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LOU DOBBS TONIGHT

Iran May Be Linked to 9/11; VP Candidates Dominate Campaign Trail

Aired July 19, 2004 - 18:00   ET

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


LOU DOBBS, ANCHOR: Tonight, President Bush says the United States wants to find out whether Iran was involved in the September 11 attacks. President Bush, responding to news leaks about the 9/11 commission report, also accused Iran of funding terrorism.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: As to direct connections with September the 11th, you know, we're digging into the facts to determine if there was one.

(END VIDEO CLIP)

DOBBS: Tonight, our guest, one of the country's most distinguished former intelligence officers, Admiral Bobby Inman. We'll be talking about al Qaeda, this week's 9/11 report, Iran, China and the need for a massive shake-up in our intelligence agencies.

Chaos in Gaza. Yasser Arafat faces an unprecedented challenge to his authority. Israeli Prime Minister Ariel Sharon struggles to stay in power himself. And I'll be joined by the Israeli Consul General Alon Pinkas.

Dry weather, high winds hampering firefighters who were trying to control wildfires north of Los Angeles. We'll have a live report.

No apologies tonight from California's governor, Arnold Schwarzenegger, after he used some colorful language to describe some of his Democratic opponents.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I call them girlie- men.

(END VIDEO CLIP)

DOBBS: Exporting America. Senator Hillary Clinton says companies that ship American jobs to cheap overseas labor markets will be disappointed. We'll have a report.

And a business magazine that suggested readers quit whining about outsourcing experimented with outsourcing and says it will never do it again. The editor of "Business 2.0" magazine, Josh Quittner, is our guest.

ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, July 19. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

The U.S. government is investigating whether Iran played a significant role in supporting the September 11 attacks. President Bush today accused Iran of funding terrorism and harboring al Qaeda leaders. President Bush's accusations follow published reports apparently based on the September 11 commission findings that as many as 10 of the al Qaeda hijackers passed through Iran before the September 11 attacks.

White House Correspondent Suzanne Malveaux reports -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, you're absolutely right. As many as 10 of those 19 hijackers of September 11 passed through Iran.

Now this is information that was confirmed over the weekend by the acting director of the CIA. Also, it's expected that additional details will emerge from the final report of the 9/11 commission regarding Iran's role.

Of course, many questions now whether or not Iran had any kind of direct role in those September 11 attacks. President Bush today, emerging from his Oval Office meeting with the head of Chile, was asked that question. He said that Iran did not play any direct role in the September 11 attacks, that there was no evidence that indicated that, but he did say that Iran is a state sponsor of terrorism. He also said that that is a state -- a country that needs to make amends.

(BEGIN VIDEO CLIP)

BUSH: I have made it clear that if the Iranians would like to have better relations with the United States, there are some things they must do.

For example, they're harboring al Qaeda leadership there, and we've asked that they be turned over to their respective countries.

Secondly, they've got a nuclear weapons program that they need to dismantle. We're working with other countries to encourage them to do so.

Thirdly, they've got to stop funding terrorist organizations, such as Hezbollah, that create great dangers in parts of the world.

(END VIDEO CLIP)

MALVEAUX: Now, Lou, privately, administration officials say that there is no new evidence that the 9/11 commission's investigation offers that says there is any more of a direct relationship with the 9/11 attacks with Iran. However, this is a very political issue. As you know, there are some Democrats and those against the Iraq war who are using this and using the report, which has yet to be released, to make the case here that they believe the president's response to the 9/11 attacks, namely the invasion of Iraq, the Iraq War, was misguided.

One of those, Senator Dick Durbin, a Democrat from the Senate Intelligence Committee, making that case, as well as many others. They believed that perhaps Iran was more dangerous to the United States than Iraq -- Lou.

DOBBS: Outside the political and partisan context, are the Democrats suggesting to the president and this administration what should be done about Iran?

MALVEAUX: Well, essentially, they're saying that what has happened with Iran is that the administration has taken a number of significant positions. They have said, look, they're working with the international community, with the International Atomic Energy Agency when it comes to its nuclear programs to get rid of those weapons.

They are also working with them in releasing some of those al Qaeda terrorists, but they believe that more than words -- the president has talked about encouraging Iran. They believe more than words is necessary and that he needs to take a tougher stand when it comes to Tehran.

DOBBS: Of course, Suzanne, President Bush and the administration have done precisely what you've just articulated. Any further suggestions?

MALVEAUX: Well, at this time, the only suggestion is that they get a bit tougher, that they give more of a chance for that international diplomacy to work.

They believe that each one of these countries has to be handled on a case-by-case basis. They believe that the model with North Korea really is more of the kind of model they'd like to use with Iran.

They'd like to get more of the international community involved in putting pressure on them to give up those nuclear weapons.

DOBBS: Thank you.

Suzanne Malveaux, reporting from the White House.

