[John King, Guest:] Now on WOLF BLITZER REPORTS, a new year begins in Afghanistan with unfinished business from 2001 still high on the agenda.
[George Walker Bush, President Of The United States:] Anytime you get a person running, it means you're going to get him pretty soon. And same with Mullah Omar. It's just a matter of time.
[King:] Unprecedented security the ball will drop just hours from now in Times Square. One last hurrah for the man in charge.
[Mayor Rudy Giuliani , New York:] I just feel an enormous gratitude that the people of the city of New York have given me an opportunity to be their mayor for eight years. These are the most incredible people that I've ever known.
[King:] Millionaire Michael Bloomberg stands ready to take over.
[Michael Bloomberg , New York:] It's a daunting task to know what lies ahead.
[King:] From the war against terrorism to the economy, we'll look at what's ahead for the nation in 2002. I'm John King in for Wolf Blitzer. With hours left in 2001, President Bush is already setting optimistic goals for the year 2002. What will the new year bring for America's jobless? What missions will the U.S. military undertake? In a moment, a few predictions and news of troops in pursuit of Mullah Omar, the spiritual head of the Taliban. But first, the latest developments. President Bush says the country will remain on alert in the coming new year. In a chat with reporters in Crawford, Texas today, Mr. Bush spoke of a new American culture. The key word: vigilance. He also said the past year's hardships have made the country stronger. The hunt is heating up for Taliban leader Mullah Mohammed Omar. The United States says that rival militias are moving on a city north of Kandahar where Omar is believed to be hiding. U.S. special forces are on the scene as well. The Pentagon says the target struck Sunday by U.S. bombers was a Taliban compound, not a village. A military spokesman says secondary explosions suggested the presence of weapons or fuel. Local Afghan witnesses claim today the attack killed scores of civilians. India says a Muslim militant arrested today in New Delhi was caught with explosives and detonators and may have been planning a New Year's bombing. Also, the Indian government welcomed the arrest by Pakistan of two militant leaders linked to the recent assault on the Indian parliament. India's foreign minister called Pakistan's move a step forward. Here in the United States, the latest phase of the effort to kill anthrax spores in the Hart Senate office building was completed earlier today. It may be a week before officials know if the delicate effort to scour the air conditioning and ventilation systems was successful. The hunt for Mullah Mohammed Omar could be heading to Bagram, an area northwest of Kandahar. U.S. officials have what sources call, quote, "credible reports" that Omar may be hiding in that area. CNN Pentagon correspondent Barbara Starr joins me now live with the latest Barbara.
[Barbara Starr, Cnn Pentagon Correspondent:] Hi, John. Yes, Pentagon officials are confirming that anti-Taliban forces led by Gole Sharzay, one of the local anti-Taliban warlords, are moving towards the Bagram area, this area about a hundred miles or so northwest of Kandahar, and that U.S. special forces are going to move in with them. And these special forces, these U.S. commandos are going to do what they've been doing throughout the conflict. They will be on the ground with the anti-Taliban forces providing intelligence and targeting information to call in U.S. air strikes if those local anti-Taliban forces get a good fix on exactly where Omar is John.
[King:] And, Barbara, do they believe Omar has a large group of men who would fight with him and any indications at all that perhaps the elusive Usama bin Laden could be hiding in this area as well?
[Starr:] Well, exactly. There are growing intelligence reports that Omar is there and that there are hundreds if not perhaps thousands of Taliban with him, that these are the Taliban who fled Kandahar several weeks ago when it fell and simply disappeared into the local village and countryside structure of Afghanistan. And there are even reports, some reports that Usama bin Laden might be in the same general area under the protection of the same Taliban forces. But senior Pentagon officials say these are just one set of intelligence reports and that they honestly do not know where bin Laden is at this point.
[King:] Obviously, the use of special operations forces, one of the most sensitive issues at the Pentagon. Any indication at all of how many about how many U.S. troops we could be talking about, whether this is, as in the past it has been, perhaps a mix of military special operations and perhaps CIA and intelligence officials as well?
[Starr:] Well, you're right. The Pentagon's very sensitive about any use or any discussion of special forces. We really do not know how many are involved. Typically, over the last several weeks of this conflict, it has been a mix. It's been Army, perhaps some Air Force, perhaps some Navy, and it has been CIA paramilitary operatives on the ground. There's really no reason to think that it will be any different in this case. It's likely to be a mix of people.
[King:] Barbara Starr, a fabulous new edition for us here at CNN over at the Pentagon. Thank you very much.
[Starr:] Thank you, John.
[King:] President Bush said it again today. Wherever they are, both Mullah Omar and Usama bin Laden will not escape justice. CNN's Kelly Wallace is with Mr. Bush at his ranch in Crawford, Texas and joins us now with a look at the president's day Kelly.
[Kelly Wallace, Cnn Correspondent:] Well, John, as you know, almost every time the president goes before reporters, the question comes up: Where is Usama bin Laden? And often: Where is Mullah Mohammed Omar? Well, today, no different. And Mr. Bush's answers the same. He did a short question-and-answer session with reporters here at the only coffee shop in the small town of Crawford, Texas. The president said there are no artificial deadlines here, that he remains patient, and he believes it is just, in his words, "a matter of time before the U.S. locates Omar." And Mr. Bush says the same holds true for the most wanted man of all, Usama bin Laden.
