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THE SITUATION ROOM

Israel: "All-Out War" with Hamas; War Fallout-Angry Arab Streets; Interview with Israeli Ambassador to the United States

Aired December 29, 2008 - 17:00   ET

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


SUZANNE MALVEAUX, CNN CORRESPONDENT: You're in THE SITUATION ROOM.
Happening now, breaking news -- punishing air strikes reduce parts of Gaza to rubble. The death toll tops 300 in what Israel calls a war to the bitter end against Hamas. But no let up from the Palestinian militant group -- firing more deadly rockets into Israel.

This latest crisis hits just weeks before Barack Obama's inauguration -- can he succeed in the Middle East where others have failed?

I'll ask analysts James Carville and William Bennett.

And the FBI is now on the case of a woman who disappeared from a cruise ship off the coast of Mexico -- what the surveillance tape may show.

Wolf Blitzer is off today.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

Breaking news -- and Israeli warplanes pound targets in Gaza for a third straight day.

Israel's defense minister calls it an all-out war with the Palestinian Hamas group.

Here are the latest developments.

Israeli sources report at least 20 air strikes today. Palestinian medical sources say the death toll has topped 300 -- mostly militants -- but more than 50 of the dead are civilians.

Dozens of mortar shells and rockets were fired into Israel today, killing two Israelis bringing the death toll to three since Saturday.

Israeli tanks have moved to the outskirts of Gaza. And at least 2,000 Reservists have been called up.

Our CNN's Cal Perry is live from Jerusalem -- and, Cal, obviously, there is no letup of the assault.

What is the very latest? CAL PERRY CNN CORRESPONDENT: (AUDIO GAP) now beginning to bury their dead.

Grief amid a continued barrage of violent attacks. As Gaza lays its dead to rest, Israel's military might remains unabated, as one of the most densely populated places on earth is slowly reduced to rubble -- as are the lives of those living in Gaza.

(VIDEO CLIP)

PERRY: "What are my five girls guilty of," this man says?

"I have seven and five were killed. They were sleeping. I want to understand why they were killed. I only have God. That's all have I."

As the death toll continues to rise, Israel maintains it's not fighting the Palestinian people, but rather is targeting their Hamas leadership.

(VIDEO CLIP)

PERRY: "We want peace," he says. "We have stretched out a hand in peace many times to the Palestinian people. We have nothing against the people Gaza, but this is an all-out war against Hamas and its branches."

After more than 300 air strikes, all-out war is exactly what seems to be unfolding.

Israel says the goal of its operation is to stop an ongoing stream of rockets being fired from Gaza into its south. But the Israeli military says that since its campaign began, more than 150 rockets have been launched from Gaza.

Across Southern Israel, sirens wail and the young and old run for cover. In the southern city of Sderot, fear turns to overwhelming emotion. A grief counselor tries to help, but it seems to make little difference.

(END VIDEOTAPE)

PERRY: Now, the United Nations is calling for both sides to put an end to the violence. But at this hour, Israel continues to move both troops and equipment to Gaza. So a cease-fire at this point seems highly unlikely -- Suzanne.

MALVEAUX: Cal Perry out of Jerusalem.

Thank you, Cal.

Let's look at Israel's adversary in this conflict. Hamas is an acronym standing for Islamic Resistance Movement. Founded in 18 -- in 1987, it won popular support for charitable activities. But Hamas also has a military wing and its goal is an Islamic fundamentalist Palestinian state, with a covenant calling for the obliteration of Israel. Hamas opposed the 1993 peace accords between Israel and the Palestinian Liberation Organization.

Now, a year later, it orchestrated its first suicide bombing in Israel. After more bombings killed dozens of Israelis, the U.S. State Department added Hamas to its list of terror organizations in 2001.

Following Israel's Gaza pullout, Hamas won Palestinian elections in 2006. In 2007, after bloody battles with the mainstream Palestinian group, Fatah, Hamas seized control of Gaza.

This crisis had been simmering for some time.

Our CNN's Jim Acosta joins us now -- Jim, what has touched off the latest series of explosions and violence?

JIM ACOSTA, CNN NATIONAL CORRESPONDENT: Well, this has been brewing for some time. And I think a lot of Americans are probably wondering how did it get to this point?

So let's map it out. The six month truce between the Hamas government and Gaza and Israel expired a week ago. But in reality, the truce had started breaking down two months ago.

Rocket attacks by Hamas militants -- as you can see on the map here -- against Israel, became more frequent.

Then on Saturday, it all came to a head. Shortly before noon, Israel responded, launching air strikes -- some 100 tons of bombs -- on security compounds in Gaza. Since then, Palestinian militants have fired dozens of rockets into Israel, including a strike that killed an Israeli man.

Then on Sunday, it flared up again -- Hamas militants firing more rockets into Southern Israel. That's where a lot of the activity has been in the last 48 hours. That attack killing a second Israeli.

Israel retaliated with more than 40 air strikes on the Egyptian border with Southern Gaza, targeting some 40 -- get this -- tunnels. This is important. Israel says those tunnels are used by Hamas to smuggle weapons into Gaza.

