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CNN LOU DOBBS MONEYLINE

Saddam Has 26 Hours Left to go Into Exile or Face War; White House Says Remaining Would be a "Final Mistake"

Aired March 18, 2003 - 18:00   ET

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

ANNOUNCER: This is LOU DOBBS MONEYLINE for Tuesday, March 18. Here now, Lou Dobbs.
LOU DOBBS, HOST: Good evening.

Saddam Hussein has just 26 hours left to go into exile or face war. The White House said Saddam Hussein would make, quote, "his final mistake," end quote, if he does not leave Iraq. Secretary of State Colin Powell said 30 countries are now active members of the coalition of the willing. Senior White House Correspondent John King reports.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): It was 34 hours and counting when the Pentagon brass arrived to brief the president on the war plan, near the 33-hour mark when they emerged, knowing Iraq already had rejected the U.S. ultimatum.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: Saddam Hussein, if he does not leave the country, will make his final mistake.

KING: Senior U.S. officials say the president and vice president were told the troops are ready, and these officials say an order to attack could come as early as Wednesday.

Only Great Britain and perhaps Australia are slated to directly join the fight. But the administration listed 30 countries it says are part of the U.S.-led coalition, from Italy, Iceland, Spain and South Korea to the Czech Republic, Nicaragua, tiny Albania and the impoverished East African Nation of Eritrea.

Mr. Bush called Presidents Putin of Russia and Hu of China, voicing hope long-term relations would not suffer despite profound disagreements over war in Iraq. White House anger at France and Germany runs deeper, even more so after fresh criticism of Mr. Bush's march to war.

JACQUES CHIRAC, PRESIDENT OF FRANCE (through translator): There is no justification for this unilateral resort to war.

GERHARD SCHROEDER, GERMAN CHANCELLOR: There is no reason to end this disarmament process now. KING: Dissent at home as well. Leading Democrats accused the president of botching diplomacy and say his domestic agenda is at odds with the country's wartime footing.

SEN. TED KENNEDY (D), MASSACHUSETTS: We should not have a tax cut until we are going to pay for the war in Iraq, pay for the occupation in Iraq and also pay for the return of the troops.

KING: The treasury and commerce secretaries are telling the president the economic impact of the war should not be all that severe. And the White House hopes a short conflict will boost not only financial markets but also Mr. Bush's clout on Capitol Hill.

(END VIDEOTAPE)

KING: Now, that deadline lapses in 26 hours. Senior administration officials say the president could act almost immediately, though two senior officials suggested today Mr. Bush might wait a bit, wait until he is told by military planners that the time is near perfect. Those officials referring to the president's remarks last night that America will strike, quote, "at a time of its choosing."

And even if Saddam Hussein accepted exile, the White House says U.S. troops would still go into Iraq to destroy its weapons and secure its borders, but here at the White House no one expects the Iraqi leader to go peacefully -- Lou.

DOBBS: John, thank you. John King, our senior White House correspondent.

An overwhelming majority of the public approves of President Bush's ultimatum to Saddam Hussein. A CNN/"USA Today"/Gallup poll finds that 66 percent of Americans support that ultimatum, 30 percent disapprove. The survey also found 68 percent say the United States has done all it can diplomatically to solve the crisis. Twenty-eight percent disagree.

In a separate poll for NBC and "The Wall Street Journal," 62 percent of Americans said they approve of the job President Bush is doing. That's 8 percent higher than the last survey taken in January.

With diplomacy on the Iraqi issue at end, the French ambassador to the United States today made an astonishing offer. He said the French military might assist U.S.-led forces but only if Iraq uses biological or chemical weapons against coalition troops. Joining me now live from the United Nations, senior U.N. Correspondent Richard Roth -- Richard.

RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT: Lou, the U.N. is not dead yet. A lot of activity here. First, let's deal with Iraq's U.N. ambassador, who if he could have responded to that poll certainly would have taken one side. He ripped President Bush for conducting a campaign of genocide if he goes ahead with war. And he also had harsh words for the United States leader for what he was trying to do to his president. (BEGIN VIDEO CLIP)

MOHAMMED ALDOURI, IRAQI AMB. TO U.N.: This is the first time in the history a president of a state ordered another president of another state to leave his own country. It is a mess. It is unacceptable by any logic. Unless we have to accept the law of the jungle, might is right.

(END VIDEO CLIP)

ROTH: The Iraqi ambassador said he's going to be here for weeks, even years. This as war clouds loom.

As for the French, well, President Chirac last evening again condemning what he says is a U.S. ultimatum for war. Yet today the French Foreign Ministry issued a statement which said if Iraq uses chemical or biological weapons against U.S. forces France would reconsider and would become involved in the war.

(BEGIN VIDEO CLIP)

JEAN-DAVID LEVITTE, FRENCH AMB.TO U.S.: If the war starts and if Saddam Hussein uses chemical or biological weapons, it would change completely the situation for the French president and the French government. And President Chirac will have to decide what we will do to help the American troops to confront this new situation. But I confirm it would change completely the perception and the situation for us.

