport -- drove his vehicle into the airport, set it on fire. He worked at the hospital behind me, the Royal Alexandra Hospital, just a few miles from the airport. He was an Iraqi. We know that. He worked at the hospital. We know that.

One reporter, in a discussion with another doctor at the hospital here, said that he studied religion a lot. We know very few other details about him.

We know a little more about the Jordanian doctor, Mohammed Asha. He was a Palestinian from Jordan. His father said that he had come to England to study, to further his medical qualifications. He has been in Jordan a high flier, winning a scholarship to study medicine, going to a very, very privileged school that he won a scholarship, again, through his academic abilities. His father very surprised to find out that he's been arrested in Britain.

Again, the police, at this time, saying very, very few details publicly. But we're learning a lot from sources here -- Suzanne.

MALVEAUX: And, Nic, what do we know about a possible motive in this case?

ROBERTSON: Well, both the prime minister and the home secretary have said that this seems to be an Al Qaeda-related type operation, an Al Qaeda-related group. And that appears to be, perhaps, the best assessment that we've had publicly from officials so far.

I did talk to one member of parliament earlier. He said that he thought perhaps the attacks in Scotland, because there had been a change now from prime minister, Blair, to Prime Minister Gordon Brown, and Gordon Brown coming from Scotland, perhaps that reason for the attacks in Scotland -- Suzanne.

MALVEAUX: Sure.

Thank you very much, Nic Robertson.

A day of fast moving developments in this story. Each new bit of information raising anxiety across Britain.

Our chief international correspondent, Christiane Amanpour, is live in London -- Christiane, you have been watching all of this, this problem in the U.K. for quite some time.

Do you think that this is an isolated incident or do you suspect more?

CHRISTIANE AMANPOUR, CNN CORRESPONDENT: Well, it's not isolated. It's after a string of events such as this which started back two years ago. And because the threat is now critical, and has been since Saturday, that means the government here expects another one, although they have no specific information, neither they nor Scotland Yard. The Metropolitan Police say they don't have any specific indication, but they do expect another one could be imminent.

So they have blanketed out. There is a huge police investigation. It's up and down the breadth of the country. They've been very, very lucky, first, that there were no casualties yet; and, second, that there was so much preserved evidence because of the failure of these explosives.

They say that they are absolutely confident that they will know not only the people involved, but the motive and the network. And one of the things that they are looking at is the possibility that this could now be a network of medical professionals who have come from outside the country to create these kinds of terrorist attacks.

So far we're being told none of those arrested are, in fact, British born and raised. Those British born and raised minority, the same kind of people who did the 7/7 attacks -- that was on the subways and busses -- two years ago, they were British born and raised. And much of Scotland Yard and the police counter-terrorism investigations have centered on homegrown cells. This, they don't believe, is a homegrown cell. In fact, we know that there are certainly at least several who have been arrested who are from either Jordan or Iraq or various other countries -- Suzanne.

MALVEAUX: And, Christiane, it seems to be that these suspects are well educated, they're middle class.

Is that unusual?

AMANPOUR: Well, yes and no. There have been, you know, whether you take the terrorist attacks here or whether you take the ones in the United States in 9/11, these were educated enough to learn how to fly planes. Here you've already heard the evidence of at least one of the doctors who has been arrested. We're not quite sure yet what his involvement was. But potentially -- well, he is a suspect, the British say. But he clearly has had a very, very sterling medical qualification and academic record.

And many of these people, we're being told, are in the medical profession. And that indicates, you know, a level of intelligence and professionalism.

So this is something that's, you know, actually has been the case in many of these cells.

MALVEAUX: Christiane Amanpour, thank you very much.

Christiane.

And some experts believe that the timing of these latest U.K. attacks may be deliberate.

Our CNN homeland security correspondent, Jeanne Meserve, joining us live with that part of the story -- Jeanne, does the summer look like this is going to be a terror season?

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Suzanne, officials believe they may be seeing a seasonal pattern in terror activity.

(BEGIN VIDEO TAPE)

MESERVE: (voice-over): Car bombs in London and Glasgow just the latest in a series of summertime threats.

Last August, authorities uncovered a plot to blow airliners out of the sky with liquid explosives.

In July of 2005, the London transit system was bombed.

9/11 took place at the tail end of summer.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: All those things put together do cause us to be concerned going into the summer. But we do not have any specific information about a particular attack at this point. ADAM GADAHN, AL QAEDA SPOKESMAN: We shall continue to strike back hard.

