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THE SITUATION ROOM

McCain Aide Apologizes for Terror Remark; Saudi Oil Pledge Falls Short

Aired June 23, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM.
Happening now, the Saudis budge a bit on pumping more oil, but the price still goes up.

We're going to hear if the White House has an answer. We'll go live to Saudi Arabia, as well.

She's being called a scorpion with a cobra's head with blood on her lips and fangs. The Palestinian militant group, Hamas, aims the vicious rhetoric at the secretary of state, Condoleezza Rice.

So what's behind their venom?

And the stunning allegations that put her town in the national spotlight. But now a Massachusetts mayor is voicing doubts about claims of a pregnancy pact among the girls -- the school's girls.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Well, we begin this hour with breaking news. A formal apology just coming into THE SITUATION ROOM from a top adviser to John McCain for those very controversial remarks he made about terrorism. The chief strategist for the McCain campaign, Charlie Black, quoted in "Fortune" magazine as saying a new attack on the United States would be "a big advantage to McCain."

Let's go right to CNN's Dana Bash.

She covers the McCain campaign for us.

I understand there's a brand new statement just coming in from Charlie Black.

What's he saying -- Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, apology is a good way to put it, even though it's not exactly the words that he used. And this is a statement, Wolf, that's coming from the McCain campaign.

And what they say -- and I'll read you the statement. It says: "Charlie deeply regrets his comments. They were inappropriate and he recognizes that the candidate we work for has devoted his entire life to putting -- protecting his country and placing its security before every other consideration."

Now, the McCain campaign is saying that Charlie Black doesn't really remember making those comments to "Fortune," but he also is not disputing it. And in the context, they insist what Charlie Black was trying to get across in that interview is that McCain is favored on national security issues and anytime you're talking about national security is a good day politically for John McCain, which is something that Black has said to me and others in the campaign have said to me over and over again with regard to the import and the advantage they think they have on terrorism in this campaign, for the McCain campaign.

Regardless, you heard John McCain. In the last hour, he was speaking in California, saying that he doesn't know where Charlie Black got those comments, that they're not true and he doesn't agree.

But having said that, Wolf, it's very interesting, the other part of what Charlie Black was talking about in that "Fortune" magazine interview was the fact that their experience during the primaries was when Benazir Bhutto, the former prime minister of Pakistan, was killed -- was assassinated, John McCain jumped all over that and he used it to his political advantage.

So what Black was saying was that helped -- they showed -- that showed that that kind of issue, national security, helped John McCain. And it's something that McCain himself admitted to me that day, when Bhutto was assassinated, that that kind of incident, international incident, shows that he has the credentials, he thinks, that should show voters that he should be president -- Wolf.

BLITZER: We're going to have more, Dana, on this story coming up in the next hour, including a full discussion with the best political team on television.

Dana, thanks very much.

The price of oil rising once again, today, despite Saudi Arabia's promise to pump more of it. The debate over what to do about the oil crisis is at the center of the presidential campaign right now, even as time is running out for the current president to act.

We have two reports. CNN's Wilf Dinnick is standing by live in Saudi Arabia.

But let's go first to our White House correspondent, Ed Henry, who's watching all of this for us -- I take it, Ed, White House officials really wanted more of a production increase by the Saudis than they got.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf. The president met himself with King Abdullah both in January and in May. So he's literally pushing for action all year. He finally got a little bit of action this weekend and yet oil prices still went up today. The reason is many analysts were expecting it to be a much bigger boost in production, if there was going to be one. Instead, this was a much smaller one than expected. Also, some civil strife in Nigeria has the markets concerned that output from Africa is also going to decrease. And with gas prices already over $4 a gallon and climbing here in the United States, the White House realizes it has a political problem on its hands. And that's why it's trying to downplay this result from this conference over the weekend.

(BEGIN VIDEOTAPE)

DANA PERINO, WHITE HOUSE PRESS SECRETARY: Look back to what we said going into the conference, which is that this is going to take a long time for us to deal with. There's no magic wand. It's not going to be a problem that we solve overnight. And I don't think anybody anticipated this conference was going to have an immediate impact on prices.

(END VIDEO CLIP)

HENRY: Now, one idea Democrat Barack Obama came up with today is that he's pushing for more aggressive investigation of whether there's market manipulation. The White House says basically they think that might be a factor, but they don't really think it's the dominant factor. So they poured some cold water on that idea. And the bottom line is neither side really has a short-term fix -- Wolf.

BLITZER: Ed Henry at the White House for us.

Thanks, Ed, very much.

Let's go to Jeddah, Saudi Arabia right now.

CNN's Wilf Dinnick is standing by.

They had a huge conference there over the weekend -- Wilf. They made some announcements.

What's the latest?

WILF DINNICK, CNN CORRESPONDENT: Well, the fact that prices didn't go down from this conference is not really a big surprise. But the fact that prices went up a little really plays into the hands of the Saudis, because what they're saying here is that it's not a case of supply and demand, that the fundamentals of the market are off and what Ed said is market manipulation -- those oil traders in New York and London, who the Saudis and OPEC nations accuse of buying and selling and sending up demand and sending up price.