President Bush famously referred to Iraq, North Korea and Iran as the axis of evil in his State of the Union message in 2002. The State Department now says, in addition to North Korea, Iran remains one of seven countries still activity sponsoring international terrorism. Iran has been at the center of anti-American radical Islamist terrorism since Ayatollah Khomeini took power 25 years ago.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE) KITTY PILGRIM, CNN BUSINESS CORRESPONDENT (voice-over): It's more than two years since Iran was named in the axis of evil by President Bush. Iran shares borders with Afghanistan and Iraq. The suspicion is it may have been a veritable highway for terrorists to move across in planning operations, such as al Qaeda in Afghanistan or the Ansar Al Islam group in northern Iraq and others.

But U.S. troops are now in both those countries. Former National Security Adviser Zbigniew Brzezinski just co-authored a new report out today on Iran.

ZBIGNIEW BRZEZINSKI, COUNCIL ON FOREIGN RELATIONS: We are now on the frontiers of Iran, both on its eastern frontier and its western frontier, and the Iranians obviously have to re-assess their regional position.

PILGRIM: Some take a harder view of Iran's laxness in stopping terrorists.

SEN. SAXBY CHAMBLISS (R), GEORGIA: I'm not totally surprised that any of the hijackers might have passed through Iran. It's been a safe haven for terrorists. President Bush identified Iran as one of the three axis of evil. So Iran is of concern.

PILGRIM: A suspicion that still is disquieting, even if there is no direct connection with the September 11 attack.

JAMES WOOLSEY, FORMER CIA DIRECTOR: This is a world in which the enemy of my enemy is my temporary friend, and both Iran and Iraq, I think, were probably doing some things to help al Qaeda, even if they weren't, you know, directly and intimately planning operations with them.

(END VIDEOTAPE)

PILGRIM: Now Iran was already at odds with the Bush administration over its nuclear program. Now Iran denies it's working on nuclear weapons. It says it's developing an energy program for peaceful purposes, but, with these charges and charges of sponsoring terrorism, the burden of proof is on Iran -- Lou.

DOBBS: And it's generally considered absolutely palpable nonsense that it is not a weapons program in Iran.

PILGRIM: Most people agree that it would be...

DOBBS: So there's no need for us to preserve any artifice here in terms of language.

Kitty, thank you very much.

Kitty Pilgrim.

In Iraq today, a suicide bomber in a fuel truck killed eight people near a police station in Baghdad. That bomb wounded more than 60 other people in the explosion. The attack came as police officers were waiting to receive their daily assignments. This, the third major bomb attack against an Iraqi government target in less than a week.

A U.S. Marine who disappeared in Iraq and later turned up in Lebanon today said he did not desert. He said he was captured by insurgents, but Corporal Wassef Hassoun gave no information about what happened to him in Iraq, nor did he explain how he made his way from Iraq to Lebanon.

Senior Pentagon Correspondent Jamie McIntyre with the report -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Lou, part of those questions are all going to be part of a subsequent investigation, but Marine Corps officials said today that Corporal Hassoun was unhappy with the fact that he's been portrayed in the news media as a potential deserter, based on some statements, some made officially, some unofficially, about the circumstances of his departure from his base in Iraq.

Today, Corporal Hassoun said publicly what before he's only said privately to the Marines after he got back in their custody.

CPL. WASSEF HASSOUN, U.S. MARINE CORPS: I did not desert my post. I was captured and held against my will by anti-coalition forces for 19 days. This was a very difficult and challenging time for me. Since my release, I have been fully participating in the repatriation process. I thank everyone who was looking for me and give thanks for God for everything.

MCINTYRE: Now that repatriation process continues at the Marine Corps base at Quantico, but Marine officials today indicated that Corporal Hassoun will be soon returning to his home base at Camp LeJeune to continue the process.

What hasn't started yet is the interrogation or investigation by criminal investigators into the circumstances of his disappearance, and that includes questions about the circumstances under which he left, as well as whether he gave any information to his captors that might have compromised security, questions on the minds of investigators. The defense attorneys, legal experts point out today that Corporal Hassoun, while not technically a suspect, could undoubtedly face some serious charges down the road.

They say that he should be provided with a military attorney, and they say, unless that happens soon, he'll be able to argue that anything he says now should not be used against him in a potential criminal case down the road -- Lou.

DOBBS: Jamie, thank you.

Jamie McIntyre reporting from the Pentagon.

Still ahead here, the 9/11 commission is expected to call for a huge reorganization of our intelligence agencies. I'll be talking with Admiral Bobby Inman, one of this country's most distinguished former intelligence officers about that and a great deal more.

Firefighters now face a new challenge. They're struggling to control a wildfire north of Los Angeles . We'll have a live report from the scene.

In America Votes tonight, we'll have a special report on the states that could well determine the outcome of the presidential election.

And California's governor, Arnold Schwarzenegger, refuses to back down or back off after calling some of his Democratic opponents girlie-men.

All of that and more coming right up.

(COMMERCIAL BREAK)

DOBBS: This week, we'll have the final report of the September 11 commission. That report will be released Thursday. The report is expected to strongly criticize the federal government for its failure to prevent the al Qaeda attacks.