MESERVE: Although recent messages from Al Qaeda have threatened attacks on the U.S. counter-terrorism officials have not seen a significant spike in chatter or up tick in intelligence.

London and Glasgow, however, were a surprise to the British authorities. And U.S. officials know there may be something afoot here beneath their radar.

A former top homeland security official says terrorists may see summer as offering opportunity. Heavy travel and vacations by people in law enforcement could make it easier to slip through security. A purchase of fertilizer, a potential bomb component, might not raise suspicion during the growing season.

GEORGE FORESMAN, FORMER HOMELAND SECURITY UNDERSECRETARY: There are different patterns during the summertime that could potentially mask some of the preparations for terrorist attack.

MESERVE: Summer also means big public gatherings, which could be tempting targets.

(END VIDEO TAPE)

MESERVE: Hundreds of thousands are expected to gather here in Washington for July 4th. But law enforcement doesn't expect big changes in security. It was already very high -- Suzanne.

MALVEAUX: OK, Jeanne Meserve.

We'll keep our fingers crossed.

Thanks, Jeanne.

Stay tuned to CNN day and night for the most reliable news about your security.

Up ahead, a thorn in the side of Israel for years. Now evidence Hezbollah is playing a violent role in Iraq. We'll show you.

Also, Senator Fred Thompson taking flack from Hillary Clinton and others about over a controversial remark about Cubans.

And my one-on-one interview with First Lady Laura Bush speaking about abstinence and AIDS in Africa.

You are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: U.S. officials say the arrest of a top Hezbollah special operations officer has yielded evidence at last of something they had suspected all along -- a new foreign terror threat in Iraq.

What does the new information mean for the coalition's mission in Iraq?

Michael Ware now joining us from Baghdad.

Thank you so much.

Now, we have heard about Al Qaeda in Iraq. We've also heard about Sunni insurgents and Shia militia.

You have now broken the story that there are Hezbollah now inside of Iraq.

Tell us about their presence and what kind of operations are you seeing.

MICHAEL WARE, CNN CORRESPONDENT: Well, right now, Suzanne, the presence of Lebanese Hezbollah inside Iraq is unquantifiable. Obviously, this is happening out there in the hazy ether of the cloak and dagger world of this war. These are men who are well trained in the trade craft of espionage and spying and not being found.

But what the U.S. military is saying is that based on what they've learned from their arrest of a senior Lebanese Hezbollah special operations commander here in Iraq, is that Hezbollah is doing a number of things.

Firstly, they're here in an advisory capacity. The U.S. military says they know for a fact that Hezbollah is helping train Iraqi paramilitaries inside Iran. What's long been rumored but never proven until now, is that they're actually crossing the border with some of these paramilitaries and guiding and training and assisting their operations.

Now, those operations are part of a broad program and include the use of deadly roadside bombs known as the EFP, or explosively formed projected that punches through American battle tanks with ease. Kidnapping -- just like Hezbollah kidnapped Israeli soldiers to spark the Lebanese war, we can -- the U.S. military can link this commander to the attempted kidnap of five American soldiers in January, which unfortunately ended with their deaths.

So Hezbollah is part of a broad ranging program run by Iran focused on these anti-coalition activities.

MALVEAUX: So, Michael, let's talk about the strength of Hezbollah. You're saying, obviously, they have the support of the Iranians.

We saw, of course, in Lebanon the fighting taking on the Israelis, essential beating them in that war.

What do you think that they are capable of doing to American soldiers in Iraq?

WARE: Well, they're eminently capable of making an impact, particularly at this crucial time. Now, we know this fellow has been in and out of Iraq for over a year -- for about a year before he was captured. So -- and it's long been said that their presence predates that.

What we know is that they're small in number, but these are the masters of guerrilla warfare in this region -- trained by the Iranians, but hardened in the fires of battle against the Israelis. They're experts in this particular type of Iranian roadside bomb that's having such an impact here. They're experts in the kind of operations Iran wants its Iraqi proxy paramilitaries to carry out.

And essentially what Iran is doing is trying to put the pressure on America. It knows the domestic timetable. It knows General Petraeus is going to face Congress in September. So it wants to skew his figures for that as much as possible. Their foot is on the accelerator -- Suzanne.

MALVEAUX: And, Michael, let's talk about that deadline, that assessment in September.

