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LOU DOBBS TONIGHT

President Bush Trumpets War Success; 'Bin Laden' Tape Released; Kenneth Starr Battles In Supreme Court Over McCain-Feingold Law

Aired September 10, 2003 - 18:00   ET

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

LOU DOBBS, CNN ANCHOR: Still a war and still at large. President Bush trumpets success in the war on terror.
A new bin Laden tape emerges urging guerrillas to bury American troops in Iraq. National security correspondent David Ensor with a report.

"A Changed Nation," how September 11 has redefined U.S. foreign policy. Kitty Pilgrim has the special report. How does the world view America? Two very different perspectives.

And "Islam and Democracy," our special report in conjunction with "The Economist" magazine. Tonight: Egypt, the largest Arab country, America's No. 1 ally in the region, destined for dictatorship or democracy?

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, September 10. Here now, Lou Dobbs.

DOBBS: Good evening.

President Bush today said the United States will pursue terrorists on every front. The president said this country will never be complacent in the war on terror. And he called upon Congress to pass new anti-terrorist laws on the eve of the second anniversary of the September 11 terrorist attacks. The president's speech today coincided with the release of a new videotape that purports to show Osama bin Laden and his top deputy.

Senior White House correspondent John King has the story and joins me now -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, the president was at the FBI Academy, Quantico, Virginia.

Word of those tapes were distributed to the White House press corps. They asked the president. He simply said -- quote -- "Haven't seen it." They are analyzing that tape, of course. But Mr. Bush, perhaps underscoring the message of the tape, the unfinished business in his speech at Quantico, paying tribute to the families of the 9/11 victims, saying the war on terrorism continues and that, for all of the progress the administration is claiming, Mr. Bush says the hunt must continue until more terrorists are captured.

The president also responding to his critics today, many saying the president lost focus in the war on al Qaeda by going to war in Iraq. Mr. Bush was quite defiant, using his remarks to say that, no, he believes the Iraq war was justified and that Iraq now is the central front in the global war on terror.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The terrorists have lost a sponsor in Iraq. And no terrorist networks will ever gain weapons of mass destruction from Saddam Hussein's regime. That regime is no more.

(END VIDEO CLIP)

KING: Mr. Bush disputing, though, also any criticism that he has lost focus on al Qaeda, saying the administration continues to pursue -- quote -- "the evil serpents" who planned and carried out the September 11 attacks two years ago.

And as for the war on terrorism here at home, the president appealing in that speech also for new powers for the government. He says the government should be able, in some terrorism cases, to issue subpoenas without going to a judge and should have broader powers to hold some terrorism suspects without bail and to subject them to a death penalty. That is a continuing debate with the Congress, Lou, and with some groups in this country who say the administration is going too far and stripping away civil -- Lou.

DOBBS: John, thank you.

I understand there's been a change in the vice president's plans to be in New York tomorrow for ceremonies commemorating September 11. What can you tell us about that?

KING: A change at the request of Mayor Michael Bloomberg, Lou. The vice president was to be at the morning memorial service at the World Trade Center site, where they will read the names of the victims. Many of the families went to the mayor's office, the mayor says, and says they thought there would be too much security with the Secret Service involved in a vice presidential visit.

So the vice president will not attend that morning event, but he will still be up in New York. He will attend a later memorial service at the Port Authority for the fallen officers and other Port Authority employees who were killed in the attacks two years ago.

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

Terrorists in Iraq have killed another two American soldiers; 289 U.S. troops have now died in Iraq since the start of the war against Saddam Hussein, 185 of them in combat. Central Command today said four U.S. military intelligence officers were wounded in the car bomb attack in Irbil in northern Iraq yesterday.

Walter Rodgers in Baghdad has the report.

(BEGIN VIDEOTAPE) WALTER RODGERS, CNN CORRESPONDENT: Perhaps it's coincidence, perhaps not, but tomorrow is the anniversary of 9/11. And here in the Iraqi theater, there has been a spike, a surge, in the number of attacks against U.S. and coalition military personnel in the last 24 hours.

This morning here in Baghdad, another American serviceman killed. He was trying to diffuse an improvised explosive device, a roadside bomb. I heard a loud boom, ran to my window, looked out. A cloud of smoke was rising less than a mile away up Tigris River, the member of this team, this explosives, demolition, ordnance team, trying to disarm the bomb killed. Yesterday, just about 24 hours ago, another U.S. soldier was killed, improvised explosive device again.

These are very lethal against U.S. service personnel. A U.S. military patrol north of Baghdad riding along a road, roadside bomb improvised device throws deadly shrapnel into the soft-skinned vehicle, one soldier wounded, another killed, two dead Americans in the last 24 hours.

And in Irbil in northern Iraq, there was a deadly explosion late Tuesday. That explosion was a bomb that was hidden in a Toyota SUV outside a building which is leased by the Americans for operations in the northern Iraqi theater. The strategy here in Iraq on the part of the insurgents and the military Islamists appeared to be, make the Americans bleed, because the Islamists and the insurgents do not believe that the Americans have the staying power to last in Iraq.

