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Fmr. Israeli Prime Minister Shimon Peres Holds News Conference on Middle East Crisis

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

FRANK SESNO, CNN ANCHOR: Joining us now right here is Zbigniew Brzezinski, former national security adviser.

Dr. Brzezinski, we've been talking as we've been hearing these reports go by, you've been commenting on how serious you think this is and what is happening, in terms of the two sides, the ability to draw back from this.

Your analysis, please.

ZBIGNIEW BRZEZINSKI, FMR. NATL. SECURITY ADVISER: Well, first of all, let me say that I am full of sympathy for the successors here in office here in Washington who are dealing with this issue. This a complex and incendiary problem and could explode. We are on the brink of a very major crisis on both sides, on the Palestinian side, and on the Israeli side; I am afraid that the dynamic at work is pushing each side toward a more extreme position, toward a more violent posture, and the consequences are going to be disastrous for both sides. If Arafat's authority is destroyed, the Palestinians will sink into anarchy and totally extremist elements will takeover. If Barak position is undermined, more extremist elements originated from the Likud will have an effect, control over policy in Israel. There will be a reimposition of occupation of an entire West Bank, and something along the lines of civil unrest and guerrilla welfare.

Dr. Brzezinski, I'm sorry, I don't want to interrupt, but I must, because CNN International said Rula Amin is standing by now with more -- Rula.

(JOINED IN PROGRESS)

RULA AMIN, CNN CORRESPONDENT: Back to you.

UNIDENTIFIED CNN ANCHOR: Rula, Yasser Arafat has described this as war. And in wars, generally both sides fight. Has there been any mobilization of the Palestinian police or of the men and weapons that are under Yasser Arafat's command?

AMIN: Palestinians police are on high alert here. In the streets, you can see them with their weapons, but you can see more preparations toward the anticipating more attacks, and so they're trying to evacuate and keep the civilians out of the area why where they think might be possible targets for Israeli attacks, such as the police headquarters, such as (UNINTELLIGIBLE) and Mr. Arafat's organization. One of his headquarters was attacked in these attacks, and so they're trying to keep the people away from these locations, but other than that, we did not see a whole mobilization.

We did see people, angry people, average people on the streets, ordinary Palestinians, men and young people, who told me they were very angry and were talking about going and getting back at Israelis for doing this, because they feel they were very vulnerable, that they are weak, and they don't have much weapons, and that they were attacked by helicopter gunfire.

Back to you.

UNIDENTIFIED CNN ANCHOR: Can you tell us about the extent of the casualties in Gaza and the damage from these attacks?

AMIN: You know, John, the damage is not much in terms of the physical damage. At the marina, where it's the Palestinian police marine has some boats there and some weapons that has been attacked, we saw a couple of boats that were damaged. (UNINTELLIGIBLE) headquarters, in one of the areas here in Gaza, was also attacked, but it's more than that the actual physical damage. It's the message that was sent with these attacks. Palestinians see it as a declaration of war. They think Mr. Barak is taking a risk at the peace process, and basically saying, I am not going to negotiate on you with the table, I am going to negotiate with you with my power.

And the response we're hearing from people here is that Israel is very strong, they might have -- they may be very powerful and much stronger than the Palestinians, but as Mr. Arafat told you just now, he thinks that he has the will the determination of the Palestinian people, and that will give him enough strength to resist -- Jonathan.

UNIDENTIFIED CNN ANCHOR: Rula Amin in Gaza City.

We're going to go now to our Jerusalem bureau chief Mike Hanna.

Mike, what's going on there?

SESNO: And we're going to come back to you and bring you up to date on some of the happenings here in Washington as this is a very volatile, very unpredictable and dangerous situation in the Middle East -- continues to play out.

Kelly Wallace, White House correspondent standing by there. Having monitored the president's efforts over these past several days and more intensive efforts just in the last several hours.

Kelly, over to you.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well, Frank, President Clinton arrived here back at the White House a short time ago. He was spending last night in Chappaqua, New York to be with his wife, Hillary Rodman Clinton for their 25th wedding anniversary.

As soon as the president arrived he, pretty much, immediately headed into a briefing with his national security team including his national Security Adviser Sandy Berger, Secretary of State Madeleine Albright, Defense Secretary William Cohen.

As we've been reporting all morning, the White House is really watching two fronts: watching the events in the middle east, also watching the situation, that explosion on the U.S.S. Cole.

As for the Middle East, Mr. Clinton has been working the phones this morning. After he received word about thee two Israeli soldiers killed by a mob in the West Bank, Mr. Clinton called the Palestinian leader Yasser Arafat to voice his concern about the incident, to, basically, convey to the chairman that the chairman must do everything he possibly can to end the violence and restore calm.

