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THE SITUATION ROOM

Terror "Rehab" for GITMO Prisoners; Keeping Out Suspicious Travelers; Where 2010 is Already Here; Securing the Celebration; Drag Queen in a Giant Shoe; Israel's Airline Security Success; From Banker's Son to Extremist

Aired December 31, 2009 - 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: Well, you're in THE SITUATION ROOM.

Happening now, the president hears from federal investigators about that botched airliner bombing. And government agencies are scrambling to close the bureaucratic loopholes that might let another terror suspect travel to the country.

And heavy security in Times Square now -- radiation detectors, bomb sniffing dogs -- ahead of the big New Year's Eve celebration. We're going to take you there; to, also, Key West, Florida, where some revelers will be in bathing suits and a drag queen in the star of the show.

And a major corporation drops its sponsorship deal with Tiger Woods. New details emerge about the aftermath of the golfer's early morning car crash.

Wolf Blitzer is off today.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

Federal investigators are reporting to the president today on what they've learned about last week's failed airline bomb plot. And government agencies -- they're working to close the door left open to the bombing suspect before some other suspicious person uses it to enter into the United States. Now that means taking prompt action when there are concerns about visas.

Our CNN foreign affairs correspondent, Jill Dougherty, of course, doing double duty here. Obviously, another very important story.

Tell us a little bit about when we think some of these changes are going to go into effect.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, you know, it's been almost a week since the attempted bombing and today we learned of the first major step the State Department is taking after analyzing how it handled its part in all of this. And they're shutting down a major loophole that, if it had been closed before, might have grounded the suspect.

(BEGIN VIDEOTAPE)

DOUGHERTY: (voice-over): One key fact about the Christmas Day bombing suspect is that he had a U.S. visa allowing him to board a plane to America at any time. But that crucial detail was never included in a cable about him sent to the National Counterterrorism Center in Washington.

Now CNN has learned the State Department is ordering American embassies around the world to change their procedures. Any time embassies send so-called visas VIPIR cables with information about suspicious individuals, they must answer the question, "Does that person have a U.S. visa?"

Starting now, that will be required.

Information that the bombing suspect did have a visa was available in government databases, but someone would have to be worried enough about him to search for it.

In another attempt to shut down loopholes, the State Department is considering automatic notification of airlines when someone's U.S. visa has been revoked. Right now, Department staff may or may not notify an airline of that fact.

Congress, too, is clamoring for a quicker trigger to deny more visas and put more people on watch lists. Current standards require reasonable suspicion based on facts that someone is or is suspected to be engaged in terrorism-related conduct. Mere guesses or hunches are not enough.

Senator Dianne Feinstein says that is too restrictive and should be changed. She wants to include anyone who is reasonably believed to be affiliated with, part of or acting on behalf of a terrorist organization.

(END VIDEO TAPE)

DOUGHERTY: OK, so, under those rules proposed by Senator Feinstein, could this suspect have been put on a no fly list?

In theory, yes, because, allegedly, he was affiliated with extremist organizations. But, you know, Suzanne, that in itself raises issues of how to balance privacy and First Amendment rights with the need for security. And we're going to be hearing a lot more about that when the Senate begins hearings on this attempted terror attack. And that begins January 21st.

MALVEAUX: And, Jill, there's been a lot of criticism. Help us understand this.

The State Department -- could they have pulled his visa after there was a complaint by the father saying, I worry that my son's become radicalized?

Could they have done that to prevent him from getting on the plane? DOUGHERTY: Yes. You know, that question has been asked basically since the beginning. And today, the State Department did issue a -- a final explanation. They could have. They have the authority on their own to revoke -- to pull a visa. They can do it if they want without any other agency.

However, since 9/11, what they've done is they've had these interagency reviews. And that interagency review was done and it did not recommend pulling.

So it's almost like a catch-22.

MALVEAUX: OK. All right. Thank you.

It becomes a lot clearer now.

Thanks, Jill.

Well, it seems like there were plenty of clues about the bomb plot suspect, but cutting through, as Jill had mentioned, the bureaucratic tangle may be the biggest problem in acting on potential threats.

Our former homeland security secretary, Michael Chertoff, spoke out about that today.

(BEGIN VIDEO CLIP FROM "AMERICAN MORNING")

MICHAEL CHERTOFF, FORMER HOMELAND SECURITY SECRETARY: So much information comes in, how do you operate what we call the signal from the rest of the noise?

And -- and often, it's very difficult to do.

I have to say, in this case, when the father, who is obviously a -- a prominent Nigerian, comes in and talks to the embassy, that strikes me as a little bit more than the random tip that comes across the transoms. It sounds like the problem was not so much a failure to share as a lack of urgency in tracking down the leads and the information that was available. Obviously, when you have a father coming in and talking to the embassy about his son, who's radicalized, gives the embassy the passport number, the first thing you would think is that a very fast effort to see if the person has got a visa and suspend the visa. And I guess you get a little bit of a sense that people took their time, which I think may lie at the -- at the core of the problem here.

