Dan Rather Reports

Episode Number: 310

Episode Title: Captain Gildroy's War

Description: As the war in Iraq enters its sixth year, we travel to a seldom visited area south of Baghdad where a US Marine officer gives a unique perspective on what's going right and what's not. Also a retired general who fought on Iwo Jima gives his views on the effectiveness of torture. And, the slumping American economy.

Transcript:

I CAME HERE FIRST AND FOREMOST TO LIBERATE THE IRAQI PEOPLE SECONDLY I FEEL IT'S VERY IMPORTANT TO HAVE THE OIL FIELDS IN THE SOUTH AVAILABLE TO THE FREE MARKET AND POTENTIALLY GAIN A STRATEGIC FOOTHOLD HERE AND FROM MY PERSPECTIVE HERE IN THE SOUTH, I DON'T THINK WE'LL ACCOMPLISH ANY OF THE THREE

I'VE BEEN IN THREE WARS, I'VE NEVER TORTURED ANYBODY TO TRY TO FIND OUT SOMETHING BUT I DO KNOW THAT HUMANE TREATMENT DOES WORK AND I DO KNOW THAT HE WORLD WATCHES WHAT WE DO

AND IF WE GET FURTHER FINANCIAL CRISES THE LIKES OF WHICH WE'RE SEEING BY WITH BEAR STEARNS COLLAPSE IT COULD BE EVEN WORSE NOW THAT GETS YOU INTO A WORD THAT NOBODY LIKES TO TALK ABOUT IT STARTS WITH D AND IS STANDS FOR DEPRESSION WE'LL BRING YOU THE NEWS TONIGHT ON DAN RATHER REPORTS

GOOD EVENING. IT'S BEEN FIVE YEARS SINCE SHOCK AND AWE, FIVE YEARS SINCE A CONFIDENT MILITARY SWEPT INTO IRAQ LOOKING FOR WEAPONS OF MASS DESTRUCTION. AND FIVE YEARS SINCE AN AMERICAN PRESIDENT ANNOUNCED HE WOULD CREATE A DEMOCRATIC EXAMPLE IN THE HEART OF THE ARAB WORLD. WHAT HAS HAPPENED SINCE, IS OF COURSE, WELL KNOWN. BUT TONIGHT WE'RE NOT GOING TO LOOK BACK. THE HEROIC AMERICAN TROOPS SERVING IN IRAQ DO NOT HAVE THAT LUXURY. OUR REPORT TONIGHT IS ABOUT THE PRESENT AND THE FUTURE - A WORLD OF AMERICAN MONEY AND IRAQI POLITICS. IT'S A COMPLICATED PLACE, NOT CONDUCIVE TO PRESIDENTIAL CAMPAIGN SOUND BITES OR SO- CALLED ANALYSTS WHO SIT IN AIR- CONDITIONED TELEVISION STUDIOS. YOU'RE GOING TO SEE A RARE AND CANDID PERSPECTIVE OF IRAQ AS SEEN THROUGH THE EYES OF A REMARKABLE YOUNG, MARINE CAPTAIN. AND BEHIND THE CAMERA REPORTING THIS STORY IS AWARD-WINNING PHOTO JOURNALIST LUCIAN READ, WHO HAS SPENT TWO YEARS IN IRAQ CHRONICLING THE VIOLENCE AND ANGUISH OF WAR.

FOR THIS REPORT, WE START BY LEAVING THE CROWDED STREETS OF BAGHDAD BEHIND. THE SECTARIAN VIOLENCE THAT HAS PLAGUED THIS ANCIENT CAPITAL HAS DOMINATED MEDIA ATTENTION, BUT WE ARE HEADING SOUTH - TO IRAQ'S SHIA-DOMINATED REGION. I THINK THE SOUTH BY AND LARGE IS FAR MORE STABLE THAN-- THAN BAGHDAD. IT'S I THINK REFLECTIVE OF THE FACT THAT, SINCE THE SURGE'S STARTED IN IRAQ, THE SECURITY SITUATION IS-- HAS GREATLY IMPROVED. AND-- AND DIWANIYAH IS AN EXAMPLE OF THAT. 31-YEAR OLD U. S. MARINE CAPTAIN ANN GILDROY IS STATIONED IN DIWANIYAH. IT'S A PROVINCIAL CAPITAL OF AROUND 400,000 PEOPLE 90 MILES SOUTH OF BAGHDAD. IT'S LOCATED IN A PARTICULARLY FERTILE PART OF THE COUNTRY - WHAT WAS ONCE MESOPOTAMIA. CAPTAIN GILDROY HAS A UNIQUE PERSPECTIVE ON THE CHALLENGES FACING IRAQ. FOR STARTERS, SHE STUDIED INTERNATIONAL SECURITY AND DIPLOMACY AT GEORGETOWN UNIVERSITY, SERVED IN THE MARINES IN IRAQ, WENT TO HARVARD BUSINESS SCHOOL AND THEN RETURNED TO ACTIVE DUTY AND IRAQ FOR THIS SPECIAL ASSIGNMENT. ALTHOUGH SHE'S ONLY A CAPTAIN IN RANK, GILDROY HAS TREMENDOUS RESPONSIBILITY. SHE OPERATES LARGELY OUTSIDE OF THE MILITARY'S CHAIN OF COMMAND, REPORTING DIRECTLY TO AMERICA'S TOP GENERAL IN IRAQ, DAVID PETRAEUS. SHE'S HIS EYES AND EARS IN THE REGION AND IS WORKING TO BRING COUNTERINSURGENCY TACTICS TO THE SOUTH. AND CAPTAIN GILDROY IS PART OF A THREE PERSON TEAM WHO VOLUNTEERED TO COME BACK FOR THEIR SECOND EXTENDED TOUR TOGETHER - WORKING FOR GENERAL PETAEUS. SHE SAYS SECURITY HERE HAS IMPROVED, A SUCCESS THAT CAN BE MEASURED IN DAILY ANECDOTES. WE USED TO GET SHOT AT EVERY DAY WE WENT ON PATROL. OUR PATROL BASE WAS ATTACKED CONSTANTLY DOWNTOWN. NOW, WE GO DOWNTOWN WHERE GRAFFITI USED TO SAY "LONG LIVE THE SNIPERS". IT SAYS "LONG LIVE THE COALITION FORCES." SO, FROM A SECURITY PERSPECTIVE RIGHT NOW, I THINK THE SITUATION IS VERY GOOD IN THE PROVINCE. CAPTAIN GILDROY IS ALSO ONE OF ONLY A HANDFUL OF AMERICANS FOR MILES AROUND. AS THE SIGNS ON THE BASE SHOW, THIS PART OF IRAQ IS PATROLLED BY THE FEW REMAINING COUNTRIES OF THE COALITION OF THE WILLING: TROOPS FROM BOSNIA, THE UKRAINE, AND THE BIGGEST FORCE OF ALL HERE, POLAND. CAPTAIN GILDROY'S JOB IS TO MAKE SURE THESE TROOPS ARE FOLLOWING UP ON SUCCESSFUL STRATEGIES AMERICAN FORCES ARE USING IN OTHER PARTS OF IRAQ. THE GOAL IS NOT ONLY TO REDUCE VIOLENCE, BUT ALSO TO SHOW THE LOCAL POPULATION THE BENEFITS OF WORKING WITH THE COALITION. HERE POLISH SOLDIERS OPEN UP A NEW SCHOOL.

POLAND'S COMMANDING GENERAL TADEUSZ BUK. FOR LAST HALF A YEAR WE HAVE SPENT FOR DIWANIYAH CITY AND QADISYAH PROVINCE ALMOST 15 MILLION DOLLARS. THIS PART OF THE OF THE CITY WAS TARGETED TO SEND A MESSAGE REBUILDING INFRASTRUCTURE AND IMPROVING SECURITY CAN REIGNITE HOPE. WHEN WE STARTED TO EMPLOY THOSE TACTICS DOWN HERE, WE STARTED TO SEE A CHANGE I WOULD SAY WITHIN FOUR WEEKS. AND THAT HAD A VERY LARGE SPILL OVER EFFECT TO THE DISTRICTS BEYOND THE ONE THAT WE HAD ISOLATED. SO, VERY QUICKLY, YOU REALIZED THE PEOPLE WERE NOT HAPPY TO HAVE THE INSURGENTS LIVING AMONGST THEMSELVES. THEY WERE NOT HAPPY TO HAVE IEDS GOING OFF IN THEIR STREETS AND TO BE HAVING THEIR HOUSES SPRAYED WITH GUNFIRE. AND ONCE YOU CAN PROTECT THEM FROM THAT, THEN THEY'LL BE YOUR ALLY. THEN YOU GET A TUG ON YOUR SHIRT THAT SAYS, MISTER, MISTER, YOU KNOW, IED, IED. AND ALL OF A SUDDEN, THE POPULATION IS A FORCE MULTIPLIER BECAUSE THEY'RE WORKING WITH YOU AGAINST THE INSURGENTS. BUT CREATING SECURITY HAS COME AT A PRICE, A PRICE PAID IN COLD, HARD, UNITED STATES GREENBACKS.