But the other problem here is that out of that conference, what they did is created recommendations. But it's not clear a list of priorities of those recommendations -- what comes first, who's going to tackle them. There is a meeting in London following this and -- in October. And perhaps they'll check up on those recommendations to see just what action has been taken. But one last thing, Wolf, I've got to tell you. We're outside a gas station here in Jeddah and it's a standard price for fuel. It's subsidized by the state. And it's an astonishing 68 cents a gallon. So you won't find too many Priuses or hybrids around here -- Wolf.

BLITZER: A lot of big fat cars in Jeddah, Saudi Arabia right now. They can afford it, even if the price of gas were more. If it's 68 cents a gallon at that gas station in Jeddah, where Wilf is reporting for us, that's pretty amazing.

Wilf, thanks very much.

Wilf Dinnick reporting from Jeddah.

Let's go to Jack Cafferty.

He's got The Cafferty File.

That's pretty amazing, you've got to admit -- Jack -- 68 cents a gallon for gas in Jeddah, Saudi Arabia, where Wilf Dinnick was reporting from.

CAFFERTY: And what is it here?

Four -- I think it's four -- premium in my town in New Jersey is now $4.35 a gallon.

BLITZER: That's what I paid yesterday in Maryland, outside of Washington.

CAFFERTY: And all of this sucking up that President Bush does with all his dear friends over there in Saudi Arabia and it's $4.35 a gallon.

Republicans have something else to worry about besides $4.35 a gallon and the war in Iraq and the economy and President Bush and stuff.

Former Republican Congressman Bob Barr is running as a Libertarian candidate for president. Some in the GOP are worried Barr's candidacy could take away conservative votes from John McCain, not that McCain's having a lot of luck attracting conservatives anyway. But Barr being in the race isn't going to help.

They fear the Barr factor combined with high turnout and enthusiasm among the Democratic base could spell more trouble for John McCain. One Republican says he doesn't think Barr would get more than 4 percent of the vote, but it might be enough in some states.

And some Democrats agree, saying that Republicans are crazy if they're not worried about Barr, who was the first lawmaker to call for Bill Clinton's resignation over the Monica Lewinsky scandal. He also made a name for himself fighting against the loosening of drug laws and supporting gun rights. He is way to the right on this stuff.

The Libertarian Party is already on the ballot in 30 states. It's aiming to get on in 20 more.

Not everybody's worried, though. Newt Gingrich said no reasonable conservative is going to vote for anyone except McCain.

Oh, really Newt?

And Barr himself insists he won't play the role of a spoiler. He says if McCain loses, it will be due to his own message and vision.

It's worth remembering Bill Clinton was elected president twice and never got a majority of the popular vote.

Why?

Because there was a third party guy in the race.

Remember Ross Perot?

Here's the question -- should Republicans worry that Libertarian Bob Barr will take away votes from John McCain?

Go to CNN.com/ whatever it is and write a note.

BLITZER: Cafferty File. That's what it is.

CAFFERTY: Yes. Oh.

BLITZER: OK, Jack.

See you in a few moments.

Thank you.

A priest punished after delving into politics. Now he's back sounding defiant.

(BEGIN VIDEO CLIP)

REV. MICHAEL PFLEGER, ST. SABINA CHURCH: I will not let my faults or my imperfections cause me to run nor will I allow them to cause me to hide. Nor will I allow them to cause me to play it safe, nor will I allow them to cause me to be silent.

(END VIDEO CLIP)

BLITZER: You're going to find out what else he's saying about the controversy he caused that led to Barack Obama's decision to leave his church of 20 years.

Also, we'll take you inside Obama's so-called Muslim dilemma.

How does he knock down the rumors he's one of them while not offending them?

Plus, a huge new twist in what was described as a pregnancy pact among high school girls. You're going to find out what officials are today saying actually happened, what's going on. We'll have details right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Barack Obama finds himself in a little bit more of a bind, hitting back at the persistent rumors that he's a Muslim while trying not to offend American Muslim voters in the process.

Let's go to Mary Snow.

She's watching this story for us.

It's sort of a delicate balance he's got to deal with.

How's he doing?

MARY SNOW, CNN CORRESPONDENT: Yes. Well, Wolf, one Arab-American group puts it this way, that Obama is faced with this delicate dance. And some say there needs to be more balance in reaching out to Muslims and Arab-Americans.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Democratic presidential hopeful Senator Barack Obama has been fighting rumors for months, even creating a Web site to debunk them.

SEN. BARACK OBAMA (D), PRESUMPTIVE NOMINEE: If you get one of these e-mails that says I'm a Muslim, not true. That -- never been a Muslim. This is just stuff that is designed to make people suspicious.

