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THE SITUATION ROOM

A Rare Glimpse Into the Lives and Grief of Michael Jackson's Children; Sarah Palin Insisting She's Not a Quitter; The Obama Family Travels to Russia, Italy and Ghana

Aired July 11, 2009 - 18:00   ET

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


WOLF BLITZER, HOST: President Obama reveals the 4:00 a.m. highlight of his trip to Russia. This hour, an interview with the president on what he saw in Vladimir Putin's eyes, unrest in Iran, and his memories of Michael Jackson.

Also, new glimpses into the lives and the grief of Michael Jackson's children. We saw his daughter distraught at his memorial service. How are the kids coping though right now?

And Sarah Palin insists she's not a quitter. In a CNN interview, the Alaska governor portrays herself as a victim of political blood sport and keeps struggling to explain why she's stepping down. We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

It's a family vacation unlike any other. President Obama accompanied by his wife and daughters in a grueling trip to Russia, Italy, and Ghana. Our senior White House correspondent Ed Henry sat down with the president in Moscow to discuss his dealings with the Russian leadership, Iran and Israel, his thoughts on Michael Jackson, and traveling with his family.

(BEGIN VIDEOTAPE)

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Thank you, Mr. President.

Obviously, a grueling trip. What is it like, though? Does it take the edge off having not just your wife but your daughters here as well to get to visit the Kremlin and tag along for what must be a pretty exciting trip?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You know, it makes a huge difference. The girls are just a joy.

Sasha, this morning, at around 4:00 a.m., wandered into our bed and plopped down and started chatting. That was sort of a highlight, although I am a little groggy now as a consequence.

But, having her and Malia be able to see the world and then report back to us on what they're seeing is just extraordinary. And then Michelle is just -- she's always -- she's a star abroad and a star at home.

HENRY: You finally got a chance to look into Vladimir Putin's eyes. Did you see into his soul?

(LAUGHTER)

HENRY: Why did you say before this trip that he has got one foot in the old way of doing business and one foot in the new way of doing business? What was the purpose of that?

OBAMA: Well, I think, in a lot of ways, Prime Minister Putin is representative of Russia. He is very popular here.

And I think that Russia is still, on the other hand, processing the transition out of the Cold War and the dissolution of the Soviet Union. On the other hand, they recognize an interest in modernizing, diversifying, and recognize, I think, that economic power is going to be the most important currency in the 21st century.

I found him to be tough, smart, very unsentimental. I think he is a practical person. And to the extent that there are common interests, like fighting terrorism, potentially nuclear proliferation, where he believes that working with the United States advances Russian goals, I think he can be a potential -- a potential partner.

HENRY: Some Iranian clerics came out yesterday and raised more questions about the disputed election. How do you engage in a government that doesn't seem to maybe want to be engaged, and may even be thumbing its nose at democratic values?

OBAMA: Well, I think it's a problem. And I've said this earlier. Our theory has consistently been to present a door of opportunity for Iran to have its sovereignty respected, to join the community of nations more fully. But the events that we've seen over the last several weeks, haven't just disturb us in America, they've disturbed the world. You know, violence, detentions, you know, have been, I think, not only heartbreaking, but really raise questions about the direction that Iranian leaders want to take their country and have obviously raised issues of legitimacy that haven't yet been resolved in their own country.

We have to wait to see how the dust settles. Right now, what we have to do is to continue to speak out and bear witness to the fact that the Iranian people need to be treated with justice and fairness. But it certainly complicates our efforts, because there's the possibility that those who are now empowering Iran choose to retrench and dig in as opposed to opening up. And that's where having conversations with Russia, China, other countries that still do business with Iran is so important. And it's something that I raise consistently in conversations here.

HENRY: On Iran over the week, Vice president Biden seem to leave, sort of suggest that the U.S. would not stand in the way if Israel wanted to launch a preemptive strike against Iran's nuclear sites. Are you giving Israel a green light?

OBAMA: Absolutely not. And I think it's very important that I'm as clear as I can be and our administration is as consistent as we can be on this issue. I think Vice President Biden stated a categorical fact, which is we can't dictate to other countries what their security interests are.

What is also true is that the policy of the United States to try to resolve the issue of Iran's nuclear capabilities in a peaceful way through diplomatic channels. That is our policy. I've been talking about this for the last two years. We are going to continue to pursue this. And you know, we have said directly to the Israelis that it is important to try to resolve this in an international setting in a way that does not create major conflict in the Middle East.

