FTN - 11/24/02

BOB SCHIEFFER, Chief Washington Correspondent: Today on Face the Nation, is there a Saudi money connection to the 9/11 hijackers? The U.S. government is investigating a possible money link between a member of the Saudi royal family and the 9/11 hijackers. We'll talk to foreign policy adviser to the royal family Adel Al-Jubeir.

What if a link is established? What would that mean for the U.S.-Saudi relationship? We'll ask Senator Joe Lieberman, Democrat of Connecticut and member of the Armed Services Committee.

Tom Friedman, foreign affairs columnist of the New York Times, will be here to talk about that and Iraq and the Middle East.

Gloria Borger is here, too. And I'll have a final word on another anniversary of that dark day in Dallas. But first, is there a Saudi money connection to 9/11?

ANNOUNCER: Face the Nation with CBS News Chief Washington Crrespondent Bob Schieffer. And now from CBS News in Washington, Bob Schieffer.

SCHIEFFER: And good morning again.

Washington is fixated this morning on a story broken over the weekend by Newsweek magazine investigative reporter Michael Isikoff. And the gist of the story is this, that large sums of money from Princess Haifa, the wife of the Saudi Arabian ambassador in Washington, may have wound up in the hands of two of the hijackers who crashed the aircraft into the Pentagon.

The Saudi government confirms that a $15,000 payment and $2,000-a-month stipends did go from the princess to the wife of a Saudi citizen named Basnan who lived in this country, but that the money was meant to pay medical expenses.

The spokesman also confirms that at least one of the checks was endorsed and passed on to the wife of another Saudi citizen, a Mr. Al Bayoumi, who was giving money to the hijackers.

The government spokesman, Adel al-Jubeir, spoke with us this morning. He strongly denied the Saudi government was behind any of this. Instead, he suggested the princess had been taken advantage of.

(BEGIN VIDEOTAPE)

ADEL AL-JUBEIR, Foreign Policy Adviser to Saudi Crown Prince Abdullah: No, she had no idea. What actually happened, the $15,000 that Mr. Basnan was paid was paid for medical expenses. His wife had a thyroid operation.

Then subsequently, his wife wrote a plea to Princess Haifa asking her for assistance to support herself and her children. When she wrote that letter, she dropped her last name. So Princess Haifa supported the request without knowing that she was Mr. Basnan's wife.

They only discovered that this lady was Mr. Basnan's wife after we reviewed the bank records and found that the checks had been endorsed to a number of people.

We don't know if there was a con job perpetrated here. We don't know if there was deception perpetrated here.

What we do know is that Princess Haifa is a very generous woman who helps a lot of people who ask for assistance. We do know that she wrote that she approved payments of $2,000 a month to a lady by the name of Magda Ibrahim Ahmad. The lady who received the checks had endorsed at least one check to Mr. Bayoumi's wife and several checks to her husband, Mr. Osama Basnan.

(END VIDEOTAPE)

SCHIEFFER: Remember now, Mr. Bayoumi is the one who was funneling money to the hijackers. We asked how the Saudi royal family had reacted.

(BEGIN VIDEOTAPE)

AL-JUBEIR: People are outraged that somebody would try to attach Princess Haifa's name to probably the most heinous crime ever committed against man as a terrorist act. People are outraged.

She is a mother. She is a grandmother. She is a woman who has raised tens of millions of dollars for charitable causes, whether it's Save the Children, whether it's Race for a Cure, whether it's to save children with AIDS in Africa, over the years. Here is a woman whose father was killed by a terrorist in 1975.

To presume or to assume or to speculate that she may be funding terrorists is absolutely outrageous. In a desire to help people, she helped someone and she gave them money. This person turned out to be not the person that she thought she was, and this person endorsed checks over to someone else.

(END VIDEOTAPE)

SCHIEFFER: The FBI says it is still investigating all of this, but Al-Jubeir told us this morning the agents had questioned Basnan and Bayoumi earlier, and both men are now out of the United States, and he concluded from that that the investigation was over.

(BEGIN VIDEOTAPE)

AL-JUBEIR: The reason I assume that there is no investigation is I would assume that if this issue was serious enough, we would have been contacted by your government about this matter. And as far as I know, we have not been.

We are investigating this matter of the checks, primarily through Princess Haifa's office because she is very, very upset about the situation and the fact that people will try to smear her in this manner.

We are looking into this, in terms of through our embassy in Washington, D.C., what other departments may have had contact with them. And we're trying to assemble the facts.

But if you're asking me, have we been contacted by your government on this matter recently, as far as I know, I do not believe so. And so that's why I assumed that the investigation was completed.

(END VIDEOTAPE)

SCHIEFFER:And we repeat that the U.S. government says that all of this is still being investigated for a possible connection.