They point to the Americans being driven out of Beirut in the early '80s by bombs. They talk about the Americans driven out of Somalia and also almost out of Afghanistan, reduced presence there. This is their strategy. It remains to be seen if it will work.

Walter Rodgers, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Nonetheless, Defense Secretary Donald Rumsfeld today said the coalition is making good progress in Iraq, compared with international efforts to rebuild other countries. Secretary Rumsfeld said the United States has no interest in occupying Iraq.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Our goal is not to create a dependency in Iraq by flooding it with Americans. Our goal is to get a still broader international face on it and then a considerably greater Iraqi face on it, as they contribute more and more to their own political future and their own economic future.

(END VIDEO CLIP)

DOBBS: Tonight, CIA analysts are examining new evidence that the leadership of the al Qaeda terrorist network may still be alive.

The Al-Jazeera television network today broadcast what it says is new video of Osama bin Laden and his top lieutenant. The network also aired an audiotape attributed to those two men. The tape called upon Muslims to "devour" the Americans.

National security correspondent David Ensor has the report -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, Lou, CIA analysts are looking at that audiotape, listening to that audiotape, Very closely.

Within a day or two, they'll be able to say whether the voices really are those of Osama bin Laden and his deputy, Ayman al-Zawahiri. Officials say their preliminary view is that the videotape was not recorded recently. Al-Jazeera television, which first broadcast the tape, said it believes the tape was produced in late April or early May of this year.

And there are some clues in the way the vegetation looks to suggest that may be about right. Whoever made the tape, and whenever, it was designed to get attention around the second anniversary of the 9/11 attacks. One intelligence official I spoke to called it a -- quote -- "a P.R. ploy" designed to draw attention to -- quote -- "their standard rhetoric."

U.S. officials will be analyzing the tape for clues as to where it was filmed, though they believe by now the two al Qaeda leaders must be far from that location. They continue to tell us their best estimate is that bin Laden and al-Zawahiri are somewhere along the Afghan-Pakistani border on one side or other of that border. The two have apparently given up using modern communications methods of any kind, officials say.

So, if they are directing al Qaeda's operations directly anymore, it's being done with notes, spoken messages and, of course, these tapes -- Lou.

DOBBS: David, any indication that U.S. intelligence, U.S. special forces, are at all near reaching out to any source that has knowledge about the whereabouts of Osama bin Laden?

ENSOR: The short answer, I'm afraid, Lou, as far as we know publicly, is no.

There has been some pretty tough fighting along the border on the Afghan side recently between U.S. troops and Taliban retreads, as one official put it. And a lot of the Taliban were killed in those -- in that fighting. Some prisoners may have been taken. There may be some interesting lines of inquiry that they can make. These people may have come over from Pakistan and might know something. But, in public, we do not know of any promising leads -- Lou.

DOBBS: David, thank you -- David Ensor, our national security correspondent.

Another Israeli airstrike today on a leader of the radical Islamist group Hamas. The strike followed the suicide bombings in Jerusalem and Tel Aviv yesterday. An Israeli aircraft dropped a bomb on the Hamas leader's house in Gaza. That bomb exploded. It wounded the leader and at least 20 other people. The man's eldest son and a bodyguard were killed in the strike.

Those suicide bombings yesterday killed 15 Israelis. Hamas claimed responsibility for both attacks. Today, Hamas said it will step up its terrorist campaign by targeting Israeli houses and apartments.

Coming up next: "A Changed Nation" and a changed world. Kitty Pilgrim will report tonight on the profound impact of September 11 on U.S. foreign policy.

Also ahead: slashing jobs in America. Three American companies today announce thousands of layoffs. Peter Viles will report on exporting jobs and America.

And a long-awaited day for corporate crime watchers. Christine Romans will have that story, as well as more on the battle shaping up over the New York Stock Exchange chairman's excessive pay.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Coming up next: Has the United States' effort to fight a global war on terror turned much of the world against the United States? Two leading experts tonight will face off and share their very different views.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: A major setback today for the White House in its efforts to overhaul labor laws that determine which workers receive overtime pay. Six Republicans joined Democrats in the Senate to vote against those proposed changes. The White House wants employers to reclassify some hourly workers as management, making them ineligible for overtime pay. Democrats and organized labor say the proposals would have deprived millions or workers from receiving extra earnings.

Three U.S. companies today announcing massive layoffs. International Paper plans to cut 3,000 jobs, more than 3 percent of its work force. Levi Strauss plans to cut 650 jobs. And 3Com today said it will eliminate 1,000 jobs, a third of its work force. The struggling networking company also closed its last factory and said it will outsource all of its manufacturing. 3Com does plan, however, to open a new design center and to create new jobs, but they will be in Taiwan.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Good news on the job front -- that is, if you're an engineer and you live in Taiwan, where 3Com is hiring. The struggling networking company is cutting 1,000 jobs, mainly by closing its last factory in Dublin, Ireland, also by laying off engineers in the United States and opening a new design center in Taiwan.

