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THE SITUATION ROOM

Aid Boat Rammed; "All-Out War" with Hamas; Defiant Governor Fills Obama Seat; "The Final Nail in the Coffin"; Interview with Hamas Spokesman Osama Hamdan

Aired December 30, 2008 - 17:00   ET

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


SUZANNE MALVEAUX, CNN ANCHOR: Breaking news -- no letup yet in the air assault on Gaza or the rain of rockets falling on Israel. Here are the latest developments.
Israel's officials say that the government is weighing a 48-hour halt to the air campaign to see if Palestinian militants stop their rocket attacks. But officials also say that Israel is going ahead with preparations for a possible ground offensive.

Israeli air strikes leveled at least three buildings and a Hamas government compound today, witnesses say. And Palestinian medical sources put the Gaza death toll at 375 -- most of them Hamas militants.

Dozens more rockets landed in Israel today, hitting the City of Beersheba for the first time -- well over 20 miles from Gaza. I'll speak with Israel's ambassador to the United States and a Hamas spokesperson in exile.

Well, you're about to witness something dramatic. A group of actors, medical personnel and a former U.S. congresswoman were aboard a small vessel which tried to get through the Israeli blockade at Gaza. Well, they ran into some serious trouble -- a collision with an Israeli patrol boat. The damaged aid boat managed to limp into port in Lebanon.

Our CNN's Karl Penhaul was on board and he joins us live from Beirut.

Tell us what happened -- Karl?

KARL PENHAUL, CNN CORRESPONDENT: Suzanne, it was a trip that so easily could have ended in tragedy. The Israelis say it was an accident. But from where I was sitting, it looked very deliberate.

(BEGIN VIDEOTAPE)

PENHAUL (voice-over): It was a mercy mission to the wounded and dying of Gaza -- tons of medical aid, doctors and peace activists from the Free Gaza Solidarity Movement aboard motor yacht The Dignity. As usual, it would involve defying an Israeli travel ban and running a possible blockade.

ELIZA ERNSHIRE, FREE GAZA ORGANIZER: I think there's a complacency that happens in the West. It's something that we have to fight against.

PENHAUL: The last aid loaded aboard and a crewman's warning.

UNIDENTIFIED MALE: And if you are boarded and are going to be arrested -- you're going to talk about this on the way yourselves -- I would really suggest, do not struggle against these people. They are professionals.

UNIDENTIFIED FEMALE: End the siege. End the occupation.

PENHAUL: A veteran Free Gaza activist hugs first time passenger, former U.S. congresswoman Cynthia McKinney.

UNIDENTIFIED MALE: Bye-bye.

PENHAUL: From the deck, last goodbyes -- a V for victory sign. Around 10 hours pass amid rolling seas. Then a spotlight shines out from one of two Israeli patrol boats. The Dignity is still in international waters.

They shadow us for half an hour, then, with no prior radio warning, according to the captain, one of the patrol boats rams The Dignity.

(on camera): The boats that have been following us now for some time, one of them has rammed this vessel. It rammed it in the front. That caused the glass to splinter, part of the roof to peel back -- a very dramatic moment. The captain is now saying that this boat is starting to take on water.

UNIDENTIFIED FEMALE: They're coming (INAUDIBLE) down in the water and get the right back draft.

UNIDENTIFIED FEMALE: We're trying to explore our options -- whether we might try and head toward Lebanon. But the boat is in distress.

PENHAUL (voice-over): Later, the Israeli Defense Forces said it was an accident. They say they warned The Dignity and ordered it to turn back -- a statement nobody aboard The Dignity buys.

CYNTHIA MCKINNEY, FORMER U.S. CONGRESSWOMAN: I wouldn't call it accosting. I would call it ramming. Let's just call it as it is.

PENHAUL: From dockside in Southern Lebanon, the scale of the damage to the hull and wheel house is apparent. It was a lucky escape.

DENNIS HEALEY, CAPTAIN, "DIGNITY": It could have ended with people drowning. If they'd have hit us more square on, you know, we could have gone down in minutes.

PENHAUL: Free Gaza activists are unbowed.

ERNSHIRE: We're desperate to get back in and to find a way to get this aid and more aid into Gaza and to mobilize the international community and governments of the world to stop this brutality that Israeli is practicing against the people of Gaza.

PENHAUL: But for now, The Dignity is going nowhere -- too battered to set sail.

(END VIDEOTAPE)

PENHAUL: Tonight, those three tons of medical supplies are still sitting on The Dignity down in the port of Tyre. They're desperately needed in the Gaza Strip. And what members of the Free Gaza Movement say is that they will continue to try and get that aid through. They say silence and inaction is complicity -- Suzanne.

MALVEAUX: Thank you, Karl. And be safe.

President Bush has been keeping tabs on the Gaza crisis from his Texas ranch. And while Israel may considering a brief cause in its campaign against Hamas, the Bush administration doesn't sound like it is very intrigued by the idea of this short-term truce.

Our CNN's Elaine Quijano is live from Crawford, Texas.

What are you hearing from the Bush administration -- Elaine?

ELAINE QUIJANO, CNN CORRESPONDENT: Well, Suzanne, today President Bush, from his ranch nearby here in Crawford, Texas, worked the phones. He talked to Palestinian Authority President Mahmoud Abbas and also Prime Minister Salam Fayad. The White House says the president and the two Palestinian leaders agreed that for any cease- fire to be effective, it must be respected by Hamas and it must be lasting.