Now, this is a tough job. And nobody's under any illusions that it will be easy. And I've always said that we, the United States, preserve the right. And I as commander-in-chief reserve the right to take whatever actions are necessary to protect the United States. But we are committed to a peaceful resolution of this conflict. And I think it is still possible. But ultimately, if we present an opportunity to the Iranians at some point, they've got to seize that opportunity.

HENRY: Last question. Millions of people around the world about to watch the funeral of Michael Jackson back in the United States. What do you think his legacy is going to be?

OBAMA: Well, you know, he -- I don't think there's any doubt was one of the greatest entertainers of our generation, but perhaps any generation. I think like Elvis, like Sinatra, like the Beatles, he became a core part of our culture. You know, his extraordinary talent and his music was matched with I think a big dose of tragedy and difficulty in his private life.

And I don't think we can ignore that, but it's important for us to affirm what was best in him. And that's captured by his music, music that Michelle and I listen to from the time we were little kids. I mean, I remember listening to "ABC" when I was 8 or 9 or 10. And he kept on producing extraordinary music for years after that.

HENRY: Thanks for your time, sir. I appreciate it.

OBAMA: Appreciate it.

HENRY: Thank you.

(END VIDEOTAPE)

BLITZER: Sarah Palin says she's the target of frivolous lawsuits and ethics charges, but watchdogs in Alaska say they're sure there's a smoking gun. Just to add the governor takes another shot at explaining her decision to step down in a CNN interview. Plus, roadside bomb attacks up 1,000% in Afghanistan. I'll ask the U.S. Special envoy to the country, Richard Holbrooke, why the situation seem to be getting worse. And revealing new glimpses of Michael Jackson's kids. How are they coping after their father's death? And a memorial service watched by millions.

(COMMERCIAL BREAK) BLITZER: The world said farewell to Michael Jackson this week in an emotional public memorial service, but the final official word on why he died still may be a few weeks away. No matter what the outcome, Jackson's death has highlighted deep concerns about prescription drug use and abuse.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, President Obama's drug czar, Gil Kerlikowske. He has got an important job. And it has been underlined right now by this abuse of prescription drugs. The Michael Jackson death certainly has brought that to all of our attention. How big of a problem is this?

GIL KERLIKOWSKE, DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL POLICY: It's very significant. Across this country, young people are starting more into drug problems through their parents' medicine cabinet than anywhere else. The death rate from drug overdoses or drug-induced deaths is very high. BLITZER: How high is it?

KERLIKOWSKE: In fact, it's greater than gunshot wounds.

BLITZER: How many people a year die from drug abuse?

KERLIKOWSKE: This was -- literally thousands. One of the problems, of course, is the ability of the United States government to collect the data. So even looking at 2006 deaths, it's greater, in the 30,000 range, than gunshot wounds.

BLITZER: Because we look at these celebrities like Michael Jackson or Anna Nicole Smith, Heath Ledger, drug abuse, the allegations of addiction, and it's going on in part because doctors are not doing what they're supposed to do.

KERLIKOWSKE: There are a number of parts. One is that there are doctors that abuse their -- the law and abuse their patients. There are patients that "doctor shop." There are drugs that are taken out of extended care facilities, or parents' medicine cabinets. There is a whole host of these problems.

BLITZER: How do you punish these doctors who just give prescriptions for really serious drugs they shouldn't be giving?

KERLIKOWSKE: Well, the Drug Enforcement Administration does a very good job on that. And in fact, when I was police chief in Seattle, we had several cases that we worked with them.

But the one thing that really looks very bright for that is the prescription drug monitoring programs. Thirty-eight states have passed laws, 33 have operations. That gives the public health services and sometimes law enforcement the ability to find out about doctors that are perhaps over-prescribing. And it also gives the opportunity to find out about patients who are going to multiple doctors.

BLITZER: Because if you have money, you can get a prescription basically. You'll find a doctor who is willing to write a prescription basically for almost anything.

KERLIKOWSKE: Well, I wouldn't go that far. I would hope the vast majority of physicians, I mean, clearly take care of their patients...

(CROSSTALK)

BLITZER: But there are doctors who abuse the system...

KERLIKOWSKE: There are, yes.

BLITZER: ... to make a buck.

KERLIKOWSKE: Yes. But there are a lot of other ways these drugs, these powerful painkillers, these prescriptions that are getting out into the hands of young people.

BLITZER: All right. So tell us what you're doing. You're the drug czar, you're in charge of the federal government's program.