[Bush:] We're going to get him. And it's just a matter of when. You know, you hear all kinds of reports and all kinds of rumors. You know, you got people saying he's in a cave, people saying he's dead, people saying he's in Pakistan. And all I know is that he's running. And anytime you get a person running, it means you're going to get him pretty soon. And same with Mullah Omar. It's just a matter of time.
[Wallace:] And Mr. Bush also using this brief New Year's Eve appearance to outline what are going to be three challenges for his administration in the coming year. And the president sounding upbeat about handling all three challenges. Those include the campaign against terrorism where it goes from here, the economy, and also protecting homeland security.
[Bush:] And 2002, in my judgment, is going to be a great year. It's going to be a great year, because people are going to be able to find work again. It's going to be a great year because our military is going to do the job the Americans expect. It will be a great year because at home, we'll protect the American people.
[Wallace:] And on the economy, John, as you know, the president is expected in the coming days and weeks to continue to put pressure on the Democratically controlled Senate to pass a measure to help laid off workers and to stimulate the economy. Look for Mr. Bush to take that message on the road in the days and weeks ahead. And also, John, look for the economy to be a big focus of Mr. Bush's first State of the Union Address later this month John.
[King:] Kelly, about a year ago this time, I had a conversation with then President-elect Bush in which he said one of the mistakes his father made was when you build up political capital, you need to spend it. Any indication that as the president focuses on the economy, that he plans to be more specific, more pointed in his criticism of congressional Democrats, especially since with the dawn of the new year we will be in an election year?
[Wallace:] Well, definitely. We saw some of that stepped up criticism, John, in the last couple of weeks of December. We saw it in the president's radio address during the week of Christmas as well. Look for that to continue. And that's really going to be the message. The White House knows the president has a sky-high approval rating. The administration definitely looking forward to a couple of weeks while lawmakers are away in their districts for Mr. Bush to use the bully pulpit and to go ahead and to continue to put pressure on the Senate. John, you've heard the president say that as many as 300,000 jobs in his estimation could be at stake if the Senate fails to act. So look for the president definitely to step up the pressure. And as you know, John, White House advisers don't want the president to make the mistake his father made. Many believe he did not do enough to get the economy out of a recession in the early 1990s. So look for lots of attention on the economy in the weeks ahead.
[King:] All right, Kelly Wallace reporting from near the president's ranch in Crawford, Texas. And Kelly, remember the president said he'd be in bed by 10:00 tonight. We expect the same from you.
[Wallace:] We'll keep you posted.
[King:] All right. If 2001 has been a tough year for President Bush, the lingering fallout makes it likely the new year will be a major challenge as well.
[Bush:] First of all, I wish everybody...
[King:] One resolution: Eat your cheeseburgers, and this optimistic prediction.
[Bush:] 2002 is going to be a great year for America. And we will continue to pursue our mission in fighting terror. We'll work hard to make sure our economy rebounds. But most of all, the nation will continue to embrace the culture of compassion, which really flourished right after September the 11th.
[King:] The president faces a delicate balancing act in the new year. A year-end national survey by the Republican firm, Public Opinion Strategies, finds a distinct shift in the nation's political and emotional pulse. Asked whether they are more concerned about the economy or more terror attacks in the United States, a majority 53 percent of Americans now say it's the economy. Forty-three percent are more worried about terrorism.
[Bill Mcinturff, Republican Pollster:] Three months later, they are beginning to absorb what happened, and they're moving on. And there are a lot of other issues that concern them. They're concerned about the economy. They're concerned about healthcare costs. They're concerned about wanting a drug benefit from Medicare. And they're going to want to deal with those issues.
[King:] The poll found the public split when asked which political party has the best plan for fixing the economy. Forty-five percent say Republicans, 42 percent, the Democrats. And what about the nation's emotional state? Large majorities of Americans say they are still sad, angry, disgusted and outraged. Those numbers have not fallen much since late September just after the terrorist strikes.
[Stanley Greenberg, Democratic Pollster:] I think the country's changed. I mean, the question is whether it's sustainable over a long period. The people are you know, they're more reflective, they're more, you know, serious. They think about, you know, spending time with family, getting their own personal priorities right.
[King:] But there's also evidence that Americans are less anxious as 2001 gives way to 2002. A third or fewer of those surveyed reported feeling nervous, scared or depressed. That is a big improvement from late September just after the attacks. Joining us now to discuss the mood of the nation and how all this will affect the political battles of the year 2002, from Seattle, Democratic political consultant, Frank Greer. Frank, a happy New Year to you.
[Frank Greer, Democratic Consultant:] Happy New Year.
[King:] Let me begin by asking you this question. Back in 1991, 1992, you were a key player in a campaign that had the slogan, "It's the economy, stupid," that knocked the first President Bush from office after he came out of the Gulf War with sky high approval ratings. Some already trying to draw a parallel to this President Bush. Premature to make that assessment?
