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## LOU DOBBS MONEYLINE

Dow Slides 144.55 to 9,651.57; Nasdaq Loses 46.13 to 1,496.83

Aired June 19, 2002 - 18:00 ET

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

LOU DOBBS, HOST: Tonight, a deadly attack in Jerusalem. Israel has responded by invading the West Bank. Palestinians say that action will lead to even more bombing. We'll be live from Jerusalem.

The former Secretary of State Henry Kissinger will be here to tell us whether the United States can do anything to stop this intensifying cycle of violence in the Middle East.

The Senate Banking Committee wants to force strict new regulations upon auditors, analysts, and corporate executives. Senator Paul Sarbanes who chairs that committee is my guest tonight.

Martha Stewart is in the battle of her career. Stewart says her company is still strong. Congressional investigators say they'll find out whether Stewart traded on insider information. We'll have a special report from New York.

And mission accomplished for the crew of space shuttle Endeavour. They landed 2,200 miles from their home base.

ANNOUNCER: This is Lou Dobbs' MONEYLINE for Wednesday, June 19th. Here now Lou Dobbs.

DOBBS: Good evening.

The Israeli/Palestinian crisis is worsening by the hour, spiraling out of control. Another suicide bomber struck a bus stop in Jerusalem today. At least six Israelis were killed in the attack. It was the second bombing in two days.

Israeli troops have begun taking over Palestinian towns in the West Bank. Israel says that that will stop there only when the terrorism

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8/22/2002

CNN.com - Transcripts

DOBBS: John, thank you very much.

Senior White House Correspondent John King.

This week's suicide bomb attacks in Israel could not have come at a
worse time for the president. As John King has just reported, the
president is putting the final touches on his new Middle East policy.
At the same time, President Bush is considering the largest change in
U.S. strategic thinking in 50 years.

Joining me now, the former Secretary of State Dr. Henry Kissinger.

Good to have you here.

HENRY KISSINGER, FORMER SECRETARY OF STATE: Good to be here.

DOBBS: If I may turn first -- a second day of tragic and mindless
violence in Israel. At this point, the president seems committed to
moving ahead with this initiative. Can he do so, in your judgment, to
good effect?

KISSINGER: Well, I think he can do so within a measurable time. He will have to judge what the right moment is, but I think it is the right moment for him to make some suggestion of how he visualizes the process.

DOBBS: For the president and for this administration, Secretary of State Powell, the difficulty with all of this violence, the suggestion from the Sharon government that any proposal here would look like it was rewarding violence that is being carried out by the radical Islamists and Hamas, Hezbollah, al-Aqsa.

How significant is that, in your judgment, to effectively pursuing the interest of both the Israelis, the Arab states in the region, the Palestinians, and those of the United States?

KISSINGER: Well, early in April, the president made a statement in the midst of violence which was very balanced and, I think, on the whole very helpful. I'm sure that he will make a clear statement of his condemnation of terrorism and the penalties that have to be paid.

But I think the moment has come of pointing out what process would lead us forward, and, in my view, actually, one shouldn't focus so much on the personality of Arafat, if fundamentally Arafat is the problem of the Arab countries, and I would feel that it would be better to go to the moderate Arab countries and say, basically, it's your problem, and you have to guarantee whatever emerges out of an arrangement because there isn't enough trust in him.

8/22/2002

CNN.com - Transcripts

Page 7 of 22

And one other tie -- and I'm sure this is what is going to be done in
way one or another -- to tie our -- the process -- the progress towards
peace to some reforms of the Palestinian Authority. And, on that basis,
one could make a distinction between making a peace agreement
which is final and definitive and a coexistence agreement which
enables the two societies to begin normalizing relations.

DOBBS: Is that, in your view, enough here? The president pointed out, as did Secretary of State Powell, that the Palestinians here need a more definitive horizon in order to assure an end to the violence, a role, if you will, an incentive to end this violence, that incentive being...

KISSINGER: One thing that has to become clear as the process emerges is whether the Palestinians have any particular line in mind or whether enough of them want to destroy Israel so that they'll never be quiet.

So there has to be a demonstration of a period of absence of violence, but it would seem to me that what one could propose as part of a coexistence arrangement which would include this idea of a provision of statehood would be what happens three, four, five years down the road as peace returns, reconstruction has begun.

That would seem to me the vision that would be likely and achievable.

DOBBS: You raise the issue of the leadership of the Arab states.
Crown Prince Abdullah, Saudi Arabia putting forward his initiative.
The Arab League adopting some support for that.

But they have been extraordinary -- the leaders of the Arab states in
the region have been extraordinarily quiet during this period of
escalating violence on the part of these radical...

KISSINGER: It's very difficult for them, and it's been their failure that they have been quiet for too long.

But I believe that the president when he takes his initiative -- and it
doesn't seem to me whether it happens this week or next week -- that
that is a crucial point -- should indicate the responsibility of each of
the sides, and the Palestinians alone have neither the power nor do
they have the trust to do it by themselves.

So the moderate Arab regimes -- Egypt, Jordan, Saudi Arabia, maybe
Morocco -- have to come forward and guarantee the execution of some
of these proposals.

DOBBS: And the...

KISSINGER: On the Arab side, of course.

8/22/2002

CNN.com - Transcripts

Page 8 of 22

DOBBS: On the Arab side.

And you raise the issue in terms of a coexistence agreement for an idea of a line. That line in the mind of the Palestinians -- what do you think -- what does Henry Kissinger think is the appropriate eastern border for this -- for the State of Israel and the western border of Palestine?

KISSINGER: Right now, if I understand what President Mubarak has said and what the Saudi foreign minister has said last week, is that they would be satisfied with the present eastern borders of the state of the Palestinian Authority, as long as it is clear that this will not be the definitive border.

And then when one thinks back to how peace evolved with Sadat, at first, he was asking for the '67 borders. Then a series of limited agreements were made, during the course of which enough confidence developed that coexistence was really possible so that, finally, the '67 borders were agreed to.

Now where the precise border would be -- that should be left to negotiations and shouldn't be settled now. But it should be clear that the eastern border that would be part of the provisional state is not the definitive border.

DOBBS: I take it that, within even this atmosphere this tragic climate of escalating violence, you see an opportunity here for a negotiation.

KISSINGER: I believe that there is a possibility to make significant progress. Dramatic as it looks right now and heartbreaking as it looks, I think this is -- if one looks at the history of the Middle East, this is usually where the strong leadership and solutions emerged.

DOBBS: Henry Kissinger, good to have you here.

KISSINGER: Good to be here.

DOBBS: Thank you.

Profit warnings from the technology sector today set the stage for a sell-off on Wall Street. The latest violence in the Middle East also contributing to the sell-off. The Dow tumbled 145 points today. The NASDAQ fell 46. The S&P 500 down 17 points on the day. Jan Hopkins will be here with complete coverage of the market later. Turning now to our MONEYLINE quick vote. Tonight's question is: "Do you believe the Palestinian cause would be better served by a policy of non-violence?"

You can cast your vote at cnn.com/moneyline. We'll have the results

8/22/2002