How do you stop this?

KERLIKOWSKE: We're advocates of the prescription drug monitoring programs where these states are passing these laws. And we're going to work very closely to make sure that they have the tools to put these into effect.

The other is our media campaign. The Anti-Drug Youth Media Campaign ran a number of ads both in February of '08 and also in April of '09 to educate parents about, look, be concerned about what's in your medicine cabinet, talk to your kids.

BLITZER: But should parents put a lock on their medicine cabinet?

KERLIKOWSKE: You know what? There are parents that do put a lock. And in fact, I've talked to people that actually, before they hold a party, they actually clean out prescription drugs and put them in a different place in their house. And these are adults.

Because remember, these aren't just affecting young people. You know, it can affect all ages. This prescription drug problem doesn't know boundaries of race or ethnicity or economic class.

BLITZER: Is there enough federal regulation of this whole prescription drug industry?

KERLIKOWSKE: Well, there are a couple of things going on. One is that there are several pieces of pending legislation about, how do you get rid of a drug? Well, one, we don't want people flushing drugs back down the toilet because that -- the EPA, others are very concerned about that.

BLITZER: What do you mean? What's their concern?

KERLIKOWSKE: Right. The pollution of the -- and the infection of the chemicals into the water system, that's very serious.

BLITZER: So what do you -- if you have drugs in your medicine cabinet that you don't need anymore, what do you do with them?

KERLIKOWSKE: Well, there are a couple of things that can be done. One is that they can be concealed and not left where they're entirely visible. The other is that a lot of law enforcement agencies are actually holding kind of local -- because they're authorized to receive these drugs, they're holding these local collections and picking them up. But when some new legislation is passed by Congress, I think we'll see some easier ways to do that.

BLITZER: Knowing what we know about the Michael Jackson death -- and you've studied it, all of us have, you know, watched it over these past couple of weeks -- is there anything that jumps out in your mind what we should be doing, what we -- a lesson learned from his tragic death?

KERLIKOWSKE: You know, the very sad and untimely loss of Michael Jackson is a wake-up call to the country about prescription drugs. But I would not be in a position to really comment about any of the specifics. And I really don't know anything more than I have read about this.

But if we can save lives and if we can bring to the attention of the people the dangers of prescription drug abuse, I think there is some benefit to this country.

BLITZER: Gil Kerlikowske is the director of the Office of National Drug Control Policy, better known as the drug czar.

Thanks very much. Good luck.

KERLIKOWSKE: Thank you.

(END VIDEOTAPE)

BLITZER: Michael Jackson's memorial puts his children in the spotlight, but what are they really like? We're going to find out from someone who's met them. Plus, ten years after his death, personal photos of John F. Kennedy, Jr. Some of them, the last ever taken.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PARIS JACKSON, MICHAEL JACKSON'S DAUGHTER: Ever since he was born, daddy has been the best father you can ever imagine. And I just want to say I love him so much.

(END VIDEO CLIP)

BLITZER: Michael Jackson's memorial this week only heightened the interest in his children, rarely seen by the public over the years. People are asking, what will happen to them now and what kind of children are they?

(BEGIN VIDEOTAPE) BLITZER: And joining us now from Los Angeles, Bryan Monroe, our CNN contributor, the last journalist to interview Michael Jackson.

Let's talk a little bit, Bryan, about these three kids. Did you ever have a chance to -- to meet any of these kids?

BRYAN MONROE, CNN CONTRIBUTOR: You know, actually, I had the opportunity when we did the interview with Michael back in September of 2007 at the hotel.

We were actually -- when I knocked on the door, opened the door, and was -- were greeted by Blanket, the youngest son, Prince Michael Jackson II. And he was very friendly, had a candy dish with some Lifesavers in it, offered me one. I said, I'm OK.

And then he reached out to shake my hand. And he reached out with his left hand. And Michael stopped him and said, "Oh, no, no, Blanket, not the left hand. Use the right hand."

And it was just that little moment that showed that father-and- son connection. I have got a son about the same age. And it was genuine. And -- and that was the -- the really special thing about seeing the services yesterday and watching the family come together on stage.

We saw Paris, who just brought tears to our eyes with that sincere, you know, daddy, father, you know, I have known you since I have been alive, and -- and that really sincere daughter-father connection.

But, also, I caught the glimpse of -- of Blanket. It was hard to see. As the family embraced, Blanket snuck in off to the side and was right in the middle of Rebbie, and Janet, and LaToya, in the middle of the family.

