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THE SITUATION ROOM

President Obama Speaks Out on Petraeus Sex Scandal; Interview with Michael Oren

Aired November 14, 2012 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: Also, new details of the other general now ensnarled in a scandal, a source describing General John Allen's e-mails to a married woman as, quote, "very embarrassing."

And Middle East tension exploding right now with fierce fighting between the Israelis and the Palestinians in Gaza. Hamas warning that Israel has, quote, "opened the gates of hell."

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in the SITUATION ROOM.

(BEGIN VIDEO CLIP)

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BLITZER: President Obama certainly would have preferred to focus more on the economy, the looming fiscal cliff in his first post- election news conference today. Instead, he also had to address the sex scandal that toppled his hand-picked CIA director and the decorated former army general, David Petraeus.

The president said he's withholding judgment while the FBI investigation unfolds and noted that there's no indication, at least not yet, of a security breach.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have no evidence at this point from what I've seen that classified information was disclosed that in any way would have -- had negative impact on our national security. Obviously, there's an ongoing investigation. I don't want to comment on the specifics of the investigation. I want to emphasize that from my perspective, at least, he has provided this country an extraordinary service.

We are safer because of the work that Dave Petraeus has done. And my main hope right now is that he and his family are able to move on. And, that this ends up being a single side note on what has otherwise been an extraordinary career.

(END VIDEO CLIP)

BLITZER: And there are also new developments only in the last few minutes surrounding Petraeus' former mistress, his biographer, Paula Broadwell, and her security clearances. Our Pentagon correspondent, Barbara Starr, and our intelligence correspondent, Suzanne Kelly. They're both working this story for us. Barbara, let's start with you. What are you hearing from your sources?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, CNN has now confirmed that Paula Broadwell's security clearance has been suspended. Two U.S. officials have confirmed this to CNN saying that suspended until the investigations are done at least. Our own colleague, Fran Townsend, reporting classified material was found on at least a Broadwell computer.

Now, we went to the army and asked about this officially, because of course, Paula Broadwell is a lieutenant colonel in the army reserve specializing in military intelligence. The army will only say, quote, "Appropriate actions with regard to this officer's clearance and access have been taken. The army has been cooperating with federal law enforcement authorities in this matter. And those actions are ongoing."

You don't have to read too far between the lines, Wolf. Her security clearance suspended. She has got to now answer the question, what classified information did she have? What authority did she have to have it? And if she had it in her home, was she protecting it in accordance with federal law? It doesn't get more serious than this, Wolf.

BLITZER: Certainly doesn't. All right. Standby for a moment. Suzanne Kelly is with us as well. You're getting new information, Suzanne, what the FBI apparently found on some of those computers.

SUZANNE KELLY, CNN INTELLIGENCE CORRESPONDENT: Right. And the measures that really have to be in place, Wolf, for safeguarding that material. We do know from a law enforcement source, as Barbara mentioned, that Paula Broadwell was in possession of classified material. We also know that the FBI investigation is still officially open.

So, what are investigators looking for and just how high reaching did Broadwell's security clearance go?

(BEGIN VIDEOTAPE)

KELLY (voice-over): Just when many thought the investigation had come to an end, FBI agents spent five hours hauling boxes and computers from Broadwell's North Carolina home Monday night, taking a closer look at what classified materials she had.

Military officials tell CNN's Barbara Starr that as an intelligence officer in the military reserves, Broadwell would have had secret or even top secret clearance, but that clearance would have been for information pertaining to whatever her job was.

She told an audience in Aspen, Colorado, this summer that she had to follow strict rules in order to keep her security clearance and her unprecedented access to General David Petraeus. PAULA BROADWELL, PETRAEUS BIOGRAPHER: I felt like I was almost held to a higher level of accountability, because I could lose my clearance.

KELLY: But some lawmakers are concern that she wasn't careful enough. They're calling for an investigation.

SEN. JOHN MCCAIN, (R) ARIZONA: This person who was associated with General Petraeus said at some gathering that there was two or three Libyans being held in the safehouse. Now, the CIA has said that that's just patently false. All these things are flying around. And we don't know. That's why we need the investigation.

KELLY: MCCAIN'S referring to comments like this one, that Broadwell made at the University of Denver last month.

BROADWELL: Now, I don't know if a lot of you heard this, but the CIA annex had actually had taken a couple of Libyan militia members prisoner, and they think that the attack on the consulate was an effort to try to get these prisoners back. So, that's still being vetted.

KELLY: And there's another question, were protocols for handling such materials followed?