Joining us now to talk about what you've just heard and some other things, Senator Joe Lieberman of Connecticut. He is, among other things, a member of the Senate Armed Services Committee.

As you know, Senator Lieberman, there's been kind of a fight going on between the administration and another congressional committee investigating all of this to declassify some information about this. Do you think we need to know more about this?

SEN. JOSEPH LIEBERMAN, D-CT: I absolutely do, Bob. Look, there's obviously an overriding question here about what did the Saudis know and when did they know it, including Princess Haifa, although I think it's very important not to reach any conclusions before we really aggressively investigate her involvement in this. She deserves that presumption.

But there's another more immediate question closer to the United States government, which is, why do my colleagues on the Joint Intelligence Committee, Republican and Democrat, feel that the administration has not been cooperating with them, in fact, have reached the conclusion that the FBI and maybe other parts of our government have seemed to want to almost defend the Saudis or not be as aggressive as they should be about the Saudis?

Let's remember, they're investigating a terrorist act that killed 3,000 Americans. And the FBI and the administration has to be relentless in pursuit of this.

I was troubled over the weekend when, after the first stories on Friday, I guess, about whether the FBI was as aggressive as it should be in following any leads relating to the Saudi involvement in terrorism, that the White House immediately said -- defended the FBI.

I think what we really need from the Bush administration is a full accounting of what have our government's investigators found out. If they have not been aggressive enough about the Saudi involvement in September 11th, why not?

And I also feel very strongly, in this open society of ours, dealing with an act as horrific as September 11th, declassify the information, unless it directly puts one of our agents in jeopardy. Let the public know.

SCHIEFFER: So what you're saying is that at this point, the administration ought to be asking the FBI to be more aggressive, that there are questions they need to be asking about why they were not -- well, whatever you call it, they've questioned both of these men and they've since left the country.

LIEBERMAN: Right. The congressional committee says the FBI wasn't aggressive enough in pursuing Saudi leads. The administration, the Bush White House immediately says, yes, they were.

That's not enough. The administration, the president, ought to be demanding a full public accounting by the FBI and the CIA about what they know about Saudi involvement. And why do we have to learn this from Michael Isikoff and Newsweek? Why wasn't Congress told this?

GLORIA BORGER, U.S. News & World Report: Well, what I hear you saying is that we seem to be, or the White House seems to be, treading too easily on the Saudis. Why?

LIEBERMAN: Well, I'm concerned about that. Look, this administration and previous administrations have gone some distance in trying to protect our relationship with the Saudis.

They've been important allies of ours for two reasons. One is that they've provided bases for our military in the Middle East. Of course now they're being very uncertain about whether they're going to be with us, let us use those bases if we have to take military action against Iraq.

Second, oil. And here's where, if I may say parenthetically, I think one of the great failures of this administration post-September 11th, the president didn't seize the moment and say, "Now's the time for America to become energy independent. All of us have to give up a little bit so our great nation is not dependent on countries that may, in fact, have harbored and supported terrorists."

BORGER: Do you think...

SCHIEFFER: Well, you know that Senate Democrats have long opposed the government's energy program that would include, of course, drilling on the north slope in Alaska and all of that.

LIEBERMAN: Yes.

SCHIEFFER: So is that entirely the fault of the administration that they didn't seize that moment?

LIEBERMAN: It is, Bob, because we're never going to break our dependence on foreign oil unless we break our dependence on oil. Drilling in the Alaskan Wildlife Refuge gives us a very small percentage. In 2020, I think it reduces our dependence on foreign oil by about 2 percent, if we developed it. We need to use technology to develop cleaner more efficient sources of energy.

BORGER: Just one more question on this Saudi money story. Do you think the story we are talking about today is the tip the iceberg?

LIEBERMAN: I don't know, but it is very serious. And I think the Bush administration and all of us in Congress who have felt that the Saudi relationship was critically important to us now have to look back and say 15 of the 19 terrorists from Saudi Arabia, increasing trail of money going from Saudi Arabia to the terrorists.

Remember the president's edict here, and it was the correct one. Right after September 11th last year, said to the nations of the world, "You are either with us or with the terrorists. And if you're with the terrorists, you are going to feel our wrath."

And I think we have to apply those standards not just to enemies like Iraq and Afghanistan under Taliban, or Iran. We have to apply it to our friends like Saudi Arabia.

And either they have to change, or the relationship that we have with Saudi Arabia is going to change dramatically.

SCHIEFFER: Well, what would the do? Be a little more specific on what the Saudis would do, or need to do.

LIEBERMAN: Well, they've done some things to close off the flow of money from Saudi Arabia to terrorist organizations. They've got to do a lot more than that.

Also they've got to begin to open up their society, give their people some democracy, diversify their economy so that the gap in income is not growing all the time and the poor at the bottom are fertile ground for bin Laden and fanatical Islam.