And I think, ultimately, that's where those kids belong, is in the middle of that family.

BLITZER: And we -- we're going to talk about where they're going and what might be in store for them. Blanket is now 7 years old. Paris is 11 years old.

The oldest child is Prince Michael, who's 12 years old right now. We saw him yesterday, but we really didn't hear from him. Is -- is he just basically shy, this kid?

MONROE: Well, all three of them are very close.

I think Paris and Prince, being the older ones, are a little bit more, I guess, mature, and Blanket is a little bit more precocious. But they all are so tight. And that's other piece, is they -- they're in this family of cousins.

All the brothers, you know, Marlon, Tito, Jackie, Jermaine, Randy, and the sisters, Janet, Rebbie, and LaToya, they all are part of that big family. And -- and many of them have their own kids. And, sometimes, their kids have kids. And they're growing up inside that circle of cousins, and with -- with Katherine as the matriarch of the family.

And then you have got Grace, the -- the nanny and Michael's close aide for years, there taking care of them. They call Grace mum. You know, that is that tight family. Plus, then you -- you bring in Diana Ross and her family and her extended family.

Diana, of course, you know, was asked to step in if anything happened to Katherine. And we heard Diana's letter being read yesterday at the funeral. That family and extended family structure is exactly what's needed to raise those kids.

BLITZER: So, you think -- I mean, right now, these three kids -- and they're all obviously very adorable and precocious -- they don't have a father, and they don't have a mother, really, either. They have a grandmother, who's got at least temporary custody of these three kids.

You know Katherine, the mother of Michael Jackson. She's, what, 79 years old.

Is she really qualified to raise these three kids right now?

MONROE: Well, she -- I think, again, she's there with a strong support network -- the support network in -- of her family and the extended family.

You know, you have Rebbie, who is Michael's oldest sister. Michael was one of nine children -- in fact, the third -- the third youngest of nine children. And, you know, Rebbie will also help raise the kids. You know, you've got the whole family there, whether they're in town or traveling or -- or out on the road. You know, Janet, of course, is a successful artist in her own right.

But you saw that moment with Paris leaning on Janet's shoulder. And Janet -- she reached out to touch her arm and then afterwards gave her that big embrace. That's real. That's the -- that's the image of Michael Jackson that I think we will be left with, is Michael as a father.

BLITZER: Tell us about these two parents of Michael Jackson -- Katherine, the mother, and Joe, the father. They -- they've been estranged from each other for a while.

They live in separate areas, is that right?

Because I guess the question is, what role will the grandfather have, Joe Jackson, in raising these three kids, if any? MONROE: Yes. Well, Joseph lives in Las Vegas and has been there probably for the last decade or so. Katherine, of course, with the rest of the family, is at the home in Encino.

And they've come -- they come together every once in a while. And I know they have a big -- I think it was their 60th anniversary party in -- in Las Vegas a few months ago. But part of that family, they -- they have learned a lot from Joseph as both a father, and as their, you know, de facto manager for those first few years coming out of Gary. He was very strict. He was a taskmaster. Some say he was -- he was overly tough.

BLITZER: Because Michael...

MONROE: Michael has even talked about it.

BLITZER: Michael, in his interviews, said he was abusive. And -- and I guess a lot of folks are worried, will he have a role in raising these three kids -- if, in fact, he was abusive to his own son?

MONROE: Well, I think, more importantly, that that network of family members, the brothers -- you saw Marlon there talking about the brother he lost, Brandon.

And I think the brothers and the sisters will have a much stronger role with those kids. The grandparents are, of course, very important. But, you know, you've got a family of nine brothers and sisters. They're going to make sure those kids are all right.

BLITZER: Bryan Monroe, thanks very much for joining us.

MONROE: Thanks, Wolf.

(END VIDEOTAPE)

BLITZER: Is Sarah Palin a renegade? The Alaska governor said she wants out of the spotlight, but she's on the cover of the new issue of "TIME" magazine. And explaining to CNN why she's resigning from office.

Osama bin Laden still eluding capture almost eight years after 9/11. Is he a factor in the Obama administration's new Afghanistan and Pakistan strategy? The president's point man in the region Richard Holbrooke. He's here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: It's one of the biggest political bombshells of the year. Sarah Palin deciding to resign as governor of Alaska only partway through her first term in office. Drew Griffin of CNN special investigations unit joined Palin on a fishing trip in Alaska and tried to get the answers to the questions everyone is asking. Why is she doing it? And what's next?