(END VIDEO CLIP)

MALVEAUX: The portrait of an extremist -- how the son of a wealthy banker was drawn to radical Islam to, allegedly, terror -- new details of the man accused of trying to bomb a U.S. airliner.

Also, the new year is bringing new trouble for Tiger Woods. He has just lost another major sponsor.

Plus, one of the country's more unusual New Year's Eve celebrations. It involves a drag queen and giant high heeled shoe. We're going to take you live to Key West, Florida.

(COMMERCIAL BREAK)

MALVEAUX: Much of the world has already rung in 2010.

Our CNN's Josh Levs is monitoring all of these celebrations from the CNN Center in Atlanta -- Josh, I love your job. I mean you get to see this all day, what's been going on.

JOSHUA LEVS, CNN CORRESPONDENT: I have the best assignment in the company today. I've been watching the coolest fireworks all over the world literally all day long.

And I'm going to start off taking you into Moscow. Let's take a look at this. And what we're going to be seeing at the beginning with this -- this kind of great explosion of fireworks is the backside of the Kremlin. And there you can see in the picture Saint...

MALVEAUX: Wow!

LEVS: Saint Peter's Cathedral. There you go. We got it for you. So many people turning out on the streets, huge fireworks. They spend more than a year preparing just what it's going to be like just for today. And we're hearing just amazing celebrations all over now.

If you think that's impressive -- and it is -- I'm going take you to a city that is calling itself the world's capital of New Year's, Sydney, Australia.

Take a look at the this and let's listen in.

(VIDEO CLIP)

LEVS: And let me tell you what we're seeing here. That is the Sydney Harbor Bridge. And a lot of people will remember it from the Olympics, when they had those five big rings along there. They spent 15 months preparing this. They needed a dozen computers just to send out the 10,000 signals that it took to get all these fireworks going out there. Giant numbers, of course -- more than a million people able to see it in person because that Sydney Harbor Bridge is so high up, there are vantage points all over the sprawling city.

So you have people who are able to see it there, plus, obviously, it's echoing all over the world online and on TV, as people check out those amazing fireworks out of Sydney. I absolutely love it.

All right. But before I go, let's check out Pattaya, Thailand there.

(VIDEO CLIP)

LEVS: Just south of Bangkok -- see, every city in the world -- lots of major cities getting in on this. And you can see lots of fireworks celebrations going on there -- lots of people cheering, lots of people happy. And Suzanne, you know what, one of my favorite things about fireworks, I love turning around and looking at the people and watching all these people standing still on Earth just gazing at the heavens. It's a very cool sight.

MALVEAUX: Going -- everybody at the same time -- ooh, ah. You know, that's all you can say. You know, it's just unbelievable.

LEVS: Speechless and beautiful. And, by the way, you'll be interested in this. It's very timely. I was just showing you Sydney before. They went green this year. So all the energy that it took they actually powered with renewable energy in order to kind of counterbalance what they were putting out there. A sign of the times.

MALVEAUX: Unbelievable. I've been to that bridge in Sydney and I know they allow to you climb up to the top. They have that bridge climb. I wonder if...

LEVS: I climbed it.

MALVEAUX: You did?

I did, too.

LEVS: Did you?

MALVEAUX: I wonder if they actually let you go up there while all those fireworks are going on. That might be an incredible experience. But it...

LEVS: An incredible experience, a major fire hazard -- either one.

MALVEAUX: Yes. Lawsuit, whatever.

LEVS: You've got it.

MALVEAUX: All right. Hey, have a great New Year's, Josh.

JOSHUA LEVS, CNN CORRESPONDENT: Thank you.

Happy New Year.

MALVEAUX: All right.

Well, here in the United States, New Year's Eve is synonymous, really, with New York's Times Square. And keeping that celebration safe -- that's a huge task for this new age of terror threats, clearly.

Our CNN senior correspondent, Allan Chernoff, he sent us this report just a little while ago.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Suzanne, you can think of the NYPD as bouncers at the world's biggest New Year's Eve party. But the fact is the police here do far more to try to ensure that Times Square is the most secure spot on the planet for tonight's big celebration.

(BEGIN VIDEOTAPE)

CHERNOFF (voice over): From the perspective of the New York Police Department, every reveler tonight in Times Square is a potential terror threat. That's why the NYPD will essentially lock down the Square.

COMM. RAY KELLY, NEW YORK POLICE:

KELLY: And we want people to have a -- a happy experience, but we're also concerned about a terrorist event. We have to do that after 9/11.