And a lot of Americans are wondering how do those Hamas militants get those weapons into Gaza?

The Israeli government says here's how.

Now, the Israeli government approved a measure allowing some 7,000 Army Reservists to be called up. That is raising worries of a ground offensive in the region. Today, militants in Gaza fired more than 40 rockets and mortar shells into Southern Israel.

Israel responded with more that be 20 air strikes into Gaza and one assault. An Israeli F-16 dropped rockets on -- get this -- the Islamic University of Gaza. Israeli Defense Forces refer to the site as a center for weapons research and development. But Hamas security sources say a mosque and a family home was also hit in these attacks -- Israeli rockets. And Palestinian medical officials say five children died.

So far, the death toll in this crisis -- well over 300 people.

Now, what's the impact across the world?

Not only in the United States, but across the globe, protests in places like Britain, Greece and in Iran, more importantly -- and, also, Lebanon, where violence flared up just a couple of years ago.

So, Suzanne, a lot of people obviously are very concerned about all of this and are probably caught off guard and surprised to see all of this flare up again.

And I talked to a -- an expert on Middle East violence today over at the Council On Foreign Relations. He says that this crisis will likely be around for Barack Obama's inauguration on January 20th. This isn't going anywhere any time soon.

MALVEAUX: It will be the first real test for him.

Thank you so much, Jim.

President Bush is at his Texas ranch. He is keeping tabs on the Gaza crisis, huddling at long distance with top advisers.

Let's go live to CNN's Elaine Quijano. She's in Crawford, Texas -- Elaine, we seem to have a fairly blunt reaction from the Bush administration.

What are the -- what are his aides saying today?

ELAINE QUIJANO, CNN CORRESPONDENT: Essentially sticking to the U.S.' that we heard first laid out about 48 hours or so ago that the United States really is siding with Israel when it comes to this latest round of violence -- laying the blame squarely at the feet of Hamas for what the U.S. says is a provocative act by firing rockets into Israel.

Now, President Bush -- we have not seen him since Friday. He remains at his ranch here in Crawford.

He did have a secure video conference, conferring with top advisers this morning, including Vice President Dick Cheney, his national security adviser, Stephen Hadley, and the White House chief of staff, Josh Bolten.

But, again, the White House not mincing any words -- again, sticking to its position that in order for the violence to stop, it is really up to you Hamas to stop firing rockets.

At the same time as Israel moves troops and tanks toward the Gaza border, the White House is being very careful at how it weighs in on a possibility of a ground incursion into Gaza. Here is White House spokesman Gordon Johndroe.

(BEGIN VIDEO CLIP)

GORDON JOHNDROE, WHITE HOUSE SPOKESMAN: I can't speak to any potential ground operation. I think that any ground operation, according to the Israelis, would be part and parcel of the -- of the overall operation, given their statements saying that they don't want to retake Gaza and that they simply want to protect their people.

(END VIDEO CLIP)

QUIJANO: Now, Secretary of State Condoleezza Rice has been in touch with senior Palestinian and Israeli officials, working toward what the United States is calling a sustainable and durable cease-fire -- Suzanne.

MALVEAUX: Thank you. Elaine Quijano in Crawford, Texas.

Israel's assault on Gaza through the eyes of the Arab news media -- it's coverage is generating new sympathy. Our breaking news coverage continues with Israel's ambassador to the United States.

Also, Barack Obama is now poised to inherit the Middle East crisis.

Can he succeed where other presidents have failed?

I'll ask James Carville and Bill Bennett.

Plus, new details of that Christmas Eve massacre by a man dressed as Santa Claus and the horror he unleashed on his former in-laws.

(COMMERCIAL BREAK)

MALVEAUX: Hamas may have its critics in the Arab world, but the Israeli onslaught in Gaza is generating a lot of renewed sympathy for Palestinians in Gaza.

CNN's senior Arab affairs editor, Octavia Nasr, has been watching the Arab media's handling of the story -- Octavia, what are you seeing?

OCTAVIA NASR, CNN SENIOR EDITOR, ARAB AFFAIRS: Suzanne, it's a huge, huge story on Arab media. And I have a little round-up for you.

Let's take a look.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: We need to give hope for our people.

UNIDENTIFIED FEMALE: Explosions...

NASR (voice-over): Israel's foreign minister, Tzipi Livni, appearing on Arab world's most watched TV channel, Al Jazeera -- making the case for Israel's attacks on Gaza. On her left, dramatic pictures of Gaza in smoke -- the fiery logo with the words "Gaza Under Fire."

The exchange gets personal when the anchor responds to Livni's comment that Israel regrets human loss and is only targeting the militant group Hamas.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (THROUGH TRANSLATOR): Tell me, Miss. Livni, is attacking the Islamic University and the mosques and the United Nations and civilians' homes and the children and the women -- despite all of the international condemnation -- all of that and you still think you're only targeting Hamas?

TZIPI LIVNI, ISRAELI FOREIGN MINISTER: Hamas needs to understand, enough is enough.

(END VIDEO CLIP)

NASR: Livni and other Israeli officials also appeared in a clip promoting Al Jazeera's coverage -- a clip whose tone is sympathetic to the plight of Palestinians.