[Greer:] I think that this president has really learned the lessons of his father's failure to address the economy. And he's certainly talking a good line on the domestic front. He's talking about improving the economy and getting people back to work. I'm not sure that his policy prescriptions are going to fly, because if you look at any of the other polling and it was interesting the polls that you had there. Any of the other polling also says that his tax cut, most of which goes to the wealthiest individuals and reduces the tax rate for the wealthiest individuals, is not something the public supports. They don't think that's the way to get the economy moving. They'd much rather have something that says, "Let's provide unemployment insurance. Let's provide job training to help people get back to work." So it will be a battle, and I think at least he knows, unlike his father, that he has to address it, that even with sky high approval ratings, he cannot ignore the economy. If he does so, he does so at his political peril.
[King:] So you believe and in the spirit of the holiday season, give the president some free advice from the Democrats. You believe he must be specific and very focused on these domestic issues. You do not believe, as some say, that perhaps he should focus on the war, focus on homeland security, and perhaps leave the domestic agenda to the Congress, if you will. Let it be the president focusing on the war, that Congress will deal with the home front.
[Greer:] There were two elections this year for governor: one in New Jersey, one in Virginia. Voters made a very clear distinction. They elected Democrats in both of those races. They thought that the Democrats, each candidate McGreevey and also Mark Warner in Virginia had the best economic plan, the best plan to make America strong at home. And so they made a clear distinction. The support for the president in each of those states was at over 85, 90 percent. But yet, they decide that the Democratic candidate had a better prescription primarily on education, because education was the key issue before September 11th, education and job training, getting the economy moving were the key issues after September 11th. And the poll that you just shared with us said that people are much more concerned about their economic insecurity than they are about the threat of terrorism. The nation is indeed united behind the president around his war against terrorism. But here on the home front, they're going to be looking, I think, for policy prescriptions that really help workers, help people get back to work. And tax cuts for the rich, which is their primary prescription, we've already $1.6 trillion in tax cuts. It didn't seem to help. So I think most Americans are saying, "We don't need more tax cuts for the rich. What we need is some job training, some education, some real commitment." And it's interesting, the president did recognize that one of the last things he wanted to get through this session of Congress, John, was his education bill for national testing and for national accountability. And I think it's because he politically is very astute about realizing that education is the key issue for the future, not just fighting the war on terrorism.
[King:] And quickly, Frank, is there a risk for Democrats in this new season as they run if they're too critical of the president, that perhaps there will be a backlash? How do they walk that line? Criticize the Republican agenda, as you say, is an open field for them without being seen as criticizing a wartime president.
[Greer:] I think there's a risk for Democrats and a risk for Republicans as well. The risk for Republicans is that many in Congress are complacent thinking that the president is so popular, somehow, that's going to help their chances in the congressional races and the Senate race and the gubernatorial races. I don't think that's going to be the case. In Virginia and New Jersey, the two races that we worked on, proved that not to be the case. Now Democrats, I think, do face a real risk. And yet, Democrats have been able to unite behind support for the president's policies in the war against terrorism and still make a distinction on the domestic front on the policies they think are best for the country: improving education, providing job training, providing unemployment benefits, providing better healthcare for the American people. So I think that the public is going to trust Democrats on the home front if they offer real solutions to the real problems and provide for that kind of security, homeland security that has to do with their pocketbooks and their future.
[King:] Frank Greer, we will discuss this again with you as the election year heats up. In the meantime, thank you very much for joining us today.
[Greer:] Happy New Year, John.
[King:] Happy New Year to you, Frank. Take care. A very tumultuous year has ended. And though the date will change, the year 2001 can hardly be erased or forgotten. The country remains at war, both at home and abroad. And here on New Year's Eve, there's no end in sight. Months since September 11th, the clean up continues at the site where the massive trade center once stood. Among all the other changes this country has seen, the New York City skyline is among the most poignant. Still, some things are constant. And if it's New Year's Eve, that means New York City will find a way to celebrate, and much of the country will tune in to watch. CNN's Deborah Feyerick is in Times Square, the scene of much anticipation, and this year, much security Deborah.
[Deborah Feyerick, Cnn Correspondent:] Well, John, thousands of people have already begun to gather here at the crossroads of New York. That is Times Square where Broadway and 7th Avenue intersect. Let me show you sort of the crowds. You can take a look down there. You may be able to make out, they are all penned in there. Security here is very, very tight. In order to get into those pens, they are passing through a police checkpoint. The police are actually frisking several of the people who have come in. We understand there are also metal detectors at other entry points along here in order to get into this particular area. Now the barricaded pens all sectioned off. The police have gotten very, very good at crowd control. In fact, I think here in New York City, they really brought it up to the level of a science. I am joined now by Cristyne Nicholas, who is president and CEO of New York City, Inc. You said that compared to last year, the crowd is not as big. Explain.