3Com is outsourcing all of its manufacturing to two firms, including Flextronics of Singapore, to strategy, to -- quote -- "improve efficiency and reduce costs" is sweeping the American economy, but some analysts believe it will backfire.

ALAN TONELSON, U.S. BUSINESS & INDUSTRIAL COUNCIL: 3Com and all of its other peers think that they can continue to make money by paying their workers Chinese-level wages, but expecting their customers to keep consuming at U.S. levels. But what they don't understand is that they're firing their best customers when they fire their U.S. work force.

VILES: Even Wall Street, which applauds cost-cutting, is beginning to worry about the migration of intellectual property, as research and development jobs flow to Asia.

WES CUMMINS, ANALYST, B. RILEY & COMPANY: Once all of the intellectual property go overseas, I think you have to wonder about what role the U.S. plays in the development, except for capital and marketing to U.S. companies. The role in driving new leading-edge technology may start to lessen in the coming years if this trend continues.

VILES: On the manufacturing side, it is a myth that the jobs America is losing are low-wage, low-technology jobs. Of the 2.7 million factory jobs lost over the past three years, the biggest group, 438,000, are in manufacturing of computers and electronics.

(END VIDEOTAPE)

VILES: American trade policy is becoming a bit of a gamble right now. If these technology jobs are lost forever, as some analysts believe, it's not clear how the U.S. can maintain its leadership in technological innovation -- Lou.

DOBBS: And the Bush administration policy on free trade, on the exportation of these jobs, and on the exportation, in the case of technology and computers, exportation of American intellectual capital?

VILES: They don't have a specific approach to this problem in technology. What they have said is, yes, there's a manufacturing problem. We have had it for 40 years in this country. And we need to train people for better jobs.

But something different has happened in the last couple years with technology. These jobs go quicker overseas. And they're bringing with them R&D jobs.

DOBBS: After 40 years, on a manufacturing basis, being decimated, it's perhaps to time to think about creating a policy. What do you think?

VILES: Well, we'll have a new assistant commerce secretary in a month or so on this issue of keeping jobs.

(CROSSTALK)

VILES: Whether we will have a policy on technology, we will have to wait and see.

DOBBS: A job czar.

VILES: A job czar.

DOBBS: Peter Viles, thank you.

Twenty-one months since Enron filed for bankruptcy, and today, the first executive from the scandal-ridden energy trader went to jail. Enron's former treasurer, Ben Glisan, today became the second executive in all of corporate America to be sent to prison in these corporate scandals. Glisan is one of 16 Enron executives charged with a crime; 89 executives in all of corporate America have been charged.

And in another case of investor outrage tonight, the chairman of the New York Stock Exchange, Richard Grasso, today faced one of the harshest critic his $140 million pay package.

Christine Romans is here and has the report for us -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, as reporters pored over 1,200 page documents that the NYSE gave to the SEC about Dick Grasso's pay, Grasso was in Washington on a panel on corporate governance with SEC chief William Donaldson.

Now, he defended his pay, saying he's not only a regulator, but a businessman.

(BEGIN VIDEO CLIP)

RICHARD GRASSO, CHAIRMAN & CEO, NYSE: More than two-thirds of the companies that we are today privileged to trade have joined us in the last 13 years. And so it is both. And it is both that we are very proud to do on behalf of America's 85 million investors.

(END VIDEO CLIP)

ROMANS: Meanwhile, SEC Chief Donaldson urged CEOs to take a hard look at executive compensation. And corporate governance experts took aim at fat retirement packages.

(BEGIN VIDEO CLIP)

NELL MINOW, THE CORPORATE LIBRARY: We go back to the gold watch and nothing else. They don't deserve another thing. After they retire, they can pay for their own offices. They can pay for their financial services. They can pay for their plane tickets, their caterers, their postage stamps. All of that stuff should be on their dime.

(END VIDEO CLIP)

ROMANS: Now, Grasso's retirement boon will be based on his three highest-paid years. He made $21.8 million in 2000, more than $26 in 2001, and $12 million last year.

The documents also lay out his armed security, travel and leisure time, exclusive use of private aircraft, and club memberships and cost associated with him that would not be counted as compensation. That's not unusual, really, for many CEOs -- also, retention bonuses of at least $5 million each in 2001 and 2002, although Grasso is saying he will give those up. No other details, though, of his bonuses were provided -- Lou.

DOBBS: You were at the exchange today, Christine. How is the membership feeling?

ROMANS: Many of the members are upset about what they consider as bad press. Many of them are concerned that the No. 2 and three people at the stock exchange might be very highly paid. They're not going to find out about that for sure until the annual report next spring.