(VIDEO CLIP)

NASR: Other Arab TV channels take the same view. So do the political cartoons in the region's newspapers. Here at "Hayat," a Saudi-owned newspaper, it shows Palestinians as sardines in a can. Its label reads: "Israeli Society Incorporated."

And from the Palestinian newspaper "Al Quds Al-Arabi," a jet representing "Israeli Terror." But beyond the anger, newspaper headlines and opinion pages are full of disappointment at Arab leaders' lack of action. One headline from Lebanon's "Al Safir" newspaper sums it all up: "Gaza's blood gushes out, shaming the faces of Arabs and Muslims."

(END VIDEOTAPE)

NASR: You see, Suzanne, really tough words and anger at Israel's actions and their government's inaction.

MALVEAUX: Thank you, Octavia.

Israel is making a considerable effort to explain why its launched this massive assault on Hamas.

Joining me, Israel's ambassador to the United States, Sallai Meridor.

All right. Thank you so much for joining us here in THE SITUATION ROOM.

SALLAI MERIDOR, ISRAELI AMBASSADOR TO U.S.: Thank you for having me. MALVEAUX: I want first, to start off, respond to the piece that we just saw from Octavia Nasr. There's a lot of sympathy now for the Palestinians.

MERIDOR: Well, we are not happy to see any suffering. But we have to protect our people. We are targeting only Hamas terrorist sites. We are very careful about it. The situation is that we have 500,000 Israeli citizens under constant fire today. Three Israelis were killed by rockets today. Others were wounded.

And we have to make sure that terror attacks against Israeli -- innocent civilians -- does not continue.

MALVEAUX: How do you respond to the Palestinians in her piece who say, look, this is such a small area -- when you take a look at the Gaza Strip. And you've got this back and forth that, obviously, many civilians are suffering. Palestinians say that they're getting caught up in the crossfire.

MERIDOR: Well, Hamas has taken over Gaza. And they were first elected, by the way, by the Gazans and then they forcibly took over Gaza entirely. And they're using Gaza -- after Israel left Gaza in 2005 -- as a terror base to attack Israelis.

Thousands of rockets -- 500,000 people. We're talking about young children who are waiting in beds. We are talking about elderly who cannot take a shower because 15 seconds of alert on these are not enough in order to get to a safe room.

This is the reality in which Israelis are living under.

MALVEAUX: Tell us about what is the next step here. There are a lot of people looking at these pictures -- misery on both sides. There are thanks that are poised on the border, 65,000 Reservists that have been put on high alert.

Are you preparing for a ground invasion?

MERIDOR: Well, we are preparing to take the actions that we need to take in order to damage the terrorist infrastructure.

MALVEAUX: Does that include ground troops, on the ground -- an invasion inside of Gaza?

MERIDOR: Well, we would take any action that would be needed in order to prevent terror against our citizens.

MALVEAUX: So you're not ruling that out?

MERIDOR: We do not rule anything out. What we want to achieve is calm. We want to achieve peace. You, I'm sure, know that it's not Israeli assaulting Gaza or Gazans.

Israel was hoping for a calm.

Israel was respecting a cease-fire that was in place. Hamas publicly declared that they are breaking this calm. They have launched attack against Israel. And we are taking defensive measures.

MALVEAUX: Mr. Ambassador, we are looking at live pictures of Gaza.

Is there going to be an attack tonight?

Are we going to see additional attacks this evening?

What can the Palestinians expect, who are -- who are very nervous about what is going to happen?

MERIDOR: Well, we are monitoring the situation on the ground and we're developing whatever we are doing based on the developments on the ground.

But what needs to happen is for Hamas needs to stop this terror attack. This could be brought to an end very, very quickly if Hamas was stopping to build the terror base backed by Iranian Gaza and stopping killing, hitting, terrorizing Israelis -- innocent Israelis day in and day out -- this would be over.

MALVEAUX: Mr. Ambassador, I want you to take a -- take a listen here. And we are actually hearing sirens in Gaza City now, as we're looking at some of these live pictures.

Do you have a sense of what's happening on the ground there?

MERIDOR: Well, we certainly follow everything on the ground. We are following everything on the ground in Ashkelon, in Ashdod.

We feel sympathy, by the way, to Palestinians that are uninvolved but are in the -- in the area or in the neighborhood. But the truth of the matter is that if you look at the situation, you have more than 500,000 Israelis under terror on a daily base, where Hamas terror are trying to attack only civilians, while we are trying to attack thousands of terrorists -- making every effort not to damage civilians to the extent possible.

This is the difference between the two sides here. We are trying to attack terror, they are trying to kill civilians as much as possible.

MALVEAUX: Mr. Ambassador, we're going to have to leave it at that.

But thank you so much for joining us here in THE SITUATION ROOM.

MERIDOR: Thank you very much for having me.

MALVEAUX: With the latest crisis in Gaza, the Bush administration falls well short of its Middle East peace goals.

Will Hillary Clinton be able to do any better than Condoleezza Rice?

I'll ask James Carville and Bill Bennett.