[Cristyne Nicholas, Nyc Tourism Chief:] Well, it's not as big at this time, but we expect that by midnight, you're going to have about 500,000 people or so in Times Square. And there are a lot of parties going on all over the city, and I think there is a more reflective crowd this year. A lot of people are staying home or going to parties. There's a great race in Central Park at midnight which I'll be running. And the great news is that they have 5,000 people running, which his more than last year. So people are in the mood to, you know, ring in the New Year and move on and really I think it's wonderful, though, that we have such a crowd here today and that they are going to be reflective and honor those that have lost their lives on September 11th.
[Feyerick:] Now you have you're in charge of tourism here in the city, and you say that it is not actually doing too well right now. What is the situation?
[Nicholas:] Well, we're still down about 10 percent from where we were last year, and even more so when you look at the price point. New York City is probably the most affordable city right now to come visit. That's an invitation. But the bottom line is we're going to be losing a lot of money. We've already lost a lot of jobs. Tourism in New York City supports 300,000 jobs; it brings in $25 billion into our economy. So it's a serious industry and it is suffering.
[Feyerick:] OK, Cristyne Nicholas, thank you very much for joining us. And, of course, the reason it is suffering is because of the September 11th attack. This will be a very reflective New Year's Eve. As the ball goes up, it will have Waterford crystal on it. On that Waterford crystal, engraved are the names of countries as well as rescue organizations and flights of all of the victims who perished in the September 11th attacks. The mood here at Times Square decidedly patriotic. There will be red, white and blue balloons, also confetti and pom-poms. You may be able to hear a roar going up in the crowd just behind me as people get excited. The ball is actually going to be going up at about 6:00. And at that time, there's going to be a bell ringing ceremony across New York City. Those bells ringing in memory of the people who lost their lives here. Again, not as many people turning up, at least not at this hour as there usually is. Security is very, very tight, and that is underscoring the mood throughout this city. You have snipers on the rooftops. There are metal detectors, also, officers with radioactivity detectors just in case anything should happen. They will get wind of that very, very quickly and be able to take whatever steps and whatever measures are necessary. But you've got 6,700 police officers out both in uniform and also undercover. That in order to make sure that this celebration goes off without a hitch John.
[King:] Deborah Feyerick ringing in the New Year in Times Square. We'll check in with you as the night continues. Thank you very much. And let's check now stories making news around the world. It's already 2002 in Australia. About one million revelers gather at Sydney's harbor for a firework celebration billed as one of the world's largest. Officials decided to go ahead with the display despite a fire ban due to bush fires near the city. In Tokyo, thousands of balloons were released at the stroke of midnight to mark the arrival of the New Year. The New Year also was welcomed with 108 gongs of temple bells. Traditionalists believe each ring washes away a trouble for the upcoming months. China also welcomed the New Year with a countdown and fireworks. President Xiang Zemin marked New Year's Eve by counting the blessings of 2001. They include China winning the right to host the 2008 Olympics and becoming a member of the World Trade Organization. And thousands of people filled Moscow's Red Square to ring in 2002 with fireworks. Russian president, Vladimir Putin, delivered a New Year's address broadcast at midnight in each of the country's regions. He told Russians the years of chaos caused by the fall of the Soviet Union are now behind them. And just moments ago, New Year's comes to Syntagma Square in Athens, Greece, the site of next summer's Olympics. Count on CNN to bring you the complete countdown to 2002 this New Year's Eve. Coverage of the celebrations around the country beings tonight at 11:00 p.m. Eastern, 8:00 p.m. Pacific. In a moment, steps toward preventing war between India and Pakistan. And later, the future of the war on terror and the potential battleground of 2002. Also, a new year for New York. What pitfalls await the city's new leader? For the first time in weeks, there's a small sign of a thaw in relations between India and Pakistan. The leaders of two groups India accuses of attacking its parliament earlier this month are under arrest now in Pakistan. India says that's a step in the right direction. CNN's Michael Holmes has more from New Delhi.
[Michael Holmes, Cnn Correspondent:] Some significant developments here in New Delhi today. The first stems from Pakistan's arrest of the leaders of two groups which India says are responsible for the attack on the Indian parliament building on December 13th, the attack that left 13 people dead and sparked this current crisis. President Pervez Musharraf announcing the arrest on Monday of Hafiz Saeed. He's the leader of the Lashkar-e-Tayyaba organization, and that moves follows the arrest in turn of Molana Masood Altah. He is the leader of the Jaish-i-Muhammad group, another of the terrorist organizations placed on the international list. Several members in fact, we understand two dozen or so members of both groups also taken into custody. Everyone, of course, waiting for how India would react to the detentions. And today, after a meeting of the cabinet committee on security, the external affairs minister, Jaswant Singh, came out and in essence said that if true, this was a step in the right direction. In diplomatic speak, it was a significant thing. It was the first time we've heard some really positive comments from the Indian government that they approve of at least some of the moves made by Pakistan, although Mr. Singh did add that India fully expected that to continue to insist on the complete elimination of cross border terrorism in Jamoo and Kashmir. Finally, police here in New Delhi have just announced that they have arrested what they say is a member of the Lashkar-e-Tayyaba organization, one of those two terrorist groups. Arrested him at a bus terminal here in New Delhi. And according to police, carrying 4.5 kilograms of explosives, detonators and other equipment. They say that he was planning to disrupt New Year's Eve celebrations here in New Delhi tonight. Michael Holmes, CNN, New Delhi.
