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JOHN KING, USA

Libyan Rebels' Offer of Cease-Fire Rejected; Cracks in Gadhafi's Inner Circle; Unrest Across the Middle East

Aired April 1, 2011 - 19:00   ET

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


JOHN KING, HOST: Thanks, Wolf, and good evening everyone. A gift tonight for a president about to announce he wants a second term. The unemployment rate fell to 8.8 percent last month. Not great, mind you, but still the lowest level in two years.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: After one of the worst recessions in our history, certainly the worst one in our lifetimes, our economy is showing signs of real strength.

(END VIDEO CLIP)

KING: And tonight, the bigotry of a man who claims to speak for God is the warped inspiration for a deadly attack in Afghanistan that leaves at least 12 dead and many more wounded. Pastor Terry Jones tells me he knew burning a Koran with television cameras rolling might incite violence but he did it anyway. That in my view is no man of God.

We begin, though, with a day of dramatic news in Libya and across the Middle East in North Africa. Watch some of these stunning images. Look here in Yemen. More anti-government protests in the street here. Look at the size of the crowd, how deep it goes back there. That is Yemen.

Now we move over here to Egypt, Tahrir Square. Not lost -- the memory of Tahrir not lost on these demonstrators, in the square again today, saying they're not satisfied yet with the pace of change in Egypt. From Yemen to Egypt to Jordan, anti-government demonstrators in the street coming in right up close with pro-regime demonstrators as well. You see a heavy security presence throughout Jordan.

And further to the north in Syria, again, another day of demonstrations there. Sadly, some of these demonstrations in Syria turn violent and deadly. And in Libya tonight the anti-Gadhafi opposition, first more fighting -- you see it here. This is in the east of the country -- the opposition fighting in the streets again. And in some sense -- some sense they're regrouping now, establishing a new defensive line.

Let me bring up the state of play -- new defensive line from the opposition right around here near al Brega. Still the regime has had the biggest week and big gains in this week, so the opposition perhaps because of that perhaps launching a new diplomatic initiative, a call for a cease-fire that was doomed to failure from the outset. Why?

Because it demanded Moammar Gadhafi pull his troops from the east and allow something he has prohibited for more than four decades -- freedom of speech and assembly. We begin there with Ben Wedeman reporting tonight from Ajdabiya. So Ben, the opposition came out today and said it would agree to a cease-fire, but its list of particulars, its demands, any indication that they think -- are they confident at all that Gadhafi would accept that?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: No. In fact, I think they were demands really just to state their position. Because what they're asking for are things that Gadhafi clearly is not going to accept. They want freedom of expression for all Libyans. They want a pullout of mercenary forces and snipers from cities in the west like Misrata.

They're asking for things that Gadhafi simply is not going to even consider. But I think it was important for them to state their position as to their reaction to the cease-fire that was offered several weeks ago by Gadhafi, but it's probably not going to go anywhere -- John.

KING: So a political statement unless Gadhafi does something that would stun us all. Let's talk militarily then on the battlefield. When we talked yesterday you talked about a great sense of disorganization on the front lines but I was following your tweets and you sent out a tweet today suggesting that perhaps, perhaps the opposition was starting to get its act together a little better. Tell us what you mean.

WEDEMAN: Well, we were at the gate, the western gate of Ajdabiya, which is sort of a gathering point for fighters heading toward Brega, and what we saw was that not only were they not allowing journalists past but also before they were allowing anybody with a gun expressing a desire to go fight, to go through, now they've issued orders -- and I've got a copy of these orders -- from what's described as the 1st Infantry Division of the Libyan National Army, saying that fighters cannot go to the front unless they're part of an organized unit.

We're also hearing from Benghazi, from military leaders there, that there is now a reformed army unit made up of defected soldiers who have been organized to go to the front. So it appears they're trying to put together a proper military unit, apparently equipped with long-range missiles. I'm told they have a range of about 21 kilometers. Basically, I think Katyusha rockets that have been moved to the front. So it does appear that finally some attempt is being made to organize what was frankly a very chaotic front line -- John.

KING: And we'll watch and see if that affects the shape of play on the battlefield. Ben Wedeman in Ajdabiya -- Ben, thanks so much.

Point of reference for you here -- just about what Ben's talking about. He's in Ajdabiya here. Al Brega is here. So the opposition trying to regroup somewhere in the middle here, trying to regroup after a week as you can see, in which the regime made dramatic gains, not only taking back these towns, also essentially getting almost control of Misrata -- still some disputed areas of Misrata and still some fighting as well, as you can see in this video here.

These are anti-Gadhafi, opposition forces. You see rocket- propelled grenades there and the shoulder launcher. You see pocks in the buildings -- heavy, heavy fighting in this city throughout the week. Of course that is Misrata just to the east of Tripoli. The regime's most urgent goal is to show it remains firmly in command. The current and the former foreign ministers defected this week. But Nic Robertson, who's reporting from Tripoli, he finds a concerted effort to show there will be no more major cracks.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: I'm not seeing further cracks. I think we are seeing that the regime wants to show that it's still in control. We've seen one of Gadhafi's sons make a visit to the hospital here. That's the first time we've actually seen anybody in the Gadhafi family outside of the palace compound here in Tripoli.