BEN POWELL, ATTORNEY, WILMERHALE: Classified information by its nature is the type of information that can cause significant damage to the United States if it is compromised.

KELLY: But when Petraeus granted Broadwell access including on trips to Afghanistan, her access to classified information becomes murkier, especially in meetings with the subordinates.

UNIDENTIFIED FEMALE: They're taking their signal from the general. If he's bringing her in, it's implicit that they're able to speak in front of her. And so, I think this is a pretty complicated investigation both for the FBI and for the justice department.

(END VIDEOTAPE)

KELLY (on-camera): Now, this is certainly not over for Broadwell. And as Barbara Starr reported, her security clearance has been suspended pending the outcome of the investigation. Wolf, I've reached out to Broadwell several times.

So, we talked over the summer in Aspen about her starting a second book now about General Petraeus and how that book was really meant to be his legacy. It's very possible that a lot of the information she had was in regards to that book as well.

BLITZER: Wow. All right. Thanks, Suzanne. Thanks very much.

Meanwhile, we're also learning new details of the e-mails from other general, John Allen, to another married woman, Jill Kelley. Let's go back to Barbara. What are you finding out? STARR: John Allen, Wolf, still under investigation. Of course, a new characterization of the e-mails he may have sent to Jill Kelley but now known as the other-other woman. Our Nick Paton Walsh is reporting that Allen got an e-mail, perhaps, back in the spring from a handle called the Kelley Patrol.

This was the original potentially threatening e-mail that Allen saw he forwarded to Jill Kelley and that is somewhat of what set all of this off. What are in those Allen e-mails? Officials are telling us it's embarrassing. That John Allen, the commander of the war in Afghanistan, would be very embarrassed if his wife saw those e-mails.

The problem may be here the investigators, everybody's got a different interpretation of what's embarrassing, what's over the line, were they just a little bit inappropriate or did they cross the line? That's the question, Wolf.

BLITZER: Lots of questions on that front as well. Meanwhile, his nomination to become the supreme ally commander in Europe, the NATO top commander, that is on hold. Barbara, thank you.

Meanwhile, amidst all of this Israel is striking Gaza with deadly force killing a Hamas military leader. The exploding tension has the United States right now very concerned. We're going to Jerusalem.

And woman power in the United States Congress. We have details who the parties are putting in charge.

(COMMERCIAL BREAK)

BLITZER: A controversial petition to the White House. Jack Cafferty's here with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, Texas governor, Rick Perry, does not support a petition for the Lone Star State to secede from the union, but a lot of people do. An online petition asking the federal government to allow Texas to withdraw from the United States following President Obama's re-election has more than 100,000 signatures.

It appears on a section of the White House website called, We the People, and cites economic difficulties due to the federal government's inability to cut spending. Supporters suggest that secession would protect Texans standard of living and resecure their rights and liberties.

The leader of the Texas secession movement tells "Politico" that Mr. Obama's re-election was what he called a catalyzing moment for his group's efforts to leave the United States. He insists, quote, "This is not a reaction to a person but to policy," unquote. And what they see is a federal government that's disconnected from its constituents.

Really? So far, no response from the White House, even though the number of signatures far surpasses the 25,000 needed for a White House response. For his part, Governor Perry says he believes in the greatness of our union and nothing should be done to change it, although he says he shares the frustrations a lot of Americans have with the federal government. Texas is America's second biggest state in both area and population.

It was its own nation for ten years before joining the union in 1845. And Texas isn't alone here either. A number of other states have also gathered more than 25,000 signatures on secession petitions including Louisiana, North Carolina and Florida.

Here's the question. Should Texas be allowed to secede from the union? Go to CNN.com/CaffertyFile, post a comment on my blog or go to our post on the SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack, thank you. Hope they don't. I like Texas. I like them part of the United States of America. That would be bad if they seceded from the union.

CAFFERTY: Yes. Well, it's not going to happen, but it's an interesting idea.

BLITZER: I know. I know. Thank you, Jack.

Republicans largely lost the female vote to Democrats in last week's election, and that may have been on the minds of some Republican House leaders. Right now, the House -- in the House the minority leader -- the majority leader, I should say, is Eric Cantor. He's announcing his party's leadership, including the re-election of a woman representative, Cathy McMorris-Rodgers to a powerful position.

Our Congressional correspondent, Kate Bolduan, has been working the story for us has details. So, what's going on here?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: So, Cathy McMorris-Rodgers, she actually has a more powerful position this time around. She is now the conference chair of the Republican conference. That's the fourth ranking leadership position in the House Republican leadership with John Boehner, Eric Cantor, and Kevin McCarthy ahead of her.