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT: When I first met your dad, the one thing he will me about you was how tough you were. And no matter what was coming down the pike, Sarah could handle it.

GOV. SARAH PALIN (R), ALASKA: Yes, yes.

GRIFFIN: Did this prove tougher than you thought?

PALIN: Now what has proven tough has been making this decision, because it's a decision that I did not make lightly. It was careful consideration before I made the decision. And it's tough to take a tougher road, a less comfortable road. The comfortable road for most politicians is you just hang in there, kind of go with the flow. And especially through a lame duck session.

Yes, you know, you're not going to get anything done. But hey, you take advantage of it. You go do what you want to do. You're finally here. Tough has been no, I'm not going to take that comfortable path. I'm going to take the right path for the state. I'm going to let this state progress. And then I'm going to be able to get out there and help people, help affect change in our state and positive in our nation. That is my goal, help me to work for other people to do such a thing. And I don't need a title to do that. And they don't need titles either to affect change, but I want to help people who want to fight for the right things.

GRIFFIN: But governor, if that is the right road for Alaska...

PALIN: Yeah.

GRIFFIN: ...is it the dangerous road for you to be labeled in this land of tough people a quitter?

PALIN: I'm certainly not a quitter. I'm a fighter. And that's why I'm doing this, to go out there and fight for what is right without the constrains that have been surrounding me in these final months. And anybody who lives in Alaska will tell you of course our administration has been paralyzed. We spend most of our day fending off frivolous lawsuits.

Let me give you an example. Two years ago I was out here commercial fishing. We've been doing this for decades. Out here commercial fishing. I catch a fish, so I hold the fish up . Somebody snaps a picture of it. That picture was used on our state seafood marketing ad. I was hit with an ethics violation for being in an ad for the state seafood marketing. The ethics violation charges have been absolutely ridiculous. And I'll leave it up to my attorney to keep fighting those and keep winning those, because we haven't violated the ethics code that I championed as a matter of fact when we got in here.

So no, it's not a matter of retreating or quitting. It's a matter of progressing and forwarding a good, positive agenda in an unconventional way. And I think that's what caught people off guard is wait a minute, it's kind of out of the box and unconventional. Well, that is who we are as Alaskans. That's certainly how I am as a public servant, as a person very proud of my state, seen great potential in my state. Unconventional in the way that we're getting things done, but we certainly are getting those things done.

GRIFFIN : Is this your unconventional way of announcing you're going to run for president in 2012?

PALIN: As I said, I do not need a title. I-nobody does to... GRIFFIN: Are you out of politics?

PALIN: ...affect positive change.

GRIFFIN : Political office?

PALIN: I can't seem me be totally out of public service, because that is within me. It is the way that I'm wired is to...

GRIFFIN: Governor, I'm asking you are you ever going to run for president? Are you ruling it out? PALIN: All options are going to keep on - continuing to be on the table as they have been for me my entire life. I'm not going to close any door that may be open for me out there. So all options are on the table.

But for now, I want to help other people in or out of office, don't care what party they're in, if they're willing to fight for what's right. Energy independence, national security, smaller, smarter government. Those things that I believe in that I think are the principles that have built up or nation. I'm going to fight for other people who can help affect the change in those areas.

GRIFFIN: It's been three days. How have those days been?

PALIN: Exhilarating, energizing, refreshing to get to come out here with my family and just be in this unpretentious very hard working heartland of America community and get back to some roots of mine and be out there working very hard on the water yesterday and today. This is really good for me. And it's a chance right now to start looking forward to how I can help our state and our help our country in a new direction.

GRIFFIN: One last question.

PALIN: Oh, I thought you were saying that's it.

GRIFFIN: This is one, one last question. I mean, the personal toll on your family, do you have mending to do in this family? I know you mentioned that the family voted what for...

PALIN: For yeses and one hell, yeah, mom, let's get out there and fight for what is right without the constraints...

GRIFFIN: Do they also want us to go away?

PALIN: No, the kids are really good. They're flexible, they're accommodating to all this. What my kids want to do is see their mom get out there and affect a positive change and not be bombarded and hounded by the things that are on the periphery that just distract and stymie the progress that our state and our nation can make.

My kids know me better than anybody else. They're four yeses and one hell yeah were for mom, get out there and fight for what is right. Fight for the future of our country. You can't do it with what you're doing every single day, ever since August 29th that you wake up and face.

GRIFFIN: July 3rd was deliberate?