AND THIS IS WHAT IT LOOKS LIKE. IN A PROGRAM PIONEERED A YEAR AGO TO BRING STABILITY TO THE SUNNI PROVINCE OF AL ANBAR, AMERICAN SOLDIERS LIKE GILDROY ACT AS DIPLOMATS. THEY'RE NEGOTIATING WITH LOCAL SHEIKS AND SIGNING CONTRACTS TO PROVIDE SECURITY TO THE TUNE OF MILLIONS OF DOLLARS ACROSS IRAQ. WE THOUGHT WE WERE GOING TO TRY TO NEGOTIATE PROCESS INDIVIDUALLY WITH EACH SHEIK - INSTEAD BECAUSE THAT WAS SO DISASTROUS AND THEY ENDED UP WALKING OUT OF THE ROOM ON US, -- WE DEVISED A SYSTEM WHEREBY WE WOULD GIVE A STANDARD AMOUNT OF MONEY PER KILOMETER THAT WAS GUARDED OF TERRITORY - SO EVERY TRIBE GETS THE SAME AMOUNT OF MONEY PER KILOMETER.

THEN IT'S UP TO THEM HOW MANY PEOPLE THEY WANT TO HIRE TO COVER THAT DISTANCE SO IF THEY HAVE A CERTAIN NUMBER OF UNEMPLOYED PEOPLE IN THEIR TRIBE THEN THEY'LL HIRE MORE AND PAY THEM LESS BUT REGARDLESS EVERY TRIBAL SHEIK IN THIS PROVINCE KNOWS THAT HE WILL GET PAID THE SAME AMOUNT OF MONEY PER KILOMETER. WELL YOU KNOW THEY ARE AGAIN TALKING ABOUT THE DOLLAR BECAUSE IT'S GOING DOWN FEAR NOT I'VE USED AN EXCHANGE RATE THAT'S WELL BELOW WHAT IT WILL DROP TO, SO I'VE USED AN EXCHANGE RATE OF 1200 DINAR PER DOLLAR, SO I'VE ACTUALLY GIVEN YOU THE BENEFIT OF THE DOUBT. WELL YEAH. TODAY WAS A BIG DAY. WE PAID-- ABOUT 24 COMMUNITY WATCH ORGANIZATION PROGRAMS. NAVY LIEUTENANT COMMANDER ERIC ST. PETER IS RESPONSIBLE FOR ACTUALLY HANDING OVER THE MONEY.

AND TODAY IT WASN'T JUST ABOUT PAYING FOR SECURITY. WE ALSO PAID A PRETTY BIG CONTRACT FOR A MOSQUE THAT'S BEING BUILT IN THE CITY OF DIWANIYAH. WE'RE BASICALLY AT THE 50 PERCENT POINT OF CONSTRUCTION, SO WE PAID THE CONTRACTOR 50 PERCENT OF THE PROJECT FEE. SO, WE'RE GOING LITERALLY TO THE EASTERN BORDER OF THE PROVINCE TODAY THAT BUTTS UP AGAINST NASIRIYAH BUT IT'S NOT JUST ABOUT HANDING OUT MONEY. CAPTAIN GILDROY AND A CONVOY HEAD OUT TO MEET SOME OF THE SHEIKS SHE HAS PAID ALL OF THOSE THOUSANDS OF DOLLARS. IT'S ALSO REALLY ABOUT BUILDING RELATIONSHIPS. SO, WE HAVE TO GIVE THE SHEIK A REASON TO WORK WITH US. THE SECURITY PROGRAM HAS A NAME THAT SOUNDS LIKE A NEIGHBORHOOD WATCH BACK IN THE STATES. "THE CONCERNED LOCAL CITIZEN PROGRAM" IS A TACTIC THE COALITION STARTED USING WHERE WE, BASICALLY DECIDED THAT THE PEOPLE WHO CARE MOST ABOUT THEIR SECURITY AND SAFETY-- ARE THE PEOPLE WHO LIVE IN THAT VERY HOUSE ON THAT VERY BLOCK. AND SO, WHAT WE DID IS, WE SAID, "OKAY. WE HAVE THE IRAQI SECURITY FORCES, THEY HAVE ONE JOB. BUT WHO'S GOING TO STAND ON THESE BLOCKS AT NIGHT AND LOOK OUT FOR THEIR FAMILIES AND INSURE THAT NO VIOLENCE OCCURS?" THIS IS THE WESTERN MOST CLC CARAVAN FOR THIS SUNNI TRIBE. THIS IS A CONCERNED LOCAL CITIZEN - SO HIS WEAPON IS PROBABLY FROM HIS OWN HOME - WE DO NOT PROVIDE AMMUNITION OR WEAPONS TO THESE GUYS. WHEN I WAS DOWNTOWN IN DIWANIYAH I WENT INTO MAYBE A FEW HUNDRED HOUSES AND EACH HOUSE THAT I WENT INTO NONE OF THEM HAD BEEN EMPLOYED FOR YEARS AND SO AT SOME POINT YOU WONDER YOU KNOW HOW DO THESE PEOPLE SURVIVE, HOW DO THEY KEEP GOING ON AND WHAT HAS CHANGED HERE TO MAKE A DIFFERENCE IN THAT REGARD AND I THINK OBVIOUSLY THIS IS A SHORT TERM SOLUTION SO SHORT TERM UNEMPLOYMENT HAS CHANGED A LOT BUT IT'S THE LONG TERM THAT CONCERNS ME SO I MEAN I WOULD JUST ASK HIM HOW LONG HAS HE NOT HAD A JOB FOR.

THE MEN TOLD US THEY MOSTLY HAD BEEN JOBLESS FOR YEARS. AND AS CAPTAIN GILDROY DRIVES OVER SAFER ROADS SHE KNOWS THAT MANY OF THE PEOPLE SHE IS TRYING TO WIN OVER WERE THE SAME PEOPLE WHO ONCE WERE TRYING TO KILL COALITION SOLDIERS LIKE HER. BUT SHE SAYS SHE NOW PAYS BETTER THAN THE INSURGENTS AND SHE SYMPATHIZES WITH A LOCAL POPULATION DRIVEN BY DESPERATION. IT'S SORT OF LIKE YOU GIVE SOMEBODY A CHANCE WHO HASN'T HAD A CHANCE FOR A LONG TIME. AND, YOU KNOW, I REALLY BELIEVE A LOT OF THESE GUYS-- IT'S NOT THEIR CHOICE TO PLANT AN IED. BUT BECAUSE THE UNEMPLOYMENT'S HOVERING PROBABLY AROUND 85 PERCENT DOWN HERE AND THE SITUATIONS JUST BEEN REALLY DIFFICULT HERE FOR A LONG TIME. I MEAN, THE SHIA WERE REALLY PERSECUTED UNDER SADDAM. SO, THIS ISN'T JUST BEEN FOUR YEARS OF DIFFICULTY FOR THEM. IT'S BEEN DECADES. SO, I THINK WHEN YOU GIVE THEM A CHANCE TO STAND ON THEIR FEET AND BE A GOOD PERSON, THAT'S THE CHOICE THEY WANT, YOU KNOW? THAT'S REALLY-- WHAT MAKES THEM FEEL HAPPY TO BE ALIVE. BUT, UNTIL YOU OFFER THEM THAT CHANCE, YOU KNOW-- YOU HAVEN'T REALLY ACCOMPLISHED ANYTHING. OF COURSE, SECURITY IS STILL A CONCERN (GUNSHOTS) GET DOWN, GET DOWN

AND THE AMERICANS HOPE THAT THE IRAQI ARMY AND POLICE FORCES CAN BRING ADDED STABILITY.

HERE THE IRAQI POLICE DEMONSTRATE A SHOW OF FORCE IN DIWANIYAH, BUT THEY ARE CONSIDERED ILL-TRAINED AND PLAGUED BY CORRUPTION. THE IRAQI ARMY IS CONSIDERED MORE PROFESSIONAL. IN 2007, ALONGSIDE AMERICAN TROOPS, THEY LIBERATED DIWANIYAH FROM THE MILITIA OF THE FIERY CLERIC MUQTADA AL SADR. IN THE SOUTH, THE WORRIES ARE OVER RADICAL SHIA MILITIAS AND NOT AL QAEDA TYPE FOREIGN FIGHTERS. FOR THREE MONTHS AGO, WE START A GOOD OPERATION IN DIWANIYAH. WE CAPTURE MANY, MANY MEMBERS FROM A MILITIA. MANY, MANY IMPORTANT PERSON FROM MILITIA. IRAQI ARMY CAPTAIN EHAB IS PROUD OF THE PEACE HE SAYS HIS DIVISION HAS BROUGHT TO THE REGION. WE WIN, 'CAUSE NOW WE CONTROL THE CITY. THE CITY IS SAFE AND-- YOU CAN SEE ALL THE CITIZENS, ALL THE STUDENT. MANY, MANY PEOPLE WALK AROUND AND THEY LIVE A NORMAL LIFE NOW. SITUATION IS DIFFERENT NOW. I THINK THAT THE IRAQI SECURITY FORCES HAVE INDEED MADE PROGRESS DURING THIS TIME, AND THAT THEY HAVE INCREASED THEIR CAPABILITIES SIGNIFICANTLY. AND WE CAN START TO FORESEE WHAT QADISAYAH PROVINCE WILL COME UNDER IRAQI CONTROL. GENERAL PATRAEUS, THE TOP U.S. COMMANDER IN IRAQ HAS COME TO DIWANIYAH FOR THE POLISH CHANGE OF COMMAND AND TO CHECK ON THE AREAS PROGRESS.