So I think they sort of want to get their image out there and show that they're still around, that they're still united, that they're still strong, that they believe that they can win this. The fact that we -- there's talk of an envoy for Seif al Gadhafi in London I think is more about them trying to find what diplomatic channels might be open, see what they can hear directly in face-to-face talks.

I don't think anyone from the family is looking to defect. But what we're hearing from the government, this roundly rejecting -- government spokesman roundly rejecting the rebels' offer of a cease- fire, calling it impossible conditions and plain silly, just sort of shows how far there is a sort of reality gap with the situation and perhaps the government spokesman. But the government's position on all of this, there still doesn't seem to be an alternate path out of this current situation offered by the government other than to continue fighting -- John.

KING: Continue fighting and you make the point that they reject the opposition cease-fire proposal which essentially was a political statement because the opposition knows full well Gadhafi is not going to agree to pull out of all those towns and the opposition also said their demands included ultimately regime change. So you mentioned militarily, so what is next? Is the -- your sources in the regime do they believe they can continue an offensive and continue to pick up grounds or with the coalition airplanes overhead is there a goal at the moment just stalemate, drag it out, test the will of everybody involved?

ROBERTSON: I think they want to see which -- in part which way NATO is going to handle enforcing the no-fly zone. Will it be as robust as we've seen it in the past couple of weeks where the rebels were advancing? The coalition was punishing Gadhafi's forces? I think Gadhafi wants to know if the NATO-led no-fly zone enforcement is going to be as strong. Will it push his forces back and allow another rebel advance, even if it means that you potentially get some civilian casualties on the government side. So I think the regime here is really looking perhaps to the United States to see if there's any sort of avenues of opening a line of communication there and really to see how the battle's going to play out. I think they will look at the rebels' offer of a cease-fire as the rebels offering this from a position of weakness, that they don't have the strength to continue to battle and it is a political move on the rebels' part to look good to the international community and to recognize that they really can't push this offensive on any further at the moment -- John.

KING: And for now the stalemate continues -- Nic Robertson tonight in Tripoli -- Nic thanks.

Great sense of the state of play from Nic and Ben in Tripoli and across Libya, we'll watch that as we continue into the week and next week, but dramatic developments all across the region today. Egypt's Tahrir Square among the places where there were demonstrations today. Arab gathering places this Friday. In Cairo the majority of the demonstrators trying to make the point they were there to voice their concerns that since the fall of the Mubarak government they do not see change to their liking.

Ivan Watson is in Cairo tonight. And Ivan, we see these young activists back in the square, and you get the sense that they feel somehow that they're the ones who brought all this dramatic change about and yet they're being shoved to the side a bit. Is that fair?

IVAN WATSON, CNN CORRESPONDENT: Yes, I do believe that's true. They're saying that they're marginalized. And they called Friday's demonstration the "save the revolution Friday", trying to inject some new enthusiasm, some new energy into their movement. One of the complaints that we're often hearing is that they just feel woefully inexperienced. They just do not have the party structure that one of their former allies in what had been the revolutionary coalition here, the Muslim Brotherhood, has.

The Muslim Brotherhood did not participate in the large rally we saw today of thousands of people in Tahrir Square. The Muslim Brotherhood has more than 80 years of experience here in Egypt. It's been battling against successive governments that have used incredible force and persecution tactics against it. And it's much better mobilized to organize a political party for parliamentary elections that are expected to take place in September.

Some of these young activists from Tahrir Square say they are not going to be ready. It will be very difficult for them to organize a political party in time for those parliamentary elections in September. They wanted to wait longer before those elections would be held.

KING: And so you have the tensions there. If you wait longer then you're leaving things obviously in the control of the military, many of the activists are skeptical about that. You talked about their skepticism, their worries that an Islamist group, the Muslim Brotherhood, would take dominance. Do they -- is there any middle ground there or do they just realize that they're going to have to organize more quickly?

WATSON: Well, here's one interesting thing. Even the Islamists, who are a powerful bloc here, they are not homogeneous, and even the Muslim Brotherhood itself has divisions that we've seen develop. The youth of the Muslim Brotherhood, some of them were joining in this gathering here.

But it was very right to point out the ruling military council, there's a lot of criticism coming from young revolutionaries, the bloggers, the Facebook activists of the military council, particularly a law that has been proposed that would ban the type of protests that led to the revolution that overthrew Hosni Mubarak in the first place, so some of the people gathering here also want to do away with that proposed law -- John.

KING: Ivan Watson in Cairo, a vivid reminder of still a lot of unanswered questions in Egypt -- Ivan, thanks.