So, that's big news for House Republicans, but there's also big news on the Democratic side of the House today. After much, much speculation, Nancy Pelosi announced she'll stay on for another two years as a top Democrat in the House, but that wasn't the only message she was sending today.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): Despite losing the gavel to Republicans in 2010 and failing to win it back last week, Nancy Pelosi says she's staying.

REP. NANCY PELOSI, (D) MINORITY LEADER: I have made a decision to submit my name to my colleagues to once again serve as the House democratic leader.

(CHEERING AND APPLAUSE) BOLDUAN: Flanked by dozens of her Democratic female colleagues, Pelosi clearly relished the chance to draw a stark contrast with House Republicans.

PELOSI: I'm so proud to stand here with you, my sisters. This is girls' morning out. We must have the further empowerment of women. This statement of the strength of women in the Congress of the United States.

BOLDUAN: The next Congress will have a record 78 women serving in the house, 58 of them Democrats, only 20 Republicans.

PELOSI: For some people in the general public, the thought of four men at that table was not an appealing sight, however, excellent they might all be.

BOLDUAN: With women playing a major, if not decisive role in this year's election, going by an 11-point margin for President Obama, republicans know they have work to do.

ANA NAVARRO, REPUBLICAN STRATEGIST: This election was a wake-up call. We've now lost the presidency twice. We've got to understand that the demographics are changing. Women are increasingly important. We have a branding issue. We can no longer look like, sound like, be the party of angry, old White men. We've got to diversify.

BOLDUAN: Symbolism isn't everything, but a picture can sure send a strong message.

PELOSI: A picture is worth a thousand words. That's what they say. I said then and I say now that this picture before you is worth millions of votes.

(END VIDEOTAPE)

BOLDUAN (on-camera): Enjoying herself there for sure. Republicans do point out that with the promotion of Cathy McMorris- Rodgers, they are gaining more women in top leadership ranks in the House. The Republicans also point out that they too are happy with Nancy Pelosi's continued leadership of the Democratic caucus.

Not because she's a woman, but saying she's solely responsible for relegating Democrats to, as they put it, prolonged minority status. And just a reminder, if you need another reminder in terms of top Congressional leadership, House, Senate, at large, Wolf, largely all the players remain the very same as the lineup was pre-election. So, status quo election, status quo leadership.

BLITZER: Senate leadership, House leadership basically the same.

BOLDUAN: Yes. Big players.

BLITZER: The executive branch has the same leadership as well. That would be the president of the United States.

BOLDUAN: That would be absolutely right. BLITZER: So, we're going to continue what's going on.

BOLDUAN: Yes.

BLITZER: Let's hope they can work together a little bit better.

BOLDUAN: No kidding.

BLITZER: Thank you.

Senate Democrats are adding to their strength. The independent senator-elect from Maine, the former governor, Angus King, has now announced he will caucus with the Democrats. King said the Senate majority leader, Harry Reid, reassured him his independence would be respected. He also says he's open to working with Republicans. So effectively 55 Democrats in the next Senate, 45 Republicans.

The popular video chat service, Skype, forced to shut down a critical feature after hackers uncover a security hole. We have details of that. That's just ahead.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester's monitoring some of the other top stories in the SITUATION ROOM right now. Lisa, anti-austerity strikes hitting parts of Europe. What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Yes, that's right, Wolf. Violent protests over spending cuts meant to bail governments out of debt are sweeping the European landscape. Angry workers took to the streets in Spain where a general strike has shut down airports, factories and schools. Austerity measures have caused walkouts in Portugal, France, Italy, Belgium, and Greece.

And the closing bell punctuated a rough day on Wall Street. Concerns piling up over a fiscal cliff and turmoil in the Middle East forced U.S. stocks to drop more than one percent. The Dow fell 185 points while the NASDAQ shed 37 points. The S&P 500 was down 19 points on the day.

And Skype was forced to disable its password reset option today after it discovered a huge security hole allowed almost anyone to hack into other people's accounts. Although, it popped up on a Russian site months ago, a tech news blog confirmed hackers were essentially changing users passwords and then locking them out. Skype says it's making updates to fix this flaw.

And of all the beautiful duets in history, here's one for the book. Madonna going Gangnam Style with Korean pop star, Psy. Take a look at this. Apparently, the material girl affluent sensation to fly into New York for the appearance. Psy, Madonna, his back-up (ph) dancers, all galloped along to the hit and then to her song, "Music."

BLITZER: Let's listen a little bit.