OUTGOING POLISH GENERAL BUK IS PROUD OF WHAT HE'S ACCOMPLISHED. I DON'T WANT TO SAY THAT WE DEFINITELY HAVE WON THEIR HEARTS AND MINDS ALREADY. BUT IT IS APPARENT OUT IN THE CITY, OUT IN THE PROVINCE THAT PEOPLE'S APPROACH TO COALITION HAS CHANGED. YOU CAN SEE PEOPLE-- WELCOMING US. OUR PRESENCE, OUT IN THE CITY, IN-- IN THE PROVINCE. SO IF WE FAIL TO KEEP THIS TRUST GROWING UP TO THE LEVEL THAT WE- - WE CAN SAY WE HAVE WON THEIR HEARTS AND MINDS MILITIA OR EXTREMIST WILL BE ABLE TO COME BACK AND RECONSOLIDATE. THIS IS THE MAIN THREAT. AS THE POLISH SOLDIERS GO ON THEIR LAST PATROL, THEY LET OFF A LITTLE STEAM AND TAKE PRIDE IN HELPING BRING PEACE TO THEIR AREA OF RESPONSIBILITY. I THINK VERY FEW PEOPLE WOULD DENY THAT THE SURGE HAS INDEED WORKED. BUT THE SURGE WAS NOT DESIGNED AS A MEANS TO OUR OVERALL END GOALS OF COMING HERE AND INVADING THIS COUNTRY IN THE FIRST PLACE. I MEAN, THE SURGE WAS DESIGNED TO BRING SECURITY AND STABILITY TO ALSHABEL IRAQI, THE PEOPLE OF IRAQ. AND TO PROVIDE SPACE FOR THE GOVERNMENT TO EFFECTIVELY GOVERN. SO, I THINK WHAT THE AMERICANS ARE SEEING NOW AND WHAT THE MEDIA IS SEEING IS DEFINITELY A SUCCESS OF THE SURGE. BUT IT'S NOT A SUCCESS AS FAR AS, US CREATING THE END THAT WE SO DESIRED HERE - US CREATING A DEMOCRATIC AND FREE IRAQ. AND THOSE ARE TWO VERY DIFFERENT THINGS. AND PEOPLE HAVE TO UNDERSTAND THAT SECURITY IS JUST ONE PIECE OF THIS PUZZLE HERE. AND IT'S ACTUALLY A VERY SMALL PIECE. AND IN FACT, THE BIGGER PIECE IS THE POLITICAL SITUATION. AND THAT'S WHAT'S SO INCREDIBLY DIFFICULT AND COMPLICATED. FOR ALL THE IMPROVED SECURITY, CAPTAIN GILDROY IS WORRIED. AND HER WORRIES ARE POLITICAL. IN THE 2005 ELECTIONS HERE, A POLITICAL PARTY NOW KNOWN AS THE ISLAMIC SUPREME COUNCIL OF IRAQ - OR ISCI WON BIG. ISCI HAS DEEP LINKS TO IRAN AND FAVORS STRICT ISLAMIC LAW. THE ONLY OTHER POLITICAL ENTITY DOWN HERE IS RUN BY THE SHIA CLERIC SADR, WITH WHOM THE U.S. NOW HAS A CEASEFIRE. WE FEEL WE HAVE TWO OPTIONS IN THE SOUTH. WE HAVE SADR, AND WE HAVE I.S.C.I. AND SO, WE'RE AT A POINT IN THE WAR WHERE, YOU KNOW, WE'RE NOT GENERATING ANY MORE FORCES. IN FACT, WE'RE GOING TO DRAW DOWN. THE WILLPOWER OF THE UNITED STATES TO CONTINUE THIS EFFORT IS QUESTIONABLE. AND SO, IF YOU HAVE TO CHOOSE BETWEEN THOSE OPTIONS, YOU KNOW, YOU CLEARLY CAN MAKE A CASE FOR CHOOSING I.S.C.I OVER SADR. BUT IT'S LIKE, TO ME, THE LESSER OF TWO EVILS, AND CERTAINLY NOT THE REASON I CAME TO IRAQ. YOU KNOW, I THINK THE-- THE US IS TRYING TO, IN MY OPINION, FIND SOME SORT OF OPTION THAT WILL CREATE STABILITY IN THE SOUTH. BUT THAT DOESN'T NECESSARILY LEAD TO, I THINK, ANY OF THE GOALS WE HAD IN MIND WHEN WE CAME HERE. I KNOW I CAME HERE, FIRST AND FOREMOST, TO LIBERATE THE IRAQI PEOPLE. SECONDLY, I FEEL IT'S VERY IMPORTANT TO HAVE THE OIL FIELDS IN THE SOUTH AVAILABLE TO THE FREE MARKET. AND POTENTIALLY, TO GAIN A STRATEGIC FOOTHOLD HERE. AND FROM MY PERSPECTIVE HERE IN THE SOUTH, I DON'T THINK WE'LL ACCOMPLISH ANY OF THE THREE. CAPTAIN GILDROY WORRIES THAT SOUTHERN IRAQ IS BECOMING A BASTION FOR RELIGIOUS EXTREMISTS WHO RULE WITH TACIT AMERICAN SUPPORT BECAUSE THEY ARE DELIVERING ON SECURITY - BUT AT WHAT COST TO THE FUTURE? THEY'RE HEAVILY INFLUENCED BY IRAN, EXTREMELY RELIGIOUS. THE ONLY PEOPLE IN IRAQ THAT, YOU KNOW, DO NOT GIVE ME AN IRAQI GREETING. I SHAKE MY HAND AND KISS ME ON MY FACE, ARE THE PROVINCIAL GOVERNORS IN THE SOUTH. IN FACT, THEY WON'T EVEN TOUCH ME, BECAUSE I'M-- I'M A FEMALE. I UNDERSTAND, AT THIS POINT IN THE WAR, WHY WE'RE COMPLICIT WITH THEIR CONTROL, AND POTENTIALLY, WHY WE FEEL WE MAY NOT HAVE ANOTHER OPTION. BUT IT'S-- CERTAINLY FAR FROM VICTORY IN THE SOUTH. I THINK WE'LL, YOU KNOW, WE'RE NOT GONNA BE FLYING OUT OF HERE ON HELICOPTERS, LEAVING A BURNING BUILDING. BUT WE WILL DEFINITELY NOT HAVE, YOU KNOW, BROUGHT THE COUNTRY IN THE SOUTH DEMOCRACY AND-- AND I DON'T THINK WE WILL HAVE GAINED AN ALLY FOR THE FUTURE. IN ADDITION TO THE LOCAL GOVERNMENT, THERE IS A GENERAL AIR OF ISLAMIC RADICALISM THROUGHOUT THE SHIA SOUTH. ONE THING I NEED FOR YOU AND YOUR GUARDS TO LOOKOUT FOR RECENTLY IS, WE'VE HAD UM WE CALL THEM IN ENGLISH THE SOLDIERS OF HEAVEN - COMING UP FROM THE SOUTH. CAPTAIN GILDROY IS WORRIED THAT A FIERCE ISLAMIC SECT, CALLED THE SOLDIERS OF HEAVEN IS PLAGUING THE REGION. AND SHE'S NOT THE ONLY ONE. THE IRAQI ARMY IS ALSO ON ALERT. MAJOR GENERAL OOTHMAN FAROOD, THE HEAD OF THE IRAQI ARMY IN THE AREA IS A VETERAN OF THE IRAN-IRAQ WAR. HE'S ALSO WORRIED ABOUT THE INCURSION OF ISLAMIC EXTREMISTS AND A RETURN TO THE TERROR OF TYRANNY.