SNOW: But debunking some rumors comes with difficulties. Obama had to apologize to two women in head scarves at a Michigan rally last week. Volunteers asked the women to move so they wouldn't be photographed directly with Obama. The campaign called it offensive and noted volunteers were behind it, not the staff. One Arab-American group says, though, it's touched a nerve.

TONY KUTAYLI, AMERICAN-ARAB ANTI-DISCRIMINATION COMMITTEE: He needs to come out and not just simply say I'm not a Muslim. But again, if I were a Muslim, so what?

What difference would it make?

This shouldn't be part of the discussion or the dialog.

Let's stick to the issues.

SNOW: The campaign has said the rumors are not just that Obama is a Muslim, but a radical Muslim.

Obama, in recent months, has addressed that.

OBAMA: These e-mails are misinforming people. They're also feeding on anti-Muslim sentiment. And that's also wrong, because we don't have a religious test in this country. SNOW: But James Zogby, the founder of the Arab-American institute, who's a superdelegate supporting Obama, says the debate has shed light on another issue.

JAMES ZOGBY, ARAB AMERICAN INSTITUTE: My concern as an Arab- American is that I want to see more outreach to Arab-Americans.

SNOW: Particularly, he says, when it comes to the Middle East. Obama has reached out to Jewish groups underlying the support of Israel and Zogby says it's prompted reaction in Arab-Americans.

ZOGBY: It goes from what are we chopped liver, to people being outraged. And so, yes, they don't want to feel like chopped liver, but they haven't given up on the guy, either.

(END VIDEO TAPE)

SNOW: Now, an aide to the Obama campaign says there has been outreach to both Muslims and Arab-Americans. The campaign takes it very seriously and it plans to -- on extending outreach as it heads into the general election -- Wolf.

BLITZER: Thanks, Mary.

Mary Snow reporting.

By the way, Mary, one quick follow-up, if I can, before I let you go.

How big is the potential Muslim-American vote out there?

SNOW: Well, the numbers show there's estimated about two million Muslims and about 3.5 million Arab-Americans, mostly Christian, in the United States. The key thing is those populations are concentrated in some pretty key states, such as Michigan, Florida, Ohio and Pennsylvania.

BLITZER: I would say those are pretty key states in the battle for the Electoral College, no doubt about that.

Mary, thank you.

The old saying is that religion and politics don't mix. But in this presidential campaign, members of the clergy have been preaching politics.

A Chicago priest has returned from a suspension imposed after he mocked Hillary Clinton from the pulpit of Barack Obama's former church.

CNN's Susan Roesgen is following this story for us in Chicago.

There's been a late development.

What do we know -- Susan? SUSAN ROESGEN, GULF COAST CORRESPONDENT: Well, we know that Father Michael Pfleger is the Chicago priest who just blistered Senator Hillary Clinton a couple of weeks before she dropped out of the race. He was suspended for his remarks in that sermon. But now he's back. And the Chicago archdiocese and Senator Barack Obama have to wonder what this fiery priest might say next.

(BEGIN VIDEOTAPE)

ROESGEN (voice-over): Father Michael Pfleger returned to the pulpit of the St. Sabina Catholic Church on Sunday after a two week suspension. He promised the Chicago archdiocese that he will not mention any political candidate's name in public between now and November. But he did not promise to stay quiet.

PFLEGER: I will not let my faults or my imperfections cause me to run, nor will I allow them to cause me to hide. Nor will I allow them to cause me to play it safe, nor will I allow them to cause me to be silent.

ROESGEN: Father Pfleger has said that he's sorry for what he said in May about Senator Hillary Clinton before she dropped out of the race.

PFLEGER: I'm Bill's wife.

ROESGEN: He also told me today that when he watches this video now, it makes him say ouch to see himself mocking Senator Clinton.

PFLEGER: I'm white. I'm entitled. There's a black man stealing my show.

ROESGEN: Father Pfleger calls his remarks that day overly dramatic and he says this was just a couple of minutes taken from an hour-long speech on race. But the Catholic Church condemned the sermon and so did Senator Barack Obama.

OBAMA: Father Pfleger, who is somebody who I've known, who I consider a friend, who has done tremendous work in Chicago, but made offensive statements that have no place in our politics and in the pulpit.

ROESGEN: Still, Father Pfleger's parishioners are overjoyed to have him back. He says he will continue to speak out on political issues like race, poverty and the war in Iraq.

PFLEGER: Committed to the gospel of justice.

ROESGEN: But he won't be endorsing a candidate.

(END VIDEO TAPE)

ROESGEN: Father Pfleger told me today, Wolf, that he tried to apologize directly to Senator Clinton. He got on the phone and dialed her campaign office, but he couldn't get through -- Wolf.

BLITZER: All right.

A quick question. I assume we're going to be hearing more from Father Pfleger in the days and weeks to come.

Is that his game plan?

ROESGEN: Yes, he says that you cannot do justice to the gospel, Wolf, without being an activist -- an activist on these very important social issues that do play into any political campaign. But he says he promises that he will not mention any names up there, neither Senator Barack Obama or Senator John McCain.