As you know, General Petraeus and others are going to be looking at that.

From what you can tell, in two months or so, what do you think that so-called U.S. surge is going to produce?

WARE: Well, it's really, truly a mixed bag. Certainly in some areas, the figures are down. For example, according to the Ministry of Interior here in Iraq, albeit a less than a reliable source in the past, it has accounted that civilian deaths this month are the lowest they've been all year -- 700 down on last month; just over 1,200 this month, down from 1,900 last month. That's a good figure.

But American deaths, for example, continue to stay high, hitting triple figures. So we're not seeing any dip in that.

Now, the Americans would say that's because our boys are in the field and they're in the line of fire. But that's also because, according to the second most powerful general here in Iraq, as Lieutenant General Odierno said, our enemies are surging, as well. So they're trying to dilute the results.

At the end of the day, General Petraeus is going to have a big mix of conflicting data. He's going to have a host of conflicting opinions coming at him from everywhere. And when he goes back to tell America what's possible, he's really going to have to go on his gut. He's not going to deliver a miracle. The best he can say is we see signs it could work, give us more time.

MALVEAUX: OK, Michael Ware, thank you so much, from Baghdad, joining us here in THE SITUATION ROOM.

WARE: Thanks, Suzanne.

MALVEAUX: This is the fourth anniversary of a dare President Bush made to insurgents in Iraq, one he later said he regretted.

(BEGIN VIDEO CLIP FROM JULY 2, 2003) BUSH: There are some who feel like that, you know, the conditions are such that they can attack us there. My answer is bring them on. We've got the force necessary to deal with the security situation.

(END VIDEO CLIP)

MALVEAUX: Protesters marked today's benchmark by marching outside the White House. It was a dare many critics still call reckless. One demonstrator said he was in Baghdad during the U.S. invasion in 2003. He says he was horrified by the president's statement and feared for his life.

Coming up, find out what one Republican possible White House contender said about terror that has him under fire from Democrats, Cuban-Americans and others.

And a critical court ruling for the vice president's former chief of staff.

Will "Scooter" Libby get out of jail?

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Our T.J. Holmes is monitoring stories incoming to THE SITUATION ROOM right now -- T.J. what are you looking at?

T.J. HOLMES, CNN CORRESPONDENT: We are looking at Mickey Mouse and pipe bombs. That doesn't sound right. One of the last things you'd expect at a Disney theme park -- what's described as a very crude device, possibly a pipe bomb, blew up in a trash container in a remote parking lot at Florida's Walt Disney World. This went off just about -- just after midnight, rather, this morning. Orange County officials there say were no injuries and a small fire in the container was quickly put out. But they are certainly looking into it at this point.

Also, the doctor of dead professional wrestler Chris Benoit has been indicted by a federal grand jury. Dr. Phil Astin faces seven charges of improperly dispensing and distributing painkillers and other drugs. Local police and federal agents searched Astin's offices last week. Benoit's name does not appear on the indictment, but federal agents are investigating whether or not Astin may have prescribed controlled substances to him. Police say Benoit strangled his wife, smothered their 7-year-old son, then hung himself late last month. They are still awaiting toxicology reports.

A federal appeals court says former White House Aide Louis "Scooter" Libby must go on to prison for his conviction stemming from the leak of the CIA operative's identity. A three judge panel today rejected Libby's bid to remain free on bond while he appeals his March conviction for perjury and obstruction of justice. The former chief of staff to the vice president faces 30 months in prison. Well, more than a third of U.S. adults have abused alcohol at some point in their lives. But only a handful of them have gotten some kind of treatment for it. Those are the findings from a newly released government study. It found that only 24 percent of alcoholics report receiving any treatment. Those who did first received treatment at the average age of 30, roughly eight years after developing a drinking problem. So interesting findings there.

We know you're just a half a glass of wine kind of girl yourself, Suzanne.

MALVEAUX: Absolutely.

HOLMES: so no issues for you.

All right.

MALVEAUX: All right, T.J. Holmes, thanks again.

And coming up, all smiles at a seaside summit.

But did the meeting between President Bush and his Russian counterpart do anything to warm frosty relations?

Plus, find out why the biggest threat to Iran's government may be at the pump.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, a disastrous mess in southeast Kansas, where 42,000 gallons of crude oil spilled from a refinery into hazardous floodwaters. The water is carrying the slick toward a popular lake in Oklahoma. EPA teams are on the scene of the spill.