(BEGIN VIDEO CLIP)

GORDON JOHNDROE, WHITE HOUSE SPOKESMAN: We want to see an end to the violence for the long-term, not just the immediate. So, again, we don't want a cease-fire agreement that isn't worth the piece of paper it's written on. We want something that's lasting and, most importantly, respected by Hamas.

(END VIDEO CLIP)

QUIJANO: Now, President Bush also spoke today to Hosni Mubarak, the president of Egypt. Egypt, of course, is the intermediary with Hamas. We should also mention, Secretary Rice was also working the phones -- talking to her counterparts and officials in the region, trying to push forward what the United States is calling a durable and sustainable cease-fire -- Suzanne.

MALVEAUX

Elaine Quijano in Crawford, Texas.

Thanks, Elaine.

The current Middle East crisis is not Barack Obama's problem -- at least not yet. He is keeping on top of the situation, obviously. Let's go live to our senior White House correspondent, Ed Henry -- Ed, what are you hearing from the Obama team today?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Suzanne, very little. Because, as you know, while this is a fresh reminder of the challenges ahead for the president-elect, he is basically holding off on getting involved until he's actually sworn in.

(BEGIN VIDEOTAPE)

HENRY (voice-over): As his aides continue the mantra "there's only one president at a time," the crisis in Gaza is not stopping President-Elect Barack Obama from working on his golf game. But Mr. Obama has been staying in the loop -- a telephone briefing from Secretary of State Condoleezza Rice over the weekend and phone calls with his own top advisers -- retired Marine General Jim Jones and Senator Hillary Clinton.

(VIDEO CLIP)

HENRY: During a July visit to Jerusalem as a candidate, he had high hopes of a peace deal.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: It is my hope that I can serve as an effective partner, whether as a United States senator or as a president, in bringing about a more lasting peace in the region.

HENRY: Now, Mideast experts say the best Mr. Obama can hope for is managing the conflict rather than actually resolving it.

AARON DAVID MILLER, FORMER STATE DEPARTMENT ADVISER, WOODROW WILSON CENTER: He'll inherit the hundred year headache that many of his predecessors have inherited, except with a much weaker American hand. Because at the end of this, Israel and Hamas will still be at war.

HENRY: Mr. Obama is deferring to President Bush, who is also on vacation in Texas -- and through a spokesman, is blaming Hamas for the spiraling situation -- without urging restraint from Israel.

JOHNDROE: In order for the violence to stop, Hamas must stop carrying rockets into Israel and agree to respect a sustainable and durable cease-fire.

HENRY: There's not a lot of daylight between the Bush approach and what Mr. Obama said this summer during another round of violence.

OBAMA: If somebody was sending rockets into my house where my two daughters sleep at night, I'm going to do everything in my power to stop that. And I would expect the Israelis to do the same thing.

HENRY: That statement was made in the heat of the campaign, when Republicans were charging that Mr. Obama was not a strong defender of Israel. MILLER: When we don't call the Israelis out on actions that they take that undermine and hurt American interests, when we have to run everything in negotiations through the Israelis first, then you have a problem. Because then America loses its credibility and effectiveness as an independent mediator.

HENRY: A major challenge for Mr. Obama if he doesn't want to follow in the footsteps of a string of predecessors who all found a peace deal elusive.

(END VIDEOTAPE)

HENRY: And that's what precisely takes it so difficult for Mr. Obama in the days ahead, especially because his own advisers are saying it's difficult to get a handle on the situation. It's literally changing hour by hour -- Suzanne.

MALVEAUX: And, Ed, he's three weeks to do it.

Thank you so much, Ed.

HENRY: That's right.

MALVEAUX: A bold and some say outrageous move -- the embattled Illinois governor fills the Senate seat he's accused of trying to sell. But his pick may never make it to Washington if Senate Democrats have their way.

Also, the pregnancy was a campaign bombshell. Now, former vice presidential candidate Sarah Palin -- well, she's a grandmother.

And CNN's Paula Hancocks is blindfolded by Hamas and taken inside a secret factory where the rockets are made -- the same rockets Israel says are prompting its assault on Gaza.

Israel's ambassador to the U.S.

Is here to respond.

(COMMERCIAL BREAK)

MALVEAUX: It's a defiant, some say outrageous, move -- embattled Illinois Governor Rod Blagojevich filling the same Senate seat that he is accused of trying to sell. Just a couple of hours ago, he tapped former Illinois Attorney General Roland Burris to replace President- Elect Barack Obama in the Senate.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH (D), ILLINOIS: The people of Illinois are entitled to have two United States senators represent them in Washington, D.C. As governor, I am required to make this appointment.

If I don't make this appointment, then the people of Illinois will be deprived of their appropriate voice and vote in the United States Senate. Therefore, I am here to announce my intention to appoint an individual who has unquestioned integrity, extensive experience and is a wise and distinguished senior statesman of Illinois. This man actually want once was an opponent of mine for governor.

So I'm here today to announce that I am appointing Roland Burris as the next United States Senator from Illinois.

And now I'd like to ask everyone to do one last thing. Please don't allow the allegations against me to taint this good and honest man.

(END VIDEO CLIP)

MALVEAUX: CNN's Jim Acosta joins us live with more -- and, Jim, obviously, the Senate Democrats reacting very strongly.