PALIN: July 3rd was deliberate. That's a good catch because that was the eve of Independence Day, yes.

GRIFFIN: I'm told by your attorney that was your declaration of independence.

PALIN: Well, it was a declaration of come on Alaska, let's move forward. I am willing to step aside and allow our state to progress. I love Alaska that much. I don't want to hamper its progress and it's potential. And our path, I'm reaching our destiny. Our destiny is to contribute more to the U.S. to provide that energy independence and that national security aspect. I don't want to get in the way of that. And I'm willing to step aside and fate for what's right in -- on a different path. So it's not retreat. It is progress. Thank you, sir.

(END VIDEOTAPE)

BLITZER: Seven years into the war in Afghanistan, troubling trends, violence is up. What's President Obama's plan for trying to turn things around? The president's special representative for Afghanistan and Pakistan is standing by. He's here in THE SITUATION ROOM, Ambassador Richard Holbrooke.

And on this, the 10th anniversary of John Kennedy Jr.'s death, there are newly released images, photos of him that you're going to want to see.

(COMMERCIAL BREAK)

BLITZER: A new warning this week that home made explosive devices are the number one threat to U.S. troops in Afghanistan. According to Pentagon figures, those attacks have increased by more than 1,000% since June of 2005. The danger on the rise as the United States increases its military strength in Afghanistan.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now, the special U.S. Representative for Afghanistan and Pakistan, the former United States Ambassador to the United Nations Richard Holbrooke. Mr. Ambassador, welcome back.

RICHARD HOLBROOKE, SPECIAL U.S. REPRESENTATIVE FOR AFGHANISTAN AND PAKISTAN: Great to be here, Wolf.

BLITZER: It looks like this situation in Afghanistan is going from bad to worse. Is it?

HOLBROOKE: Well, the situation in Afghanistan deteriorated dramatically in the last four or five years.

President Obama came to office pledging to reverse that, because our national security interests are directly at stake. This isn't some remote place. This is the area from which the men of 9/11 planned to attack the U.S. And they say they're going to do it again.

(CROSSTALK)

BLITZER: But it seems to be deteriorating almost on a weekly or monthly basis.

(CROSSTALK)

HOLBROOKE: Well, I would -- I think what is true is that it has deteriorated steadily, and that the enemy increased its forces. This is why President Obama made what he himself has called in his recent interview with "Newsweek" the most difficult decision in his presidency, to send a 17,000 troops and 4,000 military trainers there to reverse the trend.

BLITZER: Another 21,000, on top of the many thousands who are already there. And...

HOLBROOKE: A total of 68,000 Americans...

BLITZER: Sixty-eight thousand U.S. troops in Afghanistan.

HOLBROOKE: Plus a lot of NATO allies, over 100,000 troops.

The Taliban are getting supported by al Qaeda. They pose a direct threat to the United States. We here in the middle of an Afghan election campaign. It's a very difficult situation, but it is one in which the American and international resources are increasingly steadily.

BLITZER: It seems to be coming increasingly dangerous for U.S. troops in Afghanistan, with these IED attacks increasing so dramatically.

HOLBROOKE: It is dangerous.

BLITZER: There is concern, though, that the Afghan army itself is not stepping up to the plate.

HOLBROOKE: Well, the Afghan army has not been a sufficient part of the current offensive, as General McChrystal has said.

BLITZER: Well, they have the most at stake, the Afghan people right now.

(CROSSTALK)

BLITZER: Why are they MIA?

HOLBROOKE: They are -- they're not MIA. It's that -- that they weren't fully integrated into the military plans of the current offensive. They will be.

And I -- and I think these issues about the Afghan army are related to a much deeper point, which is, we need to strengthen the Afghans' governmental capacity, militarily and economically.

So, what we're -- we're doing, we're dramatically increasing agricultural efforts, because we have to take the young youths away from the Taliban by getting jobs.

BLITZER: You...

HOLBROOKE: This is an agricultural country.

BLITZER: You have confidence in Hamid Karzai, the president of Afghanistan?

HOLBROOKE: He's the president of the country. We're working with him closely. In a month and 10 days, there's going to be a hugely important election in Afghanistan. There are other candidates in the race.

We don't have a candidate. We don't support, we don't oppose anyone. Ambassador Karl Eikenberry, our former NATO commander, our brilliant new ambassador there, has been meeting with all the candidates.

BLITZER: There's been some excellent reporting by our Michael Ware in neighboring Pakistan. And he sat down with representatives of the Pakistan military, the Pakistan intelligence.