CHERNOFF: Security sweeps begin well in advance of New Year's Eve. Detectives gain intelligence from local hotel and restaurant personnel on the lookout for suspicious activity. Police search garages and subway tunnels for bombs, remove trash cans, seal mailboxes and manhole covers.

A search on Wednesday of a suspicious van led to a partial evacuation of Times Square, though the van turned out to pose no threat.

Beginning at 3:00 on New Year's Eve, traffic is banned and all streets leading into Times Square are blocked off. Police sample the air for biological agents. They wear radiation detectors and dogs sniff for bombs.

As the crowd gathers, thousands of police, uniformed and undercover, converge on Times Square. From the ground and air, the NYPD watches Times Square like a chess board.

(on camera): Times Square is essentially, now, the safest place in the world on New Years Eve?

KELLY: Yes, that's right. Yes. Absolutely. It's a very, very safe place.

CHERNOFF (voice over): It wasn't always this way. Twenty years ago, before terrorism was such a concern, this center of the world on New Year's Eve was a dangerous place.

(on camera): Times Square used to be a mad house.

KELLY: True. True. It was somewhat rowdy, disorderly. You would see a lot of drinking that started early on. So by the time midnight rolled around, a lot of people were feeling no pain. They were doing...

CHERNOFF: People were rolling around.

KELLY: People were rolling around. Right. And doing some strange things.

CHERNOFF (voice over): The NYPD began placing the crowd into pens fenced in by interlocking barriers in the late '90s, which brought order to what had been the world's biggest mosh pit. Today, alcohol and backpacks are banned and the crowd is generally orderly and well behaved.

Still, Commissioner Kelly is ready to toast the New Year only after the party is over.

KELLY: When the ball drops, it's a certain feeling of relief and we've made it through another year.

CHERNOFF (on camera): A sigh of relief?

KELLY: Right. Right.

CHERNOFF: It's a lot of stress on the police department.

KELLY: There is some stress, no question about it. But that's, you know -- that's all part of the business.

(END VIDEOTAPE)

CHERNOFF: Even with the threat of terrorism, Times Square is much safer and much more secure than it used to be. And the party has gone from a rowdy event to a family celebration -- Suzanne.

MALVEAUX: Thank you.

Well, New York, it has its New Year's Eve tradition, but so does Key West, Florida.

And our own CNN's John Zarrella -- for seven years, John has been on hand for this raucous celebration and it culminates with a very unique countdown to midnight. It involves a drag queen and a giant high heeled shoe.

Now, John is joining us live -- John, I don't know, we're all kind of envious of your assignment. This just looks kind of just like a lot of fun. And we see every single year, you've been doing this.

Take us to Key West.

What's going on?

JOHN ZARRELLA, CNN CORRESPONDENT: Yes, Suzanne. It's -- it's quite an event down here every single year. And the crowd grows bigger and bigger. And they have about 25,000, 30,000 people that pack Duval Street. You can see, they're just now getting set up here -- getting stage ready for the drag queens, Sushi, the drag queen.

Now, there's a shoe up there. There it is. There's the red shoe.

MALVEAUX: And there it is.

ZARRELLA: And at midnight, Sushi will be in that shoe -- yes, there it is. And Sushi will come down. They'll drop Sushi down with a bottle of champagne. And every year Sushi -- and I don't know what she's wearing this year -- will come in some sort of a new dress. And she makes -- or he makes -- all of her own dresses.

MALVEAUX: Wow!

ZARRELLA: So we're not sure what the -- the colors will be this year, but, quite frankly, it will be -- it will be quite special. In fact, you know, I ran into a couple on the street a few minutes ago who said every year they watch us. They've been watching us every year, they think it's great. The highlight of their -- their New Year's is the Key West celebration. And they were saying that they finally had an opportunity to come down this year and see it.

And, quite frankly, we see and hear from a lot of people as the night gets later, that have come down here for this event. And it is quite a spectacular -- not only Sushi, but you've got several other members of the cast of the show that they run across the street at 801 Bourbon. And that's where the performers are. And they put on quite a show, the drag queens here in Key West.

And not only this event, but up the street, you've got, at Sloppy Joe's, they've got a conk drop later tonight at midnight. And they also, of course, being in the Key West spirit, they have a pirate wench who descends from a schooner at midnight, as well.

So they really go all out down here -- Suzanne.

MALVEAUX: Hey, John, I...

ZARRELLA: And look it, I've got the tuxedo. We always have to wear a tux down here.

MALVEAUX: Very -- very smart looking there. And I want you to notice in the wall we have in THE SITUATION ROOM, we have pictures of you every year -- for the last several years, you've been doing this every single year -- pictures of you just having a grand old time.

ZARRELLA: Yes.