ALL WE NEED IS JUST FOR YOUR MEN IN YOUR WHOLE TRIBE TO LOOK OUT FOR ANY MOVEMENT THAT'S STRANGE ESPECIALLY AS I'VE SAID IN RECENT DAYS WE'VE HAD A LOT OF REPORTS ON THE SOLDIERS OF HEAVEN COMING INTO THIS PROVINCE. IN ORDER TO FIGHT EXTREMISM, CAPTAIN GILDROY MEETS REGULARLY WITH TRIBAL LEADERS. THEY HAVE NO FORMAL ROLE IN GOVERNMENT BUT THEY TELL HER THEY WANT TO PLAY A PART IN REBUILDING THERE COUNTRY. AT THIS MEETING, SUNNI AND SHIA COME TOGETHER TO DISCUSS THE CAPTAIN'S CONCERNS AND THEIRS OVER LUNCH. THE ROOM IS CROWDED AND THOUGH THE CONVERSATION IS RELAXED AND FRIENDLY, THESE SHEIKS HAVE REAL CAUSE FOR CONCERN AND MOST OF IT IS WITH THE LOCAL GOVERNMENT. THEY WANT TO KNOW WHY THEIR TRIBESMEN ARE NOT BEING BROUGHT INTO THE IRAQI ARMY. IF IT MAKES YOU FEEL ANY BETTER, WHICH IT PROBABLY WON'T, IT SEEMS THAT ACTUALLY THE GOVERNOR IS NOT SUPPORTING ANY OF THE TRIBES AND NOT HIRING ANY OF THE TRIBES INTO THE IRAQI SECURITY FORCES SO I THINK ACTUALLY IT'S MORE OF THE GOVERNMENT REALLY SORT OF BEING THREATENED BY THE TRIBES AS A WHOLE WHETHER THEY'RE SHIA OR SUNNI SO THAT'S BEEN MY EXPERIENCE HERE. CAPTAIN GILDROY BELIEVES THAT THE TRIBESMEN AREN'T BEING ALLOWED INTO THE ARMY BECAUSE THE LOCAL GOVERNMENT RUN BY THE ISCI POLITICAL PARTY DOESN'T WANT A THREAT TO ITS POWER. IT'S A TOPIC OF CONVERSATION WHEREVER SHE GOES. DOES IT BOTHER YOU THAT THE CURRENT GOVERNMENT THAT THIS ISCI PARTY IS UNWILLING TO HIRE ANY OF YOUR MEN INTO THE IRAQI ARMY OR THE IRAQI POLICE?

WHY DO YOU THINK THEY'RE DOING THAT?

THE DIFFICULTY I HAVE IN MY JOB IS, I'M HERE AS AN-- AS AN AMERICAN MARINE. I'M SUPPOSED TO BE PROVIDING SECURITY AND STABILITY TO THE POPULATION AND - AND, ARGUABLY, SUPPORTING THE GOVERNMENT-- THAT'S IN POWER. AND, ACTUALLY, I FIND MYSELF SUPPORTING THE TRIBAL SHEIKS THAT ARE IN DIRECT OPPOSITION TO THE GOVERNMENT IN POWER. SO, THAT'S A VERY BIG CONFLICT.

I'VE CHOSEN TO SUPPORT THE SHEIKS BECAUSE I'VE SEEN THE DIFFERENCE IN HOW THEY CARE ABOUT THE IRAQI PEOPLE VERSUS THE LOCAL GOVERNORS WHO HAVE MOST OF 'EM SPENT QUITE A SIGNIFICANT AMOUNT OF TIME IN IRAN. WHO SIT IN THEIR LARGE, PLUSH OFFICES AND REALLY HAVE DONE, THERE'S NOT MUCH THAT'S CHANGED IN THE CITY FROM THE FIRST TIME I ARRIVED HERE IN 2004 TILL NOW, ALMOST 2008, EXCEPT FOR THE WORK THAT THE COALITION HAS DONE REBUILDING SCHOOLS AND THINGS OF THAT NATURE. SO I'M NOT SURE EXACTLY WHAT THE GOVERNMENT HERE IS DOING. THIS IS PROBABLY THE WORST SCHOOL I'VE SEEN SINCE I'VE BEEN HERE. I DON'T SUPPOSE THE GOVERNOR'S BEEN OUT HERE TO SEE IT. WELL, DON'T WORRY WE'LL TRY TO HELP YOU.

BUT SOMETIMES EVEN CAPTAIN GILDROY'S BEST INTENTIONS AREN'T ENOUGH. OK LET'S JUST FIGURE THIS OUT IN THE NEXT ROOM SO THESE 2 GUYS ARE FREE TO GO? IT'S A PLEASURE FOR ME TO WORK WITH THE TRIBAL SHEIKS. THEY ARE QUITE DEMANDING AT TIMES.

I HAVE A CONTRACT WITH FADL KAREEM AND SO THAT IS WHAT I AM GOING TO PAY. SHE IS TRYING TO BRING STABILITY TO A LAND THAT HAS ONLY KNOWN TYRANNY AND OPPRESSION FOR DECADES AND WHERE THE PROSPECTS OF AMERICAN MONEY THE CASH PAYMENTS CAN LEAD TO HEATED DISPUTES. I DO NOT RESOLVE THAT BUT I DO PAY BASED ON WHOSE NAME IS ON MY CONTRACT. HOWEVER YOU ALL DIVIDED IT IS FINE BUT TACLEEF'S NAME IS ON THE CONTRACT. THE TRIBAL STRUCTURE IN THE SOUTH IS SO FRACTURED WE SPEND HALF OF OUR TIME SETTLING TRIBAL DISPUTES BECAUSE UNLIKE RAMADI AND ANBAR WHERE THE TRIBES ARE REALLY ENORMOUS, AND THERE'S NO DOUBT ABOUT WHO THE HEAD SHEIK IS FOR ONE TRIBE, HERE YOU'LL FIND A TRIBE ONLY CONTROLS A KILOMETER OF LAND AND EVEN IN THE BIGGER TRIBES THE HEAD SHEIK IS IN CONTEST AND THE REASON BEHIND THAT IS BECAUSE DURING THE SADDAM ERA HE ACTUALLY HAD PROVINCIAL GOVERNMENTAL CONTROL THAT WAS SUNNI AND NOT FROM THE SOUTH AND ONE THING HE DID TO PLACATE THE TRIBES IS HE WOULD HAVE HIS LAWYERS COME UP WITH LISTS OF PAYOFFS FOR THE TRIBES BUT THE MEN THAT HE PAID OFF FROM WITHIN THE TRIBES WEREN'T NECESSARILY THE SHEIKS THAT CAME DOWN FROM PRIMOGENITOR SO WHAT HAPPENED IS THERE STARTED TO BECOME A SPLIT IN POWER BECAUSE HE WAS FUNNELING MONEY TO ILLEGITIMATE SHEIKS AND SO AS A RESULT NOW WE HAVE AN EXTREMELY FRACTURED SYSTEM DOWN HERE SO THE FIGHTS ARE PRETTY UNBELIEVABLE. I WILL PAY HIM AFTER I SEE THE THREE OF YOU IN GENERAL OOTHMAN'S OFFICE. SERIOUSLY? OK, YOU KNOW THIS'LL KEEP GOING ON AND ON AND ON. AHMED, BRING THEM BACK TELL THEM I AM NOT MAKING THIS DECISION ITS GENERAL OOTHMAN'S DECISION IT IS NOT ANN GILDROY'S DECISION. AS CAPTAIN GILDROY DEFERS THE DISPUTE TO THE TOP IRAQI GENERAL HERE, HE SAYS THAT MUTUAL RESPECT FOR IRAQIS AND FOREIGNERS IS VITAL FOR ANY LONG-TERM SUCCESS.

OK, THESE ARE FANCY, WE CALL THESE MARY JANES IN THE STATES. THE COMPANY I'M GOING TO WORK FOR WHEN I GO BACK AND GET OUT OF THE MARINE CORPS WAS VERY NICE TO DONATE THESE SHOES FOR THE CHILDREN OVER HERE WOW YOU'VE GOT BIG FEET, YOU'VE GOT BIG FEET. CAPTAIN GILDROY HAS A JOB AT THE INVESTMENT FIRM GOLDMAN SACHS WAITING FOR HER WHEN SHE RETURNS TO THE U.S.A. AND SHE PERSUADED THE COMPANY TO DONATE THINGS LIKE SHOES TO HELP THE PEOPLE OF IRAQ. DO THOSE FIT YOU? THEY'RE A LITTLE BIG. THERE IS NO END TO THE NEED HERE OK RIGHT NOW, THESE ARE VERY POPULAR IN THE UNITED STATES. OH MY GOSH, NOW YOU'RE ADORABLE. COME HERE.

