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Crisis in Israel; Clinton Meeting with Israel's Netanyahu; No Peace Deal Announced; Three Calls from President Obama in 24 Hours; Egyptian President Plays Key Role; IRS: $370,000 Makes Top 1 Percent; Children and Families on the Front Lines

Aired November 20, 2012 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: no cease-fire, no peace, just another day of deadly attacks in Gaza and Israel. The secretary of state, Hillary Clinton, she's here in Israel right now. She's trying to find some way to broker a deal to stop the fighting.

All the while, civilians on both sides of the Israeli/Gaza border live in terror. The next explosion could claim their homes, their relatives or their own lives.

We'd like to welcome our viewers in the United States and around the world. I'm Wolf Blitzer reporting from Jerusalem. You're in THE SITUATION ROOM.

We're coming to you from Jerusalem at end of the seventh day of this latest deadly crisis between Israel and the Palestinian militants in Gaza. It's been two hours since we expected an official of Hamas, the militant organization that controls Gaza, to come before cameras in Egypt and announce a period of calm.

But that announcement has not happened. Instead, the office of the Egyptian president, Mohammed Morsi, told CNN the Egyptian government has no plans to make an announcement tonight. Since Wednesday of last week, militants have fired hundreds of rockets into Israel. We're about to bring you one family's harrowing story of dodging the rocket that hit their home today.

Random attacks like this provoke ferocious air assaults on Gaza by the Israelis, which also continued today. About two hours ago, a Reuters camera in Gaza City caught this explosion.

CNN's Ben Wedeman reports a building near the city was likely hit by an Israeli airstrike in Gaza. He was on the air live with CNN International's Hala Gorani when the explosion happened. Take a look.


BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: I think it is pretty clear that we are moving in the direction of...


WEDEMAN: I can hear shattering glass out there right now. The building just shook. Of course, because I was looking at the camera, I didn't see where the blast took place. Anybody see it? OK, to the north of this building here. So, despite talk of cease-fire, Hala, it appears that the guns are still firing.


BLITZER: The Gaza Ministry of Health says 114 Palestinians have been killed and at least 900 injured since last Wednesday.

The Israeli military announced that an Israeli soldier was killed by a Hamas rocket this afternoon, bringing the Israeli death toll to five with at least 70 people wounded. Our CNN crews are monitoring the situation on both sides of the Israeli/Gaza border.

In addition to their reporting, we expect to hear from Secretary of State Hillary Clinton who arrived in Tel Aviv about an hour or so ago to meet with Israeli Prime Minister Benjamin Netanyahu right here in Jerusalem. That meeting is expected to begin shortly. We're expecting statements from both Hillary Clinton and Benjamin Netanyahu.

You will see and hear those statements live. We will see if they announce anything closely resembling some sort of cease-fire. Despite the expectations that the diplomats are close to reaching some kind of cease-fire agreement, today was anything but a period of calm for civilians in Southern Israel.

We visited a neighborhood in Beer Sheva earlier today, visited members of a family who narrowly escaped death.


BLITZER (voice-over): The Hamas rockets came toward Beer Sheva and hit the ground, sending people scrambling for cover even in residential neighborhoods. This house was hit by a rocket a few hours before we arrived. And from the outside, it didn't look too bad. But inside it's another story.

A mother and father and four of their children were inside the home when it was hit. When the sirens went off, they had less than a minute to run into their safe room. And they made it. They survived.

"We did the procedure," the husband says. "We went to the safe room, closed the door. We heard a big boom and straight after that an electric outage." He says the young girls were in a little hysteria. "We were lucky we entered the safe room." His wife says their fear was at first for the family and to protect the children. Then later, when they saw the incredible damage, they were stunned.

"We will go to a hotel for a few days until they find us an alternative home," she says. Their 9-year-old daughter said she was frightened when she heard the initial siren and then the large explosion.

An Israeli member of Parliament who came to the house minced no words in what he thought Israel had to do.

UNIDENTIFIED MALE: Israel, they are ready to go further. BLITZER: But there's a major debate in Israel on whether that's wise. A former commander and mayor of Beer Sheva says he hopes Israeli air and naval airpower alone can get the job done.