And eight people missing in a pair of avalanches -- a desperate search is underway, but is time running out?

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Jim Acosta is monitoring the stories that are incoming into THE SITUATION ROOM right now -- Jim, what are you watching?

ACOSTA: Suzanne, Wall Street opened this abbreviated trading week on a down note. All three major indexes lost ground, with the Dow and the S&P slipping about .4 percent and the NASDAQ losing 1.3 percent.

Analysts say there's no major news driving the market right now. And with the holidays, there's just not much buying happening.

In Southeastern British Columbia, a desperate search is going on for eight people missing in two avalanches. And rescue officials are saying bluntly time is not on their side.

CNN meteorologist and severe weather expert, Chad Myers, has more -- Chad?

CHAD MYERS, CNN METEOROLOGIST: Jim, we have had almost a season's worth of snow in some of these ski resorts out to the west and to the northwest. So we have snow that came down in October. It's cold and hard.

Now we have a lot of snow that came down over the last weekend and it's sliding off that very cold and hard slope.

This is back up into Fernie -- up into British Columbia, Cedar Bowl. They're actually skiing on this snow here, but we know about the snowmobilers that are missing in this area.

Down to the south, down into Jackson Hole, Wyoming -- we'll take you down here. This is going to take you to an area that actually had a slide on Friday and another one today. The one today actually closed the resort for a while. The one that we had over the weekend that actually killed a skier was right here, in a place called Paint Brush -- a small little black diamond slope. But that's all it took. It was a slab slide. All the snow from up here slid on down.

Another slide that we had was into Utah. Utah -- this one's easy to see what happened here. This is Logan Peak. These snow chutes are clearly defined -- easy to see. The snow piles up on top of the mountain and it slides down the chutes. And there were snowmobilers down below this. And I've got a quick picture of a snow slab slide. This is a slab of snow -- a hard pack below it. And it slides down into the valley. You don't want to be down here into the valley. That's where the danger zone is -- Jim?

ACOSTA: Thanks, Chad.

And we've gotten some new pictures from Jackson Hole, Wyoming, which was hit by yet another avalanche just two days after a wall of snow killed a skier there. Today's avalanche happened before the slopes opened to the public and no one was hurt -- so, Suzanne, some serious weather in THE SITUATION ROOM. And some very amazing pictures. It's just incredible to see some of that stuff happening out there at some of these ski resorts -- Suzanne.

MALVEAUX: Absolutely. Thank you, Jim.

It stymied Bill Clinton and George W. Bush -- so what can Barack Obama do to help solve the Israeli-Palestinian crisis?

James Carville and Bill Bennett are here to discuss.

Also, new details of the holiday horror that shocked the world -- a Christmas Eve massacre that left nine members of one family dead.

And his drunken tryst in a Middle East country set off a legal nightmare for one man -- now he's speaking out about it for the first time.

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, breaking news -- Israel's deadly all-out war on Hamas just weeks before Barack Obama becomes president.

How should he handle his first international crisis?

I'll ask James Carville and Bill Bennett.

Also, lost at sea -- an American woman believed to have gone overboard from a cruise ship off the coast of Mexico. We are just getting word of some potentially critical new developments, including her own family now speaking out about what they think happened.

And busted for allegedly having sex on the beach -- Dubai unleashes its own brand of justice on a British man. Now he is speaking out for the first time about his Middle East nightmare.

Wolf Blitzer is off today.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

The crisis in Gaza explodes just weeks before Barack Obama's inauguration.

Our CNN's Brian Todd is with us -- Brian, obviously the question is, can Obama succeed where so many other American presidents failed?

BRIAN TODD, CNN CORRESPONDENT: It's going to be a very difficult task, Suzanne. The next president already facing an economy in crisis, plus ongoing wars in Iraq and Afghanistan. The fighting in the Middle East now may compete for Barack Obama's attention.

The question is, will it get it?

(BEGIN VIDEOTAPE)

TODD (voice-over): It's an age-old conflict that has defied countless American leaders' attempts to solve it. Soon, it will be Barack Obama's turn.

AARON DAVID MILLER, FORMER STATE DEPARTMENT ADVISER: He'll inherit the hundred year headache that many of his predecessors have inherited, except with a much weaker American hand.

TODD: That's because America is tight on cash, Israel is waiting for elections and Palestinians are divided between two factions. Now, the Obama team has to figure out how it will deal with Hamas, which Gaza voters picked to run their government, ousting the moderate Palestinian wing, Fatah, last year.

NATHAN BROWN, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: They're not going to deal directly with Hamas. That's clear.

But do they want to sort of foster some kind of Palestinian reconciliation between Hamas and Fatah, so when you're talking to the Palestinians, you're talking to a unified front?

Or do they want to continue with the Bush administration policy, which is to keep Hamas bottled up in Gaza?

TODD: Mr. Obama visited moderate Palestinian leaders in July, as well as an Israeli city targeted by rockets from Gaza. He said he'd understand if Israel were to strike back.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: If somebody was sending rockets into my house where my two daughters sleep at night, I'm to do everything in my power to stop that. And I would expect the Israelis to do the same thing.