LET'S SEE IF THESE FIT. BUT THE FEAR HERE IS THAT NO MATTER THE HEROIC ACTIONS OF AMERICAN SERVICEMEN AND WOMEN, THE LONG-TERM PROSPECTS IN IRAQ ARE A REASON FOR WORRY - ESPECIALLY WITH THE LOCAL GOVERNMENT BEING RUN BY THE IRANIAN-BACKED ISCI PARTY. NOW, I MEAN, AGAIN, IT ALL DEPENDS. WHAT DO WE WANT HERE? IF WE WANT TO SET THE STAGE FOR WITHDRAWAL, THEN YES, WE HAVE IT. I.S.C.I.'S IN CONTROL DOWN HERE, THEY'LL INCREASE THEIR CONTROL. AND FINE, WE'RE GOOD TO GO. BUT THE QUESTION IS, WHAT DID WE COME HERE FOR IN THE BEGINNING? I MEAN, WHAT-- WHAT WAS THE END STATE WE WERE LOOKING FOR? WAS IT A DEMOCRACY? I MEAN, THE SITUATION IN THE SOUTH, I THINK IF MOST AMERICANS SAW IT FIRST HAND, THEY WOULD NOT BE HAPPY WITH IT. I MEAN, THEY WOULD NOT SAY, WOW, THIS WAS A REAL SUCCESS. IT'S, IN MY OPINION, WE'LL LEAVE A REAL DISASTER IN THE SOUTH. WE'LL LEAVE THE SITUATION THAT SADDAM HAD, YOU KNOW WHERE HE DID STARVE THE SHIA AND HE HELD THEM UNDER POWER EXCEPT THE DIFFERENCE IS WE'LL HAVE THIS TALIBANESQUE APPLICATION OF ISLAMIC LAW WHERE AS SADDAM DID NOT DO THAT TO THE PEOPLE DOWN HERE SO I'M NOT SURE AT THIS POINT IN TIME HONESTLY WHAT WE CAN SAY WILL BE ANY DIFFERENT IN THE SOUTH THAN IT WAS UNDER SADDAM'S REGIME. I ALSO FEEL THAT WE'LL LEAVE YOU KNOW THE NATURAL RESOURCES IN THE SOUTH SIMPLY TO EMPOWER WHAT I THINK IS AN ARCHENEMY OF OURS, WHICH IS IRAN, TO THE EAST. AS CAPTAIN GILDROY LEAVES A MEETING OF TRIBAL SHEIKS, SHE HEARS A COMMON CONCERN. HE DOESN'T WANT YOU TO FORGET ABOUT THEM. I'M NOT FORGETTING ABOUT YOU SIR, I PROMISE.

HE WANTS YOU TO CONTINUE THEIR PROGRAM. WHEN YOU LEAVE THEY WILL NOT STOP DOING THIS SO THEY CAN LIVE. I'M GOING TO TRY I'M FIGHTING FOR IT SIR. I'M NOT REALLY SURE, AFTER ALL OF THIS SORT OF BLOOD AND MONEY, WHAT WE'RE COMING OUT WITH. IF WE CAME OUT WITH THE LIBERATION OF A PEOPLE, BUT NOT THE SPOILS OF WAR, FINE. IF YOU KNOW, WE CAME OUT WITH SOME SPOILS OF WAR, AND THE PEOPLE WEREN'T LIBERATED, MAYBE WE COULD TOLERATE THAT. BUT AT THIS POINT, I DON'T-- I DON'T THINK WE'RE GONNA COME OUT WITH EITHER ONE. I MEAN, THE SECURITY SITUATION HERE IS SIMPLY A SMALL FRACTION OF THE PROBLEM. AND WHEN YOU, WHEN I ARRIVED HERE IN AUGUST, ALL I COULD THINK ABOUT WAS, OH MY GOD, HOW DO WE FIX THE SECURITY? WHAT OPERATION ARE WE GONNA DO NOW, TO KILL THESE INSURGENTS? WELL, THAT'S GREAT. AND IT BECOMES ALL ENCOMPASSING, WHEN YOU'RE GETTING SHOT AT, AT A DAILY BASIS. BUT THEN WHEN YOU FIX THE SECURITY SITUATION, YOU REALIZE THE PROBLEM IS FAR GREATER THAN SECURITY. AND YOU SORT OF PEEL BACK THE ONION, AND YOU REALIZE WHAT'S LEFT. AND IT'S, THAT'S THAT'S SCARY. I THINK SCARY FOR THE PEOPLE, AND NOT SO GOOD FOR THE FOR THE UNITED STATES. MARINE CAPTAIN ANN GILDROY DECIDED TO CUT HER TOUR IN IRAQ SHORT AND WAS ALLOWED TO DO SO BECAUSE OF THIS SPECIAL ASSIGNMENT. SHE SAID SHE WAS FRUSTRATED THAT SHE COULD NOT COMPLETE THE MISSION UP TO HER OWN PERSONAL STANDARDS. NOW COMING UP NEXT, WE'LL HEAR FROM A DISTINGUISHED AMERICAN GENERAL AND THE TOPIC IS TORTURE SO STAY HERE WITH US. IT'S AN ARGUMENT AS OLD AS WARFARE AND AS NEW AS TODAY'S HEADLINES. HOW DOES A COUNTRY AT WAR TREAT ITS PRISONERS? EVER SINCE 9-11, DEBATE HAS RAGED OVER THE USE OF SO CALLED " EXTREME INTERROGATION" TECHNIQUES TO TRY TO GET INFORMATION FROM CAPTURED SUSPECTED TERRORISTS. THE DEBATE BOILS DOWN TO TWO QUESTIONS: SHOULD A DEMOCRACY LIKE OURS USE WHAT MANY WOULD CALL TORTURE? AND, IS TORTURE USEFUL? WE WANTED TO HEAR WHAT THE PEOPLE WHO HAVE TO FIGHT THE WARS HAVE TO SAY ABOUT THIS. SO, WE TURNED TO RETIRED MARINE MAJOR GENERAL FRED HAYNES, WHO HAS FOUGHT IN THREE WARS. MUCH DECORATED HE'S SEEN IT ALL, FROM THE SOUTH PACIFIC TO KOREA TO VIETNAM. NOW IF YOU THINK THAT OFFICERS LIKE GENERAL HAYNES WOULD FEEL THAT TECHNIQUES LIKE WATER- BOARDING ARE ACTUAL USEFUL TOOLS IN A WAR AGAINST ISLAMIC EXTREMIST OR FOR THAT MATTER AGAINST ANYBODY ELSE, YOU MAY BE SURPRISED TO HEAR WHAT HE HAS TO SAY IT'S A BLOT ON THE AMERICAN CHARACTER. WE, WE'RE NOT THAT WAY. I MEAN, EVEN IN THE MOST FEROCIOUS FIGHTING OF WORLD WAR II, WE GENERALLY TREATED OUR PRISONERS VERY HUMANELY. IF WE TOLERATE THE KIND OF TORTURE WE'RE TALKING ABOUT, WE LEAVE OURSELVES OPEN, WE LEAVE OUR TROOPS OPEN TO BEING TREATED THAT WAY. I FIRST MET GENERAL HAYNES NEARLY 30 YEARS AGO, SOON AFTER HE RETIRED AS A MAJOR GENERAL AFTER A 34-YEAR CAREER IN THE MARINES. HAYNES ENLISTED DURING WORLD WAR II, AND WAS A CAPTAIN DURING WHAT MAY BE THE BLOODIEST SINGLE BATTLE IN AMERICAN HISTORY: IWO JIMA. HAYNES WAS NO REAR-ECHELON DESK JOCKEY - THAT'S HIM ON THE RIGHT OF YOUR SCREEN, PREPARING TO LEAD MARINES INTO AN ATTACK ON JAPANESE POSITIONS ON THE PACIFIC ISLAND. WE LOST, OUR OF MAY COMBAT TEAM, ALL BUT 600 MEN. WE STARTED WITH ABOUT 4,000. AND WE ENDED WITH 600. IF ANYBODY HAD ANY REASON TO TREAT PRISONERS BADLY, TO TORTURE THEM, IT HAD TO BE US, BECAUSE OF WHAT WAS HAPPENING. EXTREMELY HIGH CASUALTY RATES. VERY HIGH. KIND OF CASUALTY RATES ON AND HOUR-BY-HOUR, DAY-BY-DAY BASIS IS ALMOST UNIMAGINABLE NOW. WELL, IT'S TRUE. THE FAMOUS FLAG-RAISING WAS DONE BY MY COMBAT TEAM. WE TOOK MOUNT SARABACHI IN ABOUT FOUR DAYS. WE LOST 1,000 MEN TAKING IT. I'VE BEEN IN THREE WARS, AND NOTHING ELSE HAS EVER EVEN COME CLOSE, TO THE FIGHTING ON IWO. NEVER.