While we were in this expanding and modern city, 11 Hamas rockets entered the vicinity. Some were intercepted by Israel's Iron Dome anti-missile system. Others got through and caused casualties.

We were allowed to go inside the emergency medical command center. Sirens alert them when rockets are incoming and they brace for the onslaught of calls.

(on camera): We're inside this Israeli ambulance. We have just left the command center heading towards an area where rockets just landed and currently there are injured and maybe even worse. We will see what's going on.

(voice-over): Lieutenant Sharon Howard is the Israeli army liaison officer helping to coordinate medical care.

LT. SHARON HOWARD, ISRAELI DEFENSE FORCES: If there are any in need, if there are many casualties, so also medical units, the army also join again to take care of all the injured.

BLITZER (voice-over): Turns out it was a woman overwhelmed by fear during the rocket attack, very common these days. Back at the command center, the sirens kept going off.


BLITZER: Both the Israelis and Hamas say the other side has not agreed to the terms yet for a cease-fire or for calming the hostilities.

Let's go to our senior international correspondent, Arwa Damon. She's in Gaza City.

Arwa, I take it you're hearing more explosions in the distance over there. What's going on?


Just a few moments ago in the span of a minute, there were around six or seven explosions we saw in the distance, balls of fire rising up and then, of course, the sound rumbling across the city. They were pretty much across the entire horizon. There have been a fair amount of intense explosions here, to say the least. One of the blasts happening just around the corner from our live location, shaking the building, breaking glass.

Gaza residents have been saying that normally they would see this kind of intense activity in the later hours at 1:00, 2:00 in the morning. But we really have been seeing it ever since darkness fell on this night. We had been seeing earlier in the day rockets being fired from here towards Israel. After we saw one of them being fired, we then shortly heard from our Jerusalem bureau that the sirens had gone off there.

So most certainly any talk of a cease-fire at this point in time just seems like it's really, really something that is entirely unachievable.

BLITZER: Yes. It seems like that here as well.

But, Arwa, as you know, there's been a lot of speculation that it may be imminent. The U.S. Embassy, by the way, in Tel Aviv has just released a photo of the Secretary of State Hillary Clinton here in Israel. She's getting ready to meet with the Israeli prime minister. We will have live coverage of their statements. It will be intriguing to hear what they have to say.

But, Arwa, what about the leaflets that are being distributed in Gaza? Tell us what you're seeing.

DAMON: Well, earlier in the day, around midday, we did see leaflets being dropped over the city. We managed to get our hands on one of them, effectively very straightforward, the Israeli Defense Forces warning residents in certain areas, mostly in the northern part, to stay away, to leave their homes.

And in fact this goes so far as to name the routes that they should take to come to the center of the city. And they're telling residents they needed to leave because that was the only option they would have to effectively stay safe. We went to a school where a lot of these people were gathering. And the schools were just overwhelmed.


BLITZER: Arwa, I'm going to interrupt you right now. We're hearing Prime Minister Netanyahu and the secretary of state speaking right now. Let's listen in.


BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: ... enemies of Israel are doing everything in their power to maximize the number of civilian casualties.

Obviously, no country can tolerate a wanton attack on its civilians. Now, if there's a possibility of achieving a long-term solution to this problem through diplomatic means, we'd prefer that. But if not, I'm sure you understand that Israel will have to take whatever action is necessary to defend its people.

This is something that I don't have to explain to Americans. I know that President Obama, you and the American people understand that perfectly well. And I thank you once again for your support. Welcome to Jerusalem.

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: Thank you very much, Prime Minister.

I look forward to a productive discussion this evening at such a critical moment for Israel and the region. President Obama asked me to come to Israel with a very clear message. America's commitment to Israel's security is rock-solid and unwavering.

That is why we believe it is essential to de-escalate the situation in Gaza. The rocket attacks from terrorist organizations inside Gaza on Israeli cities and towns must end and a broader calm restored.

The goal must be a durable outcome that promotes regional stability and advances the security and legitimate aspirations of Israelis and Palestinians alike. President Obama has emphasized the same points in his multiple conversations with President Morsi of Egypt. And we appreciate President Morsi's personal leadership and Egypt's efforts thus far.