The commission will also call for a major restructuring of this country's intelligence operations, and, as part of that reorganization, the commission will likely recommend the creation of a new Cabinet-level post to oversee all 15 of America's diverse intelligence agencies.

The commission is also expected to say there have been links between the al Qaeda terrorist network and Iran.

Joining me now from Austin, Texas, Admiral Bobby Inman, former director of the National Security Agency, deputy director of the CIA.

Admiral, good to have you here.

The...

ADM. BOBBY INMAN (RET.), FORMER NSA DIRECTOR: Thank you, Lou.

DOBBS: The process of getting to this final report has been by -- whether partisan views or your depth of concern, it has been grueling. Is it your judgment that this report will be formative in terms of the future of intelligence operations in this country?

INMAN: I think there's a reasonable prospect that it will be. The challenge is getting all 10 commissioners to agree, so I'm waiting to see the final report to make sure that occurs.

DOBBS: The idea that there should be, if you will, an uber- director over all of our intelligence agencies -- does this appeal to you, or do you think it's wise?

INMAN: I have proposed -- I proposed about eight years ago a major restructuring of U.S. intelligence. The Cold War was over. We needed to look at the entire world, non-proliferation of nuclear weapons, terrorism, narcotics.

There was no appetite. I -- the answer was that we're going to do evolution, not revolution. Not one of the individuals who served as director of Central Intelligence wants to see the separation. They're afraid that they'll lose their power base.

But I think in the troubled world we're in, we need a much broader geographic focus of our intelligence. We need rebuilding across the board, including the overt human collection that was done for many years by the State Department, drawn down in huge numbers over the last 20 years.

So it's -- one caution I would make is that we should do it at a measured pace, not in a hurry. Right now, we need to make sure the smaller numbers we have are focused on watching the immediate threats, not worrying about whether or not they're going to have a job tomorrow.

Admiral, as we listen to former CIA director George Tenet talking about five years to have an effective covert operation or the acting director, McLaughlin, each of these is -- each of these men suggesting that it's going to take a measured pace to even be effective.

That is, to most of us, I think, in this country somewhat disappointing because we assume that the United States and the American government, the American people are capable of doing anything on a timely basis and doing it highly effectively.

Are we doing enough, are we doing it with the right attitude, are we -- or have we lost something here in our capacity to drive forward on an initiative and a critical initiative of national security like this?

INMAN: We drew down manpower beginning in '67. That was turned around in '81 for four years, a surge to rebuild. Then we went back to the old pattern. And the last 12 years -- 12 years ending in 2001 saw a very sharp draw-down in talent.

But the bigger problem, Lou, is you take out the infrastructure, the limited capacity to train clandestine agents, the time to train people across the collection disciplines for language in the process. So I was disappointed to hear five years, but not surprised.

DOBBS: And one of the suggestions -- and you are intimately familiar, obviously -- with electronic intelligence, the fact that we just discovered that China has a new submarine that's moved beyond prototype. It is their first. We're not too sure as to its power or its capacity, but we did discover it. That's shocking, to find out that the U.S. intelligence, vaunted, venerable, effective, was surprised. Does that trouble you?

INMAN: It -- it troubles me that we are at a position that we don't have global coverage that we need, but, you know, we shifted 10 years ago toward an approach that we didn't need all this seven-day-a- week, 24-hour-a-day coverage and alertness. Five days a week, eight hours a day would be fine. You get what you pay for. We all hoped for a lot more peaceful world when the Cold war was behind us. In fact, it unleashed tribal, ethnic, religious conflicts that have grown, not diminished, and the difference is they've now reached to our own shores.

DOBBS: It is, of course, no surprise to Americans that the price of freedom is vigilance. We have been hardly that. Can we step it up? Can we bring ourselves to a state of readiness in our intelligence-gathering and analysis sooner than five years?

INMAN: Oh, we have the capacity to do it, and the -- I've been struck over the last three years being around college campuses how many really bright youngsters want to get in this field; 9/11 was a dramatic turning point for a lot of people reluctant to go get involved in this.

Now they're eager to do it. We do need some forward-looking new leadership, I believe, to look where we can best accelerate, make judgments about priorities, what are the targets that we've got to get up first, but, keeping a long-range vision, we really do need global coverage.

DOBBS: Admiral Bobby Inman, as always, good to have you with us and, as always, enlightening. Thank you.

INMAN: Thank you.

DOBBS: That brings us to the subject of tonight's poll question. How do you think the United States should deal with terrorist nations -- economic sanctions, covert action, military action or diplomacy? Cast your vote at cnn.com/lou. We'll have the results for you later in the broadcast.

Fox News Channel's slogan, "Fair and Balanced," is actually false and fraudulent according to Democratic activist moveon.org.

Moveon.org and Common Cause, a non-partisan lobbying group, today filed a petition with the Federal Trade Commission. That petition cites a Republican bias in Fox News coverage. Those groups are asking the agency to stop Fox News from using the "Fair and Balanced" tag line.

A spokesman for Fox News called the actions a transparent publicity stunt, adding, quote, "We recognize all forms of free speech in this country, and we wish them well."