BLITZER: And we've invited him to join us here in THE SITUATION ROOM if he'd like to discuss all of this. He's more than welcome.

All right, thanks very much for that, Susan.

Susan Roesgen reporting.

She's out of the race, but drowning in debt. We're going to show you what Hillary Clinton is doing right now to try to fix that.

Plus, a tirade unlike any other unleashed against the secretary of state of the United States, Condoleezza Rice. You're going to find out who's calling her a Scorpion with a cobra's head. And that's only just the beginning.

And there are new developments to a story that's left many of you scratching your heads.

Did a group of female high school students in Massachusetts make a pact to get pregnant and raise their babies together?

There are new developments today in that story. That's coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, federal prosecutors in Florida are charging two men with illegally selling parts for a military aircraft to Iran. The men appeared in court briefly today. They're due back on Thursday for a detention hearing. The lawyers are not commenting on the case. This is taking place in Florida.

Remember these images that made headlines a few weeks ago purporting to show an undiscovered tribe in the Amazon?

Well, not so much. The man who took these pictures now admits this tribe was first documented almost a century ago, but he says he left out that tidbit of information, hoping to increase opposition to logging that's threatening Amazon tribes. Forget dot-com, dot-org and dot-net, how about dot-you?

The international group that oversees the Internet is meeting this week and will debate relaxing rules governing domain names, allowing businesses and individuals to use their own names. One official says the meeting could produce the biggest changes to the Internet in decades. We'll keep you posted.

And doctors are warning troubled Grammy Award winning singer Amy Winehouse is in danger of being killed by drugs. That's what her father told Britain's "Sunday Mirror." Mitch Winehouse is quoted as saying his daughter has emphysema and that crack cocaine and cigarettes have left her with only 70 percent lung capacity. Amy Winehouse was hospitalized last week after collapsing.

Such a talented, so sad -- Wolf.

BLITZER: So talented, but she needs a lot of help. Oh my god.

COSTELLO: Nothing seems to work for her.

BLITZER: Yes.

All right.

Thanks very much, Carol for that.

A mayor is casting some serious doubts on a story that thrust her town into the national spotlight -- allegations by the high school's principal of a pregnancy pact that has 17 students now expecting.

Let's go to CNN's Dan Lothian.

He's in Gloucester, Massachusetts watching this story for us.

There have been new developments today. Update our viewers -- Dan.

DAN LOTHIAN, CNN CORRESPONDENT: Well, that's right, Wolf. And you did mention, this is a story that has gotten a lot of attention. And it's not the kind of attention that people here in Gloucester tell me that they really appreciate. And of course now, today, the mayor comes out and says that no official has been able to verify that any of these allegations of a pregnancy pact are true.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): On the job for just six months, Gloucester Mayor Carolyn Kirk faced tough questions, stumbled at times, but didn't back off from her main point.

MAYOR CAROLYN KIRK, GLOUCESTER, MASSACHUSETTS: Any planned blood oath bond to become pregnant there is absolutely no evidence of.

LOTHIAN: The report of a pregnancy pact first surfaced in "Time" magazine last week. Gloucester High School Principal Joseph Sullivan told the magazine that some of the 17 girls who got pregnant this past school year actually planned as a group to have babies. But since then, the principal's memory seems to have gotten fuzzy.

KIRK: The principal could not remember who told and suggested that to him.

LOTHIAN: The school superintendent, who had publicly repeated what the principal originally said, now suggests the teens may have been bonded after they got pregnant.

CHRISTOPHER FARMER, SCHOOL SUPERINTENDENT: Children who are faced with some common situations, some challenging situations, are likely to come together for mutual support.

LOTHIAN: This explosive story has angered many in this fishing community.

LESLIE BELL, GLOUCESTER RESIDENT: It's destroyed our city completely.

LOTHIAN: Some say instead of chasing rumors, officials should be focused on a more important issue -- sex education.

ANNETTE DION, GLOUCESTER RESIDENT: And it's needed now more than ever, with all the mass media sex scandals and everything is sex, sex, sex. So that's the only message that they're getting.

LOTHIAN: Mayor Kirk agrees that social pressures are influencing young women. After meeting with school officials early in the day, she's still having a hard time explaining why a school principal would make public a sensational claim that so far he has been unable to back up.

(END VIDEO TAPE)

LOTHIAN: And the principal was not at today's closed door meeting. He was also not at the press conference, the mayor saying that she did not feel comfortable having him here.

Meanwhile, an investigation continues, even as officials vow to really tackle the problem of teen pregnancy head-on -- Wolf.

BLITZER: Thanks very much, Dan.

Dan Lothian watching this story for us.

She's no longer in the race, so why is Hillary Clinton asking her supporters for a huge favor, right now?

Also, details of a very vicious tirade against the secretary of state, Condoleezza Rice. We're going to show you who's behind it and what they're accusing her of.