[King:] President Bush today praised Pakistan for, quote, "cracking down hard on Islamic militants" and said the arrests are a good sign. Earlier, Pakistan's foreign ministry spokesman said his country would be glad for a dialogue with India. CNN's Tom Mintier is in Islamabad, Pakistan and filed this report.
[Tom Mintier, Cnn Correspondent:] The crackdown against Islamic militant groups in Pakistan couldn't have come at a better time, at a time when tensions between India and Pakistan were at their height. The arrests of nearly 30 people in Karachi and the closing down of three offices of the Islamic militant groups couldn't have really basically prevented anything from happening, but it was something that India was looking for. And it was something that President Pervez Musharraf said he had as a high priority domestically here in Pakistan.
[Pres. Pervez Musharraf, Pakistan:] I would like to eradicate any form of terrorism from the soil of Pakistan. Now this was one purpose to take all the politicians along with whatever I want to do inside Pakistan to improve our domestic environment, establish the writ of the government, and avoid this extremism and intolerance in our society.
[Mintier:] On Monday at the foreign ministry, they were a bit cagey about the timing, saying that this was an ongoing campaign against terrorism and against the militants here in Pakistan, saying that it was something that they have continued to do and would continue to do. Along the border between Pakistan and India, tensions do remain high. Everyone is now looking forward to what might happen in Katmandu. A south Asian summit there will provide the opportunity if it is accepted for the two sides to get together and talk. There is already a possibility at the foreign ministry level that the foreign ministers of both India and Pakistan will sit down for a meeting there. But there are no promises made. Up higher on the heads of state level, it's quite possible that that meeting will not take place. President Musharraf, when asked if he would speak with Prime Minister Vajpayee, said he will sit across the table but he may be looking in another direction. Tom Mintier, CNN, Islamabad, Pakistan.
[King:] Tom Mintier is just one of many CNN reporters in India, Pakistan and the surrounding region. To see where our other correspondents are and what they're reporting, click on the "On the Scene" box at cnn.com. AOL keyword is CNN. Let's check some other stories from our news wire. Argentina's congress plans to convene tomorrow to decide who will lead the country after the resignation of interim president, Adolfo Rodriguez Saa. The man next in line for the presidency also quit. Officially, Rodriguez Saa is still in charge until congress accepts his resignation. Texas is ringing in the New Year with some wintry weather. Icy conditions created a nightmare for some drivers in the Lubbock area. The National Weather Service has issued a winter storm warning through the Panhandle today where temperatures are in the teens. And clean-up crews in Buffalo are spending New Year's Eve clearing more roads of more snow. About seven feet of the white stuff fell on the city since Christmas Eve, or about 90 percent of the average snowfall Buffalo normally gets for the entire winter season. More snow is forecast through New Year's Day. When we come back, we'll update today's developments including new word from our Pentagon correspondent, Barbara Starr, of a U.S. casualty in the war in Afghanistan. Also, where will the war take us in the year 2002? Later, a send off for a big city mayor and what his successor will need to succeed. In a moment: the future of the war on terrorism first, the latest developments. The hunt is heating up for the Taliban leader, Mohammed Omar. The United States says that rival militias are moving on a city about 100 miles north of Kandahar, where Omar is believed to be hiding. U.S. special forces are on the scene as well. President Bush says the country will remain on alert in the coming new year. In a chat with reporters in Texas today, Mr. Bush spoke of a new American culture the key word: vigilance. He also said the past year's hardships have made the country stronger. And the Pentagon says the target struck by U.S. bombers was a Taliban compound, not a village. A military spokesman says secondary explosions suggest the presence of weapons or fuel. Local Afghan witnesses claimed today the attack killed scores of civilians. We want to take you back to the Pentagon now for some late- breaking news about U.S. special forces under fire in Afghanistan. CNN's Barbara Starr is there. Barbara, what's the latest?
[Barbara Starr, Cnn Pentagon Correspondent:] Hi, John. The latest is that the Pentagon is confirming a U.S. special operations soldier was shot earlier today. It is a non-life- threatening wound. He is getting medical treatment. What happened was, a group of special forces soldiers were riding in a vehicle near Jalalabad. They came under enemy fire. They returned fire. And a quick-reaction force of other special forces quickly swooped in. And whoever was doing the shooting fled the scene John.
[King:] Barbara, any indication of that, of who was doing the shooting? Do they believe this was a pocket of Taliban forces or just some local militia, perhaps, unhappy with the presence of U.S. troops?
[Starr:] Well, they really don't know, because whoever was doing the shooting did flee the scene. But it could be either of those. There are pockets of Taliban resistance throughout the region. And, in that area, there are a lot of local people who are not thrilled with the U.S. presence.
[King:] And this in a very different part of the country from the operation we were discussing earlier near Baghran, perhaps the search for Mullah Omar this obviously elsewhere in Afghanistan. Nothing to connect the two, correct?