Mr. Clinton is also trying to have a conversation with Israeli Prime Minister Ehud Barak. We understand from White House Press Secretary Jake Siewert that conversation has not yet happened, but the White House fully expects that conversation to happen. The prime minister has been busy in a cabinet meeting.

Earlier this morning we heard Secretary of State Madeleine Albright talking to reporters, saying this a sad and difficult period. Basically calling on both sides to stop the violence and agree to a cease-fire. She, basically, called on Chairman Arafat to do everything he possible can to end the violence.

Here is what the secretary said a short time ago.

(BEGIN VIDEO CLIP)

MADELEINE ALBRIGHT, SECRETARY OF STATE: We are calling on the Israelis to bring an immediate end to the current operations by the IDF. Now is the time for leadership. There needs to be a cease-fire by both sides. Neither Israelis nor Palestinians can gain from further killing.

Both gain from the silencing of guns, a cooling of tempers and a resumption of serious and constructive talks. The future of the Middle East must be decided at the negotiating table, not in the streets.

(END VIDEO CLIP)

WALLACE: And so the White House, from President Clinton on down, intensively engaged in trying to reduce tensions in the Middle East. CIA Director George Tenet is in the region. President Clinton had dispatched him there to try and improve coordination between the Israeli and Palestinian security forces.

All eyes on that situation at this time -- Frank.

SESNO: Kelly, let's pick through a couple of things here.

Just a few moments ago we heard former national security adviser Brent Scowcroft say, essentially, that the ball is in the Israeli courts, that if he were still in office, if he were still advising the president, the place he would start would be with a cessation of hostilities, first, by the Israelis.

Is that the administration's take?

WALLACE: Well, you certainly heard Secretary Albright kind of appealing to both sides; basically calling on Chairman Arafat to do what he can to stop the violence, also calling on the Israelis. No matter how, she says, they feel justified to take some action, that they must do more to, basically, exercise restraint.

The U.S. though, Frank, is really trying to stay in this difficult position of trying to be an honest broker. Trying to not...

SESNO: Kelly, I'm sorry to step in on you here, but we're getting Shimon Peres in London, he's been at No. 10 Downing Street, coming out to the microphones, we want to listen to what he has to say -- a defender of the peace process.

(JOINED IN PROGRESS)

SHIMON PERES, FORMER ISRAELI PRIME MINISTER: All of us would like to save the peace of the buried. Some of the news, with your permission, are incorrect. I mean, Israel didn't bomb the headquarters of Arafat, as it was published; neither his residence. The targets were some police (INAUDIBLE) without any civilian targets in mind, and to best of our knowledge no civilian person was hit as a result of this bombing. In Ramallah the target was a police station. And before the police station was hit, the people were warned, so the station was empty.

I mean, Israel has had to react after this (INAUDIBLE) terrible accident, I mean, to make a lynch on the soldiers in face of the television, and they were in the police station. So the reaction was immediate, but restrained in a way. And I don't think that any of us wants to escalate the situation, if at all we'd like to de-escalate it. And here we are.

QUESTION: How do you respond, Mr. Peres, to Palestinian claims that this was a declaration of war by such a heavy-handed attack?

PERES: Well, until now there was a war without a declaration by the Palestinians. For us it doesn't change. I mean, we don't understand -- we didn't understand why did the Palestinians went to stones and bullets again, what for?

You know, you cannot compare this intifada with the previous intifada, which took place eight or nine years ago. The first intifada took place when Israel was present in the territories. Today we are out of Gaza, we are out of Nablus, we are out of Ramallah, and actually the attack is against Israeli forces outside the Palestinian territory.

We are negotiating. The prime minister of Israel, Mr. Barak, went a very long way in Camp David, is the most generous offers that one can have. Why are some turn to violence?

QUESTION: Is there anything concrete that the British government can do in order to try and defuse the situation?

PERES: Well, I understood from Prime Minister Blair that the British government is ready do everything which is possible. And I think tomorrow (INAUDIBLE) they will try to sort out what can be the best measures. Because right now, as you can understand, the heat is at its height. But I think, for example, a cessation of violence, a fact-finding committee, which we are not against, on the contrary. We would like to see all the facts emerging as clearly and loudly as they are and maybe to see if there is still an open road to return to negotiations.

SESNO: Former Israeli Prime Minister Shimon Peres, an architect of the peace process visiting Prime Minister Tony Blair in London, talking to reporters there, saying Israel is not attacking civilians, that it went after the police stations in the Palestinian areas after warning folks there that that attack was going to take place because, he said, Israel had to respond to the murder of the -- the killing of the two Israeli forces in the streets of those areas.

