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CNN NEWSNIGHT AARON BROWN

Initials of Downed Pilot From First Gulf War Found Scratched on Wall in Iraqi Prison

Aired April 23, 2003 - 22:00   ET

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

AARON BROWN, HOST: Good evening again, everyone. A headline caught our eye today. A venerable actress says she was given a sentence of 74 lashes for giving a young actor a peck on the cheek at a public event last fall. Lucky for her, it's a suspended sentence.
This is a real headline from Iran today. The great fear for the United States is that it could be a headline from Iraq five years from now.

Believing that the Islamic fervor in southern Iraq these days is not exactly home grown, the administration issued a warning today. More on that in a moment.

But we begin the whip at the Pentagon. And our senior Pentagon correspondent, Jamie McIntyre. Jamie, a headline.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Aaron, it's not much to go on. What appears to be the initials "MSS" scratched in the wall of a Baghdad prison. But it is the piece of tantalizing evidence that suggests that Captain Michael Scott Speicher may have been alive after the first Gulf War and could possibly still be alive today -- Aaron.

BROWN: Jamie, thank you.

Another day of celebration and protest at the Shiite pilgrimage in Iraq. Nic Robertson is in Karbala for us. Nic, a headline from you.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Aaron, the celebration passed off peacefully but not without calls from people here for the United States to pull its forces out of Iraq and calls from the leadership, the religious leadership here, for a much bigger political stake in the future of Iraq. A future that could be an Islamic state -- Aaron.

BROWN: Nic, thank you.

A deal just in time in a fight involving the leadership of the Palestinians. Kelly Wallace covering that from Ramallah tonight. Kelly, a headline.

KELLY WALLACE, CNN CORRESONDENT: Aaron, for decades, Yasser Arafat was the unchallenged leader of the Palestinian people. He fought hard to hold onto as much power as possible. But in the end, international pressure forced him to back down and agree to almost all of what prime minister designate Abu Mazen wanted.

BROWN: Kelly, thank you.

And back home now, in an ugly controversy, for executives at American Airlines. CNN Financial correspondent Bill Tucker on that. Bill, a headline from you.

BILL TUCKER, CNNfn CORRESPONDENT: Aaron, it could be a case of good night and no, don't sleep tight for the chairman of American Airlines. We'll have the story for you.

BROWN: Thank you very much. We'll have all of that coming up and much more on tonight's edition of NEWSNIGHT.

Bold plan from Democratic presidential hopeful Richard Gephardt to extend health insurance to every working American. Yes, 2004 is sooner than you think. But the really bold part may be the way he wants to pay for it. Jonathan Karl will report a little bit later.

And very troubling news about some of the looters who made off with Iraqi treasures. Some of the people there to tell the story have become the story. And they're in a mess of trouble, as well.

All of that and much more coming up in the two hours ahead. We begin with the day in Iraq. One that brought a clear warning from the United States to Iran. More dramatic discoveries of hidden American cash. And yet the biggest catch yet in the hunt for the most wanted Iraqis.

(BEGIN VIDEOTAPE)

BROWN (voice-over): As the enormous Shiite demonstrations came to a close in the Iraqi city of Karbala, the Bush administration put neighboring Iran on notice. Do not, it said, meddle in the newly liberated Iraq.

ARI FLEISCHER, WHITE HOUSE SPOKESMAN: We have made clear to Iran that we would oppose any outside organizations' interference in Iraq. Interfering with the road to democracy.

BROWN: Because Iran has a dominant Shiite leadership, the administration officials believe Iran wants to play a significant role in determining who finally emerges in the power centers of Baghdad.

Something very much on the mind of Ahmed Chalabi, a Shiah who is what returned to Iraq after decades of exile.

AHMED CHALABI, IRAQI NATIONAL CONGRESS: No one should lay claim to authority unilaterally. And it will quickly backfire on people because people simply are not prepared to follow and obey civil authority or police authority which is not legally constituted.

BROWN: Several more cards in that Pentagon 55 card deck fell today. The Queen of Diamonds, head of the air defense command. The seven of Hearts, the head of military intelligence. The minister of trade, the six of Hearts. And one not in the deck, the head of the American desk of Iraqi intelligence.

In the capital, even more U.S. currency was recovered. These soldiers found more than $100 million stashed behind a wall in an animal kennel once owned by a top Iraqi official. In all, so far, nearly $750,000 have been found.

Four American soldiers held, however, on charges of trying to steal some of that money.

Iraqi oil began to flow for the first time since the war today. These are refineries in the south near Basra. And all of the oil, for now, is intended for domestic consumption.