And California's first couple facing a political divide, a very serious one. You're going to find out how Republican Governor Arnold Schwarzenegger and his Democratic wife Maria Shriver are coping. Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL)

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

Happening now, frantic efforts underway to reinforce levees newly threatened by the flooding Mississippi River. One in Lincoln County, Missouri is described as being so soft, it's like walking on a water bed. And it's the only thing standing between floodwaters and 100 nearby homes.

Also, rescuers in the Philippines have now found 34 survivors of a disaster at sea -- a ferry that capsized with 864 people onboard. Hundreds are feared still trapped inside the ship.

And plans now being announced for what's being called the nation's first offshore field of wind tunnels. They call for 150 wind turbines anchored in the seafloor about a dozen miles off Rehoboth Beach in Delaware.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The race is over but the bills are still coming in to Hillary Clinton's campaign and now she's asking her supporters for more support.

Let's go to CNN's Brianna Keilar.

She's watching this story for us -- Brianna, how much does the Clinton campaign owe?

BRIANNA KEILAR, CNN CORRESPONDENT: Well, Wolf, at last count it was a little over $22 million. And Hillary Clinton is returning to Capitol Hill tomorrow, a little over two weeks now since her concession speech. Her spokesperson tells us it's really back to business as usual for her tomorrow. That said, her campaign may be over, but there's still a whole lot of debt there, as I just said. And today Hillary Clinton put out a new message on her website, making it clear that she needs to clear up that debt, so she can work toward what she calls a goal of building an America that respects and embraces the potential of every last one of us.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK: This goal is shared by our Democratic Party nominee, Senator Barack Obama. And I look forward to campaigning with him across this great country of ours. Stand with me and support by going back to HillaryClinton.com. We still have so much to do together. We've made history. Let's make some more.

(END VIDEO CLIP) KEILAR: There's a big button on her website that has a dollar sign and "contribute" on it, I should say. Senator Clinton's office isn't being specific what's on her schedule tomorrow, but there's an important vote on the housing bill. There's also a hearing on antibiotics resistant superbugs. She might attend that since she's on a committee that deals with health. She could go to the usual Tuesday lunch with all of her Democratic colleagues in the Senate, Wolf.

BLITZER: What are the Democrats in the Senate, her colleagues in the Senate, saying she should do now that she's back?

KEILAR: Well Wolf, there's some questions about whether there should be some special leadership role for her but leadership aides say there's no plans for that. And a lot of her supporters are hoping that she follows the model of Ted Kennedy in 1980. You may recall he returned to the capital after losing the nomination and poured himself into legislative business. They're hoping that she does that as well, Wolf.

BLITZER: Brianna Keilar, thank you.

Meanwhile, venomous rhetoric aimed at the secretary of state, Condoleezza Rice, from the Palestinian militant group Hamas.

Carol Costello working this story for us.

Carol, this time, the words are very, very vicious. What is it all about?

CAROL COSTELLO, CNN CORRESPONDENT: It's pretty nasty stuff, Wolf. I mean, Satan, a cobra, blood on her fangs? It was Hamas' minister of culture who spewed that venom on Hamas TV. Listen.

(BEGIN VIDEOTAPE)

COSTELLO: It started off with a prayer to Allah, then a plea for strength from what he called all Satans. First and foremost among them, American secretary of state, Condoleezza Rice. The gist of this interview on the Hamas controlled TV station, Secretary Rice is a black scorpion with a cobra's head that has the blood of Palestinian children between her fangs.

TAMARA WITTES, SABAN CTR. AT BROOKINGS INSTITUTION: This kind of rhetoric shouldn't be that surprising. I think it only serves to underscore that whatever tactical arrangements they may come to with the Israelis, they're really not interested in a peace process.

COSTELLO: Wittes is talking about the cease-fire between Hamas and Israel, brokered by Egypt without U.S. support. The State Department lists Hamas as a terrorist organization, and the Bush administration says it does not negotiate with terrorists. It's in favor of isolating Hamas-controlled Gaza, and believes the cease-fire will only prove Hamas is using its citizens to push its ultimate agenda, the elimination of Israel.

CONDOLEEZZA RICE, SECRETARY OF STATE: Now, we hope that the effort for calm will be successful, because ultimately what has to happen is that we need to get an agreement between the Palestinians and the Israelis, and then they'll be able to say to the Palestinian people, do you want to live like we do in the West Bank or do you want to live like they do in Gaza.

COSTELLO: Rice has traveled to the Middle East to meet with Israel and the Palestinian president Mahmoud Abbas a number of times in the last few months to try to broker peace. Hamas says Rice is using her venomous fangs to kill this new spirit that we should protect. Analysts say Hamas is really bragging while it can.

WITTES: This is a reflection of the fact that this administration is in its last months, it's out of gas, and its policies aren't really serving the interests of the party on the ground anymore. So they're going their own way.

(END VIDEOTAPE)

COSTELLO: But Wittes adds at least Secretary Rice is keeping the peace process alive. It may be limping, says Wittes, but at least it will be alive for the next administration. And whoever gets to be president has a tough job ahead.