(BEGIN VIDEOTAPE) (SINGING)

SYLVESTER (voice-over): I really love that. That's a great combination, you know? It's nice that Madonna thought of bringing him in there. But, I'm not sure if I'm ready quite yet to my public debut of Gangnam Style.

BLITZER (voice-over): I spoke to someone who was at Madison Square Garden for the concert. And this was clearly was a total surprise. The folks went crazy when the two of them did their little -- two songs they did. There she is, Madonna.

SYLVESTER: Oh, I can believe it. I mean, he, in his own right, is just hugely popular. I mean, you talk about the internet sensation.

BLITZER: Wow! Look at her go.

SYLVESTER: Now, we're going to have this song, you know, playing in our heads like for the next couple of hours, Wolf. I love it

BLITZER: I love this. All right.

(LAUGHTER)

(END VIDEOTAPE)

BLITZER (on-camera): As much as I'd like to, we've got to leave it there. Big fan.

Investigators tracing the e-mails behind the Petraeus scandal. Just ahead, we have details on new privacy concerns, serious ones, that are being raised.

Plus, a powerful military chief taken out in a string of deadly Israeli attacks. Up next, the Israeli ambassador to the United States, Michael Oren, he's here. He'll respond to charges as country -- charges from Hamas as country has opened up the gates of hell.

(COMMERCIAL BREAK)

BLITZER: Dramatic video we're just getting in here in the SITUATION ROOM from the Israeli military showing a deadly air strike taking out the head of Hamas' military wing commander in Gaza. The attack which killed nine people and wounded 35 others was the first in a broader Israeli assault on targets in the region.

Several other strikes have occurred as well. All this in reaction to hundreds of rockets coming into Southern Israel from Gaza. Let's turn to our senior international correspondent, Sara Sidner. She's in Jerusalem for the latest. Sara, what are we seeing here? Is this the beginning of a new war?

SARA SIDNER, CNN SENIOR INTERNATIONAL CORRESPONDENT: It is what it is looking like right now, Wolf. A lot of concern on both sides especially civilians living in Southern Israel and those living in Gaza. We are seeing a definite ratcheting up of tensions between Israel and Gaza. Let me give you the very latest that we're hearing right now.

So far, in Gaza, there have been at least 30 air strikes, 84 people injured, several of those injured children. We know that eight people have been killed, two of those young children. But we should talk about the leader of Hamas' military wing, because he wasn't just the leader of Hamas' military wing, but he was also a symbolic member of Hamas, one of the founders of Hamas.

We are expecting a huge reaction from Hamas. They have basically said and I'm quoting here, "We will open the gates of hell. Israel has opened the gates of hell. Our occupying forces have opened the gates of hell." And we are seeing the reaction now. There are more rockets coming into Israel.

Since Saturday, more than 130 rockets have come into Israel. Some of those blasted away by the iron dome, but some of those have landed injuring about a dozen Israelis. We also know that there are four soldiers who have been injured, two of them severely. That happened just a couple of days ago. This is a real tension that has ratcheted up.

We also know that Egypt has removed its ambassador to Israel. And we're getting that information just as we speak. Also, there are a lot of rumors floating around, but right now, we talked directly to the military spokeswoman who told us that Israel is considering whether or not it will perform a ground war in Gaza.

Right now, they are holding off, but they are bringing reservists in just to be prepared in case they think that a ground war is necessary. For now, we're hearing that there are continued air strikes. And there is some action from the Mediterranean just off of Gaza where Israeli warships are shooting into Gaza.

We are also hearing from the militants inside Gaza saying they have also targeted the Israeli navy ships that are there anchored outside on the Mediterranean, outside of Gaza. So, a lot of action going on, and certainly, there is expected to be more action overnight -- Wolf.

BLITZER: A situation unfolding right now. Sara Sidner, we'll stay in close touch with you.

Let's dig a little bit deeper, right now. Joining us is the Israeli ambassador to the United States, Michael Oren.

Mr. Ambassador, thanks for coming in. Is there going to be not only an air war, if you will, air strikes from naval vessels in the Mediterranean, but is Israel going in on the ground into Gaza?

MICHAEL OREN, ISRAELI AMBASSADOR TO THE UNITED STATES: Good to be with you, Wolf, as always. Israel's action, called Pillar of Defense, follows, as you heard, days in which hundreds of rockets have been fired by Gaza, by terrorists at Gaza at a million Israeli civilians in the southern part of the country. That would be like the equivalent of 40 million Americans who have to huddle in bomb shelters or be no more than 15 seconds' run from some bomb shelters, because that's how much time you have to get to that bomb shelter when these shells start coming in on you.