It is also safe enough in the south for the first visit of a senior coalition political leader. The British defense secretary, Jeffrey Huhn, met with British troops in the city of Umm Qasr.

The American in charge of reconstruction, retired General Jay Garner, continued his tour of the north, now in the city of Erbil.

In Baghdad, as the Army was patrolling the city, the overall American commander told reporters by videophone that he was not discouraged at the inability to find the weapons of mass destruction.

LT. GEN. DAVID McKIERNAN, COALITION LAND FORCES COMMANDER: Personally, I knew this would be a long process, that we would not find the material for weapons of mass destruction right away.

BROWN: Long convoys of badly needed supplies began moving on the roads into the capital city. And for the first time since the war, there was power to run the printing presses. Iraqi newspapers are back on the streets.

(END VIDEOTAPE)

BROWN: That's the big picture of the day. We'll spend some time tonight now looking at the smaller pieces of that puzzle.

Ever since Central Command made public its deck of cards with those 55 names of former leaders in the regime of Saddam Hussein, every other day or so it seems at least one of those cards has fallen away, the man either captured or surrendering.

Today, the biggest day so far in that department. Three of the men in the deck now under American control. And a fourth who wasn't, caught as well.

Even more intriguing, some tantalizing new information on the possible fate of a Navy pilot shot down during the first Gulf War. So there's a lot on the plate tonight of our senior Pentagon correspondent, Jamie McIntyre. Jamie, good evening.

MCINTYRE: Well, Aaron, good evening. Along with that search for weapons of mass destruction, and senior regime leaders, the U.S. has also had another mission: trying to answer the question of what happened to Navy Captain Michael Scott Speicher, shot down in his F-18 on the first night of the first Gulf War back in January of 1991.

And today, we're told they made a tantalizing discovery. In a prison cell in Baghdad, they found the initials "MSS" that appeared to have been scratched on a cell wall.

Now, that's inconclusive but nevertheless, what made it interesting to the U.S. search teams is it appeared to corroborate information given by an informant who claimed that Michael Scott Speicher might have been held in that cell in the early 1990s.

Now that doesn't show that he's alive today. But it does raise interesting questions about what happened to him and seems to confirm, if it's true, the theory that he was captured by the Iraqis.

The U.S. is continuing to press for answers, and they're hoping that perhaps they'll get those answers from some of the senior Iraqi officials they continue to round up.

Today, as you said, a couple of big cards from the deck, including the Queen of Diamonds. This is a man who was in charge of the air defense for Baghdad. He lost his job early on when it was clear that Baghdad didn't have much of an air defense.

Next to him, the seven of hearts, the defense -- the military intelligence director. This is a man who was in the regular army, not the Republican Guard. And although he has intelligence in his title, we're told from intelligence sources that his main job was overseeing the loyalty of Iraqi troops.

And then it was the minister of trade who also fell into U.S. custody today.

But again, the most intriguing person who came into U.S. custody today, not from a surrender but from a commando raid, was a man identified as the chief of Iraqi intelligence services' American desk.

And we're told from the U.S. Central Command that he would have information about Iraqi intelligence operations inside the United States, including the names of Iraqis who may have spied on the United States for Iraq.

All of these people, they're hoping to be able to get some valuable information from if they talk -- Aaron.

BROWN: Just a quick thing on a slight change of subject. We saw a story today out of Australia about prisoners held in Guantanamo as part of the war on terror in Afghanistan who are juveniles. Know anything?

MCINTYRE: Well, apparently they have confirmed that some of the prisoners there are underage, so to speak. And at this point, it's unclear what, if anything, the U.S. is going to do about it.

At this point, the word we had from Pentagon officials was that it was unfortunate that apparently some of the people who they felt were unlawful combatants on the battlefield in Afghanistan were, upon further checking, under the age of majority. But it's unclear at this point whether they'll be entitled to any different treatment because of that.

BROWN: Jamie, thank you. Our senior Pentagon correspondent, Jamie McIntyre, tonight.

This is a story about Iranian exports to Iraq which has nothing to do with business. The United States is deeply concerned that Iran is exporting its Islamic ideology and the manpower pushing that ideology to Iraq. U.S. efforts to block those exports have clearly intensified.

Here's CNN's David Ensor.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): With Iraqi Shiah passions high for their holy days, U.S. officials say there are signs Iranian intelligence agents are moving into Iraq in increasing numbers, causing concern in Washington.

FLEISCHER: We made clear to Iran that we would oppose any outside organizations' interference in Iraq, interfering with their road to democracy. Infiltration of agents to destabilize the Shiah population clearly fall into that category.