As you see from the flashing circles here on the map, demonstration across the region, not just in Egypt, but in Yemen, in Syria, in Jordan as well. Commonplace in recent weeks, yes, but remember, remember, this is a region where these displays have been unheard of, prohibited for decades. Hala Gorani helps us understand tonight from the Jordanian capital of Amman.

Hala, let's start with the unrest where you are there in Jordan, a heavy police presence in the street. It seems that King Abdullah is determined hopefully to use his security forces to keep this from bubbling over.

HALA GORANI, CNN CORRESPONDENT: Absolutely. It appeared as though on the streets of Amman there was sort of a security buffer, a cordon separating the pro-government demonstrators, the pro-monarchy demonstrators, and those protesters in the street who are calling for reform. And that kept things relatively quiet. Unlike last week you'll remember, John, when there was significant violence, although nothing like what we've seen on the scale of other countries in the last few days.

KING: And if we move across the border into Syria, at least seven dead, more injured. President Assad on the one hand talking about reform, talking about listening, but what you see on the streets is more evidence it seems that he has decided his best option is to use brute force.

GORANI: Well, it's been mixed messages that come from this regime over and over again. On the one hand he delivered a speech to the nation at the parliament building in Damascus where he didn't really mention reform in any substantive kind of way. But a few days later we hear that committees are studying the listing of the emergency law that's been in place for almost half a century in Syria.

So that was a message that was in contradiction with his speech on Wednesday but then today once again we've seen protests peppered across the country where security forces in some cases, according to witnesses, fired into the crowd. We've seen video of people who were hit in the head and other parts of the body, a crackdown on demonstrations across the country. And John, that's what's significant about today, is that people came out on the streets of Syria despite the fact that they knew they were taking significant risks.

They've been warned over the last few days not to do it, and they did it anyway. And what's more significant is the protests were not just centered around Daraa in the south and Latakia on the Mediterranean coast. We saw large demonstrations by Syrian standards at least in a Damascus suburb that killed according to some eyewitnesses nine people today -- John.

KING: And Hala, each country is different. But are there unifying threads? Can you connect dots in some way? On this day where we have been reminded yet again it is not just Tunisia, it is not just Egypt, it is not just Libya, that throughout the region there is political uncertainty, political unrest and all these demonstrations. Each country is unique, but are there common threads?

GORANI: There are common threads. It's what the demonstrators don't want anymore that unifies them. Each individual country has a set of protesters and pro-democracy activists who want different things from their government. Some, for instance, in Jordan want to maintain the monarchy but want political reform. Others in Syria, for instance, if you speak to them, even those against the regime, will say it's too early to get rid of this regime and leave a power vacuum but we do want significant reform.

What unifies them is what they don't want. They don't want the oppression anymore. They want the freedom to be able to assemble, to openly criticize their leadership if they want to without getting shot at by security forces. So the next chapter is the one that's very significant, I think, for this region.

It's once these regimes, those who do end up falling, fall such as Egypt, such as Tunisia, and others, what comes next? What is going to fill the vacuum at the very top? What system of government is going to work for the Middle East and the Arab world? And that is the big question. And some analysts say, John that might be tougher than the revolution itself.

KING: Excellent points, as always. Hala Gorani for us tonight in Amman -- thank you so much.

Later, a Koran burning in Florida is blamed for a deadly attack in Afghanistan. We talked to the controversial pastor behind the burning today. He spewed more hate, blamed anyone but himself.

But next, with so much uncertainty in Libya and across the Middle East in North Africa, we know the old policy playbook is useless. So what should guide the president's actions?

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KING: Let's digest a remarkable day and a consequential week in Libya and across the region with former under Secretary of State Nicholas Burns and our senior political analyst David Gergen. Nic Burns, to you first. We think it will be laughed off the table by the regime, but the opposition did put on the table today a cease-fire proposal.

Essentially Gadhafi pulls his troops back from the cities, he allows peaceful demonstrations and peaceful assembly and free speech across the country, and the opposition also says its ultimate goal is regime change. I assume you think the odds of that being accepted, first let's start there, are zero.

NICHOLAS BURNS, FORMER UNDER SECRETARY OF STATE: I think they're zero. I think this is an attempt by the opposition to appear reasonable, as one of your correspondents said. It just points to the problem, the dilemma that the administration has right now. Their worst nightmare was that we get bogged down in Libya. It looks like we're getting bogged down in Libya because there's a stalemate.

Neither Gadhafi nor the rebels are strong enough to win an outright military victory. So we're likely facing a protracted civil war. And the administration's going to have to hope for kind of a miracle. One is that someone within Gadhafi's circle tries to remove him or removes him from power. A second would be some kind of negotiated settlement.

But that's going to be a very dissatisfactory solution for the United States because you're going to have a settlement where Gadhafi stays in power and so that can't be a victory for the United States. And we'll be held responsible by the international community and the Libyan people if he is in power.