MALVEAUX: You're doing interviews, you're in the middle of the crowds. There are people cheering and dancing. I mean every year, you can tell you really get into this.

ZARRELLA: You know, and I tell you what, Suzanne, the very first year we did it, we were kind of doing one of these, not quite sure what to expect out here. But every year, as I said, it gets bigger and better. And it is quite an event. And it's a lot of fun for everyone down here so...

MALVEAUX: All right, well...

ZARRELLA: ...if you can't be here, you've got to watch.

MALVEAUX: Absolutely.

ZARRELLA: The weather is absolutely spectacular.

MALVEAUX: John, we will be watching. We can hardly wait to see Sushi and that high heel come down. So we'll -- we're going to get back to you. Don't you worry about that now.

ZARRELLA: Yes.

MALVEAUX: All right. Thanks, John.

Well, ring in the new year tonight with a CNN tradition -- Anderson Cooper and Kathy Griffin live from Times Square. The countdown starts tonight at 11:00 Eastern.

Well, a new skirmish in an international custody battle that everyone thought was over. But now a plea for Brazil's president to get involved.

Plus, a vacation resort on edge with a warning of a possible New Year's Eve terror attack.

(COMMERCIAL BREAK)

MALVEAUX: Brianna Keilar is following the other top stories here coming into THE SITUATION ROOM right now -- hey, Brianna, what are you looking at?

KEILAR: Suzanne, the U.S. embassy in Indonesia is warning of a possible New Year's Eve attack in Bali. The embassy says the warning initially came from Bali's governor, but the governor says there's no information about a new terror threat. At least one tourist is unconcerned.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Do you know about the warning from the U.S. (INAUDIBLE)?

UNIDENTIFIED MALE: No, I just heard about it.

UNIDENTIFIED MALE: And what do you think about that?

UNIDENTIFIED MALE: Well, we're not really too worried about it. We're here and we're having a great time and -- and we really enjoy it. We've been here surfing and having a -- having an excellent time.

(END VIDEO CLIP)

KEILAR: More than 200 people were killed in the 2002 Bali bomb attacks. Terrorists have targeted Indonesia repeatedly since then.

The Brazilian grandmother in a long-running international custody dispute is pleading with Brazil's president to intervene. Silva Bianca says -- Bianchi, pardon me -- says she wishes -- or the wishes of the 9-year-old Sean Goldman should be heard in court. Sean was returned to his father on Christmas Eve after a five year legal battle. David Goldman's attorney says the Brazilian family's continued litigation could affect their visitation rights in the U.S.

It was once America's highest grossing restaurant, but tonight, New York City's Tavern On the Green will serve up its last meal. Just three years ago, it was raking in $38 million a year. But the restaurant couldn't avoid bankruptcy -- being $8 million in debt now. The restaurant first opened during the Depression and there is a legal battle underway over whether a new owner can use the Tavern On the Green name.

Certainly the end of an era -- Suzanne.

MALVEAUX: I really like that place. I -- I go often when I'm in New York.

KEILAR: Yes, I've been a couple of times.

MALVEAUX: It's a shame.

KEILAR: It's sort of a quintessential New York experience. So maybe it will change, maybe it won't. We'll see.

MALVEAUX: All right.

KEILAR: maybe the name will change.

MALVEAUX: Yes.

Thank you, Brianna.

Well, as American authorities grapple with the question of when and how to take action against a suspicious air traveler, Israel continues to apply very rigorous security checks, including profiling and behavioral screening of passengers.

Here's our CNN's Paula Hancocks.

PAULA HANCOCKS, CNN CORRESPONDENT: Suzanne, when it comes to airline and airport security, there is a lot that can be and has been learned from Israel.

(BEGIN VIDEOTAPE)

HANCOCKS (voice-over): It's considered one of the safest airports in the world -- Israel's Ben Gurion has much of the latest technology and sophisticated machinery. American security officials came to visit a few years ago to watch and learn.

But in Israel, there is also a human element. Almost every passenger is questioned, sometimes by more than one security officer. Some are strip searched. And no matter how distasteful it may be to civil liberties groups, Israel actively profiles passengers and makes no apology for it.

NERI YARKONI, AVIATION EXPERT: Good profiling is distinction. It's not discrimination. And I think that you should profile. If you don't profile, you waste -- you waste time, you waste money and you might miss what you're looking for because you're certaining (ph) it on the wrong people.

HANCOCKS: Yarkoni says profiling needs to be based not simply on ethnicity, but also on behavior, intelligence gathering and statistics.

YARKONI: The concept, as I see, is that you should impose 90 percent of the -- the efforts toward, let's say, 10 percent of the public.

HANCOCKS: But what if you find yourself on the wrong side of profiling?