He said the attacking, essentially, were surgical, but continues to lay responsibility squarely at the feet of Yasser Arafat and the Palestinians. Making the point that this uprising by the Palestinians -- and it's an important part as far as the Israelis are concerned, cannot be compared to previous uprisings because, their argument goes, the negotiations have been underway, the Israelis are out of many of the previous occupied territories such as Gaza, Ramallah, Nablus and this is an altogether unfortunate turn of events.

But a visibly shaken and subdued Shimon Peres, there.

To Andrea Koppel at the state department, monitoring diplomatic efforts on the part of the United States just now -- Andrea.

ANDREA KOPPEL, CNN ANCHOR: Frank, a lot of angst and tremendous concern by many -- felt by many in this building.

Secretary of State Madeleine Albright, earlier today, calling on both leaders, both the Israeli prime minister and the Palestinian leader to exercise leadership and step back from the brink. There is also concern within this building, and has been ever since the violence really began in full force almost two weeks ago, that the longer that the Arab-Israeli conflict continues, the greater the chances that there would be a rippling effect within the rest of the Mideast region.

Whether or not the attack in Yemen was, in fact, directly linked to the sentiment, the incredible anti-Israeli sentiment, expressed by many in the Arab world is not clear. However, many do believe, Frank, that there is tremendous cause for concern that the longer that the conflict in Jerusalem and outside in the Palestinian territories continues, the greater the chances that Americans overseas might be at risk.

They say that they have no reason, right now, to issue -- or to, rather, close down U.S. embassies as they did last weekend. But at the moment, Frank, what they are saying is that there is various, not just anti-Israeli sentiment that is growing in the Arab world, but also Anti-American sentiment.

To that end, Secretary Albright, earlier today, did speak with the president of Yemen and called on him to issue a statement condemning the attack as soon as possible.

Behind the scenes here, a lot of work that is being done within the rest of the Arab world to try to get some kind of unified statement condemning the violence from this morning, condemning the attack in the port of Aden against that U.S. ship. But, however, Frank, the U.S. does believe that Americans do need to be on alert who are overseas and are trying very hard behind the scenes to try to get the rest of the Arab world to come out in condemnation of this morning's attack.

SESNO: Andrea Koppel, thanks very much.

Well, whether in Washington or London, Shimon Peres speaking after meeting with Tony Blair, these governments are very much on the sidelines watching with great concern, growing concern, developments there.

Let's get more what is actually happening to ground. Back to Bill Hemmer in Atlanta, now.

BILL HEMMER: All right Frank, thank you. To Gaza City, CNN's Rula Amin by telephone, now, bringing us up to date on what is happening there. Again, it is nighttime in Gaza City. Yasser Arafat said to have been there earlier today. Here's Rula with more, now, after speaking recently, now with Yasser Arafat.

What did the Palestinian leader have to say?

AMIN: Bill, I just spoke to the Palestinian president Yasser Arafat, who came to the hospital to visit the wounded. And I asked Mr. Arafat what was his reaction to the Israeli attacks on certain locations in Gaza. He said, quote, he told me, "For your information, we are the Palestinians. We are the strong and we are strong, as has been mentioned Koran, the holy book for Islam. And he said we don't and will not hesitate to continue the march to Jerusalem, the capital of the Palestinian state," end of quote.

Mr. Arafat seems determined -- that the officials who are around him told us that he's determined that this attack by Mr. Barak and the decision by Mr. Barak to attack for him is a declaration of war. And there is concern here among Palestinians that this might mean the end of the peace process.

You know, this has happened just minutes after Mr. George Tenet, the director of the CIA was to come to Gaza to meet with Mr. Arafat and with Palestinian security officials to prepare for a meeting with Israeli security officials. This was what was being prepared for to end the violence and to find a way to restart the peace negotiations.

And the Palestinians say that this attack comes at the time when their efforts were concentrated on trying to find a way out of this crisis, and they take it as a signal that Mr. Barak is not really interested in resuming peace negotiations with them -- Bill.

HEMMER: Rula, back to these words, "declaration of war" from Yasser Arafat. Is there a way to measure his words? Is there a way to define what he meant by using those three words.

AMIN: No, he didn't say declaration of war. It's the officials around him, the Palestinian officials, many of them have told us that they consider this as a declaration of war. Mr. Arafat did not use those words, and all he said was this was not going to intimidate him, basically, and that he will continue his march to Jerusalem as capital for the Palestinian state.

But officials who are around him, even before the attacks took place, they told us if Mr. Barak did actually attack that would be crazy because that would be bringing the whole region, not only the conflict between Palestinians and Israelis, to a real crisis. The Palestinians here see this attack as turning point in their relationship with Israel and in the peace process with Israel because so far, they felt the confrontation was contained. And this was a serious, serious escalation as they see it.

HEMMER: A clarification well-noted on the words that are or are not attributed to Yasser Arafat on that front. However, the Palestinian officials when they use, those words is there a way to define what they intend when they use those statements?