So this is a series of bad choices in Libya for the United States. And of course, we've just withdrawn from the front lines of the military action. Not a good week, I think for the United States and for our policy in Libya.

KING: And the opposition, which was -- had its butts kicked, there's no more polite way to put it, or that's probably the most clear way to put it, this week, is trying to regroup but one of the things the opposition wants is more help. It would like more airstrikes. And we've been told by many sources it's just cloud cover.

It's just sand storms. There will be more coming. We don't quite see evidence of that yet on the battlefield. In "The Washington Post" today a leading opposition figure said "we need arms. Trust us. We're not affiliated with al Qaeda." Should the American administration, the Obama administration directly arm the opposition, Nic, or should it, as Secretary Gates said yesterday you know maybe the French should do that. Maybe the Brits will do that, but we're staying out of that business.

BURNS: Somebody in the coalition is going to have to do that because the rebels don't stand a chance of defeating Gadhafi unless they're armed and they're trained. Now Secretary Gates was very clear yesterday in Congress; he's not going to allow the United States to do that. It's probably going to be up to the French to do it. But someone has to do it if this level playing field is going to be maintained because right now Gadhafi's on the offensive and his counterattacks are working.

KING: David, you've heard Nic Burns' perspective. Nic is a smart diplomat. You're heard our correspondents in the region. The White House press secretary, Jay Carney today said this. Quote, "the overall trend here is positive in terms of the conflict." Do you buy that?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I think Jay Carney's getting better and better at his job. There's a large element of spin control in that job, as you well know. Listen, I agree with Nic's basic analysis. Someone who's supportive of the president, who heard him in a private session this week, told me afterwards, look, the president basically seems to believe that we are heading for a protracted stalemate that this is going to go on for several months.

That does not mean he's given up on getting Gadhafi out of there. Rather, he thinks we're going to do exactly what Nic just said and what his hope is, is a different option and that is he's pinning his hope on sanctions and other kinds of pressures to eventually get Gadhafi out of there. It may some kind of negotiated settlement. What we're hearing now is that maybe Gadhafi will step down and turn it over to his son Seif or somebody like that. That doesn't really solve the problem from an American point of view. But the president increasingly -- the president appears to be pinning his hope on long- term diplomatic pressure and economic pressure.

KING: And so the question is, and David, let's stick with you for a minute, the question then and that -- the better question maybe is then who cracks first? Does the regime crack further and Gadhafi is forced to yield power by somebody in his family or just by events on the ground or if this drags on in a stalemate does the coalition crack.

Do the French and the Brits want to continue to pay for the no- fly zone? Do the Arab partners say wait a minute how long are we in this for? Does Gadhafi find a way, and we've seen this happen before -- I give you Saddam Hussein -- to sell the oil, David?

GERGEN: Well he's -- you know right now he's controlling some of the oil fields and he does have that possibility of (INAUDIBLE) black market we think to give himself some financial support. But John, I think you're posing a question that the administration really does not know the answer to. It's in the same position we are.

It's looking at this, hoping he'll crack, but not at all confident. And I would suggest -- people are asking the question, and I -- well, maybe is NATO really going to come in and they're going to turn it around here in the next few days? It's hard to believe that the rebels would have put forward a cease-fire even though it's a deal Gadhafi won't accept. They'd be pushing it -- it's hard to believe they'd be pushing a cease-fire if they had serious hopes that NATO was going to save the day for them.

KING: And so Nic, you know from your job as the former NATO ambassador, you know these players here. What are the pressures -- let's put the United States aside for a minute. The president said we're going to be in the back seat. We're going to support but we're not going to lead. What are the pressures then? What do you see the Brits and the French doing next if they're looking at a ticking clock as well and saying stalemate's not good for us?

BURNS: Well the Brits and French are going to have to lead this and they're going to have two problems. Can they sustain the intensity the air operations that the U.S. has done over the last two weeks? There are questions about that. It's expensive and it's related to the second challenge that they have. Can they hold together a rather fractious NATO alliance where two of the largest, most powerful members, Turkey and Germany, don't really support this war effort, are standing outside it?

And if you know there are civilian casualties or if the war doesn't go well, there will be inevitable political pressures on the French and the British to pull back and perhaps to look for a diplomatic solution. So when you take the United States out of the front lines of NATO, we're the natural leader of the alliance, it is a bit of a risk to see if NATO can really stand firm and be successful. That's the gamble that the Obama administration has taken by essentially giving up leadership of this operation, really the first time in NATO history that the United States has not led. And let's see if the Europeans can have the political fortitude and military effectiveness to be successful over the coming weeks.

KING: Well, let's pull out and talk more broadly. It's another day of remarkable developments all across the region. Protests in Egypt, young demonstrators saying yes, we brought down Mubarak, we're not sure so far, we appreciate the transition so far -- in Yemen, in Syria, in Jordan, elsewhere. Nic, you know this as well. One of the things diplomats go by is a playbook.