A FLEET OF SHIPS LANDED MORE THAN 30,000 MARINES ON IWO JIMA ON FEB. 19, 1945. SOME 27,000 JAPANESE TROOPS - DETERMINED TO DIE RATHER THAN SURRENDER - WERE WAITING FOR THEM. THEY WERE DUG-IN TO AN ELABORATE NETWORK OF CAVES AND TUNNELS, LARGELY IMPERVIOUS TO AMERICAN HEAVY ARTILLERY. WHEN THE JAPANESE CAPTURED AMERICAN GI'S, THEY OFTEN BRUTALLY TORTURED THEM TO DEATH. STILL, OFFICERS LIKE THEN- CAPTAIN HAYNES STRICTLY ORDERED THEIR TROOPS TO TREAT THE JAPANESE THEY CAPTURED HUMANELY. WERE YOU TEMPTED TO USE TORTURE? NO, NEVER WAS, WE MADE SUCH A STRONG POINT THAT YOU DON'T MISTREAT PRISONERS, BECAUSE YOU MAY GET SOMETHING OUT OF THEM THAT WILL SAVE, MAYBE NOT YOUR LIFE, BUT SOME OF YOUR BUDDIES. YOU MUST HAVE TAKEN PRISONERS. WHAT DID YOU DO WITH THEM? MY COMBAT TEAM FOUGHT FOR A FULL 36 DAYS, AND WE TOOK 16 PRISONERS, ONLY. THE FIRST EPISODE I HAD WITH, WITH A PRISON WAS A MAN NAMED SAKAI. HIS FIRST NAME WAS TAZO, AND HE SURRENDERED. HE CAME OUT OF A CAVE, HALF- NAKED. HE HAD A CLOTH JOCK STRAP AND A PAIR OF FIELD BOOTS ON, AND HE HAD A SURRENDER LEAFLET IN HIS HAND. AND THE FELLOW WHO TOOK SAKAI PRISONER HAD JUST BEEN HIT IN THE HEAD. A SNIPER BULLET HAD GONE THROUGH HIS HELMET, MISSED HIS SCALP, CAME OUT ON THE OTHER SIDE AND DROPPED TO THE GROUND. HE COULD HAVE, THEN AND THERE, SHOT SAKAI, THINKING THAT HE HAD BEEN SET UP FOR THE SNIPER. BUT HE DIDN'T. HE IMMEDIATELY CALLED HIS COMPANY COMMANDER. NOBODY COULD SPEAK JAPANESE. AND HE COULDN'T SPEAK ENGLISH. SO, THE COMPANY COMMANDER, AN ITALIAN KID BY THE NAME LEPARDO, CAME BACK AND THEY LOOKED AT EACH OTHER, AS YOU AND I ARE LOOKING AT EACH OTHER, BUT WE CAN SPEAK A LITTLE ENGLISH, SO WE'RE OKAY. BUT FINALLY, THE PRISONER SAID, IN FAIRLY GOOD FRENCH, " YOU SPEAK FRENCH?" WELL, LEPARDO WAS A GRADUATE OF NOTRE DAME, AND HE HAD STUDIED THREE YEARS OF FRENCH. AND HE SAID: " OUI." SO, THEREUPON FOLLOWED A VERY INTERESTING CONVERSATION. SAKAI WAS A SERGEANT-MAJOR. HE WAS THE CHIEF CODE CLERK, TOP- SECRET CODE CLERK, FOR THE COMMANDER ON THE ISLAND. AND HIS FIRST STATEMENT IN FRENCH WAS: " WE'RE NOT GONNA WIN THIS BATTLE. WE'RE NOT GONNA WITH THE WAR. SO WE OUGHT TO DO ALL WE CAN TO STOP IT." AND THEN PROCEEDED TO HELP US FIND A NUMBER OF POSITIONS. AND AS SOON AS THE HEADQUARTERS FOUND OUT WE HAD THIS FELLOW, HE WAS WHISKED BACK TO WASHINGTON, DC, AND HE BECAME ONE OF OUR MOST VALUABLE PRISONERS. WAS HE EVER TORTURED IN ANY WAY? NO. THIS IS THE POINT OF THE STORY. HE WAS TREATED HUMANELY. WE PUT CLOTHES ON HIM. WE LET HIM HAVE CIGARETTES. LEPARDO GAVE HIM A BAR OF D- RATION CHOCOLATE, WHICH HAS TO BE THE WORST CHOCOLATE IN THE WORLD. AND HE GOBBLED IT UP. AND WHAT WE GOT WAS INCREDIBLY GOOD INFORMATION. WHAT ABOUT THE ARGUMENT, GENERAL, ALL WELL AND GOOD TO TALK ABOUT WORLD WAR II AND IWO JIMA. BUT IT'S A DIFFERENT TIME. DIFFERENT KIND OF WAR NOW. DIFFERENT KIND OF ENEMY. AND, THE ' CHOIR BOY' TECHNIQUES WON'T WORK TO GET THE INFORMATION WE HAVE TO HAVE TO PROTECT OUR NATIONAL SECURITY. WELL, I, I HAPPEN TO SAY FLAT OUT, I THINK THAT'S WRONG. I'D LIKE TO HEAR SOME REALLY GOOD EXAMPLE OF WHAT WE'VE GOTTEN OUT OF SOMEBODY THAT WE'VE WATER-BOARDED. I DON'T THINK YOU'RE GONNA FIND VERY MUCH. WHAT ABOUT THE ARGUMENT THAT SAYS, AS BRUTAL AS IT IS, ALMOST UNIMAGINABLY SO, SOMETIMES THAT'S THE ONLY WAY YOU CAN FIND OUT WHAT YOU NEED TO KNOW? YOU CAN'T DO IT. I, I'M CONVINCED THAT YOU WILL NEVER FIND OUT WHAT YOU NEED TO KNOW BY TORTURING ANYBODY. I MEAN, I, AGAIN, I HAVE TO BE HONEST AND SAY I'VE NEVER TORTURED ANYBODY TO TRY TO FIND OUT SOMETHING. BUT I DO KNOW THAT HUMANE TREATMENT DOES WORK. AND I DO KNOW THAT THE WORLD WATCHES WHAT WE DO. THAT'S WHY GENERAL HAYNES LEADS A GROUP OF NEARLY 50 RETIRED GENERALS AND ADMIRALS WHO WORK WITH THE ORGANIZATION " HUMAN RIGHTS FIRST," TO PERSUADE OUR COUNTRY'S LEADERS TO BAN WATER- BOARDING AND OTHER TYPES OF TORTURE. THE PROBLEM, HAYNES SAYS, IS NOT WITH THE U.S. MILITARY. WE OPERATE ON THE BASIS OF A MANUAL, WHICH IS A VERY GOOD ONE. IT'S THE U.S. ARMY MANUAL FOR INTERROGATION. AND IT PROHIBITS WATER-BOARDING, EXTREME HEAT, EXTREME COLD, STANDING UP FOR 48 HOURS AND SO FORTH. PRESIDENT BUSH VETOED THE BILL, WHICH WOULD HAVE REQUIRED EVERYBODY TO USE THE ARMY FIELD MANUAL FOR INTERROGATION. BUT HE VETOED IT. AND THAT LEAVES THE SITUATION NOW AMBIGUOUS. ALL THE MILITARY SERVICES, THEY HAVE SPECIFIC INSTRUCTIONS ON WHAT THEY CAN AND CANNOT DO. AND IT'S DOWN IN A MANUAL. IT IS. THAT'S RIGHT. BUT THE INTELLIGENCE SERVICES, THE CIA INCLUDED, BUT NOT LIMITED TO THE CIA, THAT OTHER INTELLIGENCE OPERATIONS CAN, AND THE RECORD SHOWS