What are they saying?

JIM ACOSTA, CNN NATIONAL CORRESPONDENT: Well, they're saying not so fast. And after listening to Rod Blagojevich there, it sounds like that line from "The Untouchables" -- "that's the Chicago way."

But, Suzanne, this is far from being a done deal. For former Illinois Attorney General Roland Burris to reach the Senate, he has a couple big hurdles to clear.

First, the secretary of state of Illinois, Jesse White, says he will not certify the appointment. He's released a statement saying as much. Let's put it on screen: "As I have previously stated publicly" -- this is Jesse White -- "I cannot cosign a document that certifies any appointment by Rod Blagojevich for the vacant United States Senate seat from Illinois. Although I have respect for former Attorney General Roland Burris, because of the current cloud of controversy surrounding the governor, I cannot accept that document."

But let's say, for the moment, that, for whatever reason, Jesse White changes his mind and signs off on this document, the United States Senate could hold a vote to block Burris' appointment. And right now, Senate Democrats say that's what they plan to do.

Here's a statement from the Senate leadership. Let's put that on the screen. This is from the Democratic leadership: "We say this without prejudice toward Roland Burris's ability and we respect his years of public service. But this is not about Mr. Burris. It is about the integrity of a governor accused of attempting to sell this United States Senate seat."

And if the Senate were to do nothing, in that unlikely event, Burris could be seated. But there's always the potential for legal challenges to each of these individual hurdles, which, of course, would make matters much more complicated, Suzanne.

But the Constitution does state that the Senate -- and we heard this in one of the segments earlier on THE SITUATION ROOM -- the Constitution does give the Senate the authority to intervene here. MALVEAUX: And, Jim, obviously a lot of twists and turns in this ongoing story.

Thank you, Jim.

ACOSTA: You bet.

MALVEAUX: Some former insiders are giving a blunt assessment of the Bush administration -- one that is especially unflattering to the president and vice president.

Our CNN's Brian Todd joins us live -- and, Brian, tell us about the story.

BRIAN TODD, CNN CORRESPONDENT: Well, Suzanne, this is a classic case. Former White House aides, once they've been a couple years removed from the White House, feeling they've got nothing to lose by venting. Now, to a group that's been slammed from everything to the Iraq War to Hurricane Katrina, this will sound very familiar.

(BEGIN VIDEOTAPE)

TODD (voice-over): A president with blinders on and an inner circle who manipulated him -- in a new so-called oral history, "Vanity Fair" magazine disperses some stark, if not unfamiliar, assessments of the Bush White House.

Colonel Lawrence Wilkerson, Colin Powell's chief of staff at the State Department, on the assemblage of Powell, Dick Cheney, Condoleezza Rice and Donald Rumsfeld early on as the president's security team: "It allowed everybody to believe that this Sarah Palin-like president -- because, let's face it, that's what he was -- was going to be protected by this national security elite."

We asked the White House for a reaction to that remark.

JOHNDROE: No, I have no response to Wilkerson.

TODD: Larry Wilkerson says Cheney was at the root of those early perceptions: "He became vice president well before George Bush picked him and he began to manipulate things from that point on, knowing that he was going to be able to convince this guy to pick him."

An aide to the vice president called that "another false assertion from a longtime critic of this administration."

Wilkerson is one of several former aides who later turned on the White House given prominent space in the "Vanity Fair" piece. But as the writer points out, they also spoke to people who had no ax to grind.

TODD PURDUM, "VANITY FAIR" MAGAZINE: And who speak, in many cases, to the president's good qualities -- his enormous sense of personal loyalty, his kindness, his work on AIDS in Africa.

TODD: But one former aide describes the handling of Hurricane Katrina as a low point.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And, Brownie, you're doing a heck of a job.

TODD: Former Bush pollster Matthew Dowd: "Katrina, to me, was the tipping point. The president broke his bond with the public."

Former counselor to the president, Dan Bartlett, a consistent defender of Mr. Bush, says of Katrina: "Politically, it was the final nail in the coffin."

JOHNDROE: As the president has stated many times, the response at first was not -- was not what was needed. But that is why he made repeated visits to the region to help with Gulf Coast recovery.

(END VIDEOTAPE)

TODD: But Katrina was the point where we started to see the president's approval ratings head toward historic lows.

But here's the comparison. After September 11, Mr. Bush had spiked to a 90 percent approval rating. The Iraq War took a huge chunk out of all of that.

Then in 2006, after Hurricane -- excuse me -- in 2005, after Hurricane Katrina, we saw it dip to 45 percent. Move ahead to just a few days ago and Mr. Bush's approval rating is one of the lowest levels for any president -- 27 percent.

Suzanne, it has plummeted since the Iraq War started and he's never recovered.

MALVEAUX: And, Brian, it's interesting covering the Bush administration for so many years to see these Bush loyalists now feeling free to openly criticize him.

What do they say about his handling of the Iraq War?

TODD: The quotes on that are all over the place in this piece, as you might imagine. Here's one very prominent one about Donald Rumsfeld. This was from Bill Graham, who was the Canadian defense and foreign minister at one point. This is talking about Mr. Rumsfeld's handling of the war, actually before the hostilities broke out in 2003: "Mr. Rumsfeld was not about listening and being cooperative. Mr. Rumsfeld was about getting the way of the United States and don't get in my way or my juggernaut will run over you."