By the way, that filing of that petition follows the release of a documentary titled "Out Fox (ph)," which is also critical of Fox News and its purported alliance with Republican interests.

Still ahead, chaos in the Palestinian leadership, and the Palestinian prime minister resigns and means it. The Israeli Consul General Alon Pinkas is our guest.

And the honeymoon in California is over. Governor Schwarzenegger pumping up. Serious controversy there about the state's budget and the governor's choice of words. We'll have that story.

And wildfires in the West are threatening homes and forcing thousands of people to evacuate. We'll have a live report tonight from California.

Also, a star race driver escapes serious injury when his car explodes in flames.

We continue. Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Here for more news, debate and opinion, Lou Dobbs.

DOBBS: In tonight's Campaign Journal, the vice presidential candidates dominating the campaign trail today. Vice President Cheney visited a lumber company in Missouri. The vice president told voters in the swing state that this year's election is the most important of his lifetime.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: The issues we've got to deal with this year -- the very significant issues with respect to national security and foreign policy, as well as our economy -- are going to shape the course of history really for the next 30, 40, 50 years, that this is one of those elections with big issues at stake, and it's very important that we get it right.

(END VIDEO CLIP)

DOBBS: Senator John Edwards today campaigned in his home state of North Carolina. Senator Edwards told supporters his running mate, Senator John Kerry, has the right values to be the next president.

(BEGIN VIDEO CLIP)

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: He went to Vietnam and volunteered to serve this country for a very simple reason: He loves America. And on those kind of patriotic values -- those are the kind of values that those of us who grew up here in North Carolina, in a small town where I grew up in Robins -- those are the kind of things we look up to. We look up to and admire men and women who serve their country like that. Those are the very values that all of us grew up with and believe in.

(END VIDEO CLIP)

DOBBS: North Carolina is one of two states President Bush easily won four years ago and where new polls show him in a close race now with Senator Kerry. It's a trend that could create new battlegrounds in this year's election.

Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Let's see where the electoral map stands going into the Democratic convention.

Start with the 2000 map. Red states for Bush, blue states for Gore. Have any states changed since 2000? Non-partisan polls have been done in 26 states in June and July.

Most of those states are voting the same way they did in 2000, but four Bush states look a little shaky. Recent polls in Florida, West Virginia and Ohio show Kerry slightly ahead, and a New Hampshire poll shows a dead heat. Only one 2000 Gore state looks shaky for Kerry, Wisconsin. One Wisconsin poll shows Kerry slightly ahead, one shows Bush slightly ahead.

In addition, polls in two Bush states show Bush still ahead, but by a narrow margin -- North Carolina, John Edwards' home state, and Colorado, where Kerry has run TV ads. There's one Gore state where polls show Kerry ahead by a narrow margin, New Jersey. It too could end up in the battleground column.

Add up the electoral votes in the question mark states, and you get 80 shaky votes for Bush and 25 shaky Democratic electoral votes. Bottom line: The electoral map is tipping toward Kerry.

Keep in mind the 2000 battleground states are still battlegrounds. Not a single poll in any battleground state shows Bush or Kerry getting over 50 percent of the vote.

Then there's the Nader effect.

RALPH NADER (I), PRESIDENTIAL CANDIDATE: I don't think this is going to be viewed as an assistance to President Bush.

SCHNEIDER: He'd better think again. Polls that asked people how they would vote with and without Ralph Nader on the ballot show Nader taking more votes from Kerry in eight states. In five, Nader makes no difference. There's only one state, Wisconsin, where polls show Nader taking slightly more votes from Bush.

(END VIDEOTAPE)

SCHNEIDER: We couldn't find a single state in which President Bush is doing better in the polls right now than he did in 2000, not even Idaho, Bush's best state in 2000, where he got 67 percent of the vote. The most recent poll, this summer from Idaho shows him getting 55 -- Lou.

DOBBS: Bill, Wisconsin. That's an intriguing state. Why the volatility in that state in particular?

SCHNEIDER: I don't know. It's a very strange state, but it seems to be the only state where Nader is hurting Bush more than he's hurting Kerry, and there's some speculation out there -- and this is all speculation -- that this trend could spread if Bush gets more trouble.

If the economy doesn't recover, if Iraq doesn't show up very strongly, some people -- that is if Iraq deteriorates -- some people believe that in the end Republicans may be hurting themselves by helping Nader get on the ballot in states like Michigan because what they're concerned about is that Nader could do to this President Bush what Perot did to his father, namely angry Republicans cast a protest vote.

DOBBS: And we're early as well in the speculation season, and we'll look forward to more of it, Bill.

Bill Schneider.

Thank you.

California's governor, Arnold Schwarzenegger, uses fighting words in criticizing the Democratically controlled state legislature. After an extended honeymoon in which the governor won praise inside and outside the state, the civility is disappearing in a fight over the state budget. This weekend, Governor Schwarzenegger called legislative Democrats girlie-men. If he meant it as a joke, Democrats certainly aren't laughing.