[Starr:] That is correct.
[King:] All right, Barbara Starr, with the latest from the Pentagon, thank you very much. Now, much of the fighting in Afghanistan is winding down, but the war on terrorism continues. To look at the possible direction the war could take in the new year, I'm joined by retired General Wesley Clark, the former NATO commander. General, nice to see you today.
[Ret. General Wesley Clark, Cnn Military Analyst:] Thank you, John. Nice to be here.
[King:] Indications the Marines will be switched out an announcement, actually the Marines will be switched out, the 101st Airborne going in. What does that tell us, anything at all about the focus of the military campaign on the ground?
[Clark:] Well, it says we are going to be there for some time in Afghanistan. And we are going to use Kandahar as a base for humanitarian assistance, probably a base for additional forces if necessary to come in, and maybe even opening it up commercially down there at the airfield. And that's what that task force in the 101st will be capable of doing.
[King:] A search under way, at this hour, in fact, involving some special forces from the United States, as well as local militias in the Baghran area, about 100 miles or so northwest of Kandahar, looking for Mullah Omar, some say perhaps even Osama bin Laden. What do we know about the territory there and the region there and any cooperation the United States would be getting from local militias? This, of course, being not Northern Alliance territory, but another part of the country.
[Clark:] We know that we have had contact, through our special forces, with tribes in the area. We know that some of these tribes are working with the special forces. We know others have been allied with the Taliban. We have got intelligence reports apparently that suggest that Mullah Omar may be there, perhaps even Osama bin Laden. And so now it's matter of reacting to the intelligence. That means going out there with forces on the ground, making sure you have got U.S. eyes and ears with them and the ability to bring in air support, if you need it. And then it will be the typical process, I think, of negotiation and thrust of bluff and threat back and forth as we go into this area. And we will see what is there.
[King:] It is often confusing, General, and it must be frustrating to the American people to hear: Well, Osama bin Laden might be dead. Perhaps he's alive and still hiding in Tora Bora. Perhaps he snuck into Afghanistan. Now we are saying perhaps he's in a completely separate part of the country hiding with Mullah Omar frustrating and confusing to the American people. What about as a military commander? Take us back through your experience. What do you do when you get such conflicting intelligence, that he is perhaps one place, he is perhaps another place? How does that affect how you plan and send troops into combat on the ground?
[Clark:] You have to have multiple capabilities to react to intelligence. And, in this case, we are using probably only a half- dozen U.S. special forces troops and the tribes that are mostly resident in the area to react to this. The commanders want to keep a very balanced disposition. They want to look very skeptically at all intelligence reports that come in. They want to look for confirmation of the intelligence before they react to it. They want to be able to react in a timely fashion. If it is very perishable intelligence, if it looks very credible, then we react in one way. If it is not as timely, not as credible, then we react in another. But the big thing is, keep the emotions on an even keel. Don't let the troops get frustrated. Don't let the command get frustrated. This is part of the day-to-day doing business in Afghanistan. And we are going to see a lot of these reports.
[King:] And if Mullah Omar is indeed hiding in this Baghran area, you say a process of negotiations. If he has a sizable contingent around him that is willing to fight to protect him, do you believe that the U.S. would send in more forces? And would the emphasis be on killing him or do they want him politically? Do they want him to be interviewed?
[Clark:] Well, I think that what has happened after 20 years of warfare in that country is that most people have learned that martyrdom is a bad choice. And so, if there is resistance there to the U.S. forces and their anti-Taliban allies, then more anti-Taliban tribes will come in and more U.S. capabilities will be deployed, probably airpower, because a few soft troops on the ground will probably be enough. And the show of the force of the airpower is going to be enough, I think, to persuade the pro-Taliban elements that they don't want to be the targets of those bombs. And so it will be a process of negotiations. Maybe there will be some shooting. But, ultimately, they won't want to die. And Mullah Omar will either surrender, or maybe he wasn't there in the first place. And no doubt, if he was, he will try to buy his way out. But that's what the negotiation has to prevent. And that is what the forces on the ground have to be strong enough and alert enough to stop.
[King:] CNN military analyst, retired General Wesley Clark, thank you for your thoughts today. And a happy New Year to you, sir.
[Clark:] Thank you.
[King:] Let's continue our look now at how the war may change in the new year. I'm joined here in Washington by defense policy analyst David Isby. David, let's pick up where the general just left off. Mullah Omar, if he is there...
[Isby:] Baghran.
[King:] Baghran what do we know about the terrain? And let's take a look let's show our viewers on the map, if we can, we are talking about an area here. U.S. Marines down here, but we're told they're not involved, that it is special operations.