MALVEAUX: Wow!

TODD: That's from the Canadian foreign and defense minister.

We called Donald Rumsfeld's office. They said they would not comment on any of that so.

MALVEAUX: OK. All right.

A lot of criticism coming out in the final days.

Thank you so much, Brian.

TODD: Thank you.

MALVEAUX: She was led blindfolded to a secret location -- CNN's Paula Hancocks with a behind-the-scenes look at a hidden rocket factory in Gaza.

And her daughter's out of wedlock pregnancy was a campaign bombshell. Well, now it's Grandma Palin. We've got the details.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL)

ANNOUNCER: This is CNN breaking news.

MALVEAUX: For the first time since the Israeli/Gaza conflict, we are now getting word and we are speaking with a Hamas spokesman -- a spokesman in exile out of Beirut, Lebanon.

His name, Osama Hamdan.

Mr. Hamdan, thank you so much for joining us here in THE SITUATION ROOM.

I want to first start off -- obviously, a Palestinian medical source is now saying that 375 are dead in Gaza because of the kind of back and forth between Hamas, as well as Israeli forces.

What are you willing to do to end the bloodshed?

Are you willing to look at and potentially consider a 48-hour cease-fire?

OSAMA HAMDAN, HAMAS SPOKESMAN: Well, thank you for that question.

I believe the situation in Gaza is more than bloodshed. I think it's a holocaust. That wasn't my own -- my own word. It's the word which was used by Matan Fulne (ph), the deputy chief of staff of Israeli forces.

I believe that this -- this holocaust in Gaza is against the Palestinians. We are talking about more than 370 Palestinians were killed. Most of them were civilians. Even the police were the civilian police.

There is -- there is no way to talk about just the 48 hours of cease-fire. We have to talk about an end for this attacks -- Israeli attacks against the Palestinians and opening all the exits -- all the borders for the Palestinians to have the aid, either for the military aid or any other kind of support. And then we can talk about the politics.

No one can talk about the politics while there is a holocaust in Gaza -- which is not -- I insist it wasn't my word. It was the words of one of the senior officers in the Israeli Army.

MALVEAUX: Israeli officials are saying all that Hamas has to do is to put down the rockets, to shut those rocket factories down.

Are you willing to do that to stop the air strikes, to stop the attacks from both sides?

HAMDAN: Well, I think the Israelis are missing an important point. The important point is the occupation.

If they want the Palestinians to stop the fight, they have to work in order to end the occupation. For about more than 60 years, the Israelis are occupying our land. They are killing our people. It's not the first massacre and I believe it will not be the last -- the last one if the Israelis do not bring an end for this occupation.

They have to withdraw their troops. They have to stop their military engine against the Palestinians. At this moment, we can talk about some new chapter in the Palestinian situation.

MALVEAUX: Sir, let's talk about that...

HAMDAN: But asking the Palestinians...

MALVEAUX: ...that new chapter...

HAMDAN: ...to stop their resistance, which is a...

MALVEAUX: Obviously -- I'm sorry to interrupt -- but, obviously, the Israeli officials are saying that by firing those rockets into Israel, that certainly is not going to move forward in stopping an occupation or moving forward in the peace process.

So why fire these rockets into Israel?

Clearly, you're not getting what you want.

HAMDAN: Well, it's clear that the Palestinians accepted the cease-fire for six months. Those six months, the Israelis killed more than 28 Palestinians. There was more than 100 violations against the cease-fire. The closure was 50 percent of the time. This is now 15 person of the -- of Gazanians were allowed -- was allowed by the Israelis to enter.

So, the Israelis did not respect the cease-fire. They violated the cease-fire. And then they asked the Palestinians not to react toward that.

The Israelis are using the most difficult weapons against Gaza and they are blaming the Palestinians for defending themselves. I believe they have to stop this holocaust rather than asking the Palestinians to stop defending themselves. The second point, they have to acknowledge that there is an occupation and they have to accept the idea of ending the occupation.

At this moment, we can talk about what are the Palestinians supposed to do. Before that, no one has the right to ask the Palestinians to do this or to do that.

MALVEAUX: So, sir...

HAMDAN: I believe the international community is supposed to act in order to defend the Palestinians and end the occupation.

MALVEAUX: Well, what is next for Hamas, moving forward -- looking forward here?

Because, obviously, Israeli officials say they will not stop these air strikes until they're assured that those tunnels are shut down with Egypt and that those rocket attacks will not continue.

What is Hamas willing to do?

There are some who said in your organization that perhaps they would consider these suicide strikes like we saw in 2005.

HAMDAN: Well, being that the Israelis are insistent -- that they insist to be the new Nazis, I believe this is the fact, if they continue their attacks against the Palestinians. I think they have to show the international community that they are willing to find a peaceful solution. They did not show that for -- until now.

Even in the negotiations with Abu Mazen, it's not going well. Even the negotiation with Leah Tabama (ph) wasn't going well. They finally killed him. They put him under the siege and they killed him. Abu Mazen now is under huge pressure from the Israelis to deny the Palestinian rights.

I think the situation is moving in the wrong way. They have to stop that, ask themselves -- if they want to live in peace, they have to give up. They have to -- to withdraw their troops from the occupied Palestinian land.

If they do not do that, the Palestinians will continue their resistance -- not Hamas, maybe other organizations, maybe other people -- maybe the new generation will resist.