As a regional leader and neighbor, Egypt has the opportunity and responsibility to continue playing a crucial and constructive role in this process. I will carry this message to Cairo tomorrow. I will also be consulting with President Abbas in Ramallah.

Let me also say, to echo the prime minister, I'm very pleased that the Iron Dome defense system is performing so well. Our partnership in support of this system represents America's enduring commitment to the safety and security of the Israeli people and to Israel's right to defend itself.

But no defense is perfect. And our hearts break for the loss of every civilian, Israeli and Palestinian, and for all those who have been wounded or who are living in fear and danger. I know today was a difficult day. And I offer my deepest condolences to the loved ones of those who were lost and injured.

In the end, there is no substitute for security and for a just and lasting peace. And the current crisis certainly focuses us on the urgency of this broader goal. So, in the days ahead, the United States will work with our partners here in Israel and across the region toward an outcome that bolsters security for the people of Israel, improves conditions for the people of Gaza, and moves toward a comprehensive peace for all people of the region.

And I thank you, Prime Minister, for your hospitality and look forward to our discussion.

Netanyahu Thank you.

BLITZER: All right.

So, there you see the secretary of state, the prime minister of Israel making statements. Clearly, no cease-fire agreement was announced by either of them, although there were some intriguing hints from both the prime minister and the secretary of state that maybe something is in the works, Hillary Clinton saying that there's an effort now in her words to de-escalate the situation and achieve some sort of broader calm, to restore a broader calm.

A word, this word calm all of a sudden over the past few hours we're hearing increasingly. Rather than a phrase like cease-fire agreement, we're hearing now in the short-term maybe there can be a calm, the situation can be de-escalated, if you will. And then they can move ahead. Israel can achieve in her words security and that the Palestinians' condition in Gaza can be improved as they all work towards some sort of comprehensive agreement.

But the bottom line, if anyone was expecting a formal announcement by the prime minister or the secretary of state that a cease-fire agreement has been achieved, they will be disappointed in learning that no such agreement was announced here in Jerusalem over the past few minutes.

The secretary of state now goes into this meeting with the prime minister of Israel. Tomorrow morning, she will be meeting with the president of the Palestinian Authority, Mahmoud Abbas, before flying to Egypt to meet with the new president of Egypt, Mohammed Morsi, who's been very intimately involved in trying to broker some sort of cease-fire agreement. He's got influence with Hamas.

The U.S. and Israel don't talk to Hamas. The Egyptians, as all of our viewers know, they do talk to Hamas. We will see what emerges over the next 24 hours, but right now no agreement coming from Jerusalem, and no announcement from Cairo. Hamas doesn't announce a cease-fire agreement as well.

We're going to talk about what's going on. Prime Minister Netanyahu's chief spokesman, Mark Regev, is standing by live. We will speak to him right after this.


JOE JOHNS, CNN ANCHOR: Joe Johns here in Washington, D.C. We'll get right back to Wolf in Jerusalem in a moment. But first what might be a huge step for the rebels in Syria.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now. Lisa, what do you have?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Joe. Big news on this front, both the U.K. and France are declaring support for the rebels fighting the Assad regime in Syria. France has said it would consider arming the opposition.

While the British say they will help with political and humanitarian issues. No statement yet from the United States on the violence in Syria has killed more than 37,000 people since March of 2011.

And encouraging news in the fight against HIV and AIDS, a U.N. report shows that new HIV infections have dropped more than 50 percent n 25 low and middle income countries, many in sub-Saharan Africa.

Also, experts say the number of people getting anti-retro viral treatment has increased more than 60 percent in the last two years and AIDS-related deaths have been dropping.

And Federal Chairman Ben Bernanke says, quote, "the stakes are high when it comes to the fiscal cliff." He's urging lawmakers to act quickly. Bernanke says the $7 trillion in spending cuts and tax increases could send the U.S. back into recession.

Members of Congress have been optimistic about reaching a deal, but they still can't agree on taxes. And that's going to be the big stumbling block as you well know.

JOHNS: Absolutely. That's a very tough fight and a lot yet to come. Thanks so much, Lisa.

Now we're going back to Wolf Blitzer in Jerusalem. Wolf, is there anything new in the all-important meetings between the secretary of state and the prime minister?