We have what we call a one China policy, even though we support an independent Taiwan -- we don't say that publicly, U.S. diplomats don't because it angers Beijing. There's a rule book you follow at times of crisis. The rule book when it comes to the Middle East is now moot. You might as well start a fire with it. What does the president of the United States do now as this all unfolds? Does he wait and pause and have a new policy down the road when it's a little bit more clear or do you have to have a new policy now?

BURNS: I think he might have to wait until the dust clears a little bit. The president has a very tough job ahead of him. He's going to have to balance competing interests. On the one hand the United States is going to want to continue to push political reform, democratic progress in the key states, the two key states of Egypt and Iraq, to make sure they move forward towards a more stable future.

On the other hand, we have significant vital military intelligence, counterterrorism interests in places like Yemen and Bahrain and Saudi Arabia. I don't think you'll see the United States pushing reform in those countries. We're going to want to protect our interests, protect the regimes with which we've worked so well over the last several decades. And that's the contradiction that has been built into American policy for 50 to 60 years.

It's not new to the Obama administration. And it's a very difficult balancing act for any president. That's what our president faces. And then of course, John, as you say, when the dust does begin to settle a little bit, we can see more clearly, what is a new policy, a new way for the United States to acquit itself in a region undergoing the most rapid and deepest transformation, at least since the creation of the modern Middle East 70 to 80 years ago -- a tall, tall order.

KING: Are there risks, David Gergen, in -- it's clearly -- it's a double standard. I understand the reasons for it, vital national security interest. But it's a double standard, the United States treats Libya different as Nic just noted than it would treat Yemen or treat Bahrain for a president too early in his administration went to Cairo and gave that big speech saying I want a new relationship with the Arab and Muslim world. Does he risk coming out on the other side of this tunnel in a more difficult position because -- and again, for understandable national security reasons, he has a double standard when it comes to some countries?

GERGEN: I think he's at increasing risk, John, overall. And it's understandable that he would have a policy toward the region of sort of different strokes for different folks that he's going to play it country by country, just as Nic laid it out. But now having committed himself in Libya in the way he has, he's put his prestige and the prestige of the United States on the line along with NATO of course.

But if this turns into a stalemate, after the president said we're going to get Gadhafi out of there, that's going to have a ripple effect across the region. I think it's going to encourage other tyrants in the region to believe that they can crack down and murder people without much fear from the United States or from others.

And it's also going to raise a question of U.S. weakness in the region. And so I think this Libyan thing is not isolated. And I'd be interested in Nic's view on this. But I don't think it's isolated from the rest of the region. I do think it has ripple effects and that's why what's going on right now on the ground in Libya is very concerning this week.

KING: Nic, I'm going to ask you to save your opinion on that one until next week. And we'll be back and follow up on this as it all plays out. For this evening we have to go, as always excellent insights from Nic Burns and David Gergen -- thank you, gentlemen.

Still to come here is the anti-Muslim bigotry of a Florida pastor to blame for a deadly attack on United Nations workers in Afghanistan?

But next, America's former top spy takes us inside the covert challenge in Libya.

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KING: It's been a tough week for the Libyan opposition on the battlefield and a week that saw the United States yield control of the coalition military command to the NATO alliance. But we also learned that President Obama has signed a finding allowing covert CIA operations in Libya.

A bit earlier, I discussed the stakes with the former director of central intelligence, Retired General Michael Hayden.

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KING: General, I want to get your sense, to the degree we can speak with certainty, because so much is uncertainty in the Middle East right now.

GEN. MICHAEL HAYDEN, FORMER CIA DIRECTOR: Right.

KING: But let's start on Libya. If you were in your old job as the director of central intelligence, what would your biggest question be right now as you watch this unfold?

HAYDEN: I think the biggest question I would have and the one I would expect to be asked every time was in the situation room is frankly: who are these guys? Who comprise the opposition?

Can -- do we believe they can self-organize? Can they get their act together? Can we trust them?

Myriad streams are coming together. We know they're united in opposition to Gadhafi. We don't know what they're united in support of.

And I think the president, the national security adviser, would be asking me: where is it we think that this group, this structure, this amorphous mass is going to go?

KING: And how would you process what the DNI says now as relates to NATO? Flickers -- flickers of ties to al Qaeda and Hezbollah. At large, they think this is a group of Libyans who want freedom, who want to stand up to a dictator. But flickers -- define, what does that mean to an intelligence professional?

HAYDEN: Yes. I think -- I think what they're trying to suggest, and I agree with it, I think it's about right. You're going to see a variety of elements in here, including al Qaeda. And if you keep in mind the Libyan Islamic fighting group was the al Qaeda feeder organization in North Africa, it was essentially based in the eastern provinces, which is the current base of the opposition. So, it's not surprising that some elements of the opposition have a history with these kinds of movements.

The real danger is if this movement gets stunted, if this really heads south, if this becomes an ungoverned area ala Somalia, that group, willing to conduct more violence, probably a bit better organized, certainly with a fixation on their cause, actually becomes even stronger if this situation turns worse.