Also, a lot of folks talking, Lou, about the plaque, the plaque on the front of the New York Stock Exchange, a plaque that was laid not many days after September 11, you'll recall. Some of the members are saying that the fact that that plaque on the bottom is signed "Dick Grasso" is a sign perhaps he sees himself as too important, with the New York Stoke Exchange being usurped by its leader. The members want to point out that the members own the New York Stock Exchange.

DOBBS: And that plaque commemorating the reopening of the exchange and the tragic events of September 11, there was grumbling, but very quiet grumbling, at the time it went up, no other name going up on the New York Stock Exchange building.

ROMANS: Very quiet grumbling then, but that grumbling is getting louder right now.

DOBBS: Christine, thank you very much -- Christine Romans. We appreciate it.

On Wall Street today, stocks tumbled for a second straight day. The Dow fell almost 87 points, the Nasdaq down 50. The S&P dropped a little over 12 points on the day. Checking where the market stands two years after September 10, the Dow Jones industrial average is down nearly 2 percent. The Nasdaq is up more than 7.5 percent. The S&P 500 is still down 7.5 percent from the average levels just before September 11.

Coming up next: September 11 and its effect on this country's role in the world. Kitty Pilgrim reports on U.S. foreign policy on "A Changed Nation."

And two leading experts on foreign policy face off over how the world views this country. They have two very different perspectives next.

And "Islam and Democracy," our series of special reports this week in conjunction with "The Economist" magazine, continues. Tonight, we focus on Egypt. Tonight, we're joined by Senator Richard Lugar, chairman of the Foreign Relations Committee.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: This week, our series of special reports on "A Changed Nation," the many ways in which this country has changed over the two years since September 11. Tonight, we take a look at the United States' relationship with the rest of the world.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): After September 11, the world poured out sympathy. The war against terrorists was defined.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Either you're with us or you are with the terrorists.

PILGRIM: The search for terrorists moved from Afghanistan to Iraq. The U.N. Security Council passed Resolution 1441 unanimously, demanding inspections for Iraq's weapons of mass destruction.

But when the United States moved to military action, much of that solidarity was lost.

BUSH: The course of this nation does not depend on the decisions of others.

PILGRIM: Secretary of State Colin Powell, in recent weeks, put it down to a clear dividing principle.

COLIN POWELL, SECRETARY OF STATE: The national security strategy gained attention in the aftermath of 9/11 because it made explicit the concept of preemption.

PILGRIM: And some say any perception of acting unilaterally carries a consequence.

AMBASSADOR THOMAS PICKERING, FORMER UNDERSECRETARY OF STATE: There is an in-built difficulty with being the biggest kid on the block. And there are differences about how to do this. In some cases, I do believe a confrontational style, in the short term, gets you places, but you pay over the longer term.

PILGRIM: The war was quickly over, declared a victory, Saddam Hussein deposed, mission accomplished, but, it seems, the task of winning the war easier than keeping the peace. That reality came slowly, after much devastation. BUSH: I recognize that not all our friends agreed with our decision to enforce the Security Council resolutions and remove Saddam Hussein from power. Yet we cannot let past differences interfere with present duties.

PILGRIM: There are signs of international cooperation. Positions have softened. The Arab League recognized the new Iraqi Governing Council. The United States discusses an international force in Iraq. China steps forward to broker peace on the Korean Peninsula.

(on camera): None of those steps are easy. The United States continues in its role of unrivaled strength, but now with emerging signs of increased international cooperation.

Kitty Pilgrim, CNN, New York.

(END VIDEOTAPE)

DOBBS: And tonight, in our "Face-Off": the United States' relationship with the rest of the world at a time when six in 10 Americans say the United Nations is doing a poor job. That, by the way, is the highest negative rating for the United Nations in Gallup's polling history.

We're joined now by Clyde Prestowitz, who says the Bush administration has alienated many of this country's friends over the past two years. He's the author of "Rogue Nation: American Unilateralism and the Failure of Good Intentions." And Michael Ledeen says, over the past two years, the United States has not alienated anyone that wasn't alienated before. He's a fellow at the American Enterprise Institute. And both join us tonight from our studios in Washington, D.C.

Gentlemen, let me start straightforwardly.

Have we really seen a significant change in the way in which our allies deal with us over the course of the past two years?

Let me start, if I may, with you, Clyde.

CLYDE PRESTOWITZ, AUTHOR, "ROGUE NATION": Yes, Lou.

Our problem is not so much that people dislike us, but it's more in sore sorrow than in anger. What we have seen is a situation in which our friends, the people who have been our longest allies, people like the Turks, the Canadians, have turned and said, we're afraid of where you're going. We don't understand what you're doing.

We have seen our favorable ratings in international polls drop precipitously, even in countries that have been longtime friends of ours. We have seen leaders who have been longtime friends of the U.S., staked their careers on being friends of the U.S., turn around and say, listen, we don't understand where America's going and where you're going is a place that looks scary to us.