(END VIDEO CLIP)

ROTH: France's foreign minister, who has dueled with Colin Powell in the Security Council over the Iraq issue, is coming back to the Security Council, but no Powell this time. It's a planned foreign ministers meeting, no, though all the foreign ministers won't be there, to discuss Iraq and specifically the program of work for the weapons inspectors. This based on a four-year-old resolution.

(BEGIN VIDEO CLIP)

GUNTER PLEUGER, GERMAN AMB. TO U.N.: It has to be discussed, and it also has to be endorsed. And it also makes sense because whatever happens, the system of inspections is there and it might be useful in the future again.

(END VIDEO CLIP)

ROTH: Blix today in somewhat of a farewell news conference said he could not guarantee that Iraq has weapons of mass destruction or has not. He doesn't think Iraq would use them, he thought. He also said that Saddam Hussein or someone who might end up dying still wants to protect their reputation -- Lou.

DOBBS: Richard, any explanation for why the French ambassador to the United States would make such an offer and why he thinks such an offer would be either relevant or necessary? ROTH: Well, France clearly wants to try to be on the winning side if it can, even at this late date, and certainly regards the use of chemical and biological weapons as something severe. We heard something similar from the Russian delegation today, they may be willing to join in. But for now they're staying out.

DOBBS: Richard Roth, senior U.N. correspondent. Thank you.

From the U.N. headquarters to Baghdad, Saddam Hussein today refused to comply with the U.S. ultimatum to leave the country. Iraqi television showed the Iraqi leader dressed in a military uniform. It's the first time in two years that he's appeared on Iraqi television in military garb. Senior International Correspondent Nic Robertson reports from Baghdad.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): This is the image Iraq wants the world to see: defiance on the eve of war. A hastily organized government demonstration showing support for president Saddam Hussein.

UNIDENTIFIED FEMALE: We came here to say to Bush, we all Iraqi people want peace and they are against war.

ROBERTSON: Gun-toting civilians imply defense of every household should U.S. troops arrive.

JALAL HUSSEIN, BA'ATH PARTY OFFICIAL: Let him try his bad luck here and we are ready for him. Ready with sticks, anything.

ROBERTSON: Pictures of the same demo were carried on Iraqi television, implying for anyone here who may doubt it, President Saddam Hussein is firmly in control.

Meeting top politicians earlier in the day, the Iraqi leader was seen in his military uniform for the first time in two years. He denounced President Bush's ultimatum as debased and flawed.

Indeed, his elder son, Uday Saddam Hussein, in a statement on his own television station, said it was President Bush who should leave office.

The defiant language echoed in a news conference by Iraq's foreign minister, who called President Bush an idiot and said Iraq has done all it can to avoid war.

NAJI SABRI, IRAQI FOREIGN MINISTER: The radical, I think, solution to keep this window open is for the two despots in Washington and London to leave office. Once they leave office, they can open the window for diplomacy all over the world to solve all disputes away from the cowboy policy.

ROBERTSON: Sabri also described the Iraqi leader as sure of victory.

SABRI: He is relaxed. He is good. And he is sure of beating this evil aggression against Iraq.

ROBERTSON (on camera): While there is acceptance here among Iraq's leaders that war is a certainty, there is some satisfaction that the United States and Great Britain do not have strong U.N. backing to conduct it.

Nic Robertson, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Tonight the United States mission in Iraq has a name. CNN has learned that the war, should it break out, will be called Operation Iraqi Freedom. As a run-up to that mission the U.S. military is bombarding Saddam Hussein's forces with leaflets and broadcasting warnings to urge them to surrender or die.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): Between now and when the war begins the Iraqi military will be showered with U.S. propaganda aimed at convincing Iraqi troops to keep their guns pointed down and to give up without a fight.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If war comes, do not fight for a dying regime. That is not worth your own life.

MCINTYRE: President Bush's message is being broadcast in Arabic into Iraq by a U.S. military airborne radio station. Sources say the clear instructions to avoid attack promised by President Bush tell the Iraqi military to lay down their weapons, park their tanks or other military vehicles, and remain in their barracks until U.S. forces arrive. If the Iraqi troops don't resist and technically don't surrender, that could reduce the number of POWs the U.S. military is responsible for and in turn that could allow ground troops to leapfrog over Iraqi regular forces in the south and more quickly move against the Republican Guard, which has dispersed around Baghdad and Saddam Hussein's ancestral home of Tikrit.

In addition, sources say, U.S. and British troops in Kuwait are hoping to score a quick victory in the southern port town of Basra which has a Shiite population that tends not to support Saddam Hussein. Pentagon strategists theorize early reports of jubilant Iraqis in Basra could prompt other Iraqi units to fold. The two big unknowns in the war plan, will the vaunted Republican Guard fight if it's clear Saddam Hussein's fate is sealed? And will they carry out orders to use chemical weapons?

(END VIDEOTAPE)

MCINTYRE: Another indicator of possible plans to use chemical weapons is that the Iraqi commander put in charge of defenses in the south is nicknamed chemical Ali because of his connection to the use of chemical weapons against Iraq's own people in the Kurds in the north in 1988. And by the way, we've obtained some videotape of that Arabic translation of President Bush's remarks last night that was broadcast to the Iraqi people. In which he called on the Iraqi military to not fight in that what he said would be a losing cause.