KING: I assume then under that scenario, you prefer a more swift resolution and not a stalemate that leaves Gadhafi in power in Tripoli and this fractured, less organized opposition perhaps controlling the eastern part of the country?

HAYDEN: Right. John, I mean, I'd be reluctant to tell you what I'm going to tell you now and say, I absolutely believe this, but here's my instinct. The worst possible outcome is a stalemate. Not Gadhafi winning but a stalemate, because what you end up with, stalemate is a fractured Libya and the great danger that that eastern part of the country begins to look like an ungoverned area.

Of course, the best possible outcome, though the one frankly, the only one that allows us to achieve our objectives, is for Gadhafi to go.

KING: And you say that's the best possible outcome. I think there's widespread agreement to that in the world. However, one complicating factor is the president of the United States has made a decision that yes, he signed a presidential finding, we know there are CIA sneakers on the ground, or shoes on the ground. We don't call them boots. It's not troops per se.

But he has said the United States, the military operation, number one, under the U.N., is not about regime change, he says. That's the U.S. goal, but they won't use military force to bring that about.

How do you get regime change, then?

HAYDEN: I truly don't know. And look, it's unfair --

KING: Is there a problem -- is there an inconsistency and a problem with the policy?

HAYDEN: I think there is. And I'm reluctant, hesitant to be critical because I know how tough these decisions are, how difficult these meetings are. But to my eye, there is a fairly significant gap now between what you called our objective, he must go, and our means.

And if that gap sustains, John, this thing, you called objective, isn't an objective. It remains an aspiration. And that's a bad place to put American power.

KING: But, you know from your days in the intelligence business, you know this guy, Gadhafi. He's a rogue. He's a terrorist. But he's a survivor.

HAYDEN: He is. He really is. Wise? No. Clever? Yes. Cunning? Yes. Brutal? Yes.

And frankly, he's also a megalomaniac. And, right now, I said he must go and I wish we would offer him some sort of exit that he could slither through to go, but I'm not sure he would take it.

You know, there's part of me that's saying, he's loving this. This is him against the world. He's on stage. He's on camera. This was almost made for his personality type. KING: And so, when you hear about the cracks, the foreign minister defects, the former foreign minister defects -- some rumors at least of one of the sons talking to the Brits about maybe if I get to a point, how do I get out of here? Do you believe it? Do you think it can get from the second circle to the inner circle and then to the one, Gadhafi? Would he do that?

HAYDEN: It's possible. And that's certainly one way this goes well. This is one way that we succeed.

But I have to add, so, we've got Moussa Koussa, whom we know and, frankly, who was our intelligence partner from about 2003 onward with regard to both weapons of mass destruction and counterterrorism, he goes -- he goes to London and he's greeted with the promise he's going to go in front of the International Criminal Court. Look, I know these are hard decisions. You've got the demands of simple justice.

But I think we've just given Gadhafi his talking points to the other members of his inner circle who remain behind. Do you see what happens when you leave?

KING: So, would you give him immunity?

HAYDEN: Look, that's a political question. I think --

KING: Do you believe he's responsible for Lockerbie?

HAYDEN: Who? Moussa?

KING: Yes.

HAYDEN: I don't know. I don't know. He certainly -- I mean, it's hard for me to conceive that there isn't -- there aren't some threads that connect him to Lockerbie given where he's been in the government. But I have to point out, just as a statement of fact, he was not indicted.

KING: Right.

HAYDEN: All right? So, John, I'm sitting across the table from him at our headquarters at the CIA. I'm talking to him about mutual interest and mutually productive activities. And I know his history. That's an interesting conversation.

KING: The defense secretary, who was once the director of central intelligence, calls this a pickup ball game -- essentially saying the opposition does not have the skills, the training, the arms to win on the battlefield on its own. The president of the United States has said the United States is not going to train them and most likely will not arm them, maybe the French will decide to do that, maybe the Brits would decide to do that.

Is that the way to go here, to arm the opposition, or is that dangerous?

HAYDEN: It is dangerous. And I -- frankly, I'm conflicted on it because if you don't do it, if you don't turn them into an effective force, I don't see how we exit from what it is we began anywhere near the goals that we stated at the beginning. But there's real danger in that. Hence, you asked me at the very beginning, what would you go after first? And that's, who are these guys? Can we trust them?

KING: Are there levers? We know that CIA directive empowers the teams there, as you noted, to find out who the opposition are, who can we work with, who should we be worried about, what are their capabilities? Are those teams also likely trying to by -- I'll use the word shenanigans. I know that's not an intelligence lexicon term -- are they trying to effect regime change? Are they trying to encourage defections? Are they trying to get into the minds of Gadhafi and his closest inner circle?

HAYDEN: First thing I have to point out, John, I can't confirm or deny anything because, frankly, I don't know. I'm not in government. But conceptually you've got two lanes working here. The first lane is intelligence collection. That's not covert action.