Now over the course of, even since 2009, the last time we operated in Gaza, there have been over 2,500 rockets fired at our citizens in the south. Israel had exercised immense restraint -- I would say, superhuman restraint -- before this, but no Israeli government can permit a situation where a million of its citizens are in these bomb shelters and subjected to these shellings daily.

BLITZER: But this targeted assassination or killing of the Hamas military commander, you knew that was going to generate a response.

OREN: Well, this military commander, Mr. Jabari, is responsible for the deaths of dozens of Israelis. He was the one who planned and carried out the kidnapping of Gilad Shalit, and two soldiers were killed in that operation as well.

We've tried to arrange cease-fires through Egyptian mediation. The terrorists have broken all of those cease- fires. Hamas, Islamic Jihad, other terrorist organizations, Iran is -- this is basically an outpost of Iran, all these organizations are directly or indirectly receiving aid from Iran.

And so this is a situation which was completely unacceptable for Israel, as it would be for any country in the world. And Israel will take all the measures necessary to defend its citizens.

BLITZER: How much coordination or warning did you give the U.S., the United States government, about what was going on?

OREN: We've been closely coordinating and communicating with the United States government. Prime Minister Netanyahu spoke with Vice President Biden today, as well as with President Obama about an hour ago. And Prime Minister Netanyahu expressed his deep appreciation for the president's unequivocal support for Israel's right to defend itself.

BLITZER: So there's no issue, the U.S. is not saying anything; stop this, don't do this, they're not worried? What's been the U.S. reaction?

OREN: The U.S. reaction is to express complete understanding of our situation and support for our right to defend our citizens from terrorist attacks.

BLITZER: How worried are you that this, what effectively is now emerging as a war in the south, could lead to a war in the north with Hezbollah, based in Lebanon, as well?

OREN: First, we don't want any war in the south. Israel does not want a war. We've spent --

BLITZER: But if you go in on the ground and go into Gaza to do whatever you want to do, that effectively is going to be a war.

OREN: Well, we're not there yet. We are preparing for any eventuality; that is true.

BLITZER: You're calling up reserve units?

OREN: I can't go into that detail, but I'll tell you, we've made all the preparations we need to defend the citizens of the south. We've sent a message, a very powerful message to the terrorists of Gaza, saying stop it. You cannot shoot with impunity at our citizens. And if they internalize that message and they stop shooting, then there will be no further escalation.

BLITZER: We did get a statement from Lt. Col. Avital Leibovitch of the Israeli military, saying there are some reserve units that are preparing, but nothing more than that at this point. That's the statement we got.

Where do you see Iran playing in over this, if you see Iran's hand at all?

OREN: We see Iran-- Iran is the direct support of organizations like Islamic jihad, which fire rockets, carry out terrorist attacks. Hamas also receives support from Iran. So these are Iranian proxies. This -- all of Gaza is an Iranian outpost.

BLITZER: So you think Iran is instigating this right now, so -- for whatever reason?

OREN: Well, we have no hardcore evidence whether Iran is trying to divert attention from its support of the Assad regime and its massacre of the Syrian population or to try to divert attention from the Iranian nuclear program but certainly Iran has no interest in peace between Israel and its neighbors. Iran states openly -- its leaders state openly that their goal is to destroy the state of Israel.

BLITZER: You have a peace treaty signed in 1979 with Egypt still in effect. But now we're hearing the Egyptians have recalled its ambassador from Israel. Is that true?

OREN: We've heard that that is true. The -- Israel's peace with Egypt since 1979 has been the cornerstone of our regional security outlook. It is vital to Israel's security, it's vital to Egypt's security, I think it's vital to security of the region. It's a paramount American interest as well.

And we hope the Egyptians will play a constructive role in this current chapter in our struggle against terrorism in Gaza as they have played a constructive role in the past.

BLITZER: How worried are you that the entire Israeli-Egyptian peace treaty, as a result of this and other issues, could collapse?

OREN: Well, again, we hope the Egyptians will continue to play that constructive role. They recently appointed a new ambassador to Israel. And, again, we have hopes for the continuation of that treaty.

BLITZER: We did get a statement from the State Department deputy spokesperson -- and I'll read a little bit of it to you.

"We strongly condemn the barrage of rocket fire from Gaza into southern Israel. We regret the death and injury of innocent Israeli and Palestinian civilians caused by the ensuing violence. There's no justification for the violence that Hamas and other terrorist organizations are employing against the people of Israel.