A slide in quarterly fundraising has forced John McCain's presidential campaign to make some staff cuts. The Arizona Republican's effort raised $11.2 million between April and June, down from the $13 million raised the first quarter of 2007. Advisers blame McCain's support of the failed immigration bill.

And officials in California say firefighters now have full containment of a week old fire at Lake Tahoe. The fire destroyed more than 250 homes and burned more than 3,100 acres of forest. More than 3,000 people had to evacuate their homes. Many of them lost everything.

I'm Suzanne Malveaux and you're in THE SITUATION ROOM.

President Bush and Russian President Vladimir Putin presented a united front against Iran's uranium enrichment program today during their summit in Kennebunkport, Maine. But while the U.S. and Europe focus on the nuclear issue, many Iranians have other matters on their minds.

Our CNN State Department correspondent, Zain Verjee, joining us now -- Zain, many Iranians seem to be very angry with their government.

Why?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, that's exactly right, Suzanne.

Many Iranians have been gas guzzlers, but now their president wants to change that.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): On the streets of Tehran it's not nuclear weapons they care about, it's gasoline. Iranians are having major problems at home getting fuel for their cars. President Mahmoud Ahmadinejad just jacked up gas prices by 25 percent and then ordered rationing.

Iranians, who gorged on cheap gas, are furious. Stations on fire, violent protests on the streets, a crush to fill up for those who can afford it. Ahmadinejad could even squeeze himself out of a job.

TRITA PARSI, NATL. IRANIAN AMERICAN COUNCIL: I think this is going to be an unpopular decision and it's probably not going to help him in his reelection.

VERJEE: Despite a wealth of crude oil underground, Iran doesn't have enough refineries producing gasoline and is forced to get it from outside. But some experts say the gas rationing is a smart move ahead of possible new international sanctions over the nuclear standoff.

PARSI: By the time there may be some sanctions on gasoline to Iran, the Iranians will either be self sufficient or they will have already artificially decreased demand so much that the sanctions themselves will not be seen as very effective.

VERJEE: U.S. officials say that's not in the cards.

SEAN MCCORMACK, STATE DEPT. SPOKESMAN: We weren't looking at imposing sanctions on the oil and gas sector. And that's something that still holds.

(END VIDEOTAPE)

VERJEE: President Ahmadinejad has been really criticized for mismanaging the Iranian economy. But, Suzanne, experts also tell us that he's the only Iranian leader willing to raise gas prices. None of the others, they say, had the guts to do so.

MALVEAUX: So, Zain, how much are the Iranians paying for their gas? Is it like us, is it more or less? VERJEE: No, no, no, no, it's not like us. In Iran, gas is actually cheaper, Suzanne, than water. It costs the equivalent of 38 cents a gallon. And that's just a fraction, as you know, of what we pay.

MALVEAUX: OK. Thank you very much, Zain. Iran has a new English language satellite television channel, the Tehran-based channel was launched today. And officials say it will seek to add balance to world news coverage which they say is in the grip of the West. The 24-hour state-owned channel has bureaus in a number of world capitals.

Now more on our top story, the so-called "lobster summit" between President Bush and President Vladimir Putin, with the Russian leader offering a surprise pledge of more cooperation on a U.S. missile defense system. Joining us to talk about it, our world affairs analyst, former Defense Secretary William Cohen.

Come on in, Chairman. Thank you very much for joining us. Obviously, it was very interesting to see what happened today. Not really surprising. Some breakthroughs here. But if you were, once again, secretary of defense, what would you offer Putin to smooth over relations?

WILLIAM COHEN, CNN WORLD AFFAIRS ANALYST: Well, the first thing I would continue to invite him back to Maine. Things go better in Maine than perhaps elsewhere.

MALVEAUX: They seem to.

COHEN: They seem to. And so having these meetings, particularly in this kind of setting, sets a tone that we want to establish a better relationship with President Putin and with Russia itself. Secondly, I would, through these discussions, point out that Russia has a similar concern -- should have a similar concern about Iran going forward with a nuclear weapons program.

It seems to me inconsistent on the part of President Putin to say on the one hand he doesn't want to increase sanctions on Iran, on the other he doesn't want to see the United States put up a defense capability against Iran should they ever decide to launch missiles.