BLITZER: Certainly on that issue, of course.

COSTELLO: Everyone agrees.

BLITZER: Yes. Of course, everyone agrees on that. Thanks very much, Carol, for that.

North Korea promising to blow up part of its own nuclear reactor, and it's inviting the world to watch it happen. Our own Christiane Amanpour, she'll be there. She's standing by live right now to tell us what this is all about.

They're a high-profile example of a house divided by this presidential race. Arnold Schwarzenegger versus his wife, Maria Shriver.

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

(COMMERCIAL BREAK)

BLITZER: This just coming into THE SITUATION ROOM; the Pentagon now formally reporting to the Congress that all the major indicators show a big drop in violence in Iraq, down by as much as 80 percent since the start of the U.S. troop increase, the so-called surge. On the phone, joining us, our senior Pentagon correspondent, Jamie McIntyre.

Jamie, how do they measure this? What does it mean?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well Wolf, it means that by any measure, in fact by almost every measure, violence is down in this latest report to Congress, dated June of 2008, whether it's IED attacks, whether it's suicide attacks, whether it's the number of U.S. troops or Iraqi troops killed.

What it doesn't mean is that al Qaeda has been defeated. In fact, the report notes that al Qaeda is still capable of high-profile attacks. And today the second ranking general in Iraq, Lieutenant General Lloyd Austin, told reporters here at the Pentagon that this latest suicide bombing in Baqubah is another example of those kind of spectacular attacks.

The other thing it means, Wolf, is that Iraqi security forces are improving. The operation in Basra, in the south, while marked by mistakes and miscues, did show that the Iraqi military can move troops from one part of the country to another. That's something they couldn't do a year ago. But no U.S. commander at this point is willing to declare victory. They say the progress is tenuous and could be reversed.

Wolf?

BLITZER: Jamie McIntyre, thanks very much.

North Korea is coming up with a major development right now, the country about to live up to its nuclear agreement with the United States in a very public way. And it's inviting the worldwide news media, including CNN, to watch as it starts to blow up part of its own nuclear reactor.

Our chief international correspondent Christiane Amanpour has covered this story for a long time.

Christiane, what do we make of this development?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, we've been following this now for quite some time; in fact, from the time we were in Pyongyang with the New York philharmonic, meeting the North Korean nuclear negotiator. I was able to exclusively. And they said they were determined to end this phase of talks with the United States in a positive way.

So they are going to give over their declaration on all their plutonium activities, the Pyongyang nuclear power plant, then they will be removed from the list, the U.S. list of states that sponsor terrorism. Then President Bush will inform Congress that they should be removed from some sanctions under the trading with the enemy act. And then as their own separate gesture, this is not part of any formal agreement, but of their own separate gesture, they are going to implode, collapse, that distinctive cooling tower. That is the tower that basically says, this is a nuclear reactor. Therefore, very visual, very important, very symbolic. But also psychologically important in a country like North Korea, where everything is so symbolic, and where everything is so centrally controlled. To actually go this extra mile, to do that, we've been told is a definite symbol of intent for the future.

Wolf?

BLITZER: What about the existing stockpile of nuclear bombs that they have, Christiane? I assume they keep those, or do they start destroying those?

AMANPOUR: Well, we've been told that they're going to hand over all the details of that. That is the plutonium that I'm talking about, which was extracted at the Pyongyang facility. They have extracted, and as you know, during the Bush administration, they kicked out the IAEA inspectors, they withdrew from the NPT, the non proliferation treaty and they test fired a nuclear weapon. So this point, coming to this week, is a major break-through, and a major step forward. So they're going to fess up and declare all of the activities that they've had, and show all this plutonium and give it up that they had there.

BLITZER: I guess the question, though, do they get to keep their nuclear bombs for the time being, or the long term, dismantle the nuclear bombs that they've already created?

AMANPOUR: Well, I'm going to get back to you on that. But certainly that is the intent, to get them to be deactivated, not to be able to use them. And I think to give them up. But the problem here also is that the U.S. is saying that this is a good deal, but not a perfect deal, because the U.S. believes that there's other issues, like uranium enrichment and proliferation, which the North Koreans are not going to include fully in this declaration, except to say and to acknowledge, to acknowledge, that they're not doing it, they say, and they won't do it in the future.

BLITZER: But the incentives for North Korea are pretty impressive that the U.S. and the others are offering them.

AMANPOUR: Well, that's right. The six-party talks have been going on for a couple of years. They've hit road blocks, stumbling blocks. Other people have called them impasse. But I must say and we were there in February and were able to talk to the senior-most nuclear negotiator there, the senior most North Korean official that anybody could talk to, we got a definite sense that they want to move this process forward. They want to get out of this stalemate they're in with the United States. And it seems, if they're removed from the list of states that sponsor terrorism, it means, therefore, that they're going to get off the official axis of evil list.

BLITZER: All right. Christiane, thanks very much. I've seen various estimates that they may already have eight or ten, maybe more nuclear bombs. We'll continue to watch this story.