And as you said, Lou, this operation does appear to have a name now. At least a working name. Operation Iraqi Freedom is the unofficial name. The Pentagon cautions, though, until Defense Secretary Donald Rumsfeld or the president announces it, it could still change. It won out, by the way, over operation desert freedom -- Lou.

DOBBS: Jamie, thank you very much. Senior Pentagon correspondent, Jamie McIntyre.

Still ahead here, U.S. troops in the Persian Gulf may be in action within a matter of days. We'll have the latest for you on the plans of the Coalition forces to "shock and awe" Iraqi troops into surrender.

Former defense secretary, MONEYLINE regular contributor, William Cohen joins us tonight to give us his assessment of the Coalition's prospects of a quick and decisive victory.

The government has announced plans to protect the United States from possible reprisal terrorist attacks.

Jeanne Meserve will report on Operation Liberty Shield.

On Wall Street today the Dow and the S&P up for a fifth consecutive session. The Nasdaq also advanced. Christine Romans will have the market.

Former White House economic adviser Lawrence Lindsey joins us. He once suggested the war with Iraq could possibly cost as much as $200 billion. We'll ask him tonight if he stands by that estimate.

All of that and more still ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: There is a new possibility that Turkey would provide bases for U.S. combat troops in the event of war against Saddam Hussein. The pentagon wants the right to use bases such as Incirlik for attacks against Iraq. The Turkish government discussed the issue again today. In the past half hour the government has said it would present a new motion to the Turkish Parliament to allow U.S. combat troops on its territory.

In Britain Prime Minister Tony Blair won overwhelming support in parliament today for war against Saddam Hussein. He beat off a rebellion by some members of his own Labor Party and won that vote by 412 to 149.

Joining us now to discuss the situation in Turkey, the support of Britain's Tony Blair, the decision by the French to join in the fight under certain conditions is former defense secretary, regular MONEYLINE contributor, William Cohen.

Bill, good to have you here.

WILLIAM COHEN, FMR. DEFENSE SECRETARY: Good evening, Lou.

DOBBS: Let's start with the French, simply because the French seem to linger on this issue. What in your judgment would be the reason for Chirac's government to make this rather bald offer to a government that doesn't seem in the least interested?

COHEN: Well, the French government has indicated it wanted more time to determine whether there are chemical or biological weapons. If Saddam were foolish enough to launch an attack against U.S. troops with chemicals, then that would certainly prove the lie that Saddam has been adhering to. I think the French at that point would look for any justification to become part of the Coalition. I think that obviously relations are strained right now but they'll have to be repaired at some future time. This may be an opening bid to start that repair in advance.

DOBBS: Do you really think this would be in some way a reparation? This is -- and why precisely would these relations have to be repaired?

COHEN: Well, because in the future we're going to need -- we've talked about this before. But this war against terror is not going to be won primarily on the battlefield. Iraq aside for the moment. It's going to be won on the sharing of information, good police work...

DOBBS: No, I understand, Bill. But what I'm asking is -- it's in the French self-interest to protect themselves against al Qaeda terrorists and other terrorists associated with radical Islamist groups.

What has that to do with the relationship of the United States if they are not willing to act in their own interest?

COHEN: Well, it has to do with we still want them to act in their own interests but cooperating with the United States. So to the extent that we can repair our relationship we ought to seek ways to do it. It's not going to be easy, and it won't be quick, but nonetheless we still have to try to build alliances for the future, even as this one has fallen through.

DOBBS: The Turks having problems of their own. The country almost 100 percent Muslim. A new prime minister. Perhaps a new vote in parliament on a resolution authorizing the presence of U.S. forces or at least overnight of Turkish territory. What's the likelihood in your judgment?

COHEN: Well, I think it's in the Turkish government and the Turkish people's interest to allow our forces to be able to fight from Turkey. Right now it would appear to be confined to mostly air power with our forces in Incirlik. It's a bit late now to talk about moving a large number of armored forces through the north. But I think it's in their interests just as much as ours to help make this a very successful and quick campaign. And there are long-term consequences that certainly will be taken into account in the future, and I think the Turks ought to take that into account as they reconsider this vote.

DOBBS: With or without Turkish assistance, with or without the assistance of the French military, this president has set forth an ultimatum of 48 hours. We know that the initial strategy is what is termed "shock and awe" by the Pentagon. What does that entail, and how effective do you think it is?

COHEN: It entails large numbers of our forces on air and land and sea, all moving nearly simultaneously. This is something that is quite bold. It carries great promise but also great risks. To the extent that this movement is not as precise as some kind of a symphony, as such, with a symphony precision, then it can in fact impede the movement itself. So it's bold, it has the promise of very quick results, but to the extent something goes wrong then there's a tendency to pull back and then to reevaluate.

So I'm sure that Tommy Franks has taken this into account, and he's much like a quarterback, looking at the defense, calling audibles if he needs to call them depending on what the defense is doing at any given time.

But that's the kind of contingency planning that our forces engage in on a regular basis.

DOBBS: And this situation, should it lead to war, will mean that Saddam Hussein has chosen war over exile and rather comfortable terms for his sons and his inner circle as well.