If I were director and I had a problem like this, I would want to get people on the ground. It would be politically foolish of me not to inform the White House about that to get a political understanding of it, but you don't need special authority. You don't need a finding. That's just collection of intelligence.

If you want to move from collecting intelligence to actually influencing events, then that becomes a covert action. That requires a presidential finding. It requires an opinion from the attorney general. It requires you briefing significant numbers of members of Congress.

I think we're probably between those two points right now. And I don't -- my sense is you don't get to the second one, trying to influence events, until you're satisfied with the first one that you actually know what's going on and who they are.

KING: Let me close with a broader question. If you go back to 9/11, the days immediately after, one of the big criticisms of the United States was that for all our electronic gizmos and things we can fly in the sky and our satellites in space, we had a problem with human intelligence on the ground, especially in this part of the world.

HAYDEN: Right.

KING: With all that's happening, Egypt, Tunisia, Libya now, Syria, Bahrain, Yemen, Jordan, and on and on and on -- are you confident that at this moment in time, when the director of central intelligence and the president of the United States need a whole lot of quality information real-time, are they getting it?

HAYDEN: Well two, points, all right? What we call RFIs, or PRIs, priority intelligence requirements. They change. These are new.

I mean, we weren't organized to study the Libyan opposition over the past several years. We were organized to cooperate with the Libyan service in a mutual counterterrorism effort. So, we're shifting gears.

The second thing, it's very important that most people perhaps don't appreciate and need to understand: human intelligence is the most valuable kind of intelligence, and it's also the most slow- moving. You can turn technology on a dime and look at new targets. To turn human intelligence on a dime is very difficult because you've got to develop sources. That I think is what's going on now.

KING: And so, that would give you some pause as a policymakers to make quick Decisions, when your information is perhaps, especially at the beginning, maybe not so reliable.

HAYDEN: Well, I mean, life's hard. It's never -- intelligence is never perfect. There's always judgment involved. And that's why I think American intelligence right now is working very hard to give policymakers as clear a picture as possible.

But, at the end of the day, it's still going to be a tough decision.

KING: General Hayden, we appreciate your time.

HAYDEN: John, thanks.

KING: Thank you.

(END VIDEOTAPE)

KING: Ahead: a Florida pastor says he knows -- he knows burning a Koran could incite violence in the Middle East, perhaps deadly violence. And he did it anyway.

And when we come back, the day's other big headlines are next, including a welcome gift for a president about to announce re-election -- the unemployment rate, while still high, at its lowest point in two years.

(COMMERCIAL BREAK)

KING: Welcome back. If you're just joining us, here's the latest news you need to know right now:

It will be a busy weekend for the prospective 2012 Republican presidential candidates. Tim Pawlenty, Rand Paul, they'll be in Iowa. Rick Santorum, off to South Carolina. Newt Gingrich heads to New Hampshire on Monday.

We learned today that Minnesota Congresswoman Michele Bachmann, a Republican, raised more money than Mitt Romney, another Republican in the first quarter of this year, $2.2 million to $1.9 million.

At Florida's Kennedy Space Center today, dress rehearsal day for the crew of the space shuttle Endeavour, commanded, of course, by Congresswoman Gabrielle Giffords' husband, Mark Kelly. The launch is scheduled for April 19th.

A commuter plane with dozens of passengers aboard made an emergency landing at the Little Rock National Airport late this afternoon after the pilot reported hitting a large flock of birds. An airport spokesman says the plane had significant damage to the nose.

And, finally, the Labor Department says the economy created 216,000 jobs in March, beating economists' expectations. The unemployment rate dropped to a two-year low of 8.8 percent.

Let's take a closer look. This one important, of course, to you at home if you need a job, and if you're feeling better about the economy -- also important because the president's about to announce he's running for re-election. That announcement will come in the coming days.

You see, down to 8.8 percent. We know -- we know, especially if you can't find a job, that is way too high. Still, it is still the low point, though, in the last two years. That's one way to look at it.

Where did the new jobs come from? Let's take a look right here. You see, this is the down days -- the down days early in the Obama administration, a few good months and then some bad months.

Now, we have had, as you see right there, six months in row of positive job growth. Again, reason to be encouraged, reason to think the economy and recovery are starting to gain traction. Still not great news if you're out there looking for work.

Where are the jobs? What sector of the economy? Business services up. Health care up. Leisure and hospitality up. Manufacturing -- always good to see made in America doing better -- manufacturing up 17,000 jobs last year -- last month as well, excuse me.

Here's the hard part. There are more jobs. Many of them, though, aren't paying very well.

You look here at the change in total compensation. In 2008, a job in 2009, up a little bit but now down little bit right here -- a concern that some of those new jobs maybe don't pay so great.

So, more jobs out there, still a long way to go in the recovery.