AMANPOUR: We know that, Wolf. This is what all this is about. We know that they have that. And this is what this deal is about. They've even test fired one of those weapons.

BLITZER: Right, I know. All right. Christiane, thanks very much.

An important development, Christiane's going to be all over this story for us.

Meanwhile, a longtime leader is forced into a runoff election and is now doing all he can to remain in power. That includes forcing his opponent from the race and using violence against voters. U.S. protester falling on deaf ears.

Our State Department correspondent Zain Verjee is watching this story for us.

Zain, what's the latest in Zimbabwe?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well Wolf, the best way to win an election is just to be the only candidate. That's Robert Mugabe's plan.

(BEGIN VIDEOTAPE)

VERJEE: Imagine this November, you vote for the man you want to be president of the U.S., and get beaten or killed for it. That's what's happening in Zimbabwe, and the U.S. can't do much.

TOM CASEY, STATE DEPARTMENT SPOKESMAN: There's no secret that we, the United States, have limited ability to influence Mugabe and his regime.

VERJEE: Anarchy in the streets as pro-Mugabe gangs chase down opposition supporters. Just weeks ago their leader was running for president. Now Morgan Tsvangirai is running for his life, hiding out at the Dutch embassy, after pulling out of the election to save his supporters from more bloodshed.

MORGAN TZVANGIRAI, OPPOSITION LEADER: Mugabe said he will not leave, even if he loses. He has said that only God will remove him. So it doesn't matter whether I am in or not. The outcome is already predetermined.

VERJEE: The world is outraged.

DAVID MILIBAND, BRITISH FOREIGN SECRETARY: Robert Mugabe and his thugs made the election impossible.

VERJEE: Secretary of State Condoleezza Rice says without a fair election, the government cannot be considered legitimate. Washington wants the United Nations Security Council to turn up the heat, and wants African leaders, especially South African President Thabo Mbeki, to get tough on Mugabe. So far they haven't delivered.

RICE: I don't see anything that President Mugabe has been helpful to the Zimbabwean people. Maybe it's time for international pressure.

VERJEE: Zimbabwe's crops used to feed much of Africa, but under Mugabe, it's descended into chaos. Most are starving. With inflation so high, few can afford food. Now the government's been using food aid as a weapon, seizing food from opposition supporters, and giving it to Mugabe's cronies.

(END VIDEOTAPE)

VERJEE: The U.S. and Europe are calling on the world to recognize Morgan Tsvangirai as Zimbabwe's real president because he won an earlier election. What they're saying is that without a free and fair runoff, that result, Wolf, should stand.

BLITZER: All right. Zain, thanks very much. Zain Verjee reporting.

They're already a political odd couple. Now California's Republican Governor Arnold Schwarzenegger and his Democratic, wife Maria Shriver, they find themselves on opposite sides of the presidential campaign.

And the endorsements are rolling in for Barack Obama. But the biggest one of all, still missing. Democrats are wondering when will it happen?

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

(COMMERCIAL BREAK)

BLITZER: One of the country's most prominent mixed marriages, Republican Governor Arnold Schwarzenegger and his wife Kennedy cousin, Maria Shriver. Now the presidential campaign is underscoring their divide. He's for John McCain. She's for Barack Obama.

CNN's Kareen Wynter takes us inside a house divided.

Kareen?

KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: Wolf, this type of political divide, it's a lot more common than you may think.

(BEGIN VIDEOTAPE)

WYNTER: She's backing Barack.

MARIA SCHRIVER, ARNOLD SCHWARZENEGGER'S WIFE: He's about empowering all of us.

WYNTER: He's putting his political muscle behind McCain.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: He's a great American hero.

WYNTER: California's first couple, Governor Arnold Schwarzenegger and Maria Shriver, partners split on the presidential ticket. They've even placed competing campaign signs outside their home.

J. EMILIO FLORES, NEW YORK TIMES/REDUX: It's going to make for some very interesting dinner conversations.

WYNTER: Even their children are involved in that conversation. Schwarzenegger says his daughters support Obama, and his sons back McCain. Democratic pollster Celinda Lake says when it comes to politically mixed marriages, Schwarzenegger and Shriver's dueling party preference isn't unique.

CELINDA LAKE, DEMOCRATIC POLLSTER: You're going to see men and women disagreeing about races but I think what's different now is it's usually been more private. I think a lot of women went into the ballot box knowing they disagreed with their husband, but they weren't putting yard signs out in their yard. Now you see it playing out publicly.

WYNTER: According to the Battleground Survey, Lake says more women tend to vote Democratic, and men Republican. Although married women are less likely to vote for the Democrats. Lake says an estimated 7.5 million married people will vote differently from their spouses in this election.

ALAN NICHOLS, REPUBLICAN: McCain's not as good at that.

WYNTER: Barbara and Alan Nichols live under the same roof, but root for different political parties.

BARBARA NICHOLS, DEMOCRAT: He's gotten more vocal about it, and it does make me mad. Sometimes I just have to let it go.