"We call on all those responsible to stop these cowardly acts immediately. We support Israel's right to defend itself and we encourage Israel to continue to take every effort to avoid civilian casualties."

There have been civilian casualty.

OREN: Well, you're dealing with an enemy, whether it's Hamas, Islamic Jihad, any of these terrorist organizations, they perpetrate a double war crime. They shoot at our civilians to kill our civilians and they use their own civilians as human shields. They want their own civilians to get killed.

And we are -- we are trying our utmost to avoid inflicting civilian casualties, but they place their rockets in the middle of schools, in the middle of mosques, in the middle of playgrounds, even in houses. We have pictures of rockets in houses, where the roof opens up and the rocket shoots up. They actually want civilian casualties.

So we have to -- I know of one particular airstrike today that was called off at the last minute because the pilot saw that there were children playing in the vicinity. So we're doing our best. But at the end of the day, this is an enemy that wants its own civilians killed.

BLITZER: One final question: the president was asked about Iran and its nuclear program at the news conference today and the possibility of direct U.S./Iranian talks, face-to-face meetings between the U.S. and Iran. Listen to what he said.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I will try to make a push in the coming months to see if we can open up a dialogue between Iran and not just us but the international community to see if we can get this thing resolved. I can't promise that Iran will walk through the door that they need to walk through. But that would be very much the preferable option.

(END VIDEO CLIP)

BLITZER: You have a problem with direct U.S./Iranian talks on its nuclear program?

OREN: In the past we've said that the Iranians -- we see that the Iranians have used talks as a means not actually of reaching an agreement but of spinning out time so they can keep their centrifuges spinning.

But we're in, again, close consultation with the Obama administration about ways of preventing Iran from acquiring military nuclear capabilities. And that conversation is very intimate, very close and continuous.

BLITZER: So does that mean you don't have a problem or you do have a problem?

OREN: I want to say that we're talking about it very closely.

BLITZER: I'll leave it at that.

OREN: Thank you.

BLITZER: Mr. Ambassador, thanks very much for coming in.

An FBI probe explodes into a scandal that takes down the CIA director. We're learning new details of how that investigation unfolded and the privacy concerns it's now raising.

(COMMERCIAL BREAK)

BLITZER: Anyone who sends and receives e-mail should be concerned about the investigation that toppled the CIA director General David Petraeus. It's raising very serious concerns about privacy. And now we're learning new information about how it all unfolded.

CNN's Brian Todd has been working this part of the story for us.

So, Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: New details from sources, Wolf, on the path of this investigation. How investigators started with harassing e-mails from Paula Broadwell to Jill Kelley, traced them and ended up finding correspondence involving America's top general in Afghanistan.

(BEGIN VIDEOTAPE)

TODD (voice-over): E-mails between Jill Kelley and Marine General John Allen were, according to sources, flirtatious. The sources did not provide details, but many of the e-mails may have been innocuous in nature according to a U.S. official. That's still the subject of a Pentagon investigation.

How did it get to that point after starting out as a complaint from Kelley about harassing e-mails from someone else? The FBI isn't commenting on its investigation. But CNN has new information from Tom Fuentes, a CNN contributor and former FBI assistant director, who spoke to sources with knowledge of the probe. Fuentes says after Kelley complained to an FBI agent about the harassing e-mails, agents from the bureau's cybercrime unit got a subpoena and got the Internet service provider to give them information on who owned the account of the sender.

TOM FUENTES, FORMER FBI ASSISTANT DIRECTOR: What's the Internet address that they are being transmitted by.

TODD (on camera): That likely would have been more than one Internet address. News reports say Paula Broadwell, now known as the person who sent the harassing e-mails to Kelley, is believed to have sent them while she was traveling to various places. So depending on where her computer was plugged in at the time, the sender would have different IP addresses.

(Voice-over): Chris Soghoian, an ACLU expert on law enforcement Internet monitoring explains what the FBI likely did next.

CHRIS SOGHOIAN, ACLU: So what they did is they determined that she logged into this e-mail account from hotels around the country. And so they contacted the hotels and got the guest lists, the names of people who were staying at the hotels on those various nights, and then they compared the lists of guests over a few nights at these different hotels and looked for common names and I guess hers was the only one on that list.

TODD: Tom Fuentes says once they found Broadwell, agents got a search warrant from a U.S. federal judge to read the content of her e- mails.

FUENTES: During the course of that they see a flood of other e- mail to an anonymous from an anonymous person. So they get that person's record. That's where they identify that it's Director Petraeus on the other end of those e-mails with her.