Palestinian human rights lawyer Muhammad Dalleh deals with many cases of what he calls discrimination of Arabs at the airport, saying he himself has been a victim.

MUHAMMAD DALLEH, PALESTINIAN HUMAN RIGHTS LAWYER: We are talking about 1.2 million Palestinians who are citizens of the State of Israel. They cannot be treated as a security threat. The whole community -- more than one million citizens up front to be treated as suspects.

(END VIDEO TAPE)

HANCOCKS: Israel knows it has many enemies that it has to protect itself from, so inconveniencing passengers comes with the territory. But up until today, not one single plane that has originated from this airport has ever been hijacked. And Israel's national carrier, El Al, is considered one of the safest -- if not the safest -- in the world -- Suzanne.

MALVEAUX: Thank you, Paula.

He was raised amid wealth, the son of a banker.

How and where did the alleged airline bomber turn to extremism?

We've been digging into his past.

Plus, the president's national security adviser talks about going after Al Qaeda in Yemen.

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, your local government may make New Year's resolutions for you. If it's considered dangerous, that bad habit may be taxed or even outlawed altogether.

A deadly infiltration in Afghanistan -- the Taliban claims responsibility for an attack that killed seven CIA employees.

And charges dismissed -- why a judge threw out the case against Blackwater security guards in the deaths of 17 Iraqis.

Wolf Blitzer is off today.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

He was raised amid wealth, privilege -- the son of a banker.

So how did Umar Farouk Abdulmutallab become the extremist accused of trying to blow up an airliner?

Well, our CNN senior international correspondent, Nic Robertson, has been looking into it.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): In this high school photograph, there is a look of innocence. But behind the impassive gaze, Umar Farouk Abdulmutallab appears to have been deeply troubled and lonely. He was devout, loved his faith. His friends even called him "the pope."

One of his Internet postings reads: "How can I really enjoy being with people to whom I cannot express my feelings? They know I'm Muslim, but I see how they don't understand."

But he hid his troubles well. Kwesi Brako was on the school basketball team with him.

KWESI BRAKO, HIGH SCHOOL FRIEND: To say I'm surprised is -- is -- is a given at this point. I -- I didn't -- I wouldn't have figured him to be a lonely person.

ROBERTSON: In his blogs, Abdulmutallab was longing to get to university and mix with Muslims. In the fall of 2005, he got his wish -- admitted to University College London. But this conflicted teenager was about to enter a highly charged Islamic scene.

USAMA HASSAN, FORMER RADICAL: There is a battle of ideas, if you like, going on on the campuses.

ROBERTSON: Hassan knows -- now reformed, he was once a campus radicalizer and influenced the man who orchestrated the killing of the "Wall Street Journal's" reporter, Daniel Pearl.

USAMA HASSAN, FORMER RADICAL: On British campuses he would have had exposure to a variety of Muslim voices, all claiming to speak from true Islam. Extreme from the Muslim voices who openly advocate no compromise of the westerners.

ROBERTSON: Abdulmutallab joined the university's Islamic society. By his second year became its president. He was at a different college in London. His old friend turned his back on him. Abdulmutallab was changing.

UNIDENTIFIED MALE: Aware Islamism's clothing and the matching trousers.

ROBERTSON: In 2007, under Abdulmutallab's leadership, the Islamic society organized a week of debate on the war in Iraq titled "War on Terror," a war that appears to have weighed heavily on him. This is the campus at University College London where the war on terror week was held. A year later, an independent British think tank issued a report on Islamic societies at universities like this. They concluded that while most students were tolerant, a significant minority supported violence in the name of Islam. The few friends Abdulmutallab did have at University are hard to track down. Eventually we get a lead.

We have been trying three days to find one person at the university who knew him well enough, who is willing to talk to us. We think we found him. This could be the breakthrough.

His name is Qasim Rafiq. He was the Islamic society president just before Abdulmutallab. I asked about Abdulmutallab.

QASIM RAFIQ, FRIEND OF SUSPECT: It goes back to the issue of where exactly the radicalization takes place.

ROBERTSON: Investigators are still trying to figure out where and how Abdulmutallab was radicalized. What worries Usama Hassan is Abdulmutallab may have radicalized others.

HASSAN: There is, of course, the worry that he may have a small band of comrade of friends who are thinking along similar lines.

ROBERTSON: Nic Robertson, CNN, London.

(END VIDEOTAPE)

SUZANNE MALVEAUX, CNN ANCHOR: A month ago before the failed airline plot and Yemen connection, Wolf Blitzer spoke with the president's national security adviser, General James Jones. And Wolf asked if the U.S. might take on the terror network in Yemen. Here is how he responded.