We'll take a break here. When we come back, though, a Florida pastor -- I talked to him earlier today -- he burned a Koran. People were killed in Afghanistan today by demonstrators who said they were mad at that Koran burning. The minister says he knew doing it could incite violence, but he did it anyway.

(COMMERCIAL BREAK)

KING: Late word tonight that Afghanistan police have arrested a number of people they suspect are the main organizers of today's deadly attack on the United Nations compound. At least 12 people died today when a mob attacked the northern Afghanistan compound following a demonstration against last month's burning of a Koran in Florida -- something that wasn't widely reported, although the pictures made their way around the world on the Internet.

The man at the center is Terry Jones, the same pastor who gained international attention last year by threatening to burn a Koran on the anniversary of 9/11.

Today, I asked the former CIA director, Michael Hayden, for his thoughts.

(BEGIN VIDEO CLIP)

HAYDEN: Well, John, you and I understand it -- happening in the American political context, we know in reality, it's insignificant. But other people don't. Other people see it in a completely different way, and it has disastrous effects. As you well know, I mean, you had the secretary of state, secretary of defense when this was an item of news months ago, warning against it because bad things will happen to Americans.

When I heard about this and this has happened several times in my professional life, when something like this happens, I'm actually reminded of a quote from a John Wayne movie, "The Sands of Iwo Jima," he's Sergeant Stryker. He says "Life's tough, but it's tougher when you're stupid." And this is an example of that.

I just give another thought, too. At my last job at the CIA and the phone would ring in the middle of the night -- I mean this -- the first thought I would have is, Hayden, whatever you decide on this phone call, you're going to have to live with for the rest of your life.

(END VIDEO CLIP)

KING: I had a lengthy conversation with Pastor Jones this evening. I reminded him of his promise in September to never, never burn a Koran at his church. And of the warnings, even pleadings from top Obama administration officials that doing so could put U.S. soldiers, U.S. diplomats, U.S. citizens around the world at risk, inflame anti-American sentiments in the Arab and Muslim word and give radical Islamists a propaganda tool.

He told me, and this is where I got a little testy, quote, "We definitely realized something could happen." Yet, Mr. Jones, who calls himself a Christian pastor, burned the Koran anyway and made sure those pictures were sent around the globe.

We decided tonight, after lengthy discussions, not to air that interview. I'm torn about that. Hearing his hatred is repulsive. Yet it can also be instructive. But we decided there was a risk airing it, letting people hear his hatred, even though I challenged it repeatedly, could incite further violence.

I do want to tell you, though, how the conversation ended. I asked Pastor Jones on judgment day when he meets his maker if he believes he can justify burning a Koran knowing his actions could incite deadly violence, could take lives. Quote, "I think I will, yes," he said. I disagree.

We'll be right back.

(COMMERCIAL BREAK)

KING: It's hard sometimes with all the breaking news in Libya, across the Middle East and Japan and elsewhere that when it comes to this region, we are watching history unfolds. And this was dramatic Friday, traditional prayers at mosques across North Africa and the Middle East, followed by demonstrations all across the region.

This image -- look at the power on these faces. This is Yemen. People are demanding -- demanding -- that their president step aside and that they get a more responsive, less repressive government.

Very similar in Egypt -- veterans of Tahrir Square, the people who brought down the government of Hosni Mubarak, back in the square today saying they are worried about the pace of change, worried perhaps the Muslim Brotherhood and others might take over the political process in a way that leaves the young voices who brought about. That's just Egypt there.

In Jordan today, King Abdullah sending troops into the street. You see the police forces here to keep the pro-regime demonstrators away from the anti-regime demonstrators. No major violence.

Sadly, there was violence reported, at least seven killed in Syria. Another day of demonstrations there. They simply don't buy President Assad's promises of reforms.

That's across the region.

Now, let's zoom in on Libya as we close a dramatic week there. Let's remind you of the state of play and how significant this week was. Look, on Monday, green is the opposition. The opposition controlled most of eastern Libya and was in play in the west, as well. Not quite Tripoli, but look at how dramatically the opposition to Moammar Gadhafi had changed the battlefield.

Then, though, in this past week, dramatic change. Remember all this, green is the opposition, this is the state of play today. The regime has made gains out here in the west and dramatic gains across here in the east.

Some regrouping -- some regrouping of the rebels here today. We'll show you a bit of the fighting. This is over near al Brega.

You see the rebels. These men are in pickup trucks. They have rocket propelled grenades, automatic rifles, but they're going, in many cases, up against tanks and giant rocket batteries. But our Ben Wedeman telling us today somewhat more organized tonight. We'll watch at that plays out.

Also, bloody fighting in Misrata yet again. This is a city where the regime has been punishing and pounding. Look at the all pockmarks in the building. We know the hospital among places that have been shelled.

It has been a dramatic week in Libya. Advantage regime on the battlefield, some thoughts of cracking, we'll continue to track this one.

Stay with CNN throughout the weekend. We hope to see you Monday night right back here.

"IN THE ARENA" starts right now.