Livni was attacking, a few days ago, the Palestinians inside Israel. She was attacking them, asking them to leave Israel after six decades of saying that Israeli is a democratic state. That shows how the Israelis are dealing with the Palestinians -- not only Palestinians in Gaza and West Bank, but even the Palestinians inside Israeli, who were living for the last six decades there.

MALVEAUX: Thank you.

Mr. Osama Hamdan, thank you so much, from the Hamas perspective.

We will be speaking with the Israeli ambassador to the United States momentarily.

He is under fire and possibly facing impeachment -- now this from the Illinois governor.

(BEGIN VIDEO CLIP)

BLAGOJEVICH: I've enjoyed the limelight I've had over the last couple of weeks. I think that it's been -- I don't want to hog the limelight. This is Roland Burris' day.

(END VIDEO CLIP)

MALVEAUX: Rod Blagojevich moving to fill the Senate seat several prosecutors say he tried to sell -- is he calling the bluff of the U.S. attorney?

Also, desperate measures in desperate times -- bank robberies are skyrocketing.

Which city has seen more than 400 this year alone?

And the final horrifying moments aboard the doomed Space Shuttle Columbia -- details of a report five years in the making and now just released.

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, the political debate intensifies. A defiant Illinois governor makes his choice to fill Barack Obama's Senate seat.

A sign of the troubled economic times, bank robbers are way up across the country.

And a new addition, add grandmother to Sarah Palin's list of titles.

Wolf Blitzer's off today. I'm Suzanne Malveaux. And we're in THE SITUATION ROOM.

Now back to our breaking news. The governor of Illinois names a replacement for Barack Obama's Senate seat.

(BEGIN VIDEO CLIP)

BLAGOJEVICH: Please don't allow the allegations against me to taint this good and honest man. To not fill the vacancy would be to deprive the people of Illinois of two United States senators, to deprive the people of Illinois of their appropriate voice and votes in the United States Senate.

(END VIDEO CLIP)

MALVEAUX: It was a move that federal prosecutors hoped Governor Blagojevich would not take. Well, joining us to talk about this and much, much more, Democratic strategist Steve McMahon and CNN political contributor and Republican strategist Bay Buchanan. I want to start off here. The governor makes his move. He knows the secretary of state is not going to certify it. Why go through with it? Bay, let's start with you.

BAY BUCHANAN, REPUBLICAN STRATEGIST: I think it was a brilliant move, political move. Here you have the arrogance in Washington, the leaders in the Senate saying, listen governor, you can't do this. We're not going to seat him. And other people in Illinois saying the same thing. He has all of the rights and the authority to appoint this individual. But the law said he's the only person who can. And the lecture in Illinois failed to call for a special election, which he supported, by the way. They bring in the legislature, they fail to do it. What are they supposed to do, wait six months? He did exactly what he's supposed to do.

MALVEAUX: Steve, do you agree?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: I sort of am thinking of that line in "Fatal Attraction" Glenn Close came up with, I will not be ignored and that's what Governor Blagojevich said, he will not be ignored. He's willing to take down the party. This is a ridiculous move. It was clear from the beginning his appointee was not going to be seated, either certified by the secretary of state in Illinois or seated by Harry Reid and the Democrats here in Washington. It's great for Roland Burris, though. It puts hit back on the stage and puts him back in play. Obviously if Roland Burris, his chances today of being in the Senate were better than they were yesterday but I still don't think they're very good.

BUCHANAN: On what grounds does the secretary of state say we will not authorize this? It's not about Blagojevich anymore, it's about Roland. He seems like a terrific fellow, well respected, he's done nothing wrong whatsoever. He took a phone call from the governor and got appointed to be a U.S. senator. They are going to say no to him? On what grounds? He has done nothing wrong. Like wise, Harry Reid and the crowd back here, who are they to say this man shouldn't be seated. They have not right to tell the governor who he can and can't appoint.

MALVEAUX: Does Harry Reid and the Democrats really risk overplaying their hand here? Are they going to face some backlash if they're seen as obstructing this, if this person seems to be qualified and a reasonable person caught up in this process, a spectacle?

MCMAHON: The risk was a risk Blagojevich was well aware of and that was the risk saying no to an African-American potential senator when there are no African-American members in the United States Senate. I think senator or President-elect Obama has the opportunity now to create an opening for the Democrats in the Senate to say Blagojevich's pick is tainted. This is a man who tried to sell the Senate seat and even though Roland Burris wasn't implicated at all in the pay and play deal, he is still Blagojevich's pick. It's a tainted pick, and it's going to be, if he were seated, he would be seated under that taint. It's not what Illinois needs. It's not what the United States Senate needs. MALVEAUX: And we heard from Bobby Rush, also African-American, who says he will go to the Congressional Black Caucus. Said he will beg whoever he needs to, to support this candidacy. Do you think that's effective? Is that going to work by using race here?

BUCHANAN: It could -- he threw the race card right stack in the middle of the table. I think it would come up whether or not bobby rush would do it but clearly they will play it. This is a huge constituency in the Democratic Party. Obama, if he's wise, won't touch it. This has nothing to do with him or his administration. They have their hands full with investigations and problems. They should stay totally clear of this. And as for the Senate, I think if they can get through Illinois, I think this man will be seated because the Democrats just have no grounds whatsoever not to seat this man.