So he is having it sort of both ways. And what we need to do is to point out Iran continues to pose a threat. Russia understands this. Russia does not want to see Iran become a nuclear weapons state because of what it will unleash in region itself in terms of instability, the possibility of nuclear weapons getting into the hand of the Chechnyans. Not in Russia's interest.

So what we have to do is point out why Russia should act and support the United States in dealing with Iran. Secondly, we might also extend to President Putin a sharing of our technology and working with them to say you can help us and we can help you against this kind of proliferating threat, particularly Iran and possibly even North Korea. MALVEAUX: Do you think it was wise the president's call today when he rejected Putin's offer about having that the radar system in Azerbaijan? Obviously he doesn't think the technology is up to snuff. But it does bother Putin that he can't seem to move that issue in his favor.

COHEN: Well, I think what we have to point out is we should be willing to discuss all sorts of alternatives with President Putin. What we shouldn't do is yield to the kind of threats that he has made against the Europeans, saying if they go forward with this particular plan supporting the United States, they'll become targets.

We went through this back during the Cold War when the Russians were -- the Soviets were deploying SS-20 missiles targeted at the Europeans. The United States had to then persuade the Europeans, we had to deploy Pershings in order to discourage them from going forward.

So we don't want to return to that kind of level. I think we can point out to President Putin that there is technology that could be used. We don't think Azerbaijan presents the kind technology that would be necessary in the event Iran ever launched a nuclear missile.

And so I think we can work with him, saying let's see what we can come up with in terms of technology, sharing information, sharing the kind of risk here that we have with other countries having this technology fall in their hands.

MALVEAUX: Who comes out on top after this summit? Obviously, beforehand we heard Putin actually describing that the United States government was like the Third Reich, a lot of antagonistic language between these two. Putin is very popular, increased oil revenue, President Bush is not.

COHEN: Well, he comes out on top in the sense he caught a fish today, so that puts him on top. But secondly, he doesn't come out so much on top, he comes out on top in Russia. He does not come out on top in Europe where he was making threats against them, using the potential of energy, gas and oil as a weapon against the Europeans unless they cave to his particular concerns. He might either cut the supply down, increase the price. That's not playing too well in Europe.

So I would say it's a good meeting for both. Neither one comes out on top. It's very important we have a good relationship with Russia but we shouldn't yield to pressure. We should explore in a very cool and even-handed fashion how we need to protect ourselves and to also protect the Russian people from a similar threat.

MALVEAUX: Let's talk about Bush's father here. I mean, you've got a former president, vice president, CIA head. And he was in the background. Should he have been the one, the guy who was -- you know, played a major role in perhaps smoothing things over a little bit?

COHEN: No, I think he -- the role he plays is one of setting the setting, so to speak, to making his home available, to set the tone, the mood, to provide the craft -- the seacraft, the cigarette boats or whatever he has now.

MALVEAUX: The lobsters.

COHEN: For lobsters. I think that's the role that he plays, knowing that he's in the background. But I think that President Putin has respect for him and I think it was the right move for him to make, to be in the background, let President Bush 43 take the primary role, because he's the president.

MALVEAUX: Sure. But do you think it sent a signal to Putin that we're serious here, we really want to break bread?

COHEN: Oh, I think absolutely. Inviting him to Maine, as I say, it's a good move. And I think the mood was right and it signals to President Putin we want to do business with him but we want to do it on a basis of even-handedness, not succumbing to threats, but examining the nature of the threat, see if we can't work together to put this risk at bay.

MALVEAUX: Bill Cohen, thank you very much. And up ahead, my exclusive one-on-one conversation with first lady Laura Bush. We'll talk about the controversy over promoting abstinence as the way to fight AIDS in Africa. That's next.

Also, he's not even a presidential candidate, yet his comments about Cuban immigrants and terrorism are prompting outrage on the campaign trail. Why Fred Thompson is causing such a stir.

(COMMERCIAL BREAK)

MALVEAUX: The U.S. is spending an unprecedented amount of money in the global war against AIDS. A $15 billion commitment which President Bush wants to double over the next five years. Congress requires part of that money to go to AIDS prevention programs that promote abstinence. And that's causing a fierce debate among health workers and AIDS activists over whether those programs really work.

I talked to first lady Laura Bush about the controversy when I sat down with her in a one-on-one interview in Lusaka, Zambia.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): First lady Laura Bush, preaching the virtue of abstinence in Africa's fight against AIDS.