(END VIDEO CLIP)

TODD: Now the Israelis have done exactly that. But their strikes have prompted outrage in the Arab world. The challenge for the new president -- how to get peace talks started again and how to fulfill his pledge to win Arab respect for America, while also maintaining America's staunch alliance with Israel. MILLER: The question is, will Obama allow a continuation of the exclusive relationship which we have developed with the Israelis over the last 16 years?

Will America be able to maintain its credibility and understand what is required to actually broker an agreement?

(END VIDEOTAPE)

TODD: The president-elect still has three weeks to deliberate on all that. Yesterday, his top adviser, David Axelrod, did not take a position on what to do about the conflict, saying America has only one president at a time and right now, that's George W. Bush -- Suzanne, they've said this before on other issues. But here it is a fairly difficult tightrope to walk.

MALVEAUX: So, Brian, obviously, we're seeing those dramatic pictures. We're seeing what's unfolding in the Middle East.

Do you think that there is an appetite from the American people, who are asking Team Obama, take a look at this issue, put this on the front burner?

TODD: You know, there may not be by the time Obama takes office. You've got to look at what's going on here. One analyst says there is enormous fatigue over the Palestinian and Israeli peace process here. People here are tired of it because it does not -- it has not produced a breakthrough -- maybe in several years -- and only a few in the last 50 years.

They say something dramatic is going to have to happen on the ground or Barack Obama is going to have to convince people very convincingly that this is in America's national security interests to solve this problem.

He could probably do that. But it's going to have to be a very tough sell at a very difficult time for America right now.

MALVEAUX: OK. Thank you so much, Brian.

Joining us now, Democratic strategist James Carville and Bill Bennett, host of the national radio talk show, "Morning in America," and a fellow at Claremont Institute.

Thank you for joining us here in THE SITUATION ROOM.

First and foremost, I guess -- we'll start with you, James.

What can President-Elect Obama do that is any different than the Bush administration in dealing with the Middle East crisis?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Well, the Palestinian/Israeli crisis I think we're talking about specifically here for the moment. I think there's several options that they have. They can have aggressive diplomacy. I wouldn't be surprised if there is a real push and could be successful at some kind of Israeli/Syrian agreement. Also they could push to isolate Gaza more and deal more with the west bank which is a possibility. I don't know if that's the direction they'll move in.

The incoming secretary of state Senator Clinton is very knowledgeable about these issues. And I expect she can be pretty aggressive and I think that the new president is going to give her a lot of leeway in trying to push this and see if there's some kind of way to sort of break off Hamas and Gaza and though what can happen when you have aggressive diplomacy and you could -- I don't think it's impossible at all to see something happen here in the immediate future in terms of an agreement with Syria.

MALVEAUX: Bill, do you agree? There are only 22 days before Obama takes office and at least covering him in the campaign, we haven't heard statements from Obama that are very different than President Bush. He has emphasized the right for Israel to defend herself.

WILLIAM BENNETT, CNN CONTRIBUTOR: Well, I wouldn't fault President-Elect Obama on that if nothing happens in the next 22 days or the first 22 days of his administration. It may not be -- it may be possible as James says, but it's hard. It's very hard. This is a very unhappy part of the world. And I think we should be careful about hubris. How much can the American government do. Obviously, we should try. Both President-elect Obama tries, Secretary Clinton tries. You've got a situation there where you've got a country the size of a match book on something the size of a football field which is the neighbor countries population-wise and area-wise.

Hamas wants to end the extinction of Israel. That's what its charter is all about. This is a very tough thing to negotiate out. Again, I hope they try.

One thing that Barack Obama does have and let's recognize this is he's got enormous good will. He's got respect for leaders all over the world. There was even some support and I don't mean this in any direct way as a crack of support from Hezbollah, Hamas for Obama. He obviously rejected that as was appropriate. But my point is, there is some good will, a lot of good will towards Barack Obama. He may have some measure of leverage that we haven't seen before. If he steps in, I do think he will speak with some authority that a new president brings with him and that Barack Obama particularly because of his international reputation. But this is one hard nut to crack. And I would not fault this president-elect or his secretary of state if they can't solve it when it's not the United States which created this problem. But people who want to extinguish the state of Israel.

MALVEAUX: James, is there good will towards Senator Hillary Clinton who will become the secretary of state? Do you think because of her husband's administration, her own role as first lady that there will be something they give her they have not offered Secretary of State Condoleezza Rice, that she was not able to deliver?

CARVILLE: Well, I think that there is a measure, but I really agree with a lot of the things that the secretary said. This is a really tough nut to crack. Also in terms of disclosure I worked for the current Israeli defense minister and remain very friendly with Defense Minister Barak there. I have respect for him. I thought our viewers should know that. I think, Ehud Barak. I think she has a good level of knowledge and she starts out in a pretty good place. Now, they expect she's going to be able to settle or solve the Israeli/Palestinian conflict anytime soon is a might much. But I think she'll come in with some ideas and I think that in the setup piece, I think it was Brian Todd made the point with everything going on here at home, the American people look at this and say gee, nothing ever gets done over there. I think they'll have the new president like to see her come back with something, some tangible thing, if not a peace agreement, at least some progress toward that. That's possible.