SOMETIMES HAVE, OPERATED UNDER A DIFFERENT ETHOS. IS THAT CORRECT? I THINK THAT'S A GOOD WAY TO PUT IT, YES THEY HAVE. WE NEED ONE BASIC METHOD OF INTERROGATION. AS LONG AS WE HAVE TWO OR MORE METHODS, ONE OF WHICH IS WORSE THAN THE ARMY FIELD MANUAL, THAT CREATES THE AMBIGUITY WE JUST TALKED ABOUT. AND, AND, AND WELL HAVE DIFFICULTY AS LONG AS WE HAVE THIS DOUBLE-STANDARD. THERE ARE BOUND TO BE SOME PEOPLE WATCHING AND LISTENING TO THIS PROGRAM WHO SAY SOMETHING ALONG THE LINES OF THE FOLLOWING: THIS IS SOMETHING BETTER LEFT TO OUR INTELLIGENCE AGENCIES. AND WHAT WE'LL CALL THE DARK SIDE. BECAUSE, IN THE PRESENT DAY, THAT'S JUST THE WAY WE GOTTA GO." AND THE ANSWER TO THAT IS, THAT'S WRONG. THE, THE FUTURE OF AMERICA IN THE WORLD RESTS ON HOW WE ACT AND WHAT THE WORLD SEES OF WHAT WE'RE DOING. RETIRED MARINE GENERAL, FRED HAYNE. IN JUST A MOMENT WHAT EVERYONE IS TALKING ABOUT. WHETHER IS GASOLINE PRICES GOING UP OR STOCK MARKET PRICES GOING DOWN IT'S ALL ABOUT THE AMERICAN ECONOMY, THAT'S NEXT. AND NOW ABOUT THE ECONOMY, WHOEVER THOUGHT WE'D SEE THE DAY WHEN THREE DOLLAR A GALLON GASOLINE WOULD BE A BARGAIN. OR THE DAY WHEN MILLIONS OF AMERICANS WOULD SUDDENLY BE ON THE EDGE IF NOT OVER THE EDGE OF HOME FORECLOSURE. OR THE DAY THE FED WOULD HAVE TO STEP IN TO HELP BAIL OUT A MAJOR INVESTMENT FIRM. THE HEADLINES CERTAINLY PAINT A GLOOMY PICTURE. IS IT AS BAD AS IT SEEMS OR BETTER OR WORSE. IT'S A COMPLICATED SUBJECT, BUT WE HAVE SOMEONE WHO CAN MAKE SENSE OR AT LEAST SHED SOME LIGHT ON ALL OF IT, HE'S DR. GARY SHILLING THE FORMER CHIEF ECONOMIST WITH MERYL LYNCH WHO NOW RUNS HIS OWN CONSULTING FIRM. WE'RE FACING A SEVERE FINANCIAL CRISIS, AND IT'S SPREADING. IF YOU GO BACK A YEAR AGO, PEOPLE THOUGHT IT WAS CONFINED TO THE SUB PRIME MORTGAGE AREA. BUT THEN, IT SPREAD TO THE REST OF HOUSING. AND THEN, IT SPREAD TO MANY, MANY OTHER FINANCIAL AREAS, ASSET BACKED COMMERCIAL PAPER, AND TO LEVERAGED LOANS, JUNK BONDS. AND A WHOLE HOST OF INVESTMENT VEHICLES THAT, FRANKLY, DAN, I DIDN'T EVEN KNOW THE NAMES OF A YEAR AGO. AND THEY KEEP COMING OUT OF THE WOODWORK. HERE'S THE THING I THINK THAT'S IN MOST PEOPLE'S MINDS. WHEN YOU READ THAT BEAR STEARNS IS IN TROUBLE AND CARLYLE IS IN TROUBLE, THESE WERE CONSIDERED ABSOLUTELY IMPREGNABLE CITADELS. OH, WELL, THEY WERE. AND THAT'S THE SHOCKING NEWS ABOUT THIS, YOU SEE. IF THE BEST, IF THE MOST ASTUTE - IF THESE OUTFITS RUN BY SOME OF THE BEST MINDS IN THE FINANCIAL WORLD IF THEY GO GET INTO TROUBLE, WHAT'S THE REST OF THE SITUATION LOOK LIKE? WELL, THEY ARE IN TROUBLE. THEY ARE IN TROUBLE, THEY ARE IN TROUBLE. - SO WHAT DOES THE REST OF THE SITUATION LOOK LIKE? WE HAD EARLIER SAID THAT WE THOUGHT THAT AT LEAST ONE MAJOR WALL STREET FIRM WOULD BASICALLY BE CARRIED OUT, OR BAILED OUT. AND HEY, WE'VE GOT BEAR STEARNS AS LIVING PROOF. AND OF COURSE, NOW EVERYONE ELSE-- EVERYONE SAYS, WHO'S NEXT? WHERE DO WE GO FROM HERE? AND THAT'S WHAT'S REALLY DEBILITATING IN FINANCIAL MARKETS. BECAUSE UNCERTAINTY IS THE REAL ENEMY OF FINANCIAL MARKETS. WHEN PEOPLE DON'T KNOW WHAT THEY'RE DEALING WITH, WHEN THEY FIGURE THAT THEY CAN'T TRUST THE OTHER PARTY, THE COUNTER PARTY RISK, IT'S CALLED-- IN OTHER WORDS, THE UNCERTAINTY THAT WHOMEVER YOU'RE DEALING WITH IS NOT GOING TO BE ABLE TO MAKE GOOD ON THEIR FINANCIAL COMMITMENTS. THAT'S WHEN GOT A SERIOUS, SERIOUS PROBLEM. ARE OTHER CHIPS TO FALL? I MEAN, BEAR STEARNS HAS GONE DOWN. WILL THERE BE A DOMINO EFFECT, OR WILL IT STOP THERE? I THINK WE HAVE TO LOOK FOR FURTHER-- FOR FURTHER PROBLEMS. BECAUSE INSTITUTIONS, INDIVIDUALS NOW DON'T TRUST ANYBODY. YOU'RE PROBABLY GOING TO SEE A CONTINUATION OF WHAT WE'VE HAD, WHICH IS A RUSH FOR TREASURY SECURITIES, THOSE ISSUED BY THE U.S. GOVERNMENT, WHICH ARE CONSIDERED THE BEST IN THE WORLD. PEOPLE ARE GOING TO NOT TRUST EVEN MONEY MARKET FUNDS, BECAUSE MANY OF THOSE ACTUALLY OWN SECURITIES THAT HAD LINKS TO-- SUB PRIME MORTGAGE BACKED INSTRUMENTS. CAN EVEN THE FEDERAL GOVERNMENT CONTINUE TO BAIL OUT THESE FIRMS? THE FEDERAL GOVERNMENT CAN PRETTY MUCH WRITE ALL THE CHECKS IT WANTS TO. IT WILL EVENTUALLY SHOW UP IN THE FEDERAL DEFICIT, AND YOU AND I, AS TAXPAYERS, WILL BE RESPONSIBLE. LET'S TALK ABOUT FAIRNESS. SOMEONE WATCHING OR LISTENING AT HOME WOULD SAY, "WAIT A MINUTE. WHY SHOULD I, THE TAXPAYER, HAVE TO PAY TO BAIL THESE PEOPLE OUT?" THAT'S AND EXCELLENT QUESTION. THERE ARE REALLY TWO ISSUES HERE. ONE IS THE FAIRNESS ISSUE. AND - AND A QUESTION OF, IF PEOPLE MAKE STUPID BETS, SHOULDN'T THEY SUFFER THE CONSEQUENCES? AFTER ALL, WE-- WE'RE NOT IN A NANNY STATE HERE, WHERE IT'S KIND OF A HEADS-- A HEADS,