And they've got to decide, which the royal family of Saudi Arabia -- difficult position -- have to decide which side they're on. For too many generations, certainly years, they have pacified and accommodated themselves to the most extreme, fanatical, violent elements of Islam.

And those elements have now turned on us and the rest of the world. And in time, they will, of course, turn on the royal family of Saudi Arabia. It's time for them to change.

SCHIEFFER: Gloria?

BORGER: Well, another factor here is, obviously, Iraq, and the possibility of going to war in Iraq. We now have inspectors in Iraq. Do you believe that chances for war have increased or decreased?

LIEBERMAN: It's really all up to Saddam Hussein. By his past, I would say that it's hard to imagine that he will comply with the United Nations resolution, which asks him to do what he promised to do at the end of the Gulf War; to disarm, to get rid of his chemical, biological weapons and the means to deliver them on people, including our troops and allies in the Middle East.

The bad news here is, and on the very day in the letter in which the Iraqi government accepted the inspectors coming back into Iraq, they again declared that they don't have chemical and biological weapons of mass destruction. We know they do.

On December 8th, Saddam faces the moment of truth. He's got to declare whether he's got weapons of mass destruction or not. If he doesn't, or if he gets us into a gray area, kind of rope-a-dope, that's going to be the test of President Bush's leadership, our willingness in Congress to stand by him and whether the nations in the United Nations will say, "Saddam Hussein, you have not complied with the U.N. resolution, and therefore we've got to take military action."

SCHIEFFER: Do you think that the president has the authority, under this resolution, to take military action at that point if Saddam says, "I do not have the weapons"?

LIEBERMAN: I do.

SCHIEFFER: And you would support the...

LIEBERMAN: I would. I'm very glad that the president went to the United Nations. I think it's critically important that we not be in a position where we have to take military action against Iraq alone. It's clear to me now that we will not have to.

I think if there is this violation, that -- I expect, although I'd be pleasantly surprised if Saddam suddenly has a death bed or a U.N.-bed conversion. But we would immediately go back to the U.N., challenge them to live by the words in the resolution because Saddam's failure to comply would have been a material breach calling for serious consequences. If the U.N. doesn't act, we have to put together our own international coalition and change that regime in Baghdad.

SCHIEFFER: One quick political question. The vice president was out now. He sort of reemerged. He says it's a different kind of guy. Does he seem different to you?

LIEBERMAN: He seems like the Al Gore that I've known for more than 15 years. It's great to see him out there. Al and Tipper look great. The book is good. And think we need his voice in national politics.

SCHIEFFER: Well, you know, you made the promise to him that you wouldn't run if he decided to run. He says he's not going to hold you to that.

LIEBERMAN: Yes. I think sometimes when he says that, he means he didn't ask me for the promise and I didn't make it to him, and he's absolutely right. It was my judgment about what was right, that this is the man who gave me an extraordinary honor and opportunity to run for vice president of the United States.

I couldn't then and can't now see myself turning on him and saying, "Thanks, pal, but I'm going run against you for the Democratic nomination." So I'm happy to wait until right after the first of the year when Al announces what he's going to do, and then I'll make my decision.

SCHIEFFER: Senator Lieberman, thanks so much.

LIEBERMAN: Thanks, Bob.

SCHIEFFER: When we come back, we'll talk to Tom Friedman of the New York Times.

(COMMERCIAL BREAK)

SCHIEFFER: And with us now for analysis and perspective, Tom Friedman of the New York Times.

Well, Tom, Senator Lieberman came on pretty strong there about the relationship between Saudi Arabia and the United States, I thought.

TOM FRIEDMAN, "The New York Times": Well, (inaudible) a big story, Bob. It's serious, so the Bush administration has taken -- the president in particular, has taken a lot of arrows for Saudi Arabia since September 11th in order to preserve the relationship, based, as the senator said, on an oil need from Saudi Arabia and our bases need in Saudi Arabia.

But one wonders how many more arrows this administration is going to take before it really loses its temper here and starts to thump the table and say we need some real answers. Why are checks coming from the Saudi embassy? Why is a guy who was in this country supporting hijackers, flees to London, we find hidden under his floor boards, according to Newsweek, phone records with the Saudi embassy in London. I do think we need some answers.

BORGER: Of course the timing of this could not be worse, and that may be one reason why the Bush administration has been trying to keep it quiet. Here we are talking about going to war with Iraq. We need the Saudis for lots of things, as Senator Lieberman was saying.

FRIEDMAN: There's no question, Gloria. You look at the predicament that the administration is in. It's got Pakistan clearly guilty of providing nuclear technology to North Korea, our key ally now in the war in Afghanistan. And we have Saudi Arabia involved in this messiness now related to the funding of certain hijackers.