DOBBS: Michael, you don't see it that way at all, do you? MICHAEL LEDEEN, AUTHOR, "THE WAR AGAINST THE TERROR MASTERS": No.

I think, basically, that France and Germany have alienated the rest of Europe. They're the ones who have been more unilateral than anybody else. And the French invaded the Ivory Coast, never once went to the Security Council, never once even went to the European Council. And nobody said boo. So what we're seeing here is just the usual ebb and flow of political concerns, varying from one government to another.

The anti-Americanism of today is nothing compared to anti- Americanism back in the 1970s during Vietnam or even in the 1980s, towards the end of the Cold War.

DOBBS: With the Reagan administration driving defense spending and tearing down walls.

Clyde, how do you respond to that?

PRESTOWITZ: Well, my response is that we don't want to go back to where we were in Vietnam and the anti-Americanism that was created by the fact of the Vietnam exercise.

But I think what's more important here is, again, I come back to this point that we -- our longtime friends, leaders who have been staunchly pro-American throughout those periods of anti-Americanism, are now turning around and saying, we think you're on the wrong track. And it's not so much anti-American as it is, we're your friends, but you're on the wrong track. Friends don't allow friends to drive drunk. We think you're driving drunk.

That's what we're hearing from leaders in Korea and leaders in Canada and leaders in...

DOBBS: Let me ask you both this.

This president campaigned on the issue of foreign policy, saying -- and it is as vivid today as almost the day he uttered the words -- a more humble foreign policy. Is it possible, given a war on terror, for any administration to conduct its foreign policy in a humble fashion?

Michael?

LEDEEN: No, I don't -- it's very hard. I mean, I suppose anything is possible, especially in politics. But that's a very hard act to pull off.

And I think that criticism of American is one thing. But what we really have to avoid, above all, is contempt for American. So, the most important thing for this administration right now is to make sure that it wins the war. And some people now have growing concern that we're excessively focused on Iraq and the internal situation of Iraq. We have lost track of the other countries supporting terrorism and particularly giving Iran a free ride. DOBBS: Clyde.

PRESTOWITZ: Lou, I think if you remember back to September 12, the day after September 11, when there was this enormous outpouring of sympathy for the U.S., the leading French newspaper ran a headline saying, we're all Americans, our embassies around the world were buried in flowers, if the president on September 13th had done something like a global satellite television hookup and said, thank you, and I'm inviting your leaders to come and spend a long weekend at the ranch with me to talk about how we're going to respond to this, he could have had anything he wanted. He could have had a resolution backing military action in Iraq. We would have had the French and Germans there with us. That's what I think a humble foreign policy would look like, just say, thank you.

DOBBS: This administration has apparently chosen to acknowledge some humbleness, some humility by going back to the United Nations. Are you both in any way assured by this new direct, by this administration on the issue of at least Iraq -- Clyde.

PRESTOWITZ: Yes, I think it's a positive step. I think he did the right thing. But again, in a kind of churlish manner, it was kind of OK, I know you didn't agree with us, but we're in trouble and send soldiers and send money, But we're not going to give up any control. I think it's important that we go to the u.n. I think we have to be prepared to share some of the power, some of the decision making.

Clyde, we have to turn quickly. We're running out of time. I have to turn to Michael Ledeen. Last word, Michael.

LEDEEN: We're not in trouble. We're doing fine. And we will do better yet. What we're doing is providing a fig leaf to countries who want to join with us and want to participate in Iraq, but for one reason or another, feel they need some kind of blessing from the United Nations before they do it.

DOBBS: As apparently does the United States in the judgment now of the Bush administration. Michael Ledeen, Clyde Prestowitz, we thank you both for being here. Please come back soon.

We want to hear from you in "Tonights Poll."

How much should world opinion shape U.S. foreign policy. A lot, somewhat or not at all.

Please cast your vote at cnn.com/lou. We'll have the result later in the show.

Tonight's thought is on international relations.

"Some of the more fatuous flag-waving Americans are in danger of forgetting that you can't extract gratitude as you would a tooth: that unless friendship is freely give, it means nothing and less than nothing.

Author and educator, Max Lerner. Coming up next: "Islam & Democracy," our series of special reports in cooperation with "The Economist" magazine. Egypt and the balance between stability and the road to democracy.

And then, we're joined by Senator Richard Lugar of Indiana, the chairman of the Foreign Relations Committee. He will share his views on Islam democracy, Iraq, Israelis and Palestinians, and of course, the global war on terror.

Fighting campaign finance reform all the way to the supreme court. The lead attorney for the plaintiffs, Kenneth Starr joins us. He says reform goes too far. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight we continue our series of special reports this week in conjunction with "The Economist" magazine on "Islam & Democracy." Tonight, Egypt. Egypt is America's oldest ally in the region. It is a democracy in name, but it is a country run without question by one man.