Is there any prospect, hopeful prospect, that Saddam Hussein would accept exile at the last moment here in your judgment, Bill?

COHEN: I think it's rather remote if not impossible.

Given his statements, given his conduct, where would he go, under what circumstances would he live? I think that at this point he prefers martyrdom than -- to personal safety. So I think it's unlikely.

DOBBS: Bill, as we approach this -- the end of this 48-hour period as the ultimatum set forth by the president, certainly the Pentagon has to be casting a very watchful and wary eye toward North Korea. Is there, in your judgment, any greater likelihood of an escalation of provocations here as we enter in this new period?

COHEN: Well, if the North Koreans are interested in trying to exploit our preoccupation with Iraq right now, then it perhaps couldn't come at a more crucial moment for them and for us. So they may have that in mind. If they do, this is perhaps our most vulnerable point in terms of having a focus right now on Iraq.

I would caution them hopefully that they would not do this, that there would be certainly grave consequences that would flow from it. But nonetheless we have to keep a very watchful eye on North Korea and hope that our friends in China, Japan, Russia, and others will also be voices of restraint to the North Koreans.

DOBBS: Bill Cohen, thank you very much.

COHEN: My pleasure.

DOBBS: Still ahead -- the State Department today said war with Iraq will make attempted terrorist attacks a certainty. National security correspondent, David Ensor, will have a report for us.

Also coming up here, the Department of Homeland Security today detailed its plan to protect Americans from heightened terrorist threats. Jeanne Meserve will report.

Also, the last U.S. diplomat to meet with Saddam Hussein, Ambassador Joseph Wilson, joins us.

And the latest on the mysterious strain of pneumonia that has sickened people all across the world, from Asia to Europe. And there may be more cases in this country.

That story, a great deal more still ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Highways and roads all across the Rocky Mountain region are closed tonight after a massive late winter snowstorm. We'll have that story and other "News Across America."

And oil prices are tumbling despite the rising possibility of war with Iraq. Peter Viles will have the special report for us.

And a great deal more still ahead here. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Health officials tonight are investigating nine suspected cases of a mysterious pneumonia-like illness that is sweeping through Asia. Severe acute respiratory syndrome, as it is called, has killed four people and infected more than 200 worldwide. These nine cases in the United States, like all of the others, have stumped health officials. They've been unable to identify the disease or determine its cause.

A major snowstorm has dumped more than three feet of snow in the Rocky Mountains. Hundreds of miles of highway remain closed in both Colorado and Wyoming tonight. Avalanche warnings in effect for much of the Colorado Rockies.

Brian David Mitchell has been charged with kidnapping Elizabeth Smart. Mitchell and his wife are also charged with sexual assault and burglary in connection with last year's kidnapping. The couple will be arraigned tomorrow in Salt Lake City.

The man who killed an abortion doctor has been found guilty of murder. James Kopp faces 25 years to life in the sniper killing of Dr. Barnett Slepian five years ago in Buffalo, New York. Operation Liberty Shield is under way in the United States tonight. Homeland Security Director Tom Ridge has raised the national threat level to orange, or high. Secretary Ridge said there is going concern that terrorists could attack this country in retaliation for a war against Iraq.

Jeanne Meserve has the report.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): From the bridges of the West Coast to the subways of New York, threat level orange was evident. Even in places where there had been a lot of security, there was more.

JOHN TIMONEY, MIAMI POLICE CHIEF: This city and other cities across America have really goosed it up, if you will.

MESERVE: The looming likelihood of hostilities with Iraq and intelligence assessments that retaliatory attacks are a near certainty prompted the change.

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: While al Qaeda and those sympathetic to their cause are still a principle threat, the principle threat: Iraqi state agents, Iraqi surrogate groups, other regional extremist organizations and ad hoc groups or disgruntled individuals may use this time period to conduct terrorist attacks against the United States and our interests, either here or abroad.

MESERVE: Under Operation Liberty Shield, as the new national security plan is called, patrols on waterways and ports are being stepped up with security zones around critical infrastructure.

Law enforcement is more visible at airports and new flight restrictions are being put in place in certain U.S. cities, plus Disney World in Orlando and Disneyland in Anaheim.

The plan also calls for increased security at chemical facilities and increased vigilance in food production, just as the General Accounting Office released reports saying the extent of security precautions in food processing is unclear and the vulnerability of chemical plants unassessed and largely unaddressed.

Meanwhile, on the National Mall, a standoff continued with a man who claims his tractor is loaded with explosives. It snarled traffic, shuttered buildings and diverted security assets and attention.

UNIDENTIFIED MALE: One cop became three cops and three cops was, like, this whole situation.

MESERVE: While it doesn't appear to be a terrorist act, that has it happened at all raises the question, is security, even in the nation's capital, what it could or should be?

Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

DOBBS: Coming up next, counterterrorism experts today warned that it is all but certain that the al Qaeda will attempt multiple attacks against U.S. interests around the world. National security correspondent David Ensor will have that report.

And the French today made a political about-face, offering to help U.S. troops under certain conditions.

Kitty Pilgrim will have the story -- Kitty.