MALVEAUX: See, when you look at what's happening in Illinois, it's obviously a spectacle. How much does it hurt the Democratic Party, and does it hurt Obama?

MCMAHON: I don't think it hurts the Democratic Party. I don't think it hurts Obama because they have kept a fair distance from this. And I think Roland Burris might be a perfectly good choice but he's not the only African-American candidate who would be a perfectly good choice. That seat probably should go to an African-American. Don't think there's anybody saying Roland Burris shouldn't be seated who doesn't think an African-American should be. I think there are a lot of people who believe and believe quite reasonably that tainted governor who tried to sell a seat shouldn't have his appointee seated, particularly after the state of Illinois, who is also a statewide elected official in the United States Senate said we will not seat your nominee.

BUCHANAN: They didn't give him an alternative. He agreed to a special election and they chose not to have a special election. By the way, this could be indicted. Whether he will be impeached by Lincoln's birthday, we will see. He said we have a new Congress started. My job, the only person who can actually fill this seat is me as governor. I'm going to do it. I'm going to do it with a man who's legitimately qualified, who does represent the people of our state and does so well.

MALVEAUX: Is this a gift to the Republicans?

BUCHANAN: This is great entertainment. It's theater. We're watching Democrats beating up Democrats. If they don't seat him, I believe they might have to hold a special election at that stage. I don't know if they will or not but if they do, I think it will hurt the Democrats. Then you see the Republicans --

MCMAHON: They may need to hold a special election. Frankly, one of the reasons a special election probably has been resisted because it would be harder for an African-American candidate in that circumstance to win that seat. I think there are people who believe and President-elect Obama is one of those people, that an African- American should have that seat. Certainly the members of the Democratic caucus think that. I don't think though, they are prepared to see Governor Blagojevich's pick because he tried to sell that pick and it was a tainted pick.

BUCHANAN: It's not about him. It's about Burris and that's all there is. He has done absolutely nothing wrong.

MALVEAUX: Thanks, we will leave it there. Thank you so much for joining us in THE SITUATION ROOM.

Despite Israel attacks, Hamas rocket attacks continue. What's Israel's next step? I will ask the Israeli ambassador to the U.S.

Plus her daughter's out-of-wedlock pregnancy was a campaign controversy. Now the former vice presidential candidate is Grandma Palin. We've got all of the details.

Also, their arrest in a racially charged Louisiana assault case led to widespread protests. Now one of the Louisiana Jena six is hospitalized just days after the arrest.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Now to an extraordinary behind-the-scenes look at the secret workshops where militants assembled a crude but deadly rockets falling on Israel. These factories are now the targets of Israel's air assault. Before the current offenses, CNN's Paula Hancocks was able to get inside, taken blindfolded to a secret location. Here's a report that Paula filed before the current hostilities broke out.

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PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): In Gaza, in tandem with the training of a militia. Beyond wing the Palestinian group population committee shows us its new recruits. Masks hide their identity. Considered freedom fighters by many here, terrorists by much of the west. The training is tough. There's little room for error or fear. Each night these men do marching drills, target practice and learn to overcome any obstacles. And a tactic feared by Israel, hostage-taking. The PRC was one of the groups involved in the kidnapping of Israeli soldier Galad Shaleat.

(on-camera): This kind of training can only take place at night so the Israeli forces cannot see it and they burn tires all around the training area so there's thick smoke, making them invisible from the air.

(voice-over): The next morning, a 20-minute warning and a meeting point. We are blindfolded and driven in the back of the van to the group's rocket factory. Our phones and the phones of the camera crews are taken. The factory is in fact a small room. The tools are basic. Only a gas leak from the canister convinces the rocket makers to move to a more ventilated area. Materials used in the rockets are kept secret. The rocket heads had been prepared beforehand. We're not told where. These men want these rooms to be filmed. They want the world to see it. They specifically want Israel to see them still building rockets but they don't want to give away their location. A spokesman, Mohammed Abdul Aal, looks on as a new rocket, NASA 4, is unveiled. He says NASA 4 has double the range of NASA 3 from 12 kilometers to almost 25 kilometers. Without doubt, this is a demonstration choreographed for the camera. But also a rare glimpse into what happens behind the scenes of a truce.

Paula Hancocks, CNN, Gaza.

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MALVEAUX: Israel says that a key goal of its air assault is to halt or severely limit the ability of Hamas to fire rockets. But Hamas continues to fire dozens each day. And they're reaching far behind the small border communities that have borne the brunt of pass barrages. Rockets have been falling 20 miles or more from Gaza. Israeli cities of Ashdod and Beersheva and beyond. And the Israeli military now estimates that 700,000 Israelis, 10 percent of the population, are now in rocket range.

Well, despite the punishing air strikes that enraged an international outcry, rockets are still being launched from Gaza and falling deeper inside Israel than ever before. So what does Israel do next? Joining me now, the Israeli ambassador to the United States, Sallai Meridor.

Thank you for joining us in THE SITUATION ROOM. You have heard our report from Paula Hancocks. You saw how those rockets s were being assembled there. What is your aim, your government's aim? Is it to go man to man on the ground to destroy those facilities?