(BEGIN VIDEOTAPE)

DOBBS (voice-over): When Anwar Sadat was assassinated in 1981, his vice President Hosni Mubarak was only steps away. So it may not be surprising that when Mubarak assumed the presidency he cracked down hard on terrorism. The struggle with radical Islamists peaked in 1997 when Mubarak crushed terrorists after bloody attacks on tourists. Criticized in much of the west for his hard line approach, Mubarak shot back after September 11 saying a firm hand essential in Egypt and beyond.

HOSNI MUBARAK, PRESIDENT OF EGYPT: We have very good experience with these people. We have to be very strict with these groups. We have to take tough action with them.

DOBBS: Today, after more than 20 years continuous and often contentious rule, there's little terrorism in Egypt but there's also little democracy.

PETER DAVID, FOREIGN EDITOR, "THE ECONOMIST": Egypt is atypical Arab dictatorship in that the dictator doesn't call himself a dictator.

DOBBS: Mubarak, facing no meaningful political opposition, has won every election with a 95 percent majority.

MAGDY HUSSEIN, GENERAL-SECRETARY, EGYPTIAN LABOR PARTY: The people are fed up and we are fed up and want to topple this regime.

DOBBS: Magdy Hussein has been arrested and jailed, his Labor Party driven underground.

HUSSEIN: We need free election for presidency, not referendum for one person. DAVID: Egypt has political parties and it has a parliament and there are elects and free newspapers. The trouble is, the parliament has no powers.

DR. ESSAM EL-ERIAN, MUSLIM BROTHERHOOD: If there is any country in the world that needs democracy, it's Egypt. Either it will be a Democratic country or it will be a chaos.

DOBBS: It is at least Ironic to hear calls for democracy from a member of the Muslim Brotherhood like Dr, Essam El-Erian, the brotherhood whose charter calls for the destruction of Israel, has long been considered to be among the most radical of the Islamist groups in the Arab world. Some say that has changed.

SAAD EDDIN IBRAHIM, HUMAN RIGHTS ACTIVIST: They have not used violence for the last 33 years.

DOBBS: Ibrahim is one of the Arab world's best known activists, one of a growing number in the Arab world who organize that Islamists who publicly embrace democracy should be given a chance.

IBRAHIM: They have declared their commitment to democracy. Whether that's sincere or not, time will tell. But I'm taking them at their own word.

DOBBS: But others are not persuaded and they suggest this public change of heart is more for western cameras. The Islamists, they warn, are using democracy to please the crowds, and Democratic powers like the United States. But if they were to gain power, some warn, Egypt might soon like like Iran.

DR. HALA MUSTAFA, POLITICAL ANALYST, AL-AHRAM CENTER: In Iran, the is last are in power and they have a kind of Democratic experience. But I want to remind you that in Iran, too now, it's forbidden for a liberal or secular to have the same right of the Islamists.

DR. MOSTAFA EL-FEKI, EGYPTIAN PARLIAMENTARIAN: I know that Islam, in particular, is a great religion, wealthy of ideas, political and social and cultural. But you know, they're using it for certain doctorings and ideas is a big catastrophe.

DOBBS: Egypt is a fulcrum in the Middle East. It's the largest Arab country, 70 million citizens mostly Sunni Muslims. Egypt is America's number one ally in the Arab world, and second only to Israel in receipt of foreign aid. Some are questioning whether America is repeating a past mistake -- choosing stability over the prospect of democracy.

UNIDENTIFIED MALE: In the past it different dictators because it denotes stability over change. In the long run it created the Taliban, say bin Laden, Saddam Hussein. These are all the bitter harbors of an opportunistic American foreign policy

Taliban, bin Laden, Saddam Hussein. These are all the bitter harbors of an opportunistic American foreign policy that goes back to 30 years ago.

DOBBS: A key task for democracy in Egypt. Will Mubarak attempt to install his son Gamal as the next president and will the United States allow that to happen?

UNIDENTIFIED MALE: Egypt is not Syria and I think the people are against this. We are a republic, not a monarchy. We have are appealing for more democracy, not a new dictatorship in this country. I will pay for this last question.

(END VIDEOTAPE)

DOBBS: Tomorrow, in our series of special reports in conjunction with "The Economist" magazine on "Islam and Democracy," we focus on Islam in Europe. Islam in France. Can France's growing Muslim population help bridge the gap between Islam and democracy? Join us tomorrow evening.

When we continue here tonight, Senator Richard Lugar, chairman of the Foreign Relations Committee, joins us to share his views on Islam and democracy, the United States policy in Iraq, the search for bin Laden and the prospects for Middle East peace.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining us now to discuss Islam and democracy, Senator Richard Lugar of Indiana, who chairs the Senate Foreign Relations Committee. Senator Lugar joins us Capitol Hill.

Senator, good to have you with us.