I personally do not believe, from what I've read, that Princess Haifa whom I've met, has any direct involvement in funding this hijacking. That I find simply unbelievable.

What I think is totally believable, is that the family was shaken down, as so many wealthy Saudis are, by these religious extremists and charities in Saudi Arabia who funnel these funds to Al Qaida and other groups. And I think it goes on every day. It's been going on for years. And I don't think we've gotten to the bottom of that.

BORGER: Well, if there's a lot of cash coming in through a diplomatic route, diplomats do not get checked at customs. If there's all this cash coming in, people like those two hijackers in San Diego and perhaps others, may have known how to game the system, which is what perhaps these folks were doing with Mr. Al Bayoumi.

FRIEDMAN: You know, Gloria, right after 9/11, I got a call from a Kuwaiti, a very, very senior Kuwaiti official because I had written a column right after saying, "Follow the money." And he called me from Kuwait and he said, "Tom, I got to tell you, you don't know how right you are."

You know, people know what's going on. They know where this money came from, but they're intimidated by these Islamists. They want to buy them off. They want to hold, you know, enemies like this very close to their chest.

And because of that, these guys have been able to use this system to fund all kinds of organizations and schools all over the Muslim world. It's a corrupt system. It's a terrible system. And it's funded every time you get in your gas-guzzler and buy a tankful of gas, frankly.

SCHIEFFER: Well, you know, I thought Senator Lieberman made an interesting point when he said that when the story broke, the administration immediately defended the investigative agencies for questioning these people and suggested that the investigation was still going on. He said they should be demanding a full accounting of that.

FRIEDMAN: I think we all should be demanding a full accounting, both from the investigative agencies, Bob, and from the Saudi government. I mean, consistently since 9/11, there have been questions of how much they've cooperated on the money trail. And the money trail is the key thing.

When you read the stories about bin Laden now, a year later, what stands out as phenomenal is the amount of money this guy had at his disposal, to buy factories, ranches and armies. It was phenomenal, and it was raised primarily through phony front charities.

BORGER: What happens if it's cash? I mean, how can you follow the money if it's cash that comes in in suitcases?

FRIEDMAN: Very difficult.

SCHIEFFER: Let me shift quickly to the war in Iraq. You heard Senator Lieberman say the next big deadline is December 8th. How crucial do you think that is?

FRIEDMAN: Well, December 8th is key because that's when Saddam is supposed to come clean on what he has. And I think there's only one question about December 8th. Does he tell a little white lie, Bob, or a big whopper, OK? Is it going to be the big lie, "I've got nothing," or is it going to be a little white lie, "Oh, I've got a few things here and a few -- gosh, we found it in the cupboard, I didn't even know it was there," you know, some biological weapons.

And I think that then is going to shape what goes forward. If he says "I've got nothing," I think you're really going to hear the war drums. You know, if he says he's got a little, who knows. You know, it depends how little he says.

SCHIEFFER: Do you think there is still a chance it will not be military action?

FRIEDMAN: I think there's still a chance -- I think there's a much bigger hope by the Bush administration that something is going to happen. That someone will step out of the shadows there, that some general will oust Saddam, that he will get the message and buy an airline ticket to Algeria.

They are still, I think, deeply hoping that all this intimidation will prompt something to happen to avoid a war. But, you know, who knows, there's still a very good chance that in a couple of months we're going to be at war in Iraq.

SCHIEFFER: But it very much in Saddam Hussein's corner?

FRIEDMAN: It's going to be his call. It's very much going to be his call.

SCHIEFFER: Thank you, Tom. Always good to have you.

Back with a final word in just a minute.

(COMMERCIAL BREAK)

SCHIEFFER: Finally today, last week marked the 39th anniversary of the awful day that John Kennedy was murdered. I covered that story as a young reporter for the Fort Worth Star-Telegram, and last week I was back in Dallas to take part in a symposium marking that day.

The top floor of the building where Lee Harvey Oswald hid in wait for Kennedy is now a museum. At first, the people of Dallas wanted no part of such a place. Some wanted to tear the building down. Many just wanted to forget what happened there.

But wiser people prevailed. Today, the museum has become a repository for film, documents, and any and all things connected with that day which can be catalogued and made available for research. And it is a place that has been tastefully arranged, so that everyone can visit and get a better understanding of the awful thing that happened there.

The assassination of John Kennedy was unlike anything modern America had ever experienced, and, in the days after it happened, as people groped for an explanation, many blamed Dallas. We soon came to understand it was not Dallas, but a madman, who was to blame.

As I strolled through the museum, it struck me that only in a land where the people rule would there be such a place. Totalitarian societies generally have no reliable history. Each generation rewrites the past to cover up mistakes and embarrassments. Only free people keep accurate histories. The people of Dallas are to be congratulated for the good thing they have done.

That's it for us. We'll see you next week, right here on Face the Nation.