LAURA BUSH, FIRST LADY: When you live in countries where 16 percent of the people could -- have or are HIV positive, could infect you if you had sexual relations with them, that huge percentage of the population, then abstinence absolutely has to be a part of it, because that's 100 percent safe.

MALVEAUX: When the Republican-controlled Congress first approved funding for AIDS prevention, it required that one-third of the money goes to abstinence programs. But do they work?

Two congressionally-mandated studies concluded that mandatory commitment to abstinence programs is actually undermining the global efforts to prevent 7 million new HIV infections by 2008. The Institute of Medicine found that it was unable to find evidence for the position that abstinence can stand alone.

L. BUSH: Elizabeth Mataka, who is the special envoy from the United Nations secretary-general for HIV-AIDS in Africa.

MALVEAUX: Ms. Mataka was recognized by the first lady for her work in fighting AIDS, but she disagrees with the Bush administration's approach, denying money to some groups who teach about condoms.

ELIZABETH MATAKA, U.N. SPECIAL ENVOY: I think actually it's a violation of young people's sexual health rights because information is a right. And if you are going to promote and leave out certain information because you don't like it, then I don't think that's correct.

MALVEAUX: Paul Kasonkomani also thinks money being poured into abstinence programs is a waste.

PAUL KASONKOMANI, AIDS ACTIVIST: I'm living with HIV since 2001. I'm married and my wife is also living with HIV.

MALVEAUX: Kasonkomani and a small group of AIDS activists gathered at the first lady's hotel, hoping to deliver the message in person.

KASONKOMANI: President Bush should know that Zambians are people. We, too, can think. We, too, can plan. We should not be taken for granted.

MALVEAUX: But the Bush administration says abstinence is only a small part of the president's comprehensive program in combating AIDS. Abstinence programs have had some success where locals have created and controlled how they're run.

And while the first lady defends the administration's commitment to abstinence, she also supports people using condoms.

L. BUSH: Because men wear condoms, and not every girl or woman can get their partner to do that. Now, I'm not saying that condoms aren't absolutely essential. They are. And it's very, very important.

(END VIDEOTAPE)

MALVEAUX: Democrats now controlling Congress have won House approval of an amendment on a bill for this year's coming AIDS funding that would allow the president to waive that one-third requirement. And I asked the first lady about it. And she said that she found that idea to be perfectly fine.

Jenna Bush accompanied her mom on the Africa tour and we got a rare glimpse of what the first daughter is really like. We're going to show you how and why she is focusing on Africa as well. And that is going to be coming up tomorrow.

And up ahead, a possible White House hopeful generates controversy with his remarks on terror, illegal immigration and Cubans. We'll have details of what Fred Thompson said and how he's defending himself.

Plus, butts out in England, following New York City's lead with a ban on smoking in most public places. Stay with us here in THE SITUATION ROOM.

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MALVEAUX: This just in, from the president's office a developing story here -- breaking story. President Bush has commuted the prison sentence of former White House aide Lewis "Scooter" Libby. This is according to the Associated Press, that a statement has been put out by the White House essentially that would mean that this aide is not going to jail.

He had been given a two-and-a-half year prison term on Monday. This order issues -- that commutes his sentence leaves the Libby probation and the fines intact, but it means that he does not go to prison. There was a lot of speculation over what the president was going to do, whether or not he was going to pardon Scooter Libby, whether or not he was going to commute the sentence. We're going to go to Brian Todd. I think he has got a little bit more information about how this developed during the day -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Well, Suzanne, this does come just a couple of hours after a federal appeals court rejected Scooter Libby's bid to remain free pending appeal. He had appealed the judge's ruling that he could not be free pending his appeal of his conviction.

A lot of this just basically throws all that out if this AP report is correct, that the president has commuted his sentence. It does look like Scooter Libby won't be going to jail after all. This last development today before this news happened essentially meant that it was just a matter of weeks probably before Scooter Libby would in fact have to report to prison.

The Bureau of Prisons was just getting set to decide where he was going to be incarcerated and when he would report. Of course, if this report does play out as reported by AP, it looks like all of that is out the window now. And it doesn't mean that his conviction is overturned. It just means his sentence is commuted. It also probably does an end-around the whole political and legal question of a pardon.

So this is pretty big news right now.