KITTY PILGRIM, CNNfn CORRESPONDENT: Lou, it was a statement that shook Washington and took everyone by surprise. We'll tell you whether it's a flip-flop in French policy -- Lou.

DOBBS: Kitty, thank you.

For more on France's offer I'll be joined by Ambassador Joseph Wilson, the last U.S. diplomat to meet with Saddam Hussein.

We'll also be joined tonight by former White House Economic Policy Adviser Lawrence Lindsey. We'll be talking about the cost of war with Iraq and the likely impact on this economy and that of the world.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The French ambassador to the United States today said France would help coalition forces if Iraq used chemical or biological weapons. The French ambassador made the statement, and it had Washington and diplomats in New York wondering what motivated the offer. Kitty Pilgrim has the story.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): A French offer of help out of the blue. The statement today, cause of much head scratching. Even the White House seemed stumped what to make of it, saying they hadn't had time to study it, keeping reaction pointedly neutral but positive.

FLEISCHER: One, I thought it was a notable statement. Two, let us hope it never has to come to pass.

PILGRIM: Some today point out it is an offer that is absolutely militarily useless.

CHARLES KUPCHAN, FRM. DIR., EUROPEAN AFFAIRS, NSC: They have the requisite capabilities, the suits, the know-how, but they will not be able to make a significantly different contribution to the United States. They don't have better suits, better know-how than the U.S. military has.

PILGRIM: Some say it's not the first French flip-flop. After all, France voted for Resolution 1441 and then rallied a coalition of the unwilling at the U.N.

Some say the French made today's offer for a reason, anxious to keep involved in the post-war rebuilding of Iraq. As if to prove that point, Foreign Minister Dominique de Villepin said Monday on French radio, "everyone knows one can win a war quickly, but no country can construct peace alone."

Others say it was an effort to damage control after a particularly bitter rift.

SIMON SERFATY, DIRECTOR, CSIS: I think the French today took a first step. It is not significant, but it is a first step that is being taken on the very day before the war. And there will have to be other steps.

(END VIDEOTAPE)

PILGRIM: The prime minister today said, "we remain allies of the United States," and he made some comments to the French National Assembly saying France would devote all of its energy to making sure that the European Union and NATO were not damaged by the rift over Iraq. That may take some doing -- Lou.

DOBBS: De Villepin saying that one can make war but one cannot make peace. I'm not sure I quite understand his point. Are the French against peace as well as war?

PILGRIM: No, no. They just think that it takes a lot of nations to build a nation.

DOBBS: Including, I guess, France.

PILGRIM: Including France perhaps.

DOBBS: What an interesting position for the French. Thank you, Kitty.

The French call the United States the world's very first hyperpower. The looming war against Iraq could be the very first demonstration of the president's doctrine of preemptive war. Some say the next 26 hours will determine whether Saddam Hussein his sons and his military command structure will stand and fight or go into exile.

Joining me now is Ambassador Joseph Wilson. He is the last U.S. diplomat to have met with Saddam Hussein, former charge d'affair to Iraq, now an adjunct scholar to the Mideast Institute. Good to have you with us, Ambassador.

AMB. JOE WILSON, ADJUNCT SCHOLAR, MIDDLE EAST ISNT.: Lou, good to be with you. I guess you've given up quiche.

(LAUGHTER)

DOBBS: Well, I actually had never taken it up in order to give it up. So it was an easy judgment for me. The fact of the matter is you're assessment would be quite interesting on whether you think Saddam Hussein has the mentality the nature, the responsibility to his people to accept exile. What do you think?

WILSON: I was surprised the other night when General Schwarzkopf said that during the first Gulf War there had been an airplane fueled and ready to go because that I don't think is typical of what Saddam would do.

In Saddam's mind he is Iraq and Iraq is him. And that's what allows him to send hundreds of thousands of Iraqis off to these futile wars without any sort of remorse whatsoever.

So I fully expect that having seen what happens to other deposed potentantates (ph) such as Milosevic in the dock at the Hague, that Saddam is going to prefer to fight in his country rather than either go to the dock in the Hague or to go to be Gadhafi's trained lion in exile in Tripoli.

DOBBS: Well, or Idi Amin's sinecure in Saudi Arabia or Baby Doc Duvalier enjoying the Mediterranean beaches. Those are also possibilities, are they not?

WILSON: Well, I don't think he'd be very welcome in France. And...

DOBBS: Really?

WILSON: ... I doubt that they would really want him in Saudi Arabia, either. I just -- there may not be an easy place for him to go where he can avoid the long arm of international law for his human rights abuses and his truly war criminal behavior.

DOBBS: And what is your assessment as to what his inner circle, the command structure, the Elite Republican Guard as they are often termed, their commanders. Any chance that they will see reason here and act in the interest of both the Iraqi people and peace?

WILSON: Well, you know, there's always a possibility when they first begin to feel the effects of the Shock and Awe air campaign that a number of generals and colonels will take it upon themselves to get rid of Saddam in order to survive themselves.

The problem is the first two inner circles, the Special Republican Guard and the Republican Guard, are essentially made up of clan members and people from Tikrit, all of whom understand that they rise or fall with Saddam and might well fight to the bitter end with him.