TODD: Fuentes says in that process the agents also would have gotten permission to read Jill Kelley's e-mails and that led them to General Allen.

Soghoian says the FBI likely didn't violate privacy rules. But --

SOGHOIAN: But our laws are just out of whack with the reality of how we use technology today, the laws haven't been updated so the FBI is benefiting from these massive out-of-date laws.

(END VIDEOTAPE)

TODD: Tom Fuentes says the FBI strictly adhere to all privacy guidelines. He says this investigation was overseen from the start by top FBI officials in the bureau's Tampa office and by U.S. attorneys -- Wolf.

BLITZER: The U.S. government is doing more and more of this kind of -- shall we say interference or eavesdropping or whatever?

TODD: It's incredible. They doing more and more of it, the volume is very surprising. The FBI of course got a subpoena and approached Google for the information about Paula Broadwell's e-mail account. Now according to Google and various news reports, that was one of 7,969 similar requests that Google received from the U.S. government just in the first half of 2012. Nearly 8,000 requests just to this one Internet service provider, Google, from the U.S. government for similar information just in the first half of this year. And of course Google is not the only IP provider. Other companies must have gotten similar requests, too. That just tells you the volume --

BLITZER: Yes.

TODD: -- of the information that the government sometimes goes after here.

BLITZER: Put it out there, somebody potentially could be watching and listening.

TODD: That's right.

BLITZER: And doing all that. Thanks very much.

One of the key players in the General David Petraeus sex scandal is now telling her side of the story for the first time. We have new information that's coming up.

(COMMERCIAL BREAK)

BLITZER: We're getting new information about Jill Kelley, the woman who triggered the investigation that ultimately exposed the sex scandal involving CIA Director David Petraeus.

CNN's Joe Johns has been working details for us.

What are you -- so what are you hearing new about Jill Kelley?

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: Well, Wolf, it's the most comprehensive account we've gotten so far from the perspective of a source close to Jill Kelley, the woman whose been described by some as a socialite from Tampa, described by others as a whistleblower.

You remember Jill Kelley was also suspected of exchanging what some military sources said were inappropriate e-mails of her own with General John Allen, the top NATO commander in Afghanistan. Well, this source says Jill Kelley has been mischaracterized. The source pushed back strongly against claims suggesting the e-mails between Kelley and Allen were sexually explicit.

Depending on your lifestyles, quote, "It says you might decide that some of them are inappropriate, but that's all in the eye of the beholder." The source said, "They are not as far as I can tell overtly sexual," end quote.

We've also heard a lot about an FBI agent involved in this case who allegedly sent a shirtless picture of himself to Jill Kelley, the source downplayed that part of the story big time asserting any photos sent were not sexual in nature. On the other hand, the source said that very same FBI agent told Mrs. Kelley that he was contacting members of Congress about this controversy.

The source also flushed out the timeline on the scandal, pointing out that the first e-mails started this thing rolling happened in mid- May, an e-mail that went from Broadwell to General Allen, which Allan in turn forwarded it Jill Kelley. It came under the e-mail handle kelleypatrol and was a warning to Allen to avoid Jill Kelley.

The source said Broadwell used at least four different e-mail handles that were difficult for investigators to trace. Some of the e-mails also were clearly to Kelley's husband, essentially asking him if he knew what his wife was up to. The implication being that Kelley had been behaving inappropriately with Petraeus, with General Allen, which is something Kelley denies.

By October, the source said it was clear Kelley that -- to Kelley that Petraeus' biographer was sending the e-mails -- Wolf.

BLITZER: Yes. That's all fascinating material. This investigation I suspect only just beginning. Thanks very much, Joe, for that.

Jack is back with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: The burning question of the hour, should Texas be allowed to secede from the union? They've got 100,000 signatures on a petition down there petitioning the Obama administration to drop out of these United States.

R in Wisconsin writes, "Texico is a good idea. A right-wing autonomous country, buffering the United States and Mexico would offer an appealing immigration alternative, a narcotics distribution center, and the population of the very rich and their very poor gardeners."

Julie in Chicago says, "Texas can be responsible of their own interstate highways, border patrol, disaster relief, education, Social Security, Medicare, defense, et cetera. Sounds to me like a good way to cut spending."

Michelle on Facebook, "I live in Texas, these people who want to secede are nuts. I would definitely move."

David in Texas, "Yes. As a resident of Texas I would welcome this. We don't need the feds down here."

Jayne in New Hampshire writes, "Round up all the people who want to secede, put them in one of the red states that takes in more federal money than it contributes and let them secede. The only problem will be building a fence high enough to keep them out when they figure out that Medicare really is a government program."