WOLF BLITZER, CNN ANCHOR: Well, they're in those meetings right now. And we're waiting -- we're going to be watching closely to see what if anything Hillary Clinton or the Prime Minister Benjamin Netanyahu say after their meeting.

You heard their statements going in. They both were expressing hope that this could be resolved peacefully. The prime minister though is not ruling out the so-called military option going in on the ground if necessary.

The secretary, Joe, she's been traveling in Southeast Asia with President Obama when she hurriedly was dispatched here in the Middle East.

Let's go to our foreign affairs correspondent Jill Dougherty, she is monitoring the situation from the State Department checking in with all of her sources.

Jill, explain to our viewers why the president decided to send Hillary Clinton halfway around the world for these urgent rounds of meetings.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: He wanted her, Wolf, to be their personally to sit down to talk with these people face to face. After all, don't forget, she knows a lot of the key players.

She certainly knows Benjamin Netanyahu. She's met with Mahmoud Abbas, the head of the Palestinian Authority and she knows of the issues. So a lot of it as Victoria Nuland, the spokesperson for the State Department, said it's really that showing up.


HILLARY CLINTON, SECRETARY OF STATE: President Obama asked me to come to Israel with a very clear message. America's commitment to Israel's security is rock solid and unwavering. That is why we believe it is essential to de-escalate the situation in Gaza.

The rocket attacks from terrorist organizations inside Gaza on Israeli cities and towns must end and a broader calm restored. The goal must be a durable outcome that promotes regional stability and advances the security and legitimate aspirations of Israelis and Palestinians alike.


DOUGHERTY: So that was as you can see the secretary, Wolf, being even handed saying, of course, support for Israel is rock solid. But also giving some space to try to bring both sides together and help both sides ultimately if that's possible.

BLITZER: You know, one of the key players in all of this, Jill, is Hamas in Gaza, but the U.S. doesn't talk to Hamas. It regards Hamas as a terrorist organization although Hamas, of course, is launching rockets and missiles, the U.S. with others trying to get a cease fire.

How does the State Department -- how does the secretary of state deal with this fundamental problem that the U.S. isn't talking to one of the key players?

DOUGHERTY: Yes, that's a good point, Wolf, because after all, she's going to be speaking with Mahmoud Abbas, who is the head of the Palestinian Authority, but really has very little influence when it comes to Hamas.

So enter Egypt. That is why she'll be going to Cairo to meet with President Morsy because they are the people who do have influence with Hamas.

And look at the words she used, you know, for Egypt, that they have the opportunity and responsibility to try to exert their efforts toward some type of resolution.

So she's urging them very strongly step up to the plate, as they already are, and try to bring that together. So she has to do it indirectly, you could say.

BLITZER: I noticed that they're not using the word ceasefire. They're talking about calming things down, de-escalation. These are significant code words. What's wrong with the word ceasefire?

DOUGHERTY: You know, ceasefire we are told by at least one official is too specific because they are not -- the officials here at the State Department, are not really sure what either side will want to use, what kind of words.

And you don't want to lock yourself into defining something that neither side has really decided on. So that's one issue. Another is, you know, you lower the bar somewhat on expectations. You don't try to predefine what's going to happen.

And then it could be a broader, let's call it a ceasefire, but it could be a broader cessation of hostilities in some way so again, not trying to get locked in.

BLITZER: You know, I wouldn't be surprised having covered this story for so long, Jill, if the secretary of state meeting right now with the prime minister. Tomorrow morning, she'll go to Ramallah on the West Bank to meet with the Palestinian Authority, President Mahmoud Abbas. Then she will fly to Cairo to meet with the new Egyptian President Mohamed Morsy, would it be surprising to you, it wouldn't be surprising to me if she were then to fly back here let's say and engage in what they used to call some shuttle diplomacy to nail down agreements back in the '70s.

What are you hearing about the flexibility of her schedule right now that would allow Hillary Clinton to engage in some shuttle diplomacy if necessary to achieve this calming down or ceasefire?

DOUGHERTY: You know, Wolf, that's a good point. I mean, there are hints that if something happened, you know, schedules could change at the very end, at this point they're not saying that specifically.