I think the Shock and Awe air campaign is going to cause a lot of consternation within Baghdad and cause a lot of people to drop their arms and run for cover. I just am not sure it's going to take the inner circle with them.

DOBBS: Give us your best assessment. One of the first aspects of this campaign, reportedly, it will be an attack against the South of Iraq, specifically Basra, in which military experts appear to think that there will be only light resistance. Do you share that assessment?

WILSON: From everything I've read, Lou, Saddam has brought his Elite troops back into Baghdad and close to Baghdad and/or Tikrit, leaving most of the other cities in Iraq lightly defended.

Basra is in the Shiah part of the country, and the Shiah, of course, rose up in 1991 after the Gulf War. I think it is probably a good assessment that Basra will be easy pickings for the first -- for a first fight.

And in fact, there may well be the jubilant celebration down there and on the road to Baghdad that everybody has been predicting because this is a part of the country that has been disadvantaged by Saddam for many, many years now.

DOBBS: And what do you expect, Ambassador, in terms of duration and -- of this conflict should it come to that against Saddam Hussein and his forces?

WILSON: Gee, that's a tough one. Shock and Awe, the air campaign over Baghdad will be maybe 24 to 72 hours. A pause. The ground troops will start moving. It'll take them a few days to get up to Baghdad. Ten days. If there's street to street fighting in Baghdad for control of the capital, maybe two weeks, maybe two and a half weeks. We'll have to get troops into the North to deconflict the oil fields in Kirkuk as the Kurds and the Turks may try and make a move on that.

I'd say inside three weeks we should have everything in place and then it will be a policing the battlefield and ensuring that we bring some stability to the country.

DOBBS: And Saddam Hussein to stand trial for war crimes?

WILSON: Yes. If we catch him, absolutely. He and his top advisers and everybody else that we can find who's been responsible for these, you know, horrible torture chambers and these dens of human rights abuse in the country.

The problem is Saddam has sort of been running the security of his country for 30 years and he may well find a way to escape and he may not want to be taken alive.

DOBBS: Ambassador Joe Wilson, good to have you with us.

WILSON: Lou, good to be with you.

DOBBS: Tonight, a senior intelligence official tells CNN there is a near certainty of small-scale al Qaeda terrorist attacks against targets in the United States. National Security Correspondent David Ensor joins us now with more on the story from Washington -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Lou, U.S. intelligence officials are speaking of what one called the near certainty of small-scale attacks by terrorists during the expected war with Iraq. State Department's top counterterrorism official, while saying that al Qaeda has been much weakened of late, goes even further.

(BEGIN VIDEO CLIP)

JOHN PISTOLE, FBI DEPUTY ASST. DIRECTOR: The concern we have now is with the probable hostilities with Iraq, what Iraqi -- either intelligence officers or other individuals sympathetic to the Hussein regime may try to do in terms of enlisting these other groups either as sympathetic to the Muslim cause or to the cause of the underdog, if you will, against the superpower of the U.S.

(END VIDEO CLIP)

ENSOR: That was the wrong bit of tape. In fact, we should have heard from Cofer Black, who spoke of the certainty in his view that al Qaeda will attempt attacks during the war.

Now, there is also a new FBI message to local law enforcement tonight, which says that the intelligence community expects al Qaeda to attack targets that offer the best combination of mass casualties, symbolism, economic damage, and psychological impact. It says al Qaeda might try to use poisonous gas in an enclosed space. And there is concern, too, that Iraq may try to recruit terrorists to make attacks on its behalf.

(BEGIN VIDEO CLIP)

COFER BLACK, STATE DEPT. COOR. FOR COUNTERTERRORISM: Al Qaeda is not the organization now that it was before. It is under stress organizationly. Its leadership spend more time trying to figure out how to keep from getting caught than they do trying to launch operations. Yet at the same time we have to be mindful that there is the certainty that terrorists will attempt to launch multiple attacks against their enemy, which is us and our allies.

(END VIDEO CLIP)

ENSOR: Apologies for confusion the two sound bites. That was Cofer of the State Department and previously John Pistole of the FBI.

Intelligence officials also say there's some evidence that al Qaeda could be in the last stages of planning for a large-scale attack or attacks. Though these same officials add that following the capture of Khalid Shaikh Mohammed and some other key al Qaeda personnel it's not clear in their view whether the terrorist group is still capable of large-scale action. Still, smaller-scale attacks against U.S. targets at home or abroad, Lou, those are seen as rather likely.

DOBBS: David, thank you very much.

David Ensor, reporting from Washington.

Still ahead here tonight, energy prices today plunged despite a looming war with Iraq, defying the experts.

Peter Viles will have more on that story for us -- Peter.

PETER VILES, CNNfn CORRESPONDENT: Lou, predictions of gloom and doom and $40 oil are taking a beating in the oil market. We'll explain why -- Lou.

DOBBS: Peter, thank you.

Also tonight, former White House Economic Policy Adviser Lawrence Lindsey joins us to tell us why he says this economy will benefit after a war with Iraq. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Six months ago my guest predicted that war with Iraq could cost $100 billion at least. He was then the White House's chief economics adviser. Lawrence Lindsey said the cost would be offset, however, by falling oil prices. He left the White House in December. He's now the chairman and CEO of the Lindsey Group and joins us tonight.