I WIN, TAILS, THE GOVERNMENT OR SOMEBODY BAILS ME OUT. BUT THE OTHER SIDE OF THE COIN-- AND THAT'S WHERE THE FEDERAL RESERVE WAS REALLY FORCED TO ACT ON THIS-- IS THAT IF THIS JEOPARDIZES THE WHOLE FINANCIAL STRUCTURE, IF IT GETS TO THE POINT THAT NOBODY TRUSTS ANYBODY, PEOPLE DON'T EVEN WANT TO PUT THEIR MONEY IN BANKS, THEN YOU'VE GOT A PROBLEM. AND THAT'S THE KIND OF THING THAT NOBODY WANTS. SO THAT'S WHAT'S REALLY PUSHING THEM. SO YOU HAVE THAT TRADEOFF. WE'VE SEEN THAT-- WE'VE SEEN THAT REPEATEDLY IN THIS WHOLE ARGUMENT-- GOING ON BETWEEN THE ADMINISTRATION AND CONGRESS, AND BETWEEN WALL STREET AND MAIN STREET, IF YOU WILL, IN TERMS OF BAILING OUT THE MORTGAGE BACKED SECURITIES. AND ADMINISTRATION IS REALLY SAYING, "HEY, WE WANT THIS DONE ON A VOLUNTARY-- ON A VOLUNTEER BASIS. WE DON'T BASICALLY WANT TO USE TAXPAYER MONEY TO MAKE GOOD FOR INVESTORS WHO INVESTED IN STUFF THAT BASICALLY WENT BAD. IF THEY DIDN'T KNOW WHAT THEY GETTING INTO, WELL, THAT'S THEIR FAULT." BUT-- BUT BY THE SAME TOKEN, IF THIS WHOLE THING JEOPARDIZES THE POINT THAT THE WHOLE MORTGAGE MARKET CLOSES DOWN, AND EVEN PEOPLE WITH GOOD CREDIT CAN NO LONGER BORROW AND REFINANCE THEIR HOUSES, OBVIOUSLY, THAT BECOMES A NATIONAL PROBLEM. WELL WHAT ABOUT THE PEOPLE WHO RUN THESE OUTFITS? TIME AND TIME AGAIN, WE'VE SEEN THE BUSINESS EITHER COLLAPSE OR GO NEAR COLLAPSE, BUT THE CHIEF EXECUTIVE WALKS AWAY WITH MANY MILLIONS OF DOLLARS. IS THIS ACCEPTED IN WALL STREET AS OKAY, THAT'S JUST THE WAY THINGS GO? (LAUGHTER) THERE'S CERTAINLY GOT TO BE A LOT OF QUESTION AS TO WHY PEOPLE SHOULD BE PAID FOR FAILURE. I'VE THOUGHT ABOUT THAT A LOT. AND IF YOU GO BACK OVER 100 YEARS AGO, WHEN PEOPLE LIKE JAY GOULD AND CARNEGIE, ANDREW CARNEGIE, AND J.P. MORGAN WHEN THOSE PEOPLE STARTED FIRMS, YES, THEY WERE, BY TODAY'S STANDARD, BUCCANEER CAPITALISTS. BUT THEY OWNED THEM, AND IT WAS THEIR MONEY, THEIR PERSONAL MONEY AT STAKE. AND WHEN JAY GOULD WENT BROKE AND DIED PENNILESS, BIG RAILROAD TYCOON, HEY, THAT WAS-- THAT WAS HIS TOUGH LUCK. AND NOBODY REALLY CARED TOO MUCH ABOUT IT. TODAY, THE CEOS ARE NOT ENTREPRENEURS. THEY'RE NOT PEOPLE WHO BASICALLY HAVE STARTED AND OWNED MAJOR PARTS OF THESE COMPANIES, BANKS, BROKERAGE HOUSES. THEY'RE BASICALLY HIRED HANDS, JUST LIKE EVERY OTHER EMPLOYEE. THEY HAVE A LOT MORE POWER THAN AVERAGE. BUT THEY ARE HIRED TO DO A JOB. THEY'RE HIRED MANAGERS. IT'S NOT THEIR CAPITAL AT RISK. AND I THINK YOU'VE GOT A SERIOUS QUESTION AS TO HOW MUCH THOSE PEOPLE OUGHT TO WALK AWAY WITH WHEN THEY FAIL. YOU SAID SOMETHING EARLY ON. YOU SAID WE'RE IN A SEVERE FINANCIAL CRISIS, IF I HEARD YOU CORRECTLY. YES, WE ARE. -HOW SEVERE? IT WILL RANK WITH THE MOST SEVERE IN THE POST-WAR PERIOD, IF OUR FORECAST IS CORRECT. I WANT TO HANG BACK FOR A MOMENT ON THE POSSIBILITY-- UNDERSCORE THE WORD-- THE POSSIBILITY THAT A LONG RECESSION, WHICH YOU'RE NOW FORECASTING, COULD LEAD TO DEPRESSION. COULD-- ITALICIZE THE WORD. COULD LEAD TO DEPRESSION WHAT'S THE DIFFERENCE BETWEEN A RECESSION AND A DEPRESSION? AS FAR AS A DEPRESSION, THERE REALLY ISN'T A DEFINITION OF THAT. BUT PEOPLE WOULD RECOGNIZE THOSE IN THE PAST. THE MOST RECENT, OF COURSE, WAS THE 1930S. BUT THERE WAS ONE IN THE 1880S. THERE WAS ONE IN THE 18-- 18 TEENS AND TWENTIES. THERE WAS ONE IN-- RIGHT AFT REVOLUTIONARY WAR. THERE'VE BEEN FOUR HISTORICALLY, IN THIS COUNTRY, THAT YOU COULD CALL DEPRESSIONS. AND WHAT THEY ARE IS EXTENDED PERIODS, PERIODS OF NOT JUST A YEAR OR SO, BUT PERIODS OF FIVE TO TEN YEARS OF EXTENDED WEAK ECONOMY, OF FINANCIAL STRUCTURE THAT IS IN TERRIBLE TROUBLE. -HIGH UNEMPLOYMENT. HIGH UNEMPLOYMENT MALAISE, PEOPLE JUST NOT WANTING TO INVEST, NOT WANTING TO SPEND. I MEAN, TODAY, YOU WOULD SAY, WELL, THE FEDERAL GOVERNMENT SIMPLY COULD NOT STAND FOR THAT. AND I-- I THINK THAT'S TRUE. AND-- AND THAT DOES LIMIT THE PROSPECTS OF A DEPRESSION, BECAUSE YOU GET MASSIVE GOVERNMENT BAILOUTS. I MEAN, FOR EXAMPLE, WE HAVE BEEN OF THE IMPRESSION THAT IF OUR FORECAST HOLDS TRUE, THAT WE GET A 25 PERCENT DECLINE IN HOUSE PRICES PEAK TO TROUGH THAT WILL WIPE OUT THE HOME EQUITY OF ALMOST EVERYBODY WHO HAS A MORTGAGE IN THIS COUNTRY. WELL, YOU CAN'T SEE THE AMERICAN DREAM DISAPPEAR LIKE THAT, DAN. AND THE FEDERAL GOVERNMENT STAND BY. ANY ADMINISTRATION, REGARDLESS OF POLITICAL LEANING, ANY CONGRESS SIMPLY HAS TO STEP INTO THAT SITUATION. LET'S TALK ABOUT PEOPLE IN WHAT IS CALLED GENERALLY THE MIDDLE ECONOMIC CLASS. LET'S SAY MAN AND WIFE ARE MAKING 65, $70,000 A YEAR. THEY HAVE A MORTGAGE ON THEIR HOUSE. THEY HAVE CAR PAYMENTS TO MAKE, THEY'RE TRYING TO SAVE SOMETHING FOR THE KIDS GOING TO COLLEGE, AND TRYING TO MAINTAIN THEIR LEVEL OF LIFESTYLE. NOW, FOR THAT COUPLE, LET'S DO A CHECKLIST OF WHAT THEY SHOULD BE DOING. SHOULD THEY PULL OUT THEIR MONEY FROM THEIR 401K OR NOT? MANY PEOPLE ARE RAIDING THEIR 401KS NOW. THEY'VE TAPPED OUT ALL THEIR CREDIT CARDS. WHEN THE HOME EQUITY DISAPPEARED, THEN THEY RAN THROUGH THEIR CREDIT CARDS. AND THEY'RE MAXED OUT ON THEIR CREDIT CARDS. AND SOME PEOPLE HAVE GONE THE EXTRA STEP OF PULLING MONEY OUT OF THEIR 401KS. THAT, TO ME, IS A HUGE MISTAKE, BECAUSE AMERICANS HAVE NOT SAVED NEARLY ENOUGH FOR RETIREMENT. I THINK PEOPLE HAVE A LOT MORE FLEXIBILITY IN SPENDING THAN THEY THINK, IN TERMS OF EATING OUT, IN TERMS OF WHAT THEY BUY, WHERE THEY BUY IT, HOW MANY TRIPS TO THE SUPERMARKET THEY MAKE A WEEK. IN THE SHORT RUN, THEY CERTAINLY CAN CUT BACK ON SPENDING, ENTERTAINMENT, THE MEALS OUT, THE ACCESSORIES, THE DISCRETIONARY SPENDING. PRESIDENT BUSH HAS BEEN SPEAKING OUT ON THIS ISSUE. IN FACT, NOT VERY LONG AGO, HE SPOKE TO WALL STREET. DID YOU SEE WHAT HE SAID? YES, I DID. AND I THINK HE'S AWARE OF THE PROBLEM. I'M NOT SURE THAT HE'S INTIMATELY AWARE, AS AWARE AS YOU MIGHT-- AS YOU MIGHT HOPE. HE'S NOT IN-- HE'S NOT A WALL STREET TYPE BY BACKGROUND. BUT HE DOES HAVE HENRY PAULSON, SECRETARY OF THE TREASURY, WHO HAS, OF COURSE, VAST EXPERIENCE AS HEAD OF GOLDMAN SACHS. AND HE DOES HAVE SOME VERY KNOWLEDGEABLE AND-- ADVISORS THERE. THE PRESIDENT, OF COURSE, ALWAYS HAS THIS PROBLEM THAT HE WANTS TO RECOGNIZE PROBLEMS, BUT NOT SCARE PEOPLE AND SORT OF SAY, "OH MY GOODNESS. THIS THING IS FALLING APART." THAT, OBVIOUSLY, YOU DON'T WANT TO HEAR. I MEAN, YOU-- YOU WILL NOT HEAR THE ADMINISTRATION, EITHER PAULSON OR THE PRESIDENT OR ANYBODY ELSE, TALK ABOUT RECESSIONS, YOU KNOW. THAT'S ONLY AFTER IT'S OVER. I DO THINK IT WOULD BE HELPFUL IF THE ADMINISTRATION WOULD BE SOMEWHAT MORE IMMERSED IN THE ISSUE, AND SHOWING MORE CONCERN. BECAUSE VERY MUCH LIKE WALL STREET, I THINK THEY'RE LATE TO THE PARTY IN RECOGNIZING THE DEPTH AND BREATH OF THE FINANCIAL CRISIS. THE PRESIDENT SAYS, "LOOK. WE'RE-- WE'RE NOT IN THE BEST OF TIMES BUT IT'S GONNA BE ALRIGHT. AND KEEP SPENDING BECAUSE IT'S VERY IMPORTANT TO OUR OVERALL ECONOMY." THEN THERE ARE PEOPLE SUCH AS YOURSELF WHO SAY, "WHAT YOU NEED TO DO IS GO DOWN THE LIST OF SEE WHERE YOU'RE SPENDIN' YOUR MONEY AND WHERE YOU CAN SAVE MONEY. WHEN I WAS STUDYING ECONOMICS MANY DECADES AGO, THEY CALLED THAT THE PARADOX OF THRIFT, WHERE THAT-- WHAT THE INDIVIDUAL NEEDED TO DO WAS BASICALLY SAVE FOR RETIREMENT, BE PRUDENT, HAVE RESERVES BE PREPARED FINANCIALLY. BUT THAT WAS DIAMETRICALLY OPPOSITE WHAT YOU NEEDED TO STIMULATE THE ECONOMY WHEN THINGS ARE NOT SO GOOD. YOU MAY SAY IT'S PATRIOTIC TO GO OUT AND SPEND EVERY DIME YOU GOT. BUT I THINK IF YOU GOT ANY BRAINS, YOU'RE GONNA-- (LAUGHS) YOU'RE GONNA GO THE OPPOSITE WAY AND FIGURE WELL, MAYBE HERE'S ONE CASE WHERE MY PATRIOTISM IS GONNA HAVE TO TAKE A BACK SEAT TO MY OWN FINANCIAL SECURITY AND THAT OF MY FAMILY. DR. GARY SHILLING. FROM NEW YORK, FOR HDNET, DAN RATHER REPORTING, GOODNIGHT.