But certainly if -- obviously, if she felt based on what people are saying here that there was some type of opportunity, she would not stop in trying to facilitate that type of outcome.

BLITZER: Yes. Let's see if she comes back to Jerusalem after her talks with President Morsy in Cairo and what happens after that. Let's see what happens.

Obviously the stakes right now in the Middle East indeed in the world as a result of what's going on enormous right now. Jill Dougherty at the State Department, thank you.

Today the Israeli President Shimon Peres says it's been a constructive surprise to him to see the constructive role he says Egypt's new government is playing in trying to end the fighting in Gaza. We're going to have a closer look at what the Egyptian role is. Stay with us.


BLITZER: We just heard from the Secretary of State Hillary Clinton and the Israeli Prime Minister Benjamin Netanyahu. They're meeting right now here in Jerusalem talking about the possibility of a ceasefire.

While civilians here in Jerusalem, elsewhere in Israel and in Gaza were hoping for some sort of announcement of sort of a deal, there's no deal yet. Secretary Clinton's next stop is to the West Bank.

Tomorrow she'll be meeting with the Palestinian Authority president and then onto Cairo to meet with the new Egyptian President Mohamed Morsy.

President Obama called President Morsy at least three times that we know of over the last 24 hours. He's clearly playing a critical role in trying to broker a deal between Hamas and Israel to stop the fighting in Gaza and Southern Israel.

Let's go to Cairo right now. CNN's Ian Lee is standing by. Ian, Egypt's president is very much involved, getting praise from the U.S., from the Israelis, from others and Palestinians, what's going on? What's the Egyptian role? Describe it to us in a nutshell. IAN LEE, CNN CORRESPONDENT: Well, Wolf, what we're really seeing is a resurgence of Egypt as a strong vocal diplomatic player. President Mohamed Morsy and his base Muslim Brotherhood historically have strong ties with Hamas. And we saw this recently during this conflict as members of the Muslim Brotherhood were visiting Hamas officials in Gaza.

And so they have this -- they're hoping to put influence on Hamas to bring about a ceasefire. If you look at Egypt, Egypt has historically had a good working relationship with Israel. It did under President Hosni Mubarak. So far we've seen them continue that.

And so it's likely to see if we do see a ceasefire, when we see a ceasefire that Egypt will be at that core -- Wolf.

BLITZER: This is a huge test for President Morsy if he succeeds in getting this deal between the Israelis and Hamas. I assume he will be rewarded. The U.S. will strengthen its relationship. The U.S. provides Egypt with extensive economic and military support. This is a big test for the new Egyptian president.

LEE: You're exactly right, Wolf. This is a huge test for President Mohamed Morsy both diplomatically and internationally. First, domestically the community the Egyptian seem to be pleased with Mohamed Morsy's reaction to what's happening in Gaza.

His harsh condemnation of Israel's actions in Gaza has pleased the Egyptian street. But they're going to want a harsher and continue this sort of condemnation if the violence continues. Well, if President Mohamed Morsy does go with that, he risks alienating foreign players.

And especially now that's crucial because Egypt is looking for money from other countries as its economy is staggering. So if Egypt were to come out harsher against Israel, it could alienate foreign donors.

We're also reading in Egyptian media people who are also condemning him for focusing too much on Gaza and not enough on the problems in Egypt right now. Just this past week we had a train accident, which saw dozens of children killed.

And so people are saying why is President Mohamed Morsy focusing too much on Gaza and not enough on the problems at home? So quick resolution to the conflict in Gaza will be good for him diplomatically -- Wolf.

BLITZER: I think economically as well down the road if he succeeds. Ian Lee in Cairo, thank you.

Remember, we're standing by the Prime Minister of Israel, Benjamin Netanyahu, meeting right now with the Secretary of State Hillary Clinton. We'll see what if anything they say following their meeting here in Jerusalem.

Meanwhile, as rockets rain down on Southern Israel as well as in Gaza, social media is playing a big role in keeping Israelis in particular safe. There's a new app for that. Standby, we have some details.


JOHNS: A bombshell announcement on Wall Street today. Lisa Sylvester's monitoring that and some of the other top stories in THE SITUATION ROOM right now. Lisa, what do you have?