Good to have you here.

LAWRENCE LINDSEY, CHAIRMAN, CEO, LINDSEY GROUP: Great to be here, Lou. Thanks for having me.

DOBBS: As we approach what appears to be a war with Saddam Hussein, we are watching energy prices fall. We have seen the markets rally, not overwhelmingly certainly, that's not a major move. But at least it's a move higher here, surprising many.

Does any of this surprise you?

LINDSEY: Well, no. I think what the world wants is certainty. And what we've had is the uncertainty of who knows what Iraq is going to do, who what the United Nations is going to do. And the president has laid down the marker, and he's established that he is going to make sure that we return to a lawful order here on the earth. And it's very hard to imagine how the planet is going to continue to grow economically when you have people running around with weapons of mass destruction. And putting an end to that I think is going to be very good for the global economy.

DOBBS: And you made headlines, as you are well aware, with your comments that were reported as a 100 to 200 billion-dollar cost of this war. In fact, I happen to be among those who know there isn't a single quotation of you ever having said that. But what do you judge the cost of war to be here now with reflection, as we can put it, with your new found freedom?

LINDSEY: Well, no one knows for sure. Hopefully, those armies will surrender. But the important point, and the point of that article was that the costs of not going to war are far, far higher. Excuse me. I should say the costs of not having a regime change in Iraq are far, far higher. You cannot have sustained economic growth when people like Saddam Hussein have chemical weapons and biological weapons and nuclear weapons. Peace and security are a necessary prerequisite for having economic growth.

DOBBS: And progress.

LINDSEY: And progress.

DOBBS: You also said, however, and this was not over reported, I think is one way to say it was under reported, that the offset in lower oil costs would match the costs of actual conflict.

Do you still believe that?

We're starting to see a significant decline already in oil prices.

LINDSEY: Well, I think that perhaps oil markets were a little bit nervous. They were uncertain as to what's going to happen. No one knows for sure. What we are seeing globally, though, is a lot more rapid economic development, particularly in China and India. A lot higher demand. And so that may offset some of the decline here. No one knows for sure where the oil price will settle. But it's important to keep in mind that today it is lower in real terms than certainly it was 10 years ago or 20 years ago. And I think that this economy is far, far more efficient in its use of oil and therefore less vulnerable to oil shocks than it was 10 years ago or 20 years ago.

DOBBS: And as you suggest, the real terms, inflation adjusted with this country is actually paying very little in the way of cost -- for prices of oil. Let me turn to also the French and the Germans. Much has been made, of course, of their opposition to the Bush policy on Iraq. Less has been made of the fact that these are two countries with very severe domestic economic problems, and leaderships that are in significant political trouble. What -- give us your assessment of where the European Union itself is economically now and how it'll be affected by a resolution of uncertainty, at least in the case of Iraq.

LINDSEY: Well, Europe is at least as dependent upon oil as is the United States and faces a very high oil cost. Unfortunately, that is not Europe's only problem. They have labor market rules that make it difficult to hire people and to fire them. They have much higher regulations than we do. They have much less efficient markets. And that's what's holding them back. I think what you saw recently was an attempt to divert public attention in France and particularly in Germany during the last election from those domestic troubles by attacking the United States. And I thought that was unfortunate. I think it cost the Atlantic alliance quite a bit. And as the earlier piece mentioned, there are many, steps that are going to have to be taken to recement this relationship.

DOBBS: Lawrence Lindsey, good to have you with us.

LINDSEY: My pleasure, Lou. Thanks for having me.

DOBBS: Still ahead here, the looming war with Iraq was supposed to send energy prices soaring. Today oil prices did just the opposite.

Peter Viles will have a report on why prices are falling, not rising, and what it means to our economy. Stay with us.

(COMMERCIAL BREAK)

DOBBS: World oil prices today plunged nearly 10 percent, continuing a sell-off that began last week. Light sweet crude oil futures down $3.26 a barrel. Many traders are betting on a short and decisive war in Iraq. But there's more to this market than what happens in Iraq. Peter Viles reports.

(BEGIN VIDEOTAPE)

VILES (voice-over): On the eve of war, Iraq readies for battle. So why are oil prices dropping like a rock? In large part because there is more to oil prices than Iraq.

Saudi Arabia has big reserves and stands ready to increase production. Venezuela ramping up its output. The United States and Japan both sitting on large emergency reserves.

Yes, the million and a half barrels a day that Iraq produces will disappear for a while, but this is the time of year when demand drops sharply anyway.

PETER BEUTEL, OIL ANALYST, CAMERON HANOVER: The good news is this, is that the second quarter often sees a drop in demand. We're expecting the drop in demand for this coming second quarter to be about 2.4 or 2.5 million barrels a day. And with the Saudi and Venezuelan increases we should be all right.

VILES: A twin worry that high gas prices will slam U.S. consumers also seems overblown. Yes, there is $4 a gallon gasoline if you go looking for it in California, but adjusted for inflation, gas and oil are not near record highs, which means energy prices have lost some of their economic clout.