ENSOR: That message went through diplomatic channels in recent days, officials say. There was a similar message just before the war from Zalmik Halassad (ph), President Bush's special envoy, at a meeting with Iranian officials in Geneva.

ROB SOBHANI, GEORGETOWN UNIVERSITY: There's no doubt that Iranian intelligence agents and revolutionary guards are in Iraq today, because to the extent that they can help set up an Islamic republic of Iraq, they would have accomplished their mission.

In addition to that, the goal of the Iranian government is for the United States not to succeed in Iraq.

ENSOR: But other analysts in and out of government are less worried. They say the influence of Iran in Iraq is, in fact, somewhat limited. The Iraqi Shiah are Arab, not Persian. And the two countries fought a bloody war.

These analysts argue, Iran does not want a confrontation with the U.S. over Iraq. And would in fact like to warm up its frosty relationship with Washington.

Former Iranian leader Ali Rashanjani (ph) recently suggested putting to a Democratic vote whether to improve relations with the U.S. Polls suggest the idea would win handily in a nation where clerical rule and reflexive anti-Americanism are no longer popular.

(on camera): U.S. officials are also emphasizing how much better U.S.-Iranian relations could become if there's cooperation, not meddling, regarding Iraq.

David Ensor, CNN, Washington.

(END VIDEOTAPE)

BROWN: There are some who believe, as David just reported, that the fear of Iranian influence in Iraq may be overblown.

But others are looking at the pictures coming out of the pilgrimage of Iraqi Shiites and they see some signs that say death to America, and they think Iran circa 1979.

The truth, as is often the case, is likely somewhere in between. Once again, CNN's Nic Robertson is in Karbala.

(BEGIN VIDEOTAPE)

ROBERTSON (voice-over): Even before first light, the Shiah devout already showing their faith in large numbers.

With dawn, the most pious executing religious rituals of guilt and atonement, cutting and slapping themselves with swords, a freedom of expression, not allowed under Saddam Hussein.

But the festival to mark the killing of a Seventh Century religious leader, not just giving Iraq's largest community its first opportunity in decades to show the depth of faith, but also providing it a political platform.

This speaker chanting anti-Saddam and anti-American chants. Themes picked up with further by the excited crowds.

UNIDENTIFIED MALE: All of the people are angry. They agree. We don't need anything.

ROBERTSON: This being the United States, of whom most here are deeply suspicious.

UNIDENTIFIED MALE: We thank them. We thank them for what they do. But we have something in our mind. Everybody has.

ROBERTSON: He tells me, we don't want to offend, but they should leave now. A message being pushed by these religious leaders, returning from exile in Iran, who point to the success of the celebrations as proof they can organize themselves.

ABDUL AZIZ AL HAKIM, SUPREME COUNCIL, ISLAMIC REVOLUTION IN IRAQ (through translator): We do not believe there is a need for an American military governor. The power could just be transferred to the Iraqis.

ROBERTSON: A few feet from the throngs, Saif (ph), who describes himself as a worker, reads his Koran in quiet contemplation.

"Our religious leaders have to fill the political vacuum," he says. "They are the most knowledgeable. They have to be our political leaders."

On the steps of this shrine, the call for religious leadership finding support.

UNIDENTIFIED FEMALE: All the Muslims in Karbala.

ROBERTSON: Amidst the fervor of the day, hard to tell how many would actually vote along religious lines.

(END VIDEOTAPE)

ROBERTSON: But as the celebrations wind down and religious leaders plot their political path forwards, many of the faithful leaving here feel that they've begun recovering their long-repressed voice, a voice that is only now beginning to reverberate around the rest of the world -- Aaron.

BROWN: Nic, have the clerics, the Shiite clerics, filled both the political and social void, if you will, of a lack of much government? Have they been controlling the situation there?

ROBERTSON: That is what they appear to have done. They assumed this -- they eschewed and helped their communities very quickly after Saddam Hussein's regime fell.

Once looting started, once there were outbreaks of gunfire on the streets, religious leaders in only a matter of days stepped in to provide security in their communities, to supply some welfare support in terms of humanitarian aid, in terms of medical aid.

And it is to those religious leaders that many people have looked to now for their political guidance. And they say they're very happy for it. Even educated Iraqis in the Shiah community, teachers, others, say that their religious leaders will provide them with the political guidance, not only the spiritual guidance, Aaron.

BROWN: Thank you, Nic Robertson in Karbala, where it's morning there.

There's a very great deal at stake in Israel today. Namely whether the man who had led the Palestinians for decades, Yasser Arafat, would actually cede considerable power and by doing so, according to the Israelis, make the prospects for peace somewhat brighter.