Shirley in Ontario, "If Texas secedes, could you please relocate Austin to Canada." Doug in Massachusetts says, "I think it'd be great if Texas could become an independent country. They could dress like Roy Rogers and Dale Evans, they could protect their own border, they could all have their own oil wells, they could have the Houston Space Center, too, maybe launch their own trip to mars. Go for it, Texas." If you want to read more about this, go to blog, CNN.com/caffertyfile, or through our post on the SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Thank you, Jack. I hope Texas does not secede from union.

CAFFERTY: Me too.

BLITZER: It's been more weeks since super storm Sandy, and get this, parts of America's largest city are still crippled.

(BEGIN VIDEO CLIP)

KRISTINA BRUNSWICK, ROCKAWAY BEACH RESIDENT: It doesn't seem like New York. I feel like we're in a third world country right now.

(END VIDEO CLIP)

BLITZER: We're going to the heart of the disaster zone. That's next.

(COMMERCIAL BREAK)

BLITZER: Here's a look at this hour's "Hot Shots."

In Australia, a boy gets ready to watch the solar eclipse through a telescope. In Myanmar, a boy boy buys ice cream in a market. In England, a temple is made from food for a Hindu celebration. And in Poland, look at this, people walk out of a warped building inspired from drawings by a Polish illustrators. I didn't think you saw that one but we'll get it to you another time.

These are some of the "Hot Shots," pictures coming in from around the world.

President Obama heads to New York City tomorrow to visit some of the areas hardest hit by the super storm Sandy, and he could get an ear full from very angry residents who weeks later, get this, are still desperately struggling to get back on their feet.

Our Mary Snow has details.

MARY SNOW, CNN CORRESPONDENT: Wolf, this is all that's left of a popular boardwalk here in Rockaway Beach. Some here in this community are describing it as looking like a war zone. And more than two weeks after super storm Sandy hit many here and nearby are still in the dark.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Pamela Shapiro has been spending her days clearing out the wreckage Hurricane Sandy left after water gushed into her home, and now she just craves to be able to turn on the lights.

PAMELA SHAPIRO, BELLE HARBOR RESIDENT: I feel let down. We've done everything that we were asked to do, and still that we don't have power is -- it's just mindboggling.

SNOW: The basement ruined in Shapiro's home had just been redone after damage from Hurricane Irene last year. And her breaking point came Tuesday when a promise of restored power was mixed because of a snafu with her electricians inspection.

SHAPIRO: For a moment, I just said, I wish I was younger again and my parents were here to take care of me. Just to make it better for half an hour. That's it. I just didn't want to be an adult for half an hour. And that's it.

SNOW: Shapiro considers herself lucky. Not far from her, there are families who can't live in their homes. The retirement house that Al Adlaon and his wife Zeny bought three years ago is now destroyed, and he says he's waiting for any kind of help to rebuild.

AL ADLAON, ROCKAWAY BEACH RESIDENT: It's just frustrating and I'm getting angrier every day. You know? That's how I feel.

(END VIDEOTAPE)

SNOW: To be clear, there are visible signs of help everywhere you go from the military to utility trucks from other parts of the country arriving on the scene. Volunteers have fanned out in the area, bringing much needed relief. Still, with Manhattan visible from this Peninsula, some are in disbelief.

BRUNSWICK: It doesn't seem like New York. I feel like we're in a third world country right now.

SNOW: But despite comparisons to war zones and scenes of destruction, there are vows to rebuild and not retreat.

(END VIDEOTAPE)

SNOW: And residents here say without volunteers from around the country showing up at their doors, they wouldn't be as far long in their clean up -- Wolf.

BLITZER: Mary, thank you.

And New Jersey residents, by the way, could be facing a property tax hike in Sandy's wake. The Governor Chris Christie said today towns devastated by the storm may have to raise property taxes to finance rebuilding efforts. New Jersey has not yet released it's storm damage estimates, but Governor Christie says he hopes to have a figure by the end of the week.

And happening now, a furious President Obama tells Republican critics of his U.N. ambassador to go after him, not her.

This hour, I'll talk to one of the senators taking a hard line against Ambassador Susan Rice. Republican Senator Kelly Ayotte.

Plus, we'll get a glimpse inside a secret briefing on the General David Petraeus scandal. The top Democrat on the House Intelligence Committee Dutch Ruppersberger was in the room. He's standing by to join us live.

I'm Wolf Blitzer, you're in THE SITUATION ROOM.