[Paula Zahn, Cnn Anchor:] And thank you all for being with us tonight. Appreciate your dropping by. There is breaking news tonight in the Middle East crisis, stories that may have major repercussions. Before our "Top Story" coverage goes in depth, here are the very latest war bulletins, starting with an attack on a U.N. observation post. It happened in southern Lebanon. At least two U.N. soldiers are dead tonight two more feared dead as well. Israel says it does not target U.N. personnel and will investigate. But, as we speak, the finger of blame is pointing directly at Israel. U.N. Secretary-General Kofi Annan says the attack apparently was deliberate, and came despite personal assurances from Israel's prime minister that the observation post would be spared. We can't remember Kofi Annan being this angry lately. Another war bulletin just minutes ago, Hezbollah's leader, Hassan Nasrallah, went on Lebanese TV to issue an ominous new threat. He says, the conflict is about to move into quote "another stage beyond Haifa." At least 96 Hezbollah rockets hit Israel's northern cities today. Hezbollah may have even longer-range rockets to unleash on Israel's bigger cities, which are further inland from Haifa. Now, all this comes as fighting intensifies in southern Lebanon. Israel's military says it has taken a Hezbollah stronghold, killing a senior commander and 20 to 30 guerrilla fighters. Tonight, we have live reports feeding into our control room from Beirut, Jerusalem, and northern Israel. Let's get right to the breaking news out of Lebanon, the deaths of at least two U.N. observers. The U.N. says it happened during an Israeli bombardment. John Roberts joins me live now from the Lebanese-Israeli border the Israelis saying that they find Kofi Annan's rather rapid response objectionable. They're insulted by it. And they said, let's have an investigation here John.
[John Roberts, Cnn Senior National Correspondent:] That's that's because the Israelis certainly do not want to be seen as targeting U.N. personnel deliberately. They say that they're trying to take every precaution to make sure that non-combatants don't get caught up in the crossfire. But it is very difficult, with the level of bombardment that we have been seeing over the last few days, particularly tonight, here at this artillery battery, for innocent bystanders, non-combatants, to get caught up in the in the crossfire. As we understand it, the nationalities of these members of UNIFIL, which is the United Nations Interim Force in Lebanon, were Austrian, Finnish, Canadian, and Chinese two of them dead, two of them injured, apparently buried in the rebel of that outpost. The United Nations, at this point, is not saying which of the four were the ones who are dead, Austrian, Finnish, Canadian, or Chinese Paula.
[Zahn:] Do you have any better understanding tonight of exactly what happened during this bombardment? Any other details?
[Roberts:] It is impossible for us to get any other information, other than what we're provided by the Israeli Defense Forces. The reason for that is that, even though we have been asking for days now, the Israeli Defense Forces will not allow us across the border. They have been saying that they have complete control over the town of Maroun al la-Ras or Maroun al-Ras, rather and Bint Jbail, which is a little bit further north of that. And we're saying, well, you have got control of these towns. When can you take us in and see them? So, with no with no impartial observers on the other side of the firing line, Paula, it is impossible for us to know exactly what went on.
[Zahn:] All right, John, if you wouldn't mind standing by, we are going to come back to you in a moment, and bring Wolf Blitzer into our conversation now. He's anchoring "THE SITUATION ROOM" from Jerusalem. He will be there all week long. Wolf, I want to remind our audience of exactly what U.N. Secretary-General Kofi Annan had to say about the deaths of the U.N. observers. Here is the statement. In it, Annan said he "was shocked and distressed by the apparently deliberate targeting by Israeli Defense Forces of a U.N. observer post in southern Lebanon, despite personal assurances given to me by Prime Minister Ehud Olmert that U.N. positions would be spared Israeli fire" an unusually strong statement from the secretary-general, and an unusually strong response from the Israelis. What are they telling you tonight about this charge?
[Wolf Blitzer, Host, "the Situation Room":] It is an explosive charge that Israel deliberately, at least apparently deliberately, tried to kill these United Nations observers. Unclear what Israel's motive might have been, if, in fact, that is true. But the Israeli government is responding very, very angrily to what Kofi Annan alleges the Israeli ambassador to the United Nations, Daniel Ayalon, coming into THE SITUATION ROOM, just moments ago, and and saying that it is deplorable, this knee-jerk reaction, in effect, he says, from Kofi Annan, before any investigation has been completed. On the circumstances, he says it is unclear who killed these United Nations observers. It could have been Israel. If it was Israel, it was a mistake. But he then goes on, and he raises the possibility it could have been Hezbollah itself. The UNIFIL, the United Nations Interim Force in Lebanon, which, ironically, is supposed to end its mandate in Lebanon by the end of this month, Paula, UNIFIL, in its original statement, blamed aerial bombs for the targeting of this U.N. position in south Lebanon. And the only ones who have aerial bombs right now in this war, if he means bombs coming from warplanes, that would be Israel. So, it is a really ugly situation, and, of course, heart-wrenching that four innocent United Nations military personnel from four different countries may have been killed Kofi Annan, in that statement, saying two they confirmed dead, two more feared dead, Paula. So, it is it's not a pleasant situation...