In the end, he did, kicking and screaming all the while. Here's CNN's Kelly Wallace.

(BEGIN VIDEOTAPE)

WALLACE (voice-over): Seven hours before the midnight deadline, no sign of a break-through but a sign of the intense international pressure on Yasser Arafat, with Egyptian presidential envoy Omar Suliman shuttling between Arafat's presidential compound and prime minister designate Abu Mazen's office about a mile away.

Then a sign the impasse had been broken. Abu Mazen, who had not met face to face with Arafat since storming out of a meeting Saturday night, arrived at Arafat's compound and they all soon gathered around the cabinet table, smiling.

The power struggle had come to an end, just before Abu Mazen was required by Palestinian law to create a new cabinet.

NABIL SHA'ATH, PALESTINIAN MINISTER OF PLANNING AND INTERNATIONAL COOPERATION: This is really a situation in which you have two partners who have been working together for a very long time, one of them the president, and the other a member of his leading organization. Now they have to share power.

WALLACE: Agreeing to share power was a large part of the problem, Palestinian sources say, with Arafat unwilling to give up the power he has wielded over Palestinian affairs for decades.

On the surface, the main dispute centered around Mohammad Dachlan. Abu Mazen wanted him to head security in his new cabinet, believing he will stand up to radical Palestinian groups like Hamas and Islamic Jihad.

But Arafat balked, pushing for one of his top loyalists instead. In the end, Arafat backed down because Abu Mazen becomes not only prime minister, but interior minister, with Dachlen in charge of security affairs.

The stakes were high, with the U.S. and Britain making approval of Abu Mazen's cabinet the condition for the publication of the so- called road map for Middle East peace.

Now, says the chief Palestinian negotiator, the onus is on the United States to act.

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: We want the production of the road map with time lines and implementation. And monitors on the ground immediately in order to engage in a meaningful peace process.

WALLACE: Israelis who want to see Arafat sidelined reacted cautiously.

EHUD OLMERT, ISRAELI MINISTER OF INDUSTRY AND TRADE: The whole process, this jubilant process of confrontations and disputes between Abu Mazen and Yasser Arafat, shows that maybe the struggle for leadership hasn't been finished yet amongst the Palestinians.

(END VIDEOTAPE)

WALLACE: Abu Mazen decided that in order to win this majority in the Palestinian parliament, he needed to strike a deal with Yasser Arafat. Now that the deal has been made, he has a good chance of getting the cabinet approved. That approval could come as early as the beginning of next week -- Aaron.

BROWN: Kelly, thank you. Kelly Wallace, a little satellite trouble there. But Kelly saying that legislative approval could come as early as next week. And then the pressure is on the Bush administration to release the road map and to engage.

Later on NEWSNIGHT, we'll have more on this deal involving the Palestinian leadership with Palestinian legislator and long-time activist Panan Ashwari (ph).

Ahead on NEWSNIGHT next, gloves come off in Washington, Democrats attacking the Bush tax plan. And presidential candidate Dick Gephardt says he'd repeal the tax cut to pay for a universal health care plan.

That and more as NEWSNIGHT continues on CNN.

(COMMERCIAL BREAK)

BROWN: Former minority leader of the House of Representatives Richard Gephardt is one of nine declared Democratic candidates hoping for the party's presidential nomination next year.

And today he tried to do what all presidential hopefuls try to do: break out of the pack. He did it with an enormous, incredibly ambitious plan to provide health insurance to every working American.

Here's CNN's Jonathan Karl.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): In announcing his health plan, Dick Gephardt is breaking ground on another issue. He's the first Democratic candidate to call for the total repeal of the Bush tax cuts, including those already enacted.

REP. RICHARD GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: Legislation repealing the Bush tax cuts and using the money to pay for universal access to health care will be the first bill that I'll send to Congress as president of the United States.

KARL: He needs to reverse all the tax cuts because his plan is expensive, costing $214 billion in the first year alone. Making it instantly the fourth most expensive federal program, behind only social security, defense, and Medicare.

GEPHARDT: I believe there's no work closer to God than caring for those at God's door. To me, your life's work is something worth fighting for.

KARL: Gephardt would funnel money from the federal government to employers who cover 60 percent of their health insurance premium costs. Companies that now don't provide any health coverage would get an even higher subsidy. States would also get a big subsidy.

All told, the ten-year cost would likely be even higher than the total cost of the Bush tax cuts, both past and proposed. (on camera): You're talking about repealing the Bush tax cut all the way back to 2001. What you're really talking about is a tax increase. Aren't they going to eat you alive, Republicans, over this?