SYLVESTER: Hi there, Joe. Hewlett-Packard says it is taking a nearly $9 billion write down on its purchase of the British software company, Autonomy. HP says it is because the company misrepresented its finances.

Stocks of HP fell sharply on this news. CEO Meg Whitman says those responsible have already left HP. Whitman says the board feels terribly about missing the accounting fraud.

And Google is getting a lot of grief for leaving out December. The people app in the new version of Google's mobile operating skips right from November to January. So people can't enter events or birthdays in the month of December. One internet headline asks if Google is the new Grinch that stole Christmas. Google says this bug is going to be fixed soon.

Have you ever wondered how much an adjusted gross income it takes to be in the top 1 percent of income earners? Well, that figure is $370,000. That's according to the IRS. But on average the top 1 percent earned more than $1.1 million.

This group of top earners remains in the spotlight when it comes to higher taxes and the fiscal cliff. And that's going to be the big question, are taxes going to go up on the richest?

JOHNS: There's a huge difference between $370,000 and $1 million, isn't it?

SYLVESTER: I think there certainly is. So $370,000 gets you in the top 1 percent, but the average is a little over a million dollars. So we're talking big bucks either way around for most of us folks.

JOHNS: All right, thanks, Lisa. While the rockets and warplanes fly over Israel and Gaza, there's also a battle being waged to influence your opinion.

Wolf is back from Jerusalem with the story behind the pictures of grief and sorrow people all over the world are seeing.


BLITZER: The Israeli military strikes against militants and the rocket sites in Gaza certainly have taken a toll on Gaza civilians. Our Brian Todd takes a closer look at the fighting's human toll and its implications.


BRIAN TODD, CNN CORRESPONDENT (voice-over): The pictures are jarring, children dead, children badly injured in Gaza. A doctor nearly breaks down.


TODD: From Cairo to Ramallah, civilian casualties in this country have led to protest against Israel supporting Hamas. Israel's leaders are hearing refrain to what they heard four years ago.

When roundly criticized by the United Nations and others for causing hundreds of civilian deaths during operation cast led. A bloody ground offensive against Hamas in Gaza.

This time around Israeli officials say they're doing everything they can to minimize that.

MICHAEL OREN, ISRAELI AMBASSADOR TO THE U.S.: We've had cases of pilots who have had to abort missions because they've seen that rockets are in the middle of playgrounds or mosques or middle of schools.

TODD: Israel's ambassador to the U.S. says rockets have been routinely fired at Israel in recent days from civilian areas in Gaza. He says many militants in Gaza have regular jobs by day and become fighters at night.

OREN: They dress in civilian garb and they are virtually indistinguishable other than the fact they have guns. But beyond that, we actually have cases of rockets that have been placed in civilian homes. We have pictures of them. These homes have families in them.

TODD (on camera): Israeli officials also tell us that in Gaza in recent days, militants have either posed as or mingled with journalists. In one case they say a militant was riding in a car marked TV. In another, militants stayed in a building known to be used by media outlets.

(voice-over): Israeli officials say it's an effort by Hamas to sustain casualties on the Palestinian side and generate more pressure on Israel. Hamas leaders say they have no choice, but to fight from among civilians in one of the most crowded places on earth. And they call Israel's campaign a massacre of civilians.

KHALED MESHAAL, HAMAS LEADER: If the leaders of the occupiers, the Israeli leaders brought to justice in the previous aggression, they would not have dare to --

TODD: But are Palestinian civilian casualties, a strategic advantage for Hamas? One analyst says it could lead to help from Egypt's new president.

JON ALTERMAN, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: That could create so much pressure than Mohamed Morsy has to open up the border and creates a very different environment in Gaza than you had beforehand.


TODD: John Alterman says Hamas could also seek to capitalize on support it's getting elsewhere in the Palestinian territories to generate more pressure on Mahmoud Abass.

The Palestinian president who has been Hamas' rival for power in the region, someone who hasn't been seen or heard from very much during this conflict, Wolf. But of course, he is now set to meet with Hillary Clinton.

BLITZER: Brian Todd reporting for us. Thanks very, very much. Anderson Cooper is standing by in Gaza. When we come back, we're going to Anderson live for the very latest.