MALVEAUX: And, Brian, I understand now we've got a little bit more information coming from our White House correspondent Ed Henry, who was with the president today in Kennebunkport, Maine. I understand the White House is now talking, several officials, about the president's latest move here.

Ed, what can you tell us?

HENRY: That's right, Suzanne. Suzanne, we have a statement from the president. He lays out -- it's a two page statement, it's quite lengthy. He lays out a lot of details about the Scooter Libby case.

But the key part is that near the end, he says: "I respect the jury's verdict, but I have concluded that the prison sentence given to Mr. Libby is excessive. Therefore, I am commuting the portion of Mr. Libby's sentence that required him to spend 30 months in prison. My decision to commute his prison sentence leaves in place a harsh punishment.

"The reputation he gained through his years of public service and professional work in the legal community is forever damaged. His wife and young children have also suffered immensely. He will remain on probation. The significant fines imposed by the judge will remain in effect. The consequences of his felony conviction on his former life as a lawyer, public servant and private citizen will be long lasting."

Finally, the president says the Constitution gives the president the power of clemency to be used when he deems it to be warranted. "It's my judgment that a commutation of the prison term in Mr. Libby's case is an appropriate exercise of this power."

The president at the very top explained, as you know, Suzanne, over and over, and we and other reporters have tried to get the president to comment on the Libby case, he has said that he would not comment until all appeals are exhausted. Because of what the U.S. Court of Appeals did today, the president says at the top of the statement: "I believe it is now important to react to that decision," that Brian was just talking about from earlier today.

So that is exactly what the president lays out. There's a lot more detail, but the key there is that he feels that this is, rather than a pardon, commutation of the sentence will not have Mr. Libby in prison but will keep the fines and other things in place -- Suzanne.

MALVEAUX: Right, right. And, Ed, I know both of us have been talking to officials for quite some time, trying to push them on this, to get a sense of what the president would do. He doesn't likely pardon people. There are a lot of different kinds of requirements that they have to meet in order for the president to do that, but this was definitely a possibility.

I want to bring Jeffrey Toobin on the phone, our legal analyst from CNN, to explain to our viewers, including the international viewers who are joining us now, what is the difference between pardoning Scooter Libby and commuting his sentence -- Jeff.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: A pardon would mean it was like the conviction never happened. It would be completely wiped off the books. It would be as if he was never charged at all. He would be no different from someone who had never had any contact with the criminal justice system.

Pardons are absolute and total. Commutations are different. They leave everything intact about the conviction, the fine, the probation, the effect on his legal record. But it does not mean he can go to jail. He is freed from any obligation to go to prison.

MALVEAUX: And, Jeff, what is the impact of that? The fact that Libby will still obviously have to pay a $250,000 fine and two years of probation, what does that mean for Libby's life now?

TOOBIN: I think there are two important points to make here. One is that the president has an absolute right to do this. He has total discretion in this area. Congress can't override it. A court can't override it. The Constitution specifically gives him this power.

The second point is this is a complete departure from the usual procedures. Scooter Libby is getting a very special brand of justice. He is getting enormous privileges that are not available to ordinary criminal convicts. There is an office in the Justice Department, the Office of the Pardon Attorney, that has very strict requirements on when you can apply for a pardon and, for example, one of those requirements is you have to have five years have to have passed since your sentence passed.

So you can just give -- have some sense of how different this is. The president has an absolute right to do this. But Scooter Libby got an enormous benefit here.

MALVEAUX: And, Jeff, just to clarify something here, is this the end of the legal battle here for Scooter Libby? This means that it's over?

TOOBIN: Not necessarily, because the remnants of the conviction are intact: the fine, the probation. He can continue to appeal his conviction while avoiding a prison sentence. And I expect he will do that. Why wouldn't he?

MALVEAUX: Bill Schneider also joining us now live.

Bill, obviously we've been talking to a lot of people about this, and conservative Republicans who really were pushing very, very hard on the president. We knew that the vice president did not want Scooter Libby to go to jail, that he was pushing towards the pardon angle here. But there was a lot of behind the scenes negotiations and discussions that got us to this point. What does it mean now for the president and his relationship to those conservative Republicans?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, I think a lot of conservative Republicans will be pleased by this move because they've been pressuring the president to pardon or commute the sentence of Mr. Libby. They didn't want to see Libby go to jail. Their argument throughout has been that there was no underlying crime here, that it was part of the legal process, that he was somehow -- committed a crime that was not a very serious crime and he shouldn't face prison time.