[David Isby, Defense Policy Analyst:] Right, upstream from Kandahar. And this is an area, certainly, where there was one of Mullah Omar's first successes. In fact, the local headman is known locally as the "Mad Mullah," raised Abdul Wali. He is an old friend of Mullah Omar's. This guy has his own hard-line Islam. He will not breathe the same air as Westerners, even converts to Islam so very much a hard-core, fanatical kind of guy. He and Mullah Omar beat up their neighbor, Masim al-Kunzada in the Helmand Valley, who was another local ruler and a poppy grower back when the Taliban was just starting out. So he and the locals go way back, even though that is not where he himself is from. This has been always the second choice of where Mullah Omar might be hiding. The other alternative, and I think the more likely one, is
[King:] Well, if he is here, what are we talking about? Is this a place where he would be hiding in a residential area? Or are there bunkers and cave complexes like we saw in Tora Bora?
[Isby:] He has to have some sort of caves, some sort of resistance. There was a lot of resistance activity there in the war against the Soviets. So they probably built on that. You have to have a place for your water, your food. So he has got these static bases that he would probably operate out of one, rather than just specific caves. So it's not simply picking him off a street are or out of a house. He is likely in a more hardened facility.
[King:] And General Clark was talking about perhaps negotiating. You say madman fanatical people. Is this the type of crowd that would negotiate? Or do you think they would fight to the death for Omar?
[Isby:] The local leader may be his friend, but many of other people, like you said, in the Taliban have since come over. I don't know how much of his people would defend him. He may still have some of the Arabs who have been loyal to him in the past. They are likely to be fanatical. If he was in
[King:] A great deal of discussion over the past couple of months, as this military campaign unfold, is, this is a new war. This shows how the United States military and the intelligence communities need to adapt to the new world. In the last few days, we say Osama bin Laden might be in a cave. He might be in Pakistan. He might be dead. Now he might in Baghran. Is that evidence that there is still failures in U.S. intelligence or does that kind of confusion just come with the territory?
[Isby:] I think so. I certainly think finding one individual is always very hard. And, indeed, when we focus on one individual, even ones as dangerous as Mullah Omar or Osama bin Laden, we look we lose the larger picture, as happened in Somalia in 1992, when we demonized, in effect, Colonel Aidid, and set out to quote, unquote "get" Colonel Aidid, which undercut our overall policies. So it's very hard to find, as they say, one particular flee on the dog.
[King:] David Isby and we thank you for your thoughts again.
[Isby:] Thank you.
[King:] And a happy New Year to you, sir.
[Isby:] You, too.
[King:] OK. The change that will jingle in 300 million pocketbooks next: how Europe is counting on its new money. The new year will change the face of finance across much of Europe. About 300 million people start using the euro at midnight. There are twelve European nations in the euro zone. CNN's Richard Quest has more from Frankfurt, Germany.
[Richard Quest, Cnn Correspondent:] An ordinary pretzel that costs two euros: my first purchase with the new European single currency. With just hours to go before 300 million Europeans find a new currency available, so the final preparations are being made. Cash machines from Finland to Portugal and all points in between are being loaded with the new bank notes. Coins have been distributed, more than 50 billion of them. And, after midnight tonight, it will be the new currency that will be in use over the continent of Europe. That is except for Britain, Sweden, and Denmark, three European nations that have decided to stay out for the time being. Everything is expected to go smoothly. The preparations have taken years to put in place. Even so, no chances are being taken in these last few hours before the euro arrives. Richard Quest, Frankfurt, Germany.
[King:] Back in the United States, business people and tourists will also be bracing for Europe's new financial era. You can learn more about the euro by logging on to CNN.com. Take an interactive look at the new paper currency and coins and chart their value with the online currency converter. The AOL keyword, once again, is CNN. In stories on the "Newswire" today: Smoke continues to blanket Sydney, Australia, as more than 100 brushfires ring the city. People are being urged to remain calm as more than 5,000 firefighters and residents try to control the fires. The toll of a deadly weekend fire in Lima, Peru continues to rise as firefighters find more bodies today; 296 people are dead. And about 150 others were injured. As searches continue, the death toll is expected to rise. Exploding fireworks touched off the blaze Saturday. And a church group in New Mexico set a fire Sunday, burning books about Harry Potter, calling them Satanic. The Christ Community Church of Alamogordo also put other books and magazines on the fire. Protesters gathered across the street chanting, "Stop burning books." The city survived a terrorist attack and has also been hit by an economic recession. We'll look at what it will take for New York to recover and prosper next year and later, a unique tribute in Times Square. A live picture here you see New York mayor for a few more hours: Rudy Giuliani, this his final walk from city hall as the mayor of the nation's largest city Rudy Giuliani shaking hands here. You see key aides and supporters around him. He is mayor until midnight, this his final departure from city hall. You hear the chants, you see the hugs for the man who became a national political presence in this country in the wake of the September 11 attacks in New York. As we watch the mayor, let's bring in Joel Siegel. He is the senior political editor for the "New York Daily News." He joins us from New York. We are watching the mayor say goodbye here, Joel. What will his political legacy be for the city of New York?
[Joel Siegel, "new York Daily News":] Well John, I think his biggest legacy will be the fact that he showed New York is in fact a governable city. I think, when he came into office, there were real question whether there were just too many problems and the job was just too imposing, and that you elect a mayor to deal with one problem and then another problem arises, and the mayor is not able to deal with that. The mayor was able to sort of put faith back in city government. And nowhere is that more apparent than in the issue of crime and public disorder. The crime rate, of course, has gone done markedly under Mayor Giuliani. And the sense of disorder that had occurred in the city, of panhandlers, squeegee men, those problems, so-called quality-of-life issues, have been largely resolved on his watch.