GEPHARDT: I don't see it that way. I see this as an alternative, and better way, to cut taxes for the American people. To get health care for everybody. And get real stimulus in our economy. Get this economy moving again.

KARL: But those income tax rates which have already been cut are going to go right back up. So the bottom line is, individual income taxes are going to be higher.

GEPHARDT: But this is an alternative tax cut that puts more money in ordinary people's pockets than anything the Bush tax cut did. It's a distinct, clear, real alternative to the George Bush failed tax cut policy that we've had over these last two years.

There hasn't been one job created by these tax cuts. There hasn't been anything good happening in this economy. Nobody's been covered by health care. No child has been educated by these tax cuts. They failed. They haven't worked. They're going to the wrong people for the wrong things.

KARL (voice-over): In a recent Gallup poll, Americans ranked health care as their greatest worry, ahead of even terrorism and the economy. Gephardt is hoping that means people will be willing to pay higher income taxes to get better access to health care.

(on camera): In a sign of how Republicans and their allies will treat the Gephardt plan, the National Federation of Independent Businesses ridiculed it as a "take two tax hikes and call me in the morning" approach that mainstream America can't afford.

Jonathan Karl, CNN, New York.

(END VIDEOTAPE)

BROWN: And while we're on the subject of domestic politics, some rather strong criticism of the president today from a somewhat unlikely source.

Louisiana Senator John Breaux is a Democrat but a Democrat who's been a favorite of the White House. He's also been among a pivotal group of senators with whom the administration is trying to curry favor for its big tax cut proposal.

It's not supposed to a battlefield, he says. But now the administration is trying to make it one. Senator Breaux joins us tonight from Lafayette, Louisiana.

Senator, what are they doing to make it a battlefield? What is unfair about putting pressure on senators like yourself?

SEN. JOHN BREAUX (D), LOUISIANA: Well, Aaron, I think what I was trying to convey was the idea we've just completed a war in Iraq. We don't now need to engage in a war with Congress if we expect to get anything done.

We have a very divided Senate, 51-49. The only way anything is going to get through in the United States Senate is by a bipartisan coalition being formed, instead of trying to pick off one senator here and another senator there.

I support a tax cut but it shouldn't be as large as the president has advocated. And we can do something that's more modest and everybody can get credit for it. That's what we should be working towards.

BROWN: Well, it doesn't sound like even the president believes in the $700 billion tax cut. He'd like something in excess of $500 billion. You're there at about $350 billion. Where does this end up, do you think?

BREAUX: Aaron, I think that's a number that can pass the Senate. I think it would be nearly impossible to get a higher number if it's not paid for.

We have to bear in mind that we are borrowing the money in order to bring about this tax cut. And we should be more conservative in about how we borrow for the future to give a tax cut which I question whether it's really stimulative. There are some things we can do for $350 million with individual rates, the marriage penalty, with the child credit, and save for later on the debate about whether we should eliminate the double taxation on dividends. I support that, but I don't think it's stimulative in the short-term. And I think we ought to find a way to pay for it.

BROWN: Why does there seem to be so little concern, honestly, about a federal deficit that is large now and getting larger?

BREAUX: Well, there is a lot of the concern. Those of us who are saying the tax cuts should be more measured point out the fact that we have a $400 billion projected deficit this year, which still a lot of costs that we know we're going to have to face. We talked about health insurance.

We're going to have to find a way to pay for prescription drugs. We're still paying for the war in Iraq. I happen to think that the Iraqi citizens in their country with their oil revenues ought to start picking up a larger portion of the tab to rebuild their country and not have the American taxpayer having to carry the entire load.

So we have a lot of obligations out there. We just have to be more concerned about how large that deficit is getting to be. I think the American people understand that.

BROWN: Are you -- Well, you're supporting one so I assume you're convinced that right now, given the economics of the moment, that a tax cut of any size is appropriate.

BREAUX: Aaron, I think we can afford a more measured tax cut. And I think the $350 billion, that's a lot, over the next ten years, is a reasonable figure. We can make it stimulative. We can help people to have money to put in their pockets so they can help drive the engine of this economy and do something in the short term. The $400 billion price tag for the taxation on dividends being eliminated is something that may be good long-term tax policy, but I frankly question, and people a lot smarter than me question, whether it's going to have any validity in the short term as far as a stimulus package is concerned.

That's the biggest ticket in the president's package. It's over half the cost of the whole package. I think we can postpone that and get some real tax relief for people who really need the help.

BROWN: Do you resent the president or the White House, the political operation, coming into your state, trying to create pressure on you to support his tax plan?