SEN. RICHARD LUGAR (R), CHAIRMAN, FOREIGN RELATIONS CMTE.: Thank you very much, Lou.

DOBBS: You recently in Uzbekistan were told there that U.S. policy would be more warmly received -- if I can put it that way -- if the United States showed more effort toward understanding Islamic culture, the culture of the society of region. What do you make of that?

LUGAR: Well, in Uzbekistan, in particular, President Karimov took me for six hours on an airplane ride to Samarkand to explain his views on democracy. He has been under heavy criticism for human rights violations, and as a matter of fact, there is not much democracy functioning there.

On the other hand, I met with 20 leaders, including leaders in the Muslim faith, the Christian faith, Jewish faith, people who were human rights advocates. So all of that was going on likewise. I think it shows the point you made earlier on -- many countries, including Uzbekistan have stability with a veteran leader. At the same time, aspirations to extend further, but great fears that some of the people that are in Uzbekistan, for example, would take Uzbekistan back to the 8th Century. They have a very strong theological view on how life ought to be lived.

DOBBS: And that is somewhat representative of the Islamic world in the Middle East For the most part. And certainly parts of Asia. But the fact is the United States is now in Iraq with troops, engaged on the issue of Israel and Palestine. What do you think is the likelihood for both success and democratizing the region and reaching real peace between Israelis and Palestinians?

LUGAR: Well, on the latter issue, I saw Shimon Peres, the former prime minister, today. He is somewhat more optimistic about the new prime minister that has been named in Palestine. So that is heartening. But he feels essentially both parties will simply have to talk, they'll have to be willing to sustain losses. That will be tough to do. And I don't know the outcome is going to come there rapidly.

I think in Iraq, this is front and center because one of the points that we've made about replacing Saddam Hussein is that it would be with the a democratic government. Very complex situation with Muslims and people -- we have the Shiites, the Sunnis, the Arab tribes, the rest. There is no road map whatever for democracy there. And for all of the reasons in your series, it is difficult because people may decide that they want to have one vote one time and somebody declare a Muslim government or they have a fledgling democracy which is poorly run and finally comes back to a situation like President Mubarak in Egypt bringing stability and other people who are Democrats decrying how little democracy there is.

DOBBS: Is it your judgment, senator, as chairman of the Senate Foreign Relations Committee, that this administration has now engaged effectively in a process of democratization? What is your judgment about how the post major combat operations phase is going in Iraq? How optimistic are you?

LUGAR: Jerry Bremer, who is the American administrator on the scene, as pragmatically rolled with the punch. By that I mean, assumptions made by some in our government that Iraqi exiles might come in, be accepted, might begin to run the country, simply did not work out. There are not roots, not much popular support for many of these people.

So as a result, a 25-member ruling council has been ruling the country. They have appointed some cabinet people now from the threshold of a constitutional group or a convention. But this is really in play. At this point, our government will have to give, I think, a great deal of thought to what kind of support we give to this and how we find international support so others do not undermine it.

But for the moment, at least the 25 members of the ruling group have done pretty well. They have put an Iraqi face in many agencies and given at least an impression enough to get acceptance in the Arab League for the moment.

DOBBS: Senator Richard Lugar, we thank you for being with us tonight.

LUGAR: Thank you, Lou.

DOBBS: And coming up next here, a battle in the Supreme Court that could shape the 2004 presidential election. Former Independent Counsel Kenneth Starr joins us. He's the lead attorney for the plaintiffs. He's with us next.

(COMMERCIAL BREAK)

DOBBS: This past Monday the United States Supreme Court held a rare special hearing on the law covering campaign finance reform. Joining me from Washington, Kenneth Starr, former Whitewater independent counsel, partner with Kirkland and Ellis. The lead attorney arguing against the McCain-Feingold law. Good to have you with us.

KENNETH STARR, ATTORNEY: Thank so much, Lou. Good to be with you.

DOBBS: You've already won at one level. You have argued before the high court in a remarkably rare, historically rare session. What is your best judgment as to the outcome?

STARR: Well, the court was clearly struggling with the law. It's so complex. I'm not going to venture or to predict an outcome. I think it's likely to be close, I'll go that far, because I think the justices really have a lot before them that is very complicated, just very briefly. And it is quite remarkable in light of your priors segment with Senator Lugar, how relevant that is in terms of instability that affects so much of the world that we have, for all of our problems and issues in the United States, such stability and one of the reasons is because of our political parties. And this law weakens those parties.

The other thing that the law does, that I think is unfortunate and we think is unconstitutional it suppresses speech by any number of organizes, nonprofit corporations in particular, in unions and the like during the most pivotal time, namely, just before an elect or before a primary. And cabins, very specifically, the kind of speech these organizations can engage in.

DOBBS: Senator Mitch McConnell from the outset said this legislation would be judged unconstitutional and he was it seemed at the time absolutely sincere in that judgment and is leading the way, of course. This is remarkable because Senator Mitch McConnell and the plaintiffs that you're representing, aligned not only with the chamber of commerce, the ACLU, the AFL-CIO.