BENNETT: May I comment on that, Suzanne?

MALVEAUX: Sure, real quick.

BENNETT: Quickly, Brian's setup piece was interesting. He talked about fatigue setting in. There are so many issues on the president-elect's plate. Nevertheless, the American people are not willing to see Israel go down the tubes. If it looks like that's what's happening, you bet it will rise to the top. Perhaps this becomes this international incident that Joe Biden you remember predicted might occur early on in Barack Obama's watch.

MALVEAUX: Let's turn the corner real quick here on Fox News Sunday, they did an interview with the first lady Laura Bush. And she was asked about her husband's legacy among that. Really the moment that he had to fight a lot of pressure in 2006, whether or not he was going to put more troops on the ground in Iraq. I want you to take a listen to her response.

(BEGIN VIDEO CLIP)

LAURA BUSH, FIRST LADY: I think that came from his really tough inner core which he has and which we needed these eight years. That's why I think he was such a really good president for these times. He didn't want us to lose. He didn't want us to give up on Iraq.

(END VIDEO CLIP)

MALVEAUX: James, obviously defending her husband's choice to put more American troops into Iraq. In looking at his legacy, is this a president that is going to be viewed as someone who had a great deal of fortitude or is it stubbornness? You could see it either way. How do you see it?

CARVILLE: You know, if look back and I think we can say mistakes were made. Most people, me included, admire Mrs. Bush and you know, of course, she's going to stand up for her husband. You know, we could say that he showed some stick to it-ness there, if not a lot of thought given into that. But it's -- they really have a push on to try to do something about his legacy and it's probably -- I can understand why they would want to do that. I clearly understand why Mrs. Bush would be supportive of what her husband did, but you know, these things are -- I think there's a new president coming in and people feel pretty good about that. I think that's where the real debate needs to be for the next foreseeable future.

MALVEAUX: Do you see that as more than just spin, Bill? Obviously some critics saying there's a lot of spinning going on.

BENNETT: History will be the judge here. Look, whether you call it fortitude or stubbornness, for Teddy Roosevelt and Truman, they called it stubbornness in office, fortitude later with evaluation. With the evaluation of the burn administration, I think this will be the victory what I think it will be a victory. Is surely seems to be a victory in Iraq will be one really good shining example of fortitude. Harry Reid you remember said the war was lost. He did not have fortitude. Bush did. Give him credit on this one. History will, I hope the American people will.

MALVEAUX: Take a look at this poll here. Who's more qualified Caroline Kennedy or Hillary Clinton back in 1999 for that senate position in New York? Interestingly enough, 62 percent thought that Clinton was qualified as opposed to 34 percent than Kennedy now, 52 percent say she is qualified as opposed to 42 percent that believed that she will isn't. Neither one having that experience, and before holding an office. What do you make of that, Bill?

BENNETT: Well, I'm with the Clinton people. I mean, Hillary Clinton I don't agree with her on a lot of things but she's an accomplished lawyer, public policy. She knew about education. Caroline Kennedy it seems to me has royalty going for her and nothing else. She has given the most meager performance in public appearances I have ever seen from someone who's supposed to be in the senate from New York and no -- virtually no contributions. She didn't even vote for Pete's sake. Let him put her in there. That will show us what the Democrat Party believes is a qualified woman.

MALVEAUX: James, do you want to jump in before we go?

CARVILLE: Well, being a member of the Democrat Party as they say, look, I think that Senator Clinton, you know, when the first lady ran, she went out and she did it and she ran. I think if Caroline Kennedy were to run for the senate, it probably would be a little bit of a different perception. But you know, she is by all accounts a very bright woman. Mayor Bloomberg, a lot of people know her support her a good deal. But I do think that thus far, she's going to have to be a little more aggressive and get out there a little bit more. This thing is -- what's really happened here, my sense is that the long they are thing goes on, the dice here it gets. They probably should have come late and hard to try to get the government -- it seems to me.

MALVEAUX: Have to leave it at that at that. OK. Thanks so much. James and Bill, thanks again.

New details on the Christmas Eve killings in California. How police were shocked when they discovered the scale of the slaughter carry out by a man dressed as Santa Claus and his elaborate get away plan.

And the Taliban claimed a victory over allied troops in Afghanistan. But a security camera show evidence it was really a savage slaughter of school children. The video coming up.

You're in THE SITUATION ROOM.

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MALVEAUX: We are learning new details of the horrific massacre that unfolded inside a southern California home on Christmas Eve as a man in a Santa suit went on a killing spree with his ex-wife and her family as the targets. Our CNN's Thelma Gutierrez joins us live.

Thelma, what are some of the details that you're hearing about this?

THELMA GUTIERREZ, CNN CORRESPONDENT: Suzanne, when detectives first arrived on the scene of the massacre, they thought they were looking at a suicide/murder. But as they uncovered more evidence, they say the gunman, Bruce Pardo, had no intention of taking his own life, just the lives of his ex-wife and her family.