[King:] And, Joel, does this mayor think he has a future in national Republican politics? He's a moderate, some would say a liberal Republican if you take him out of the city and the state of New York and put him out in the country. But, obviously, he has won national acclaim for his performance. Does he have his eyes on office outside of the state?
[Siegel:] Well, I think deep down inside he would he like to serve again. The question is where and when. Unfortunately for the mayor, there is nothing available here in New York. Both Senate seats are filled for now. And Chuck Schumer is not up for another two years. He is pretty popular. Hillary Clinton has four years. Government Pataki, a Republican, is running for reelection next year. That would be a logical step for the mayor. So, right now, when he is hot, politically speaking, there is no place for him to go. And he has always had sort of an up-and-down relationship with the national Republicans. He is more to the left on many of the social issues that are of concern to national Republicans. And many Republicans still are, let's say uneasy by the fact that he endorsed Mario Cuomo, the Democratic liberal governor, back in 1994. I think many people sort of have gotten over that, but right now there is no place for him to go.
[King:] A larger-than-life figure, if you will. You see him shaking hands, hugging here as he exits.
[Siegel:] Right.
[King:] Joel, what about the future for New York? Let's start, No. 1, with the man who, in a few short hours, will be mayor, Michael Bloomberg. What awaits him?
[Siegel:] Well, I think the biggest problem is fiscal. New York City faces a budget deficit estimated at about $4 billion for the year that begins July 1. The economy is a problem in New York state and throughout the nation, but it's a particular problem in New York City. First of all, the September 11 attacks basically evaporated thousands of jobs that have not yet come back. Many companies have temporarily left the city for New Jersey, Connecticut, and the New York suburbs. And, secondly, tourism is way down. And that's also an important and vital source of revenue for New York City. So the economy is really going to be mayor-elect Bloomberg's biggest challenge, I believe.
[King:] A wave again there from Rudy Giuliani, as we watch him exit. Joel Siegel, some politicians, though, benefit from low expectations, President Bush, for one. Many, when he came to Washington, thought perhaps he was not up to the job, period, and was a governor with little experience in international affairs. Now he gets high marks. Any sense in New York that perhaps Michael Bloomberg again, as we watch the mayor here go by an honor guard any chance that they think Michael Bloomberg might benefit from low expectations, if you will?
[Siegel:] Well, absolutely. That is a very good point. You know, we know less about the new mayor coming in than I think any political figure that we have elected here in New York, whether it's state or local. Michael Bloomberg was a newcomer to the political scene. He was a largely unknown businessman, a wildly successful businessman, but unknown to the general public. And his image during the campaign was largely shaped through carefully choreographed TV ads, which put him in the best possible light. He can't rely on that now when he takes office. It's sort of him the real Michael Bloomberg is going to emerge. And we are not quite sure what that will be. He was elected in part because he was a businessman, is a businessman, and people think that New York needs a businessman right now to deal with the economic problems. So, if can he deal with those problems effectively, that's to his credit. If he can't, it's to his detriment. And, of course, one issue is that a lot of the economic problems are really beyond the reach of a mayor to deal with. They are state in scope or national in scope.
[King:] We just saw the mayor give a high-five to his police commissioner. Joel Siegel, senior political correspondent for the "New York Daily News," thank you for your thoughts and insights on the farewell, if you will, of a man who has become a national figure, as well as the New York City mayor, Rudy Giuliani. You see him there, his last walk out of city hall as mayor of New York, ending his two terms as mayor, ending his tenure at a time of crisis for his city and the country. Let's go now to New York back to New York and get a preview of "LOU DOBBS MONEYLINE," which begins at the top of the hour. Jan Hopkins is sitting in for Lou Jan.
[Jan Hopkins, "lou Dobbs Moneyline":] Thanks, John. Coming up "
[Moneyline":] thousands of law enforcement officers, including sharpshooters on rooftops, in a high state of alert in New York's Times Square this evening. We will show you celebrations in Paris, Berlin and, of course, Times Square. A U.S. special operations soldier is shot in Afghanistan. And the Pentagon believes it may have a lead in the search for the Taliban's notorious leader. We will go live to the Pentagon. And the new year also brings about a significant change in the way 12 European countries will count their change that and much more straight ahead now back to John King in Washington.
[King:] In a moment: the countdown in Times Square that will not ring in the New Year. Just moments from now, bells will begin ringing throughout New York City to remember the people who died in the September 11 attacks. That's all the time we have on this edition of WOLF BLITZER REPORTS. I'll be back in one hour with the "War Room." Author David Halberstam, "Newsweek"'s Evan Thomas and former White House aide David Gergen join me. That's 7:00 Eastern, 4:00 Pacific. I'm John King in Washington a happy New Year to you. CNN's coverage of America's new war continues now with "LOU DOBBS MONEYLINE," which begins right now.