HOLBROOKE: Right.

BLITZER: They seem to be making deals right now with the Taliban, and they want the United States...

HOLBROOKE: Yes.

(CROSSTALK)

BLITZER: ... to get involved in this.

I want you to listen to this clip. This is -- this is the Pakistani military spokesman, Athar Abbas.

(BEGIN VIDEO CLIP)

MICHAEL WARE, CNN CORRESPONDENT: And that's where Pakistan can perhaps provide valuable assistance to the American mission?

MAJOR GENERAL ATHAR ABBAS, PAKISTANI ARMY SPOKESMAN: I think, yes, that can be worked out. That's possible.

(END VIDEO CLIP)

BLITZER: Now, he's saying on the record he wants to work out some relationship, if you will, between the U.S. and the Taliban.

HOLBROOKE: No, I don't know what he's talking about.

The Taliban and al Qaeda are linked like this. And, unless the Taliban repudiates al Qaeda publicly, this is a nonstarter...

(CROSSTALK)

BLITZER: But he -- he -- he is also confirming on the record that there's a relationship that continues between the Pakistani government and the Taliban.

HOLBROOKE: Yes.

BLITZER: Let's listen to this. Listen.

(BEGIN VIDEO CLIP)

ABBAS: No intelligence organization in the world shuts its last door on any other organization.

(END VIDEO CLIP)

HOLBROOKE: Oh, I don't know...

BLITZER: Because you know there is a long history of the Pakistan intelligence service working with the Taliban. And he says they're not shutting the door.

HOLBROOKE: I don't -- I don't know what he's specifically referring to, not shutting the door.

The United States and President Karzai have long said that Taliban reconciliation is part of our program, people who work with the Taliban, who support them, who want to lay down their arms and participate, the door is always open.

It's not going to -- this war is not going to end on the decks of the USS Missouri, like World War II did. This war is going to end when the Taliban lay down their arms and reintegrate into society. And that's always been an option.

And President Karzai has spoken publicly, in interviews with you, I believe, on that same subject.

Let me be clear on this. We are not in favor of bringing people into the government who advocate the denial of rights to the women, who are murderous, and who are closely allied with al Qaeda.

But people fighting with the Taliban include vast numbers of people,, probably three-quarters, who just pick up a gun, get paid, and go off and do these things. And there's always room for them to be reintegrated. Many have come back. That program kind of fell apart. We're going to revitalize it.

After the elections, you're going to see a very dramatic increase in our policies across the board. And this will be one of them.

BLITZER: After the Afghan election?

HOLBROOKE: Sure, August 20. BLITZER: Good luck.

HOLBROOKE: Well, I should say one more thing. It's a runoff situation, so, if nobody gets 50 percent on August 20, then there will be another -- a second round in about a month.

BLITZER: We will be covering it.

You have got a tough mission. And we wish you success.

HOLBROOKE: Well, thanks, Wolf.

(END VIDEOTAPE)

BLITZER: John F. Kennedy Jr. as you've never seen him before. You'll see pictures not revealed until now. They come just days before the 10th anniversary of his death.

And the queen of Belgium, orthodox nuns, and George Clooney all part of this week's hot shots.

(COMMERCIAL BREAK) BLITZER: 10 years after his death, new photos of John F. Kennedy Jr. surface. The photos come from a collection of a long time personal friend and show JFK Jr. and his wife at some of their most relaxed moments. They're featured in this week's "People" magazine, our sister publication.

Joining us now, "People" magazine's east coast news editor Liz McNeil.

Liz, thanks very much for sharing these pictures with us. How did "People" magazine get these photos?

LIZ MCNEIL, "PEOPLE": These pictures come from one of John's closest friends, who really felt it was time to see him happy and relaxed and full of joy.

BLITZER: The picture that we're showing our viewers now shows that he had a broken ankle. And this was occurred really just days before the tragic plane crash.

MCNEIL: Yes. These pictures were taken right after he broke his ankle. And it was a very sad time. He wanted to just spend the summer taking care of his cousin Anthony Razwill, who was dying of cancer.

BLITZER: And actually, he was in a cast at the time of the plane crash walking around with crutches, right?

MCNEIL: That's right. He was on crutches.

BLITZER: And you know, it just reminds us, he was a very, very vigorous guy.

MCNEIL: Yeah, he loved to work out. One of Sasha's favorite memories was that he was a guy who worked out every single day of his life for at least an hour.

BLITZER: Yeah, Sasha Chermay (ph).