BREAUX: It doesn't bother me at all.

I think that it's all part of the political undertaking. But, I'll tell you, when you attack people in your own party, it's going to make them not wanting to be part of the team, but be more difficult to get on board. I think that you can win a lot more people over by sitting down and talking with them. We should not have a war with the Congress.

Like I said, we just completed the war. We now ought to be able to find ways to negotiate and come up with a reasonable figure. I want to be part of that. I want to be helpful. And I think that we can come together, bipartisan, Democrats and Republicans, and get something that's reasonable. And there will be enough credit for everybody if we get something done. There's not going to be any credit for anyone if we fail.

BROWN: Senator, it's always good to talk to you. Thank you very much -- Senator Breaux in Louisiana tonight.

Coming up on the program, we'll check the latest news headlines and then we'll talk about the power of the Shiites in Iraq and whether the United States can control what it has unleashed, but a break first.

This is NEWSNIGHT on CNN.

(COMMERCIAL BREAK)

BROWN: More now on the new Iraq and whether it could emerge as a new Islamic Iraq.

Our next guest thinks the United States underestimated the strength of some Shiite forces and needs to act quickly to stop Islamic fundamentalists from grabbing more power.

Fawaz Gerges is a professor of Middle East and international studies is at Sarah Lawrence College.

Good to have you with us. FAWAZ GERGES, SARAH LAWRENCE COLLEGE: Thank you.

BROWN: I don't want to spend a lot of time on this, but do you think the administration was listening to the wrong people, listening to people who had a vested interest in regime change and, therefore, wasn't getting an accurate view on the ground?

GERGES: Well, naturally, I think the administration underestimated not only the strengths of religious sentiments in Iraq, but also the power and strengths of what I call the conservative religious forces.

The administration was determined to topple the secular government of Saddam Hussein and hoped that, somehow, by toppling the government, the administration would be able to really somehow create a new order. It did not really appreciate that this social upheaval would unleash different social forces on the scene. And that is what seems to have happened.

BROWN: Right. Clearly, one of the forces that's been unleashed -- and it's all very early and a lot of things need to settle -- it's not very settled there at this point -- is that Shia clerics are assuming -- have filled a void. They have filled political voids, social voids. We were talking about this earlier. That is not unlike what happened in Iran.

GERGES: One point must be made very clear. The Shia community is highly diverse and complex. There exists several political currents within the Shia community.

And although I would argue that the conservative religious forces are emboldened and mobilized, I think many Shias tend to be nationalistic and also moderate as well. Let's remember that the Shia community is divided along class, ideology, interests, not just religion. And many Shias throughout Iraqi history have played powerful roles in Iraqi history.

But yet, at this stage, as you said, the invasion itself, the American invasion, and years of social and political and economic dislocation have empowered these religious conservative forces, who tend to be well organized and, of course, have support from Iran. And I think, at this stage, these conservative, these religious conservative forces, would like to establish a model, an Islamic state based on that of the late Ayatollah Khomeini, a state based on (SPEAKING ARABIC) That is a government by the learned clergy.

BROWN: Let's assume -- and I think we can -- that that is something the United States does not want. Are there things that the American government can do to turn the attention to different -- in a different direction?

GERGES: Absolutely. I think the Iraqis can easily, Aaron, create what I call counterbalances to those conservative religious forces.

I think, first and foremost, the United States, along with the international community, must assist Iraqis in rebuilding their life and also create what I call the counterbalances by establishing what I call intercommunal, interethnic, inter-religious alliances and coalitions to serve as counterweight to these conservative forces.

And thirdly, I would argue, Aaron, the United States must lower its military profile by bringing the international community, Arab states, to police the order and help Iraqis rebuild their country.

BROWN: To this point, the American government doesn't seem much interested in that.

GERGES: Not at all. And this is highly, highly unfortunate, because what you want to do is, you want to allay the fears of Iraqis. You do not want to provide more ammunition to the conservative forces. And you want to convince Iraqis and the world that the United States is interested in Iraqis themselves running their country.

BROWN: About 45 seconds left.

The longer we go before elections, the more or less likely of an Islamic fundamentalist state or a conservative Islamic state, or however you want to frame it?

GERGES: Well, the truth is, if elections were to take place in Iraq tomorrow, Islamists would win easily. And this is why it's essential now to create what I call the interethnic, intercoalition alliances.

Any internal Iraqi government must be based on diversity on this broad coalition in order to really assist Iraqis in creating representative institutions.

BROWN: Professor, I said to you when you sat down, I think this may ultimately be the most challenging and interesting aspect of this. Thanks for coming in.

GERGES: My pleasure.