AMIN: They are not saying on how they will respond. They are saying that they see this attack as declaration of war on them and that this -- they are patient. They are not going to be intimidated. They will continue their fight to end whatever is left of Israel's occupation. And they're not saying what they will do.

Mostly, the people here on the streets actually are outraged. They feel very vulnerable. They feel weak. They say all they have is their light weapons, and Israelis have all the power, and now Israelis are attacking them with helicopter gunships, and they see this as a very serious escalation and they feel frustrated that they can't do anything about this.

So we heard a lot of people just on the street talking about going to Israeli checkpoints and throwing stones, or trying to do something because they feel so weak that, something like this would happen to them, and they want to retaliate.

But I think Mr. Arafat had been contacted by many diplomats, Europeans as well as U.S. officials. We know that President Clinton did talk to Mr. Arafat over the phone. We know that the U.N. envoy here had been in contact with the president of the Palestinian authority, trying to find a way out of this serious, serious crisis according to the Palestinians.

HEMMER: Rula, if I could just interject quickly, here. Was there any talk from Yasser Arafat or was he questioned at all about the two Israeli soldiers that were found dead in the streets of Ramallah earlier today? AMIN: Bill, Mr. Arafat was very brief. He only answered one question, the one we asked him. But Palestinian officials, including his spokesman, did condemn in a way this attack. They said the Palestinian police tried everything possible to protect those two soldiers, and that they were mobbed, too, and that some Palestinians police were injured, over 10 Palestinian police they say that were injured trying to protect those soldiers.

However, they do point out the fact this was Israeli soldiers in Palestinian territory, totally controlled by Palestinians in civilian clothes carrying weapons which usually carries the image of undercover units, usually goes after demonstrators and shoot at them.

HEMMER: Rula, I want to get to one more point here, then I want to cut you free to go ahead and collect more information for us. But we've been reporting that the territories Gaza and the West Bank have been closed. Give us a better idea what that means for people living in these two parts of the Middle East.

AMIN: Bill, the territories have been closed. And this is, for Palestinians, is very serious not only because it affects their livelihood. There are many Palestinians who go to Israel for work, and that means some people cannot go for work, and they are not going to earn their bread for that day.

But also, it's basically cutting Palestinian territory from each other. For example, two days ago there was a cabinet meeting for the Palestinian leadership -- it wasn't a cabinet meeting but it was a meeting for the Palestinian leadership -- and Palestinian officials, leaders, cabinet members, negotiators, head of the -- chief negotiator for the Palestinians with Israel -- they were trying to come from the West Bank to meet with Mr. Arafat in Gaza and they couldn't because the territories were closed.

Israel said no one can get in and out, not only to Israel, but they can't even move from West Bank to Gaza. And Mr. Arafat was speaking on the phone with President Clinton, and he mentioned that. He said, you know, you are talking about ending this crisis, and here we are -- I can't even get my leadership to come to Gaza. And it took some U.S. mediation to get -- find a way to get those Palestinians to come to Gaza from the West Bank.

And it's basically more than the cutting off, it's the symbolic significance of it. They feel that Israel is in control, and it's not only in control of the Palestinians they can't go in and out, but even the leadership can't leave or come in or go out without the permission of Israel -- Bill.

HEMMER: All right, Rula, we're going to cut you free. Go ahead and come back anytime as soon as you get more information. Rula Amin, again, by telephone in Gaza City. Now Daryn.

KAGAN: And as we've been tracking these events as they take place around the world, there's been an effect here in the U.S., namely on the stock market especially on the Dow which is down more than 300 points right now. For an update on that, in financial news we go to the financial news desk and Allan Chernoff -- Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Thank you, Daryn. Let's make the connection between what's happening in the Middle East and Wall Street. There's lots of concern that the situation in the Middle East could spread, could get even more tense, and the worry right here in New York is that could potentially interrupt the supply of crude oil coming to the U.S., supply which right now is extremely tight.

As a result, we have the futures of crude oil rising more than $2.50 a barrel, trading about $35.75 to the barrel right now, an extremely high-level. That is helping out the oil stocks, but it is raising the prospects of inflation down the road. That's hurting financial stocks, and within the Dow Jones industrial average we've got two very important financial stocks, J.P. Morgan, which right now is down 9 points, and Citigroup off more than 3 points right now.

The other critical factor today driving the Dow lower, Home Depot coming out with an earnings warning, and that stock is getting hammered, down more than 13. Those three stocks together are accounting for well over half of the decline that we're seeing in the Dow Jones industrial average. Back to you.

KAGAN: All right, Allan Chernoff at the financial news desk. Thank you very much. Once again, the Dow down 324 points, close to that 10000 mark.

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