NICHOLS: I don't see this issue as a killer issue. People can still get along.

WYNTER: Sentiments this powerhouse couple also share. The governor recently discussed his secret to their political marriage, saying "I sleep with a Democrat every night."

(END VIDEOTAPE)

WYNTER: Schwarzenegger has also said in the past his wife isn't afraid to express her opinion, and that he has a lot of yes people around him, and says that's the last thing he needs in a wife. Fascinating family.

Wolf?

BLITZER: Indeed it is. Kareen, thank you.

Let's go back to Jack for the Cafferty File.

Jack?

JACK CAFFERTY, CNN CORRESPONDENT: Should Republicans worry that the libertarian candidate Bob Barr could take votes away from John McCain? Libertarians are notoriously conservative folks.

R. writes, "Probably in Georgia, which would be huge. People always focus on Ohio, but Georgia only has five fewer electoral votes. So even if Obama lost Ohio, which I think he'll win, he can pull an upset in Georgia with the additional help of Bob Barr."

Ralph in Long Island writes, "Yep, and I want to send money to Pat Buchanan and Pat Robertson and John Hagee. Maybe they'll run, too."

John writes, "I'm voting for the lesser of three evils. I'm voting for Bob Barr." Richard in Tennessee, "Bob Barr's appeal is to ultra, very conservative Republicans, a group McCain's trying to bring into his camp. Should the McBush group be concerned about a vote loss to Bob Barr? You betcha."

Bener writes, "Absolutely not. The political system only allows for the two party's candidates to be in front of the public. People won't put in the extra effort to get themselves educated on the issues or the other candidates. I bet more than half the people are going to vote won't even know about the Bob Barr option until the day they go to the polls."

Jacob says, "I think Bob Barr should at least frighten some Republicans. The fact that his message and Ron Paul's are closely connected, should make many in the party worry. I'm not saying this because I supported Ron Paul, but because I recognize the fervor of his followers. If they join with traditional libertarians who didn't follow the Republican primary, they could raise money and start to tear into the base of that party."

Jay in Arkansas writes, "That's usually the way it works, but no problem. There's always Florida."

Josh in Illinois writes, "Bob who?"

And Paul in Texas says, "You could run bozo the clown and he would take votes from John McCain."

If you didn't see your e-mail here, go to my blog at CNN.com/CaffertyFile and search for yours there.

Wolf?

BLITZER: Jack, thank you.

A top adviser to John McCain now expressing regret for a controversial remark he made about terrorism. We're going to have the details of the latest fallout. And there's reaction coming in right now from the Obama campaign.

Plus, the Supreme Court refusing to get involved in the border fence controversy. Lou Dobbs will join us to talk about that, and more, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: With violence down in Iraq, the specialists who dispose of bombs and unexploded rockets are getting a little down time. CNN's Morgan Neill spent a little of that down time with them in Baghdad.

(BEGIN VIDEOTAPE)

MORGAN NEILL, CNN CORRESPONDENT: Theirs is one of the most dangerous jobs in Iraq but thankfully today is a slow day. Today these members of the Explosions Ordnance Disposal, or EOD team, are working on their jump shots, instead of investigating mortars or disabling improvised explosives. Inside their compound, an assorted collection of weapons they've put out of action, a reminder of the dangers of their work and the ingenuity of their enemy. But these days, the enemy is less active. That means at times so is the EOD team.

Since we've been here, the company spent a lot of its time waiting, waiting for the next call. The soldiers say they don't mind. Fewer calls mean fewer explosives are being found. Nevertheless, it isn't east.

UNIDENTIFIED MALE: The days would just go by because we get up, we'd do a couple of incidents and then it's nighttime, we go to sleep and we start all over but then it just seems like it takes forever for a month to be done with.

NEILL: While structuring your time usually isn't a problem in the Army, the nature of their work means the EOD team can be on call for long stretches. When the call comes, this time, just after midnight, they're ready.

LT. TODD BRYANT, U.S. ARMY: The call came in for 107 rockets. They're reporting wires coming from them so we've always got to think possible booby trap or an IED of some sort. So we'll assess the situation once we get there.

NEILL: They're on their way to Baghdad's jihad neighborhood, an area that's seen some of the city's worst violence. At the scene, the four rockets, apparently set to be fired using fuses and a battery.

STAFF SGT. LEWIN LALL, U.S. ARMY: What happened was it was buried in someone's backyard and they called it up and when they called it up, we responded. Dug it up and saw what exactly what it was.

NEILL: The rockets are packed up, destined for disposal or investigation. Just before 3:00 a.m., the call is over.

Weapons and explosives are constantly being discovered here. Disarming and disposing of them will take years. But if violence continues to go down, there will likely be more slow days for units like this one and more pickup games.

UNIDENTIFIED MALE: Every time I leave here I think we're going to be really good at sports.

NEILL: That might be the best thing for everyone here.

Morgan Neill, CNN, Baghdad.

(END VIDEOTAPE)

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