SALLAI MERIDOR, ISRAELI AMBASSADOR TO U.S.: Our aim is beyond our larger aim to reach peace in the Middle East and bring back home and make sure Gaza is not used to launch rockets against Israel or to build a base backed by Iran as we can see in this report, assembles and builds rockets and aims now, as you said, towards 700,000 Israelis. So we are going after the places that -- where these rockets are being manufactured. We are going after the people who are managing this operation of rocket launching and we are trying to damage as much as possible their capacity. It is not an easy task. It is not a short task but this is what we have to do to protect the people.

MALVEAUX: There is a report that the Palestinian cabinet was hit in Gaza. Are they specifically targeting the Hamas leadership? Is it your government's intent to kill the leadership of Hamas?

MERIDOR: We are not looking to kill anybody. What we want is to live in peace. But whoever is responsible for terrorizing 700,000 Israelis, for creating Gaza instead of a place that's a place of peace instead of a base of terror is responsible for what's going on there. We will take any step possible against whoever is responsible that any of us would have done in order to put an end or at least bring down the level of terrorism to the extent possible.

MALVEAUX: I want you to listen to the Hamas spokesperson, who I spoke with just before, Osama Hamdan, who says the Israelis are responsible for this, peace is not going to come as long as what he says an occupation continues. Why don't you take a listen?

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HAMDAN: We have to acknowledge that there is an occupation and they have to accept the idea of ending the occupation and then we can talk about what are the Palestinians supposed to do. Before that, no one has the right to ask the Palestinians to do this or to do that.

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MALVEAUX: Hamas is defiant about this. They say they're not going to give up here. They don't see a road to peace. They don't see a road to negotiations. How long does this continue, the air strikes, how long before your government is satisfied that these facilities are destroyed, that the Hamas leadership has also been weakened?

MERIDOR: Our goal is to have calm and quiet for our people. By the way, as much as we want quiet and calm for the Palestinians, we are not successful.

MALVEAUX: How do you measure that success?

MERIDOR: We are working day in and day out, looking to target their facilities, to try our best not to have uninvolved civilians damaged or harmed, and we are going to continue to do that. And we take the decision as things develop on the ground and I would not like to predict now what we may do tomorrow or the day after tomorrow or more than that, I think that you would be able to watch it. We have one purpose, and the purpose is not to allow continuous terror attacks against Israel for Gaza and the buildup of Iranian-backed terror bases in Gaza that destroys Israel and the Palestinian society and hope for peace in the region.

MALVEAUX: What about those Palestinians who are caught in the cross fire? Obviously there's an international community now calling for some sort of assistance from your government to make sure that humanitarian aid gets to the people who need it the most, that there is a humanitarian crisis that is developing. What will you do to make sure that those people, specifically civilians, are taken care of?

MERIDOR: We are certainly doing everything that we can in both targeting only Hamas facilities, in making every effort possible to try to announce to people who are uninvolved, if they are in the vicinity, they will not be hurt. Allowing terrorists day in and out in Gaza. Yesterday 63 trucks went to Gaza under this fire. Today I think 93 trucks went into Gaza, again, under this fire. Just because we want to make sure we are making every effort that is based on our shared values to help people who are uninvolved and try to target mostly the Hamas people.

MALVEAUX: Thank you very much, Mr. Ambassador, Israeli ambassador to the United States, Sallai Meridor.

We want now to go to senior White House correspondent Ed Henry, who is in Hawaii with President-Elect Barack Obama, who has now weighed in on the controversy out of Illinois, the Illinois governor now appointing Obama's replacement. Ed, what are you learning?

HENRY: Suzanne, what's fascinating is that we just gotten this written statement from Barack Obama, and in it he says he agrees with the Senate Democrats' decision to block this appointment, saying, "It is extremely disappointing that Governor Blagojevich has chosen to ignore all advice from Democrats. I believe the best resolution would be for the governor to resign his office and allow a lawful and appropriate process of succession to take place."

So once again, Barack Obama here reiterating he wants Governor Blagojevich to resign and saying he supports Senate Democrats in trying to block this appointment. Suzanne, we will have more details at the top of the hour.

MALVEAUX: Thank you very much, Ed. More at the top at 6:00.

A sharp increase in bank robberies across the country. Is it just that time of year, or is it the latest sign of an economy that's in big trouble?

Plus her daughter's out-of-wedlock pregnancy was a campaign controversy. Now the former vice presidential candidate, well, she's now grandma Palin. We have all of the details.

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MALVEAUX: It's a sign of the economic hard times. The number of bank robberies is skyrocketing in New York City and across the country. CNN's Deborah Feyerick is working that story for us.

And Deb, tell us how bad it is. How bad has it gotten?

DEBORAH FEYERICK, CNN CORRESPONDENT: Suzanne, in New York City it's particularly bad. The number of bank robberies has skyrocketed. Granted there are more banks than ever before but the robberies and the robbers are getting a lot bolder.

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FEYERICK (voice-over): Near New York City's famed Lincoln Center a bank robbery takes place here in broad daylight. That same day on busy city streets, this bank also robbed, so is this one, and this one and this one. New York City's top cop Raymond Kelly calls Monday's robberies unrelated. Admitting however they're part of a growing trend of targeting banks.

COMMISIONER RAYMOND KELLY, NEW YORK POLICE: They've turned into virtual cash machines.

FEYERICK: Bank robberies in the city are up 54 percent from last year, with more than 430 committed since January 2008. The police commissioner says it's not clear yet whether the bad economy is fueling the unusual spike.