Peter Viles reports from Los Angeles.

(BEGIN VIDEOTAPE)

DANA CARVEY, COMEDIAN: I'm Hans.

KEVIN NEALON, COMEDIAN: And I'm Franz.

DANA CARVEY AND KEVIN NEALON: And we just want to pump you up.

PETER VILES, CNN CORRESPONDENT (voice-over): It's an old line that made fun of Schwarzenegger accent.

DANA CARVEY AND KEVIN NEALON: Poor little girlie-man alone in his girlie house."

VILES: Now governor in California and locked in a budget battle, Schwarzenegger this weekend turned the line against his Democratic opponents.

SCHWARZENEGGER: I hope that those that want to sell out to the special interests, those girlie-men up there in Sacramento, if they don't have the guts, if they don't have the guts to come out here in front of you and say, I don't want to represent you, I want to represent those special interests, the unions, the trial lawyers, I want them to make millions of dollars, I don't want to represent you, if they don't have the guts, I call them girlie-men. They should go back to the table and fix the budget.

VILES: Whether it was meant as a joke or insult, the response was predictable, "A third grade insult" said one Democrat. "Blatant homophobia said another." "Sexist" said a women's right group. ARIANNA HUFFINGTON, POLITICAL COMMENTATOR: What we see in this comment is the frustration level and the anger rising in the governor, and as a result his inhibitions are down and he reversed to that part of himself that is the bully. We've know through out his whole history that that part is there.

VILES: The star of "Kindergarten Cop" also said lawmakers were acting like children and need a time-out. The Democrat who runs the state Senate, said the govern had made it difficult to restart budget talks.

JOHN BURTON, CALIFORNIA STATE SENATE: Why would I possibly call him?

What are you people nuts?

Hi, this is the scumbag girlie-boy, how are you doing?

Give my best to the kids, yes.

Did you get anything good from Marie over at the mills?

VILES: And oddly enough California doesn't face a real budget crisis at the moment, it borrowed its way out of a $15 billion hole, and there's no talk of tax increases or deep spending cuts.

(END VIDEOTAPE)

VILES: Whatever happens here, the governor needs Democratic votes and a lot of them to pass a budget. A two-thirds vote is required and Democrats have commanding majorities in both Houses of the legislature -- Lou.

DOBBS: And the fervor that the governor set off, there is any sort of political advantage to have created that fervor?

VILES: Well, it's not clear. He need some Republican votes, and this may make Republicans feel a little bit better that the governor is actually sticking up for them, but he needs a huge Democratic vote. He needs about half the Democrats on his team in both houses.

DOBBS: Peter Viles, from Los Angeles thank you.

"Tonight's Thought" is on politics and political campaigns, "Prosperity is necessarily the first theme of a political campaign." President Woodrow Wilson.

Also in the West, firefighters in California tonight are struggling to contain several wildfires that are raging now around Los Angels. Those wildfires have burned thousands of acres and forced thousands to evacuate their homes.

Miguel Marquez, joins us now from the foothill fire in Santa Clarita, California -- Miguel.

MIGUEL MARQUEZ, CNN CORRESPONDENT: Lou, this fire has been burning for most of the day, and not giving firefighters too much hassle. They've been hitting with choppers pretty hard in this little canyon here about 25 miles north of Los Angeles. Little drama on the hill just a short time ago, the fire, you can see all that smoke in there, they've been hitting it very hard with choppers recently. The fire jumped a fire line, which is essentially a trail up there. And it cut off two hotshot crews, one is now up above that fire in a safety zone, they call it, an area where all -- everything around them has burned out, and they're waiting for the choppers to try to get ahold of this fire in this area before they go back down and try to cut more line.

Another band of firefighters, of hot shots were caught down below that fire and they could be seen running out of there a short time ago. This is the Foothills Fire started by a hawk that hit a power line and burst into flames. About 1600 mandatory evacuations. Some people in the Fair Oaks area are able to get back into their homes. But at this point, with these winds kicking up as high as they are, it has turned on firefighters in an instance. And now they believe, even the area that we are standing in, which we're probably quarter mile to a half mile away from that, they feel that that -- that this area may be in danger soon as well. And that this may become an area where they have to conduct operations, and that fire can get over on the other side of this road and into the communities beyond it -- Lou.

DOBBS: Reporting live from Santa Clarita, California.

Well, investigators in Nevada say an illegal camp fire sparked a powerful waterfall fire that is now burning in Carson City. That fire burned 7,600 acres. It destroyed 15 homes. It is now contained. Firefighters are expecting to fully contain the fire by tomorrow.

Race car driver Dale Earnhardt, Jr., released today from a California hospital after a fiery crash that left burns over 6 percent of his body. Earnhardt was burned on his chin and legs yet when he hit a barrier and his car caught fire during a practice session. Despite those injuries, Earnhardt is expected to compete in the NASCAR race in New Hampshire this coming Sunday, amazing.

Well, taking a look at some of "Your Thoughts," in particular on Martha Stewart's five-month prison sentence.