DIANE SWONK, CHIEF ECONOMIST, BANK ONE: Let's put it in the context of relative to income, say, even a decade or two decades ago. Even during the Gulf War the relative price of oil adjusted for inflation, say, was much higher than it is today.

If you go back two decades ago in the early 1980s when you had a tripling of oil prices between 1975 and 1985, oil was a much larger share of what most consumers had to spend.

Now, if you still think gas is outrageously expensive at $1.72, which is the national average, check out these prices: $4.22 in France, $4.32 a gallon in Italy, $4.47 in Germany, $4.58 in the U.K.

(END VIDEOTAPE)

VILES: Now, in the event that oil prices do spike up, the administration holds a very large hammer with which to drive them down, the Strategic Reserve. It holds enough oil to replace lost Iraqi oil in this country for roughly two years -- Lou.

DOBBS: Savants and gurus wrong, everybody can relax a bit, even though the uncomfortable to pay those higher prices at the pump.

VILES: In fairness to some of those savants and gurus, they were pricing in potential disruptions in Kuwait, in Saudi Arabia. Those appear very unlikely at the moment.

DOBBS: Always protecting the savants and gurus, Peter. Thank you very much, Peter Viles.

On Wall Street today, dominated by savants and gurus, stocks built on yesterday's powerful rally and Christine Romans has the market for us now -- Christine.

CHRISTINE ROMANS, CNNfn CORRESPONDENT: Lou, it's the longest Dow winning streak in almost two years. The Dow higher five days in a row at the best level in eight weeks. Volume topping a billion and a half shares for a fifth day, and the Dow is now up 9 percent since last Wednesday.

Tobacco stocks, though, held back this rally. Altria down 6 percent. RJR down 8 percent. The Justice Department wants cigarette makers to forfeit almost $290 billion in profit, alleging years of fraudulent marketing -- Lou.

DOBBS: And the Fed didn't do anything about interest rates.

ROMAN: It didn't. Near a 40-year low, 1.25 percent. It wouldn't issue a so-called bias statement, indicating economic strength or weakness. And that confused some people on the Street. Instead, it promised heightened surveillance of the situation and bond prices tumbled today -- Lou.

DOBBS: Does that mean they're going to pay attention?

ROMANS: I guess so.

DOBBS: Christine, thanks. Christine Romans.

"CROSSFIRE" begins in a few minutes. Let's go to James Carville and Tucker Carlson in Washington. We always pay attention to these gentlemen -- Tucker.

TUCKER CARLSON, "CROSSFIRE", CO-HOST: Well, thank you, Lou. About 24 hours left until Saddam's time is up. It's a fast-moving story. There are many developments. We'll go to our correspondents around the world for updates at the top of our show.

Then we'll talk to a former secretary of state, Lawrence Eagleburger, about the way the world is likely to look once Saddam is done.

JAMES CARVILLE, "CROSSFIRE", CO-HOST: Never to be outdone, "CROSSFIRE" is doing something no one else is able to do. We will talk to Winston Churchill tonight. That's right, the grandson of Winston Churchill, whose name is also Winston Churchill, who supports President Bush's position on Iraq and says if his grandfather were alive that he would do the same.

So don't miss "CROSSFIRE." Anytime you can see Winston Churchill, it's worth looking at.

DOBBS: And James Carville and Tucker Carlson. Thank you very much, James. Look forward to it.

Coming up here, we will take a look at what you had to say about Senator Tom Daschle's criticism of President Bush yesterday. Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: Tomorrow on LOU DOBBS MONEYLINE, securing America's borders during wartime. We investigate what's been done at our borders to protect against terrorist attacks. Live reports from the Mexican and Canadian borders. Tomorrow on LOU DOBBS MONEYLINE.

DOBBS: Now a look at your thoughts. We received tons of e-mails on my commentary last night in which I mentioned Senator Tom Daschle's comment that President Bush has failed miserably at diplomacy.

Linda Davis from Iowa wrote in to say, "Thank you for your commentary on Senator Daschle's remarks. For two hours, I was so angry and need to speak out about his comments and you spoke out for me. If Senator Daschle supports our troops, he needs to support their commander in chief and save the political rhetoric for later."

Susan from Chicago said, "Lou, you must be kidding about the president's consistency with Iraq. First, it was getting rid of weapons of mass destruction, then it was regime change, then it was links to al Qaeda and 9/11. the president's march toward war is the only consistency."

Donna Wicker of Maryland wrote, "To quote Ralph Waldo Emerson: `Foolish consistency is the hobgoblin of little minds, adored by little statesmen, philosophies and divines.' Too bad we can't ad `media commentators' to that quote."

Dave Westendorf said, "Lou, you editorial on Senator Daschle was your best yet. You didn't pull any punches placing the blame where it belongs. Senator Daschle will likely pay for his lack of conviction when he runs for reelection."

And Maria Martin of Georgia said, "Thank you for your clear and wise words. At this serious time, we all should stand behind our president and out brave troops."

That is MONEYLINE for tonight. And we thank you for joining us. Join us tomorrow. Kenneth Pollack senior fellow at the Brookings Institution, General David Grange will be here to discuss a looming war with Iraq. Thanks for being with us. For all of here, good night from New York.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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