BROWN: We'll talk to you again. Thank you very much.

Ahead on the program: the trouble at American Airlines, trouble made worse when management got lucrative deals, while its workers were being told they must take pay cuts.

We'll take a break first. Our coverage continues in a moment.

(COMMERCIAL BREAK)

BROWN: Next on NEWSNIGHT: American Airlines, where financial troubles are perhaps being compounded by questionable behavior by management.

This is NEWSNIGHT.

(COMMERCIAL BREAK) BROWN: Well, now, it's been a while, hasn't it, since we had a tale of corporate outrage like this one involving American Airlines. The people who actually get you from here to there, the pilots, the flight attendants, the mechanics, are furious because they agreed last week to deep pay cuts to help keep the airline flying, only to find out hours later that the executive had given themselves major perks. Several of the unions now want out of the agreement. And American's CEO is under siege.

Here's CNN's Bill Tucker.

(BEGIN VIDEOTAPE)

TUCKER (voice-over): Don Carty seems to be in about as much trouble as American Airlines, the airline he runs. The company's board of directors meets tomorrow in Dallas amid reports that Carty's head is on the block. The company calls the reports speculation. The unions call the reports a good idea.

STEVE BLANKENSHIP, ALLIED PILOTS ASSOCIATION: We've had phone calls, e-mails, letters, conversations with other union members. That would be a move in the right direction.

TUCKER: Such a sacrifice might help the company avoid bankruptcy. And analysts agree that the company's board wants to avoid Chapter 11, where they would lose control of their future. But they also agree:

THOM NULTY, FORMER AMR EXECUTIVE: It's a mess right now. The union has lost confidence in management. Management is trying to figure out exactly how to deal with this problem.

TUCKER: This problem was created last week when American Airlines tried to sneak through a bonus plan for executives, as well as a retirement plan, protected from bankruptcy. The plans were revealed in a Securities and Exchange filing made only hours after union members agreed to give up $1.8 billion in wage and benefit concessions.

Union outrage quickly followed. And shamed executives gave up their bonuses, kept their retirement plan, and Don Carty started apologizing to the unions.

RAY NEIDL, BLAYLOCK & PARTNERS: This is a very strange situation. Don Carty and his management team know the industry. It's like building a house and, at the last minute, making a mistake and having the whole house crash down on you.

(END VIDEOTAPE)

TUCKER: And it probably about feels that way at American right now, where transport workers and flight attendants will revoke on their concessionary contracts -- Aaron.

BROWN: All of this, it seems to me, in a climate -- American has had for years very testy labor relations. TUCKER: Yes. Bob Crandall came before Don Carty. Don Carty came in and he was the guy who was going to be the savior. And for a number of years, he was. And then last week, he managed to undo it all in one fell swoop.

BROWN: Thank you for coming in tonight. Good to have you on the program.

One footnote to just how bad American was doing when American executives were giving themselves big perks: The airline said today it lost more than $1 billion last quarter, or about $8,000 a minute. CEO Don Carty called the results truly dreadful.

More on the story, the fate of American and the airline industry generally with airline analyst Richard Aboulafia. He joins from us Washington.

Good to have you with us.

Well, first of all, will American now -- sort of given the facts of where we are, will American avoid bankruptcy?

RICHARD ABOULAFIA, AIRLINE ANALYST: Well, American can avoid bankruptcy, but only if the unions agree to exactly what they agreed to the previous week, before these revelations about executive perks. It's extremely close run.

One of the great paradoxes of airline bankruptcies is that you have to have some money to actually do it successfully. You have to go in with a reasonably strong cash position. And if American is going to go bankrupt successfully, come out at the other end, now would be a good time to it, because they're still reasonably OK for cash.

BROWN: Is Carty done?

ABOULAFIA: Well, that's obviously the middle course, between the unions rejecting all the agreements outright in a revote, of course, and the unions acquiescing.

It's entirely possible that Carty will be put forth as a sacrificial goat to assuage a great deal of union member anger over the executive pay revelations. It's difficult to say. But that might just be the baseline scenario on which to speculate.

BROWN: One more question on this line, then I want to broaden this out a bit. Is it reasonable that the board of directors should be assuming some responsibility for how all of this is handled, or been handled, or mishandled? Or was this just Mr. Carty's mess-up?

ABOULAFIA: Well, I think it's ultimately the board's responsibility to be on top of these things. It's difficult to say at this point who ultimately deserves the blame, though. Whatever it is, it's a very ugly situation.

And, of course, unions are fundamentally democracies. And the rank-and-file of these democracies are extremely mad.