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GUTIERREZ (voice-over): Christmas Eve, Joseph and Elisia Ortega are having their annual holiday party. 25 family members have gathered in Covina, California for the celebration. Before midnight, their ex-son-in-law, 45-year-old Bruce Pardo pulls up to the house dressed as Santa Claus. His former niece, just 8 years old, opens the door. Pardo shoots her in the face with a nine millimeter semiautomatic.

UNIDENTIFIED MALE: Yes, I'm on North Avenue. And.

GUTIERREZ: The panicked caller dials 911.

UNIDENTIFIED FEMALE: Can you tell us, is anybody injured? We have officers en-route.

GUTIERREZ: Inside the home, police say Pardo unleashes furry on the family, shooting everyone he can. After Pardo empties the rounds of four weapons in the house, investigators say he takes his homemade flame thrower wrapped in Christmas paper and sprays vaporized racing fuel through the Ortega's home. It's quickly engulfed in flames. When police arrive, they discover the carnage, nine charred bodies in the rubble. Among those unaccounted for, Pardo's 43-year-old ex-wife Sylvia, her 80-year-old father Joseph and her 70-year-old mother Alissia.

ED WINTER, LOS ANGELES ASST. CHIEF CORONER: The bodies were burned and are charred to the point they're not recognizable.

GUTIERREZ: Investigators believe Pardo had an elaborate get away plan. He had $17,000 in cash strapped to his thigh and tickets to Molina, Illinois. What he didn't count on was getting severely burned by his own flame thrower. His Santa suit melted on to his body. Unable to escape, Pardo drove to his brother's house where he shot and killed himself. LT. PAT BUCHANAN, COVINA, CALIFORNIA POLICE: We believe he had just snapped because there was in his mind nothing left. His wife was leaving him. I think he felt financially she was taking him to the point where he won't have anything left.

GUTIERREZ: In his rental car, investigators discovered another Santa suit. Booby trapped with hundreds of rounds of ammunition. People who knew him are wondering how the former church usher, once described as a nice neighbor could go on such a murderous rampage. He had a disabled son by a previous relationship and Sylvia Ortega had three daughters by a previous marriage. Police say a total of 13 children lost their parents that terrible night.

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GUTIERREZ: Police say the couple's divorce had just been finalized a week ago, and he had also recently been laid off from a job with an aerospace company. Police also say their divorce was contentious but there was no history of threats or violence or other indication that he was planning this -- Suzanne?

MALVEAUX: Thelma, thank you so much. A very sad story.

A suicide car bomb attack today on the compound of an Afghan governor during a meeting with U.S. troops. Two civilians were killed and 16 other people wounded. Reportedly including two U.S. soldiers. The blast follows Sunday's bloody bombing near another local government building. Our CNN's Brianna Keilar joins us now. There seems to be some video that backs this up, remarkable video that we're watching.

BRIANNA KEILAR, CNN CORRESPONDENT: That's right, Suzanne. We want to give viewers fair warning these are disturbing pictures. The U.S. military and also NATO release this had video. The U.S. military saying it did so to debunk a Taliban claim that one of its attacks had killed 20 foreign soldiers and destroyed an unknown number of thanks. In reality, the U.S. military says, this was an indiscriminate act of murder where most of the victims were children.

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KEILAR (voice-over: In these pictures captured Sunday by an Afghan security camera, a car slowly approaches a security checkpoint in a rural part of coast province southeast of Kabul. At the right of the frame, people file along the edge of the street. According to the U.S. military, they're children walking near a school. As the car slows near an armed guard, it detonates. Fourteen children die according to a senior police official in the U.S. military as do a security guard and an Afghan soldier. The police official said the checkpoint and the school are close to a local government building where tribal elders were meeting at the time of the bombing.

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KEILAR: The U.S. military says those children were in full view of the bomber and he could have waited for the kids to pass by but did not. We should add there were no U.S. military casualties in this attack which Afghan President Hamid Karzai is condemning and calling an un-Islamic act.

MALVEAUX: Thank you.

We are just getting word of some major new developments in the case of an American woman believed to have gone overboard from a cruise ship. A case the FBI is now investigating.

And a tryst on the beach in Dubai lands a British man in a legal nightmare that lasted for months. Now he is talking about that for the very first time.

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MALVEAUX: There are multiple new developments in the case of an American woman who went overboard from a cruise ship off the coast of Mexico on Christmas. CNN's Sean Callebs is working that story for us.

What do we know about this?

SEAN CALLEBS, CNN CORRESPONDENT: Well, this is a case that's really taken on a number of layers. First, the search was called off just a short while ago by the coast guard. Secondly, the FBI is looking into this. They are trying to determine if a crime has been committed. That's the significant part about this. The 36-year-old woman went overboard on Christmas. A surveillance tape captured that image and we know the FBI and Coast Guard have looked at that tape. But we don't know what it shows. It is still in the hands of Norwegian cruise line. That's what's going on now. The FBI tells me anytime an American goes missing on the high seas, it's standard practice to try and determine, was a crime committed? At this point, they say they simply don't have enough information to go forward on that. So that's where that aspect stands right now -- Suzanne?

MALVEAUX: And are we learning more about the husband in this case?