How will this be interpreted or will it play any part in the interpretation by the Supreme Court that so many diverse elements of the political spectrum are banded together in this law?

STARR: It's very immpressive, it is odd, in fact, it is rare, when you can get -- I'm also privileged to represent the Southeastern Legal Fountation in Atlanta -- organizes that are typically are identified with conservative causes. On the other hand, the American Civil Liberties Unions and the like, the AFL-CIO, but they have call come together to say, can disagree on various issues, but we really do believe in our system in this country of freedom of speech.

And when the First Amendment says Congress shall make no law abridging the freedom of speech. When talking about a law that buy its very terms is directed at the most core of political speech, that before an election as well as the activities of political parties, down to the most local level, down to what mayors races, parties can do in the mayoral races in their own communities. It's really quite far-reaching, I think, and has brought a lot of desperate groups together.

DOBBS: Ken, what is your judgment as to how the court will rule, is this a typical split between the liberals and the conservatives on the court, given that there is such a broad spectrum politically represented in the -- on the plaintiffs' side, what is your judgment there?

STARR: Well, those who might be called by the pundits liberals, I think in this arena really struggle with some of the issues in terms of maybe this is an area that Congress should be able to step in and regulate. Maybe there should be freedom of speech in other areas, but here, because of the unusual sensitivity of political campaigns and the dangers of corruption, Congress should be at greater liberty to regulate.

Whereas the conservatives have tended to be more ardently in favor of free speech and freedom of association. So, sometimes it seems like a little bit of a role reversal.

DOBBS: Kenneth Starr, we have about 15 second. How soon do you expect a judgment on the part of the court?

STARR: I think it will come this calendar year, on into the fall. But certainly, my prediction is, before the real onset of the 2004 election.

DOBBS: Kenneth Starr, thank you very much for being with us.

STARR: My pleasure, Lou. Thank you.

DOBBS: There's news today that one of the most imminent scientists, Edward Teller, has died. He was 95. Teller was known as the father of the H-bomb for his work on developing hydrogen bombs. Teller also helped design and to test atomic bombs that ended the war against Japan. He was founder of the Lawerence Livermoore Weapons Research Laboratory.

Teller once said the laboratory helped maintain peace through deterrence. He never gave up his advocacy of a strong U.S. defense policy. And during the Reagan presidency, he was a leadering supporter of the Strategic Defense Initiative, the Star Wars program to build anti-missile defenses.

Edward Teller, died at his home at Stanford University after suffering a stroke yesterday.

(COMMERCIAL BREAK) DOBBS: Coming up next, your thoughts on exporting America. Including, one creative cartoon that we're going to share with you. A cartoon that cuts to the center of the many of the problems with corporate America.

That and a great deal more still ahead.

(COMMERCIAL BREAK)

DOBBS: Now the results of our poll, how much should world opinion shape U.S. foreign policy? 57 percent of you said a lot, 29 percent said somewhat, 13 percent said not at all.

Now your thoughts on the subject of New York Exchange Chairman Richard Grasso's excessive pay. An anonymous New York Stock Exchange employee wrote in to say, "Most NYSE members will not create a stir regarding Dick Grasso, because they are afraid of losing their membership by the use of unjust, arbitrary audits and regulatory reviews to quiet their voices. Grasso's package is a disgusting example of greed and nonchanance to the members he's supposed to have been serving for years."

Many of you wrote in about the exporting of America -Jobs. Brian Soloman of Portland, Oregon said, "Consumers are to blame. If you don't want U.S. jobs to go overseas, quit buying products made outside the U.S."

Timberly Willoughby of Oregon said, "If we want to save America, we need we need to invest in America. We have no right to blame anyone but ourselves."

Richard Byrd of Fort Wayne, Indiana, "It's too bad most of the capital investment and job creation that we were promised is happening in China and other countries."

And Carl Stark of Weselyn, Michigan sent in this cartoon. This cartoon showing a CEO at a company picnic -- there it is. It reads, if you can't see, "We had better turn outs before we moved our factory to China, our service department to India and our upper management to federal prison. Thanks for the weenie, you're fired." the button on his chest says, "CEO" by the way.

Our thanks to cartoonist Steve Sack of the "Minneaponis Star- Tribune" for sharing with us.

We love hearing from you. Please share with us. Send us your thoughts. Email us at loudobbs@cnn.com.

And that's our show for tonight. Thanks for being with us. Tomorrow a changed nation. The Patriot Act, we looked at one of the ways in which this country has changed. We are talking with the editors of "Newsweek" and "U.S. News and World Report" as well. Please join us.

For all of us here, good night from New York. "ANDERSON COOPER 360" is next. END

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Released; Kenneth Starr Battles In Supreme Court Over McCain-Feingold Law>


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