BROWN: Yes, I would say they're extremely mad.

To someone who gets on airplanes and sits down in a seat and tries to get from New York to Chicago or Miami or wherever, does it matter whether American goes into bankruptcy or not?

ABOULAFIA: Well, not a great deal, except that, of course, as more and more of our major carriers go into bankruptcy or get threatened by Chapter 7 dissolution, as United could conceivably be, you could see a fundamental transformation of the hub-and-spoke, big- airline system that has dominated this country for decades.

BROWN: What does that mean, that we'll all fly Southwest?

ABOULAFIA: Well, there's no doubt that point-to-point discount carriers such as Southwest and JetBlue have increased market share and taken passengers away from the Americans, the Uniteds, and the Deltas of the world.

But how much of that system or how much of the capacity they usurp is really dependent upon progress with cost cuts at American. And, obviously, if they can't make progress with these cost cuts, then Southwest and JetBlue will be able to expand to a greater extent.

BROWN: Just in a half-a-minute or so, you have these big full- service airlines, for lack of a better word, in trouble. What turns this around? Does a better economy turn it around? Or are they just dinosaurs of another time?

ABOULAFIA: Well, this is really a perfect storm from the standpoint of major airlines. You've had the simultaneous war on terror fear with an economic down cycle, along with the long-term pressures on yields from all the discount carriers. And on top of that, you've got SARS in Asia getting rid of a big chunk of the high- profit market. It's very difficult to see any short-term relief.

But, ultimately, if the business cycle turns up again, if fears of terror recede, and, of course, assuming SARS goes away and everything like that, there's no reason that the majors shouldn't be able to make a reasonably robust recovery.

BROWN: Eventually.

ABOULAFIA: Eventually. It depends on the business cycle more than anything else, I'd reckon.

BROWN: Richard, thank you. We appreciate your reckoning here.

ABOULAFIA: A pleasure.

BROWN: Thank you.

Still ahead on NEWSNIGHT: the first segment seven of the night, and the looting in Iran, not all apparently done by Iraqis, as it turns out. But we'll take a break first. Around the world, this is NEWSNIGHT.

(COMMERCIAL BREAK)

BROWN: Hundreds of American journalists went to Iraq to bring the story of the war back home. It turns out some of them brought back more than the story.

Here's CNN's Kelli Arena.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): There were paintings, gold plated AK-47s and other items officials say were all illegally taken out of Iraq, mostly by journalists.

MICHAEL DOUGHERTY, BUREAU OF IMMIGRATION AND ENFORCEMENT: For decades the Iraqi people have suffer at the hands of a brutal regime and now tragically they're being victimized again.

ARENA: The only charges filed so far are against Benjamin James Johnson a former Fox News engineer. CNN caught up with him outside his home, but he refused to comment.

Officials say he smuggled 12 paintings out of Iraq and 40 Iraqi bonds all allegedly taken from one of Uday Hussein's residences. Fox fired Johnson after learning of the charges against him.

DOUGHERTY: Information we uncovered during that investigation led to the subsequent recovery of two additional paintings smuggled into the country by members of the media, returning from Iraq.

ARENA: One of those paintings was allegedly smuggled out of Iraq by Jules Crittenden, a reporter for the "Boston Herald," he has not been charged. In all, officials say, there were five airport seizures involving members of the media.

MARVIN KALB, SHORENSTEIN CENTER ON THE PRESS: If one, two or five end up, out of 700 who were embedded, to have engaged in filching something they shouldn't have taken, that's just the act of a small number of people. It is their personal ethical standards that have collapsed, but not the standards of journalism.

ARENA: There is also one member of the military being investigated for allegedly trying to send gold-plated AK-47s to an army base in Georgia. None came from Iraq's National Museum and the search for those items continues.

DAVID SHILLINGFORD, LOST ART REGISTER: It is a case of first working out what was there, both in terms of any documentation that may still be in the museum. Although, I understand some was destroyed. Because of the importance of the collection there is documentation elsewhere in the world that can be used as part of the effort to work out what was there. ARENA (on camera): It may take years before those items surface on the black market. Experts say those pieces of art are likely to pass through many different hands before surfacing.

Kelli Arena, CNN, Washington.

(END VIDEOTAPE)

BROWN: One hour done, one hour to go. And in that hour, we'll go to Toronto, Hong Kong, and Beijing to report on the latest developments in the SARS front.

And, for years, she was known only as the Central Park jogger. Now she tells the story of nearly dying after a vicious attack -- that and more in the next hour of NEWSNIGHT, after a break and a check of the latest news headlines.

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



Scratched on Wall in Iraqi Prison>


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