MCNEIL: Yes.

BLITZER: She's the one that provided you the pictures. And she was a friend of his going back to prep school.

MCNEIL: Yes. They met in 1976 when they are both new students at Andover.

BLITZER: I want to show our viewers some of the pictures also of Carolyn Bessette Kennedy, because it reminds all of us how beautiful she was. And it tells us a little bit about her as well.

MCNEIL: These are pictures that really show her in a new light. She's very relaxed, very happy, smiling, very friendly, a little bit softer than we're used to seeing her.

BLITZER: There's this picture of her in the kitchen. Tell us about that picture.

MCNEIL: This was a picture that taken by Finneus (ph), who was John's god child. And one morning, he took a picture of her early in the morning when nobody else was up with his little Polaroid camera.

BLITZER: There's a picture of Finneus, the god son, together with the, with Caroline on the beach there. It's a great shot of her. She's obviously enjoying -- which beach was this?

MCNEIL: This was in Martha's Vineyard where John had a home.

BLITZER: So obviously, a nice shot of her. And then we have a picture of all three of them on the beach as well. It looks like they're having some fun. How much earlier, how much before the plane crash was this picture taken, do you remember?

MCNEIL: I think this picture was taken the summer of -- was it the summer of 1999? And they're very relaxed, very close. You can really see them as the way they were. Very relaxed, very happy.

BLITZER: Liz Mcneil is the news editor for the east coast for "People" magazine. Thanks for sharing these photos with us. It's hard to believe it's already been ten years since that tragic accident occurred. Appreciate it very much.

MCNEIL: Thanks a lot, Wolf.

BLITZER: The actor George Clooney in Italy in a town devastated by a natural disaster. We're going to show you what he's up to. Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the hot shots of this week, coming from our friends at the Associated Press. In India, exiled Tibetans gathered to protest against the violence toward Ugurs in China. In Romania, the queen of Belgium greeted orthodox nuns while visiting a church. In Italy, George Clooney shook hands with quake victims as he toured the damaged area. And in Scotland, two 4-week old twin red pandas played together at a conservation park. Some of this week's hot shots, pictures worth 1000 words.

Here's CNN's Jeanie Moos with a look at what may be the most unusual encounter in the comedian Sasha Baron Cohen's new film "Bruno."

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): As gay fashionista Bruno, we've seen him dressed in silver, in leopard, in wings, in hot pants, in nothing at all. So to see him walk out on Letterman as himself was a shock. Almost more shocking than to see him make Matt Lauer kiss his hand, strip -- and end up in the lap of Conan O'Brien. But in trying to come up with the oddest couple of all for his movie, Sasha Baron Cohen hit on this.

SASHA BARON COHEN, COMEDIAN: To be a comedian into being a terrorist.

MOOS: Even if his character doesn't know the difference between hummus and Hamas. (on camera): It's one thing for Bruno to make a fool out of say a talent contest genre, politician, but to use an alleged terrorist as a comedic foil? That's dicey.

COHEN: It's not that easy to find an actual terrorist. In fact, your government has been looking for one for about nine years.

MOOS: Cohen says his team looked for a few months before finding someone in the occupied West Bank who said...

COHEN: There is a terrorist who lives in my town.

MOOS: And then what Bruno needed was to find someone to protect him. A job nobody wanted. So Cohen says he settled for a guy who once did security for Enrique Iglesias.

COHEN : His main job had been protecting Enrique from flying underwear. You know, I knew if it came to it, he would take a bra for me.

MOOS: Cohen-'s cup runneth over when he finally sat down with the man associated with the al Aksa martyr's brigade.

BRUNO: I want to be famous. And I want the best guys in the business to kidnap me. Al Qaeda is so 2001.

UNIDENTIFIED MALE: I don't like. MOOS: But that wasn't the most awkward part.

COHEN: Can I give you guys the word of advice? Lose the beards, because your king Osama looks like a kind of dirty wizard or a homeless Santa.

UNIDENTIFIED MALE: Get out. Get out now.

MOOS: Who's terrorizing who in that interview? Jeanne Moos, CNN.

BRUNO: Al Qaeda is so 2001.

MOOS: New York.

(END VIDEOTAPE)

BLITZER: I'm Wolf Blitzer in THE SITUATION ROOM. Join us weekdays from 4:00 to 7:00 p.m. Eastern and every Saturday at 6:00 p.m. Eastern on CNN, and at this time every weekend on CNN International. The news continues next right here on CNN.