(BEGIN VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: We know there are plenty of al Qaeda guys in Pakistan right now operating in Pakistan. We also know that there are some operating in other countries like Yemen and Somalia if you take a look over there. Are there more al Qaeda operatives in Yemen or Somalia or Afghanistan?

GEN. JAMES JONES (RET.), NATIONAL SECURITY ADVISER: Our best information is that al Qaeda is feeling increasingly uncomfortable in Pakistan. And as you -- as I mentioned, our goal is to make sure they are very uncomfortable in Pakistan and Afghanistan. And we have evidence that they moving at least in some part to Yemen and Somalia. This organization will always seek the ungoverned spaces or the areas where they perceive they can operate under the radar. So if we can get them out of the Afghan/Pakistan region, that would be good. But this is -- this is an organization that has to be tracked and we are tracking it wherever they go.

BLITZER: Is the U.S. going to go after al Qaeda and Somalia and Yemen?

JONES: We will be working with other governments to make sure that they understand what's happening just as we are doing in Yemen now. Saudis are obviously very concerned. Al Qaeda is not exactly welcome in any one place in this world. And if we can do anything to make them uncomfortable and not allow them to survive anywhere we will be safer for it. BLITZER: Somalia is basically a failed state. The U.S., as you remember -- experience. Yemen, a government there. Is the government of Yemen working with the U.S. to crush al Qaeda in Yemen?

JONES: We are in the informative stages. Obviously we have a very close relationship with Saudi Arabia. We are sharing information with other governments to make sure they understand where this organization might be going. There's a growing network that's -- really global about this kind of organization that is increasingly effective and real-time intelligence transfer and real-time arrests of very, very individuals who don't mean as well.

(END VIDEOTAPE)

MALVEAUX: U.S. officials have made it clear that our country special ops forces and special agencies are working with Yemen to identify al Qaeda targets in Yemen.

It was one of the most notorious battles of the Iraq war but this one involved U.S. contractors, not soldiers. Now there's a stunning decision by the judge hearing their manslaughter case.

(COMMERCIAL BREAK)

MALVEAUX: Brianna Keilar is monitoring the stories coming into THE SITUATION ROOM right now.

Hey Brianna. What are you following?

BRIANNA KEILAR, CNN CORRESPONDENT: Suzanne, big news. A federal judge dismissed the manslaughter charges against five Blackwater security guards. They were accused in the 2007 deaths of 17 Iraqi civilians. They were guarding a state department convoy moving through western Baghdad when the shooting began. The judge ruled prosecutors improperly used the guard's own statements against them. The justice department can appeal the ruling or seek new indictments against the men.

Brazil's government says 14 people have died in a heavy flooding there. The deaths occurred in Rio de Janeiro state. Across the bay from the city of Rio, a mudslide left six people homeless but no fatalities are reported there.

Ex-Congressmen and ex-convict Jim Traficant says he wants his old job back. The colorful Ohio Democrat reportedly told local business leaders yesterday he plans to run for Congress again in 2010. He didn't say which district he would run in or on which party's ticket. Traficant was released from federal prison in September after serving seven years in prison. If you don't remember the name, you may remember his hair or penchant for ending speech on the house floor by saying beam me up.

Suzanne, I think my job just got a little more interesting.

MALVEAUX: Absolutely. We will see how that goes. Potential run there. Guns in the cockpit, a last-minute move by federal authorities to extend permission for pilots to pack firearms on commercial airlines. But is there trouble that is looming for the policy?

New details are emerging about how Tiger Woods finally met with police to discuss his car crash. This happens as the golfer suffers another big financial blow.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Telecom giant AT&T announced it was dropping its sponsorship deal with Tiger Woods. It comes as new details have emerged about the way his careless driving case was resolved well after he damaged his luxury SUV right outside his house. Our CNN national correspondent Susan Candiotti has been digging into all of this. She joins us from New York.

Susan, what are the details we are learning today?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hi Suzanne. Crash investigators got their meeting with Tiger Woods but it wasn't the one they originally had in mind. Woods was described as professional but as for exactly what happened that night, his lips are still sealed.

(BEGIN VIDEOTAPE)

CANDIOTTI: The meeting took place five days after Tiger crashed into a fire hydrant and a tree Thanksgiving night. A neighbor described him lying in the street snoring. His wife told police she use a golf club to bash out the windows of his car to free her husband. It was only after the case was closed and Tiger was slapped with a fine for careless driving that he agreed to sign his ticket in front of police. They said he was polite and that was it. Meeting over. The only visible injury, police described swollen lips, quote, consistent with someone that wasn't restrained in his vehicle. That could stifle some rumors.

Some of the reports have him immediately after the accident practically speaking getting on to a plane and going off to Arizona, undergoing plastic surgery. Does that seem plausible in that kind of timeline?