Marian, in Stamford, Connecticut, "Martha's sentence was too lenient especially because she expressed no remorse and continues to blame everyone but herself for her predicament."

Dr. McCubbin, from San Diego, California, "What a waste to send Martha Stewart to prison. Think of the contribution a woman of her talent, energy, and experience could have made if she had been sentenced to community service."

Satch Reed, from Arlington, Virginia, "Before commenting on Martha Stewart's sentence, I'll have to see what Ken Lays sentence is."

And Susan Davis of Medford, Oregon, "I just ordered a subscription to Martha Stewart Living, just my little contribution for all she has done for women, their families, and their households."

Send us "Your Thoughts" at loudobbs@cnn.com.

Still ahead here tonight, French President Jacques Chirac blast Israeli Prime Minister Ariel Sharon and says he is no longer welcome in France. We'll have that story and more on the crisis in the Middle East.

Our guest is Israeli consul general Alon Pinkas, that's next.

And mission critical, the United States struggling to find a defining mission nearly 35 years after Apollo 11 landed on the moon. We'll have a special report.

And "Exporting America" tonight, a business magazine that says stop whining, when it comes to globalization and outsourcing. Experiments with shipping jobs overseas, the results surprise at least the editor of "Business 2.0." Josh Quittner, he will be our guest coming right up.

(COMMERCIAL BREAK)

DOBBS: Palestinian Prime Minister Ahmed Qureiu resigned over the weekend, saying Gaza is simply in chaos. Palestinian President Yasser Arafat rejected his resignation, but the prime minister said nonetheless he has resigned. Arafat also replaced the head of national security with his nephew, a former head of military intelligence. 2,000 people in the streets demonstrated against that announcement saying Arafat was replacing corruption with more corruption, both men are now claiming to be in charge of security in the region.

Separately, French President Jacques Chirac told Israeli Prime Minister Ariel Sharon he is not welcome in Paris until he explains recent remarks urging French Jews to emigrate immediately to Israel, because of what he calls grave anti-Semitism in France.

Joining me now to discuss the Middle East is Ambassador Alon Pinkas, the Israeli Consul General here in New York.

Good to have you here.

ALON PINKAS, CONSUL GENERAL, ISRAEL: Thank you.

DOBBS: Let's start first with the Palestinian chaos, a surprise, Qorei resigning, saying point-blank there's simply a lack of control in Gaza.

PINKAS: I agree with him, and I'm not being hypothetical. I do agree with him. We agree with him. It's unfortunate that he resigned. He's a good man. He's a serious man. He is a man of peace. And he is on top of all those qualities, he is the second prime minister who resigns in the last 18 months, which demonstrates something we have said, that as long as Arafat possesses residual -- even residual executive power, no prime minister can go ahead with reforms. It's unfortunate. DOBBS: When I hear a representative of Israeli government say he is a good man, referring to a Palestinian leader, that tells me that when he stepped aside, we missed an opportunity. To what degree could there be support given to him to Palestinians of serious and goodwill in their negotiations?

What could the Israelis do?

What should the United States being doing?

Is there anything that can be done?

PINKAS: Well, absolutely. And It's a great point. Because what we are proposing, what we have proposed in the last several months, this disengagement from Gaza, which is termed unilateral, granted, but it's turned unilateral because of Arafat. Abut if but in Ahmed Qorei, Abu Ala as he is known.

DOBBS: It's unilateral also in that there's great division within Israel over the strategy as well.

PINKAS: Parliamentary division, political division. In terms of public opinion, Lou, 70 percent of the Israelis public support the disengagement from Gaza, which I'll save you a question so -- there are coalition talks going right now to enlarge the coalition to better express public opinion. The coalition as it stands now doesn't have a 70 percent majority, but the public has a 70 percent majority to disengage from Gaza. Disengaging from Gaza is a step that would be helpful to the Palestinian prime minister. President Bush, in April, endorsing and supporting the prime minister helped the Palestinian prime minister. His problem is Arafat, not Israel, not the U.S.

DOBBS: But this is no surprise to anyone that Arafat is the problem. He's identified as the problem by the Sharon government. A strategy was embarked upon to displace him and to simply move him aside, ignore him at the very least. The U.S. government fell in line with that approach. There's no surprise here. It looks clumsy, it looks late in the way both Israel and the United States are conducting diplomacy in the Middle East.

Is that an unfair statement?

PINKAS: No, it's a fair statement. It's a fair statement. It looks clumsy, because we're confused, and we're confused, because we -- after decade-odd years of negotiations, we don't know what it is that they want, the Palestinian leadership.

DOBBS: Right.

PINKAS: An American president for the first time ever, George W. Bush, not Bill Clinton, George W. Bush stated he endorsed the two states. An Israeli government, not a left wing, not a centrist government, but a right-wing government said yes a two-state solution, and the Palestinians don't respond to that. And that includes, and perhaps should be focused on Abu Ala, who rather than seize the opportunity of friendly American president to the concept, not Arafat, but to the concept, the Palestinian, and an Israeli government does nothing.