CALLEBS: Yes, we really are. His name is Raymond Seitz. We know that the Polk County Sheriff's office in Florida just a short while ago issued paper information about an alleged domestic assault that occurred back in April of 2008. We know in April 2008 that the Seitzes were married, so we can only presume that the assault took place against his wife. In that information, he basically admitted to head-butting his spouse. And later the charges were dropped once Raymond Seitz agreed to go to a diversionary program.

Another very odd thing that came just a short while ago Suzanne, a joint statement by the mother here of the apparent victim, Jennifer Seitz, as well as her husband -- now, it was said that the couple went on this cruise to celebrate their first wedding anniversary. They took Seitz's mother with him. Jennifer Seitz was having trouble sleeping and decided to walk the ship that night. But the surveillance video shows her going overboard at 8:00 at night and the Seitz did not contact authorities until 3:30 in the morning. There's a big time gap there. MALVEAUX: OK. Thank you so much, Sean.

For the first time we are hearing from a British man whose partying turned into a Middle East nightmare. CNN's Jim Boulden is in London with the details of the man's legal odyssey -- Jim?

JIM BOULDEN, CNN CORRESPONDENT: Suzanne, Dubai is a top business destination and its beaches attract a lot of western tourists. But be warned. Displays of public affection are frowned upon as the U.K. Foreign Office has been warning ever since two British tourists were convicted for having sex on a Dubai beach.

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BOULDEN (voice-over): Thirty-four-year-old Vince Acors spent the last three months in limbo his passport confiscated before finally being deported from Dubai. On Christmas Eve, he arrived back in Britain. On Monday, Acors spoke to reporters. He says he didn't realize that what he and 36-year-old Michelle Palmer were doing that night on a Dubai beach back in July was illegal in a Muslim country.

VINCE ACORS, CONVICTED OF SEX ON BEACH: The definition of sex in this country is different than the definition of sex in the Middle East. There would have been some physical contact, but intercourse did not take place.

BOULDEN: Acors admitted to being extremely drunk that night. He and Palmer were convicted of public indecency in October though jail time was suspended. He says he's learned the Middle East is full of contradictions.

ACORS: When you get there, you actually feel like you're in a western country. Alcohol is freely available. The hotels have up to ten bars in them. They have significantly discounted drinks for men and women on certain days and nights.

BOULDEN: But outside the big hotels, Islamic values prevail.

ACORS: At the end of the day, these things are not acceptable in the country that I was in. And I've never denied that.

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BOULDEN: But what were these things or acts that are unacceptable? Well, he says he will reveal all but only to a British tabloid willing to pay for his story -- Suzanne?

MALVEAUX: Thank you.

A third day of deadly Israeli air strikes. We're on top of the breaking news in Gaza. We'll take you live to the Middle East.

Plus, a potentially toxic tidal wave. A billion gallons of coal sludge.

(COMMERCIAL BREAK) MALVEAUX: In Tennessee, more than a billion gallons of coal waste has spilled in a tidal wave of sludge. CNN's Brooke Baldwin is there. Brooke, just how bad is this?

BROOKE BALDWIN, CNN CORRESPONDENT: In a word, it's bad, Suzanne. The people who live just over the other side of that plant say their homes, their lives will never be the same.

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BALDWIN (voice-over): It's a jarring juxtaposition. Beautiful blue skies and a sea of sludge.

TRAVIS CANTRELL, RESIDENT: That's a wild contrast. Yes. You really can't put it into words. There's nothing you could say about it. It's massive.

BALDWIN: Travis Cantrell has lived along this quiet cove for four years. He used to fish. Not anymore.

CANTRELL: It is 40 feet deep of sludge in the middle of a channel. In the middle of a major channel. And they're talking about four to six weeks of cleanup.

BALDWIN (on-camera): Do you believe them?

CANTRELL: That would be a stretch, yes.

BALDWIN (voice-over): Three days before Christmas, a retention pond wall collapsed at TBA's Kingston plant sending a billion gallons of water and coal ash on to more than 300 acres of land. The tidal wave of sludge was so strong that it came cascading from the plant past a couple of houses, carrying this Jacuzzi from a quarter of a mile away before landing in the middle of this yard. Local residents' initial fear has turned to furry. How could this happen? And is it safe to stay? Two questions of several that were attempted to be answered at a special meeting Sunday night.

UNIDENTIFIED MALE: That was one of the questions, is it safe to live here? We're going to put air samples in, we're doing water samples. I'm fairly confident in the water samples. But our samples will need to be verified by the Tennessee Department of Environment and Conservation.

BALDWIN (on-camera): The EPA and other independent tests are being conducted on the water and air quality. So you're moving?

UNIDENTIFIED MALE: Yes, we're leaving.

BALDWIN: This Kingston man isn't willing to wait around for the results. Even if that means leaving his favorite fishing hole behind.

UNIDENTIFIED MALE: When TBA, who makes this stuff, puts this stuff out here in our environment, they can't tell you what's in it. If they don't know what's in it, who does?

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BALDWIN: Water tests are ongoing. People who live here for now, turning to bottled water just to stay safe -- Suzanne?

MALVEAUX: Thank you, Brooke.