TOM O'NEILL, SR. EDITOR, IN TOUCH WEEKLY: There's no way that Tiger could have suffered massive damage to the face, got to Arizona, had the reconstructive surgery, made it back to Orlando within five days to see the police who only witnessed a small bump on the lip. Impossible.

CANDIOTTI: In-Touch magazine's Tom O'Neill has been following Tiger's tale. While Woods remains out of sight he lost another response soar. AT&T joins Accenture in dropping golf's biggest name. "We wish him well in the future," AT&T said in a New Year's Eve statement.

O'NEILL: Tiger may thinking style sense golden. But in fact, more damage is being done every day. Another sponsor deserts him. Another fan is disappointed. Another question goes unanswered. The damage stacks up.

CANDIOTTI: How far will it stack up? While Tiger says he is trying to repair his personal life.

O'NEILL: Who is shocked by sports figure having a sex scandal? Nobody. But we are all surprised at how poorly he is handling this.

(END VIDEOTAPE)

CANDIOTTI: Tiger Woods admitted infidelity may have cost his sponsor stockholders billions. A new study put out by economics professors at the University of California estimate this scandal cost up to $12 billion is the estimate and reduced shareholder value. Suzanne?

MALVEAUX: Very expensive. Thank you, Susan.

Guns in the cockpit. The rules were set to change at midnight tonight. But now there's been a last-minute decision by the homeland security department that changes everything.

Plus, the very public battle between Fox and Time-Warner Cable waged in major of newspapers. Will it leave millions of football fans gameless tomorrow?

(COMMERCIAL BREAK)

MALVEAUX: The climax of a very public battle between the Fox Network and Time Warner Cable could come to a head tonight at midnight leaving millions of people able to watch some of their favorite TV shows including some of tomorrow's big football games. Our CNN entertainment correspondent Kareen Wynter, she's got the very latest.

And Kareen, obviously this is coming down to the very wire here. What is happening?

KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: It absolutely is, Suzanne, coming right down to the wire. You even have members of Congress getting involved here. But if no deal is reached, well, millions of cable customers could pay the price.

(BEGIN VIDEOTAPE)

WYNTER: "American Idol," "The Simpsons." pro football, usually popular programs on Fox. But if you get them through Time-Warner Cable, you could soon see this instead. Time-Warner Cable subscribers like Al Jones aren't happy.

AL JONES: It's a very big inconvenience.

WYNTER: Fox is threatening to yank its signal off Time-Warner Cable Systems starting tonight at midnight unless the broadcast network gets a cut of each customer's cable the broadcast network gets a cut of the bill similar to how cable networks are paid. Fox wants $1 per month per subscriber and Time Warner Cable, the nation's second largest cable provider, calls those demands outrageous. The dispute would affect 13 million Time Warner Cable subscribers across the country in markets including New York and Los Angeles and Dallas.

The battle has now shifted to Washington. Senator John Kerry who chairs the Senate Telecommunications Subcommittee proposed both sides seek binding arbitration to resolve the dispute. Time Warner Cable agreed, but when Fox rejected the idea, Kerry threatened to ask the FCC to order Fox to keep its signal on Time Warner Cable until an agreement is reached. The FCC is now urging both parties to reach a temporary agreement to continue airing Fox shows until they can hammer out a deal adding, "Companies should not force cable watching football fans to scramble for other means of TV delivery on New Year's weekend." This could be just the beginning.

In the past broadcast networks like cable operators carried programs for free, but now with advertising revenues drying up fast, they are demanding a share of subscription fees. CBS was the first to strike a deal with the cable provider earlier this year for reportedly 50 cents per subscriber and now Fox is bargaining, which means that you could end up paying more.

DAVID WERTHEIMER, ENT. TECHNOLOGY CTR. AT USC: These are serious business discussions, but it all trickles down to the consumers and they have to deal with the fact that they don't have shows or they have to foot more for the cable bill.

WYNTER: Both sides are attacking each other with Time Warner Cable implying that Fox is making ransom demands.

UNIDENTIFIED MALE: Tell Time Warner Cable to stop making excuses.

WYNTER: And Fox is running its own anti-Time Warner Cable ads. Will "House" be without a home on Time Warner Cable? Subscribers are weighing their options.

UNIDENTIFIED MALE: A lot of people are going to leave Time Warner and go to U Verse.

UNIDENTIFIED MALE: There is a lot of people dropping Time Warner and going to Direct TV or Dish Network. I'm for sure going to do that if that happens.

(END VIDEOTAPE)

WYNTER: And Suzanne, this late word, Representative Steve Israel of New York says that his suggestion of a cooling off period between the parties has been rejected by Fox. But according to Israel's office, the network says it will keep negotiating throughout the night with Time Warner Cable, and one more point we should make, Time Warner Cable is an independent company and previously spun off by Time Warner the parent company of CNN. Suzanne.