DOBBS: Well, the result with even all the good will and opportunity is much the same as it was on the previous administration, that is your respective to the annunciation of strategy, the result is a continuing cycle of violence and little progress if any.

Let's turn to...

PINKAS: Not necessarily.

DOBBS: Well, I hope you're right, but...

PINKAS: Well, it's not that I'm optimistic. You know, I'm trying to be realistic, and these cliches about being pessimistic is actually being optimistic and realistic.

(CROSSTALK)

PINKAS: Without those cliches, Lou, we are intent to leaving Gaza by the end of 2005.

DOBBS: Right.

PINKAS: And the chips will fall where the chips will fall. And that's an optimistic statement. This is not me being pessimistic.

DOBBS: Let's hope that whatever the steps are and when they are taken, that it eliminates -- reduces at the very least the violence. Turning to more confusion, Ariel Sharon encouraging Jews, French Jews to leave France, now French President Chirac says, Ariel Sharon, you're no longer welcome in France.

What in the world is going on?

PINKAS: Let me explain this. I think that Chirac does not understand what Sharon was saying.

Chirac is very is sensitive -- the French president was very sensitive...

DOBBS: You rather start this by saying he understood precisely what he was saying, Sharon that is.

PINKAS: Sharon's French was not comprehensible to Mr. Chirac. Israeli prime ministers, by definition, by their mission statement, and if you will, to borrow a term from your political culture, by their manifest destiny, are expected and required to ask Jews to come and live in Israel. Mr. Sharon has asked American Jews to come and live in Israel. In fact several months ago said he hopes that within a few years, a million American Jews will come to live in Israel. I didn't hear George W. Bush saying that he's upset about it. Chirac is upset because the context, the background against which Mr. Sharon made that statement is French anti-Semitism, and it's as if the French Republic -- the heir to the republic -- to the 5th Republic is incapable and unwilling to deal with anti-Semitism. That is the truth. DOBBS: And the result is further deterioration in the relationship?

PINKAS: Not really. You know, in the diplomatic world -- so Mr. Sharon will not enjoy some French food, so big deal. He won't go to France tomorrow, he will go the next day. That's not the issue. I think that Mr. Chirac as the French usually are, extremely sensitive to what others say about him and extremely insensitive to what they say about others.

DOBBS: Ambassador Alon Pinkas, we give you the last word on the issue, thank you for being here.

PINKAS: Thank you, Lou.

DOBBS: Tomorrow, I will be joined by Deanna Butu, who is the legal adviser to the Palestinian Liberation Organization to talk about the latest developments in the Middle East.

PINKAS: When we continue, Senator Clinton speaks out to the outsourcing of American jobs to cheap overseas labor markets. And I'll be talking with the editor of a business magazine, a business magazine that in its last issue decried those who whined about outsourcing, well they experimented with it. We're going to find out how that worked out for "Business 2.0."

And "Mission Critical," our special report on the future of space exploration. We'll take a look at how a lack of funding is hampering NASA's initiatives and it's newest mission.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: In "Exporting America" tonight, Senator Hillary Clinton today said shipping American jobs to cheap overseas labor markets doesn't bring the cost savings that many companies expect. She told a New York forum on outsourcing the cost of moving and managing off- shore jobs offsets the savings from cheaper wages.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK: A call center worker, with a raw wage of $5 an hour, might not be worth it. Take the $5 an hour and add $5 for telecommunications and security, add $3 for the offshore management overhead, add $2 for technology and add $2 for training, travel and transition. The costs add up, and very quickly we get to a true offshore wage of about $17 an hour.

(END VIDEO CLIP)

DOBBS: That, of course, to say nothing of the Americans who lose their jobs result. A new poll finds most of us believe the government should do something to stop the shipment of American jobs overseas. "The Economist" magazine poll found 73 percent of Americans believe the federal government should discourage companies from sending jobs overseas. Only 4 percent say the government should encourage them. Twenty percent say the government should stay out of the matter altogether.

My next guest is a strong supporter of offshore outsourcing. His business magazine even conducted an experiment with outsourcing journalism. The experiment, well, we'll tell you little more about that, we'll let him talk about it. And we'll talk about his opinion about outsourcing.

Joining me now is Josh Quittner, he is editor of "Business 2.0" magazine. Josh, good to have you here.

JOSH QUITTNER, EDITOR, "BUSINESS 2.0" MAGAZINE: Good to see you, Lou.

DOBBS: I just wanted to put up a cover here that ran last month, which is "It Is the Global Economy, Stupid," which -- I -- what really caught my eye was the cutline below it, "Stop Whining About Outsourcing," which, of course, as you know, something we cover here. You decided to try it out yourself. Tell us a little bit about it, why you did it.

QUITTNER: We wanted to eat our own dog food. Every time we write a story extolling the virtues of offshoring, we get a lot of e- mail from our readers, who tend to be in the technical classes, who take us to task, and they say, I just hope one day you guys get offshored, we hope that your jobs get sent overseas. So one of my editors came to me after that cover ran and said, you know what, why don't we try it? So instead of just doing a story or two, we decided to offshore the entire front of the book, the front section, and just to sort of see how it would work.