But I can tell you this, the Democrats and a lot of independents and some Republicans are going to be in a state of rage over this. We just did a poll and we asked Americans, do you think President Bush should pardon -- not commute, but pardon Scooter Libby for the crimes that he was convicted of? Seventy-two percent of Americans said no. Only 19 percent supported a pardon, which means that's probably not even a majority, or close to it, for Republicans.

MALVEAUX: And, Bill, just how much pressure was being put on the White House from that small Republican group, very powerful group?

SCHNEIDER: Well, I'm sure there was pressure but I think -- my reading of it was that they expected the president to do this before he left office, possibly after the election, so it wouldn't have political repercussions. This will almost certainly have repercussions.

As I say, it will drive a lot of Democrats to a rage because their argument is he was convicted of a crime, the same crime that Bill Clinton was impeached for. Now Bill Clinton was of course eventually acquitted by the United States Senate. But their view is this has to be treated as a very serious crime and it's all wrapped up in the attempt of the White House to cover up its decision to go to war -- the evidence for its decision to go to war in 2003.

MALVEAUX: And, Bill, just for our viewers, I want to wrap up a little bit here to give a sense of background here. Scooter Libby, the vice president's former chief of staff, who was convicted for lying to authorities and obstructing the investigation into a 2003 leak of the identity of CIA operative Valerie Plame, you may recall it was Valerie Plame's husband who was a critic of the Iraq War at the time. That is where all of this took place. That's where this has stemmed from.

Now, also being told that we have a statement that is coming from President Bush. It says: "My decision to commute his prison sentence leaves in place a harsh punishment for Mr. Libby. The reputation he gained through his years of public service and professional work in the legal community is forever damaged. His wife and young children have also suffered immensely. He will remain on probation. The significant fines imposed by the judge will remain in effect. The consequences of his felony conviction on his former life as a lawyer, public servant and private citizen will be long lasting."

This is a very similar statement to what we heard from the vice president a couple weeks ago when they were reacting to the whole process, that he would in fact have to go to jail. Something that Jeff had mentioned before. He said this is something that Congress cannot fight the president on. That this is a done deal here. What can we expect, Bill, from the Democrats, who are already very angry at this president, who are already engaged in multiple investigations, who get this news today?

SCHNEIDER: More anger, more bitterness, more division, more partisanship. But it's not just Democrats, I would stress. When you're only getting 19 percent to support a pardon, it's not just Democrats who would be angry about this. A lot of voters are going to be angry. But of course President Bush doesn't have to run again. But there could be serious cost for his party. He clearly sees this commutation as a compromise, as a moderate statement, because the punishment remains on the books, he still has to pay a fine, he's on probation, he's in disgrace, so to speak, and the conviction stands. But to a lot of voters and certainly to Democrats, this is not exactly a compromise.

MALVEAUX: And I want to go to Ed Henry, of course, on the front lines with the officials -- White House officials who have been talking to them. You've been getting this firsthand, Ed. Give us an update.

HENRY: Well, it's interesting, Suzanne. As you know, what often happens at the end of a trip for the president, he is gone, the press remains behind so we can finish filing our stories. Obviously this was a thunderbolt, a shock to reporters covering the president.

There had been no inkling of this at all. White House officials not letting this out until the president had already landed. As you know, he had flown ahead. He is back from Maine. He is at the White House already. This statement coming out.

Let's remember who Scooter Libby is too. Scooter Libby was a critical staffer. He was the chief of staff to the vice president, critical in help shaping the war policy at the very beginning, the case -- building that case for war that has become so controversial.

He himself, Scooter Libby, of course, has become a lightning rod. But he also had a dual role. He was a special assistant to the president as well. That's why there was so much pressure on the president for two levels, because he was an assistant to him, but also the president had the power of the pardon.

He is choosing instead to do the commutation of the sentence -- Suzanne.

MALVEAUX: OK. Ed, thanks very much. Of course, we'll be back to you in an hour or so with the very latest. We'll be back in THE SITUATION ROOM following the political fallout of this story. Until then, I'm Suzanne Malveaux, in for Wolf Blitzer. "LOU DOBBS TONIGHT" starting right now. Kitty Pilgrim is in for Lou -- Kitty.

KITTY PILGRIM, GUEST HOST, "LOU DOBBS TONIGHT": Thanks, Suzanne.

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