MALVEAUX: Well, we will be back to you after we have further developments if that story breaks. Thank you.

WYNTER: And Time Warner has 13 million subscribers making it the number two cable subscriber behind Comcast which has 24 million, but the lineup of changes when you factor in satellite, Direct TV has 18 million customers and Dish Network 14 million, and that pushes Time Warner down to number four among all pay TV customers.

MALVEAUX: Well, get ready for new laws tomorrow. Three more states will ban texting while driving and one city will slap a so-called sin tax on medical marijuana and a smoking ban goes into effect in one of the last places you might expect.

And Kathy Griffin unleashed. She is part of the New Year's countdown in Times Square, but wait until you hear what she has to say in the meantime.

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MALVEAUX: Millions of newborns born into poverty don't get enough nourishment where the International Breast Milk Project comes in. Our CNN photo journalist Tawanda Scotr brings us the story as part of our "Giving in Focus" series.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: I have a 13-month-old Lilly.

NICOLE: I am Nicole, and I have a 16-month-old daughter Ella.

YAEL WEISS, DONATES BREAST MILK: I am passionate about breastfeeding and I knew I wanted to nurse her exclusively, so I started to pump and quickly my freezer filled up with a lot of frozen milk.

UNIDENTIFIED FEMALE: I realized that I don't know what to do with the milk, because I am producing it faster than she can drink.

UNIDENTIFIED FEMALE: My freezer was filled top to bottom with milk.

UNIDENTIFIED FEMALE: The first thing I did was Googled donate breast milk, and the first thing was breastmilkproject.org. I looked over their website and I knew about once they were reading about sending the milk to South Africa and helping these malnourished infants, I knew it was something that I wanted to do.

UNIDENTIFIED FEMALE: They send somebody, a nurse to draw blood and make sure you are healthy enough to donate, and they ship you a cooler.

UNIDENTIFIED FEMALE: I have probably shipped about four or five coolers' full of frozen breast milk over 300 or 400 ounces worth. I would guesstimate that I have donated about 1,000, or more than 1,000 ounces of breast milk.

UNIDENTIFIED FEMALE: It is the healthiest for babies and it has the mother's natural antibodies and you pass on the immunities to the babies, so the babies that are born in the critical situations.

UNIDENTIFIED FEMALE: As I am pumping everyday, I am picturing these little children and infants in South Africa receiving this breast milk and thriving on it.

UNIDENTIFIED FEMALE: It is so satisfying to give this milk knowing that I will never meet the babies that are benefiting from it. This has probably been the most rewarding and gratifying volunteerism that I have done. You are not writing a check or buying books for little kids or giving money to a homeless man on the street, because it is personal. I spent a lot of time thinking about that, and it has been rewarding.

(END VIDEOTAPE)

MALVEAUX: There's also a commercial aspect to the project. The California-based company processes and ships one quart over the milk to Africa at no charge to the project or the donor. The company pays the charity for the remaining 75% of the milk and processes and fortifies it before selling it to neonatal intensive care units across the country.

Well, Kathy Griffin is joining CNN's Anderson Cooper from CNN for the live from Times Square New Year's Eve. She talked about it with Erica Hill.

(BEGIN VIDEOTAPE)

KATHY GRIFFIN, COMEDIAN: Here is the announcement, I am thrilled to be back co-hosting with Anderson Cooper and frankly putting him on the map. He couldn't do it by himself.

ERICA HILL, CNN CORRESPONDENT: He is nowhere without you.

GRIFFIN: And the contract that I made with CNN, which I am sure they are not thrilled that I will not spill the beans. There is a stipulation in my contract that is not in yours or Wolf's or Jack Cafferty's which is that if I cuss like I did last year by accident, I have to write the check back, no joke.

HILL: So you are ready to go? Are you thinking that you have to write a check back?

GRIFFIN: I don't know if I am man enough --

HILL: To write the check.

GRIFFIN: I can write the check. What do I care? I enjoyed being a YouTube sensation, but I will try not to cuss, but it is a struggle and uphill climb.

HILL: Whose team are you on? Team Larry King or team Carry Prejean?

GRIFFIN: Well, I am a gay dude. I am team Larry King all of the time even though he thinks I am Kathie Lee Gifford and, Larry, don't argue, because you know you are not quite sure. I am team Blitzer.

HILL: Who is not team Blitzer? Did you know that balloon boy didn't know who he was?

GRIFFIN: Okay. I think that is a good relationship for me, after I dump Levi.

HILL: The balloon boy?

GRIFFIN: No, the dad. That is a good photo-op.

(END VIDEOTAPE)

MALVEAUX: Watch Anderson Cooper and Kathy Griffin tonight at 11:00 p.m. Eastern.