DOBBS: OK, how did it work? Tell us. Did you save money? Was it a great result?

QUITTNER: Well, we did save money. It ended up costing us half as much as it normally would cost to put together that many pages of a magazine. That said, I wouldn't say it was a resounding success. We probably wouldn't do it again.

The fact of the matter is, the journalism business is a very local business, and no amount of technology available right now can substitute for being in somebody's face.

DOBBS: It's collaborative, it is...

QUITTNER: It's highly collaborative, it's highly creative, and there's nothing that beats getting a bunch of brains in a room and brainstorming about things.

DOBBS: So as you experimented with it, and you've heard from your readers saying, you know, we hope you get outsourced, is what I'm hearing you say is, well, outsourcing is good, conceptually for all those other folks, but if it's my job, it's not such a bright idea?

QUITTNER: No, it's not that. I think that probably one day our jobs will be outsortsable, as technology gets better. But the fact of the matter is, right now we haven't reached the point where highly collaborative, high-touch jobs can be outsourced. Certainly some jobs can, and I think that's just how free markets work. The jobs that ought to be outsourced are outsourced, and the ones that shouldn't aren't.

DOBBS: And when you -- in those free markets, put third-world labor in competition with American middle-class men and women working at wages exponentially higher, what is that called?

QUITTNER: Well, there are arguments of the heart, Lou, and there are arguments of the head. And it is a horrible -- capitalism can be a very wrenching thing from time to time...

DOBBS: Yes, but, Josh...

QUITTNER: ... and certainly the history of this country has shown that as we move from agrarian to industrial, to post-industrial, digital economies, lots of technological displacement has occurred.

But the fact of the matter is, this is a fantastic country that has always behaved like an incubator for capitalism.

DOBBS: Well, it's been an incubator, it's been far more advanced than that, but I would remind you it was Adam Smith, who I think you would admit was the principal advocate of free markets and laissez- faire, who suggested that we maintain also a great deal of consideration of sentiments when it comes to capitalism, constrain it and even regulate it.

For that very reason you mentioned, Josh, we've got to run. It was great of you to be here, and we look forward to your next experiment. And if it has to do with outsourcing, we hope it's as big a calamity.

QUITTNER: Thanks, Lou.

DOBBS: Thanks, Josh. Josh Quittner, the editor of "Business 2.0."

Still ahead here, "Mission Critical." We begin our series of special reports on the future of American space exploration all week long. We'll continue in just a moment.

(COMMERCIAL BREAK)

DOBBS: Tonight, we begin a series of special reports, "Mission Critical," the future of the American space program. Tonight, the future of NASA itself. Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): 1969 was NASA's crowning moment, but since then, no human being has set foot on another planetary body, or traveled farther than 386 miles above the Earth. After beating the Soviets, NASA's manned space program lost its focus.

JOHN LOGSDON, GEORGE WASHINGTON UNIVERSITY: For 30 years, from 1972 through January of 2004, there was kind of -- we put people in space to put people in space.

SYLVESTER: The Columbia disaster last year was a turning point. The accident board concluded the lack of a goal for NASA was a failure of national leadership.

In January, President Bush laid out an ambitious space exploration program -- to complete the International Space Station by 2010, to develop and test a new spacecraft by about the same time, and to return to the moon by 2020. The vision included astronauts living and working on the moon, tapping its resources, and using it as a potential launchpad to Mars and beyond.

EDWARD HUDGINS, THE OBJECTIVIST CENTER: Going to Mars certainly would be cutting edge, and I think that that's something that people would get excited about. The problem is, they're not going to get very excited about it when they see the bill.

SYLVESTER: The White House has proposed spending $1 billion and diverting $11 billion over the next five years from NASA's existing programs to fund the initiative. Congressional critics say that's too much money, given the rising deficit. Scientists say it's too little. President Bush's science adviser advocates a spend-as-you-go plan.

JOHN MARBURGER, WHITE HOUSE SCIENCE ADVISER: When you say what will it take to get it all done? Well, what is "it"? What are we talking about? We're talking about a step-by-step approach. And the steps can be taken at the pace that we can afford.

SYLVESTER: One possible solution for defraying costs -- more private sector involvement. Another option is to rely on international partnerships. To get to the moon the first time took competition. The next time it may take cooperation.

(END VIDEOTAPE)

SYLVESTER: While NASA's manned program has suffered from a lack of direction, its unmanned program has had more recent successes, Cassini studying Saturn's rings, and the Spirit and Opportunity rovers exploring Mars -- Lou.

DOBBS: Thank you very much, Lisa Sylvester.

Still ahead, our poll results. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Our poll results: 25 percent of you say the United States should impose economic sanctions; 28 percent favor covert action; 9 percent military action; 39 percent diplomacy.

Please join us here tomorrow. We explore the growing controversy over e-voting. For all of us here, thanks for being with us. Good night from New York. "ANDERSON COOPER 360" is next.

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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