KELLY: Banks don't look the way they did five years ago. They look different. They look to some people as very inviting as far as going in, handing a note to the teller and walking out with $3,000 in cash.

FEYERICK: But several former federal agents who investigated bank robberies tell CNN, crime goes up when the economy is bad. Desperate people may see banks as a quick fix especially in light of recent corporate bailouts says this New Yorker.

UNIDENTIFIED MALE: The banks have all of these bailout money, probably one reason, they're thinking they have money.

FEYERICK: Robberies are up across the country in places like San Diego, Houston and Maryland. Banks seem pretty secure.

MIKE SMITH, NEW YORK BANKERS ASSOCIATION: They are secure.

FEYERICK: The head of the New York bankers association is meeting with the NYPD to review bank security to see what more can be done to discourage robbers.

SMITH: Are there enhancements? Obviously. Criminals talk to each other. They know what's going on but typically they are apprehended.

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FEYERICK: Now another factor in all of this, is that banks were all near subway stations making for a quick getaway. When you talk about the economy, there was a case a few weeks ago actually where a man alleged robbed a woman at knife point and said sorry it's the economy. So you never know -- Suzanne?

MALVEAUX: OK. Thank you Deborah.

There is disturbing new developments surrounding Michael Bell. He was one of a half dozen African-American teens dubbed the Jena Six who faced adult felony charges in the beating of a white classmate. It was a case that drew 15,000 protestors to the rural Louisiana town. Bell eventually pleaded guilty to battery in a juvenile court but now he's hospitalized with a self-inflicted gunshot wound just days after being arrested for shoplifting. CNN's Sean Callebs joins us live. Sean, tell us what is going on with Michael Bell.

SEAN CALLEBS, CNN CORRESPONDENT: Really, this has taken a very tragic turn. This is somebody who promised to keep his life on the straight and narrow. He really wanted a second chance after going through the whole Jena Six controversy.

We know that Michael Bell, Christmas Eve was arrested for shoplifting $340 worth of goods. A few days later, he was hospitalized with a self-inflicted gunshot wound. Originally his grandmother told his attorney it was an accident, that he was cleaning the gun. However the police report reads different. It says, grandmother and mother, stated that Michael had made comments over the past two days that because of the current media attention he had because of the shoplifting arrest, he didn't feel that he could live anymore. He goes on to say once he was taken to the hospital, he shot himself because he could not handle all of the media attention. This is someone who put a great deal of responsibility on his own shoulders. He remembers those 15,000 people coming to the streets last April. He gave an interview with CNN producer Ron Howe. Listen to the pressure he put on himself to walk the straight and narrow.

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MICHAEL BELL, MEMBER OF JENA 6: I feel like you know all of the people came down and supported me. Gave money to the defense fund and everything. I feel like if I do something now, I let the whole country down.

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CALLEBS: And tonight, he's being transported to a hospital in Shreveport. Suzanne he is not fighting for his life but certainly this is a life that has taken a very dramatic turn to the worst.

MALVEAUX: Very tragic. Thank you, Sean.

Former Republican vice presidential candidate Sarah Palin is now a grandmother. Her teenager daughter who's out of wedlock pregnancy was a campaign bombshell has given birth. Our CNN Brooke Anderson joining us live.

Brooke, one question, boy or girl?

BROOKE ANDERSON, CNN CORRESPONDENT: It's the color blue for the Palin family. Alaska Governor Palin fell short in her quest of vice president. But now the mother of five has a new title, grandmother.

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GOV. SARAH PALIN (R), ALASKA: Our daughter Bristol.

ANDERSON: Governor Sarah Palin's eldest daughter Bristol became a household name this summer with news of her pregnancy the announcement coming shortly after John McCain chose Palin as his vice presidential running mate.

PALIN: Some of life's greatest opportunities come unexpectedly.

SANDRA SOBIERAJ WESTFALL, PEOPLE.COM: She has said we're not unlike other families.

ANDERSON: People magazine spoke to Today Show Tuesday about how Bristol's pregnancy impacted Palin's bid for VP.

WESTFALL: It underscored her opposition on abortion and it gave her a chance to speak out on teen pregnancy.

ANDERSON: 18-year-old Bristol and her boyfriend joined Palin on the campaign trail presenting a united family front during the election. The expectant couple even inspired this Saturday Night Live joke about what traditional family should be.

People.com broke the news. WESTFALL: The baby was born on Saturday in Palmer, Alaska near their home in Wasilla, seven pounds seven ounces, about a week late and baby Tripp.

ANDERSON: Tripp Easton Mitchell Johnston, joins those of uncles Trig and Track.

WESTFALL: Track was named after the family tradition of running high school track.

ANDERSON: Bristol and Levi say they're planning to marry sometime next year.

WESTFALL: He's an apprentice electrician in the North Slope oil fields. He's working full time. He's dropped out of high school. He hopes to get his GED at some point. Bristol, also has dropped out of high school and is hoping to complete her degree through correspondence courses.

ANDERSON: A non traditional finish to their early years as they move quickly to the responsibilities of adulthood.

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ANDERSON: Now, Sarah Palin's father Chuck Heath said his daughter will be a terrific grandmother telling grandparents.com, "I don't know how much time she can spend, she's so busy. But she'll get her licks in. Don't worry" -- Suzanne?

MALVEAUX: OK. Thank you, Brooke.