[Zahn:] And, Wolf...
[Blitzer:] ... for any of the parties concerned.
[Zahn:] ... UNIFIL has added to that, saying that they believe that Israel continued to fire at close range even during the rescue operation, after the initial airstrike. We will continue to follow this throughout the hour, as new details become available. Wolf, see you a little bit later on. And I will also be speaking with a top Israeli diplomat here in the U.S. and ask him what happened. Right now, let's go quickly back to John Roberts, who is standing by on the front lines, where it is just past 3:00 in the morning, Israeli time. And Israeli forces continue their intense bombardment of southern Lebanon John.
[Roberts:] Paula, the guns have gone silent for the moment. It is the first time in the last four hours that they have. It has been an intense night, and now morning, of bombardment here at this artillery battery. Here is the intent of of of this crew. What they're trying to do right now is keep Hezbollah pinned down, trying to soften up Hezbollah positions, so that the ground forces, the Israeli ground forces on the other side of the border, can move forward, can attack those Hezbollah positions, can can move, not with impunity, certainly at this point, because Hezbollah still remains a very viable fighting force, but certainly allow themselves to move forward with least resistance as possible. On the ground today in Lebanon, the Israeli Defense Forces did claim a significant victory. Bone-tired and covered in dirt, soldiers return from the front lines, waving a captured Hezbollah flag. And, after two days of what he described as intense house-to-house fighting, their young commander made this pronouncement.
[Brigadier General Gal Hirsch, Northern Front Battle Commander, Israel Defense Forces:] The battle is going quite good. In the last few hours, actually, we took total control on the city of Bint Jbail.
[Roberts:] But taking what the Israeli army claims was Hezbollah's southern stronghold does not eliminate the danger. More Katyusha rockets fell in the Israeli city of Kiryat Shmona. The missiles ignited brushfires that burned across the hillsides. Crop-dusters, modified to carry fire retardant, swept in low to put them out. A number of missiles also hit Haifa, Israel's third largest city, causing a number of injuries. The rockets were among 96 that Hezbollah fired into Israel. And, in a staging area along the border, one soldier narrowly escaped death, when Hezbollah got off a lucky shot with a mortar that turned out to be a dud. We wanted to talk with soldiers about the battle. Army rules, though, prevent them from speaking to us without authorization. It was clear from their faces and posture that the fighting was difficult. But, rested and refueled, they're eager to get back to the battlefield.
[Unidentified Male:] No talking. [on camera]: No talking, just making coffee.
[Unidentified Males:] Yes.
[Unidentified Male:] Exactly.
[Roberts:] And, late into the evening, the Israeli army opened up a new front in its campaign, firing shells into Shiite villages north of what is called the Galilee Panhandle, not far from the Israeli town of Metulla, parts which of are now declared a military zone. All along the border, the guns are firing, a nonstop, 'round-the- clock effort to soften up Hezbollah positions. The ground forces could move forward to capture more territory. Completing the operation will not be easy. Hezbollah is dug in deep, says General Hirsch, well-trained and well-financed. He has never seen any terror organization so well-prepared.
[Hirsch:] It will take time.
[Roberts:] A week?
[Hirsch:] And...
[Roberts:] Two weeks?
[Hirsch:] I don't know, sir. It will take time, because we intend to dismantle Hezbollah infrastructure, because you can see that there is no peaceful life in almost all Israel.
[Roberts:] Israel's defense minister, Amir Peretz, said that it is Israel's intent to hold ground in Lebanon until an international stabilization force can be brought in. Paula, there isn't even any agreement to bring in an international stabilization force yet, which means that Israeli troops are going to remain on the ground in Lebanon for some time, even after the fighting is over Paula.
[Zahn:] Yes. And it doesn't seem like anybody wants to volunteer for that international stabilization force as well a lot of countries saying: We don't want in. John Roberts, thanks. And we are going to get more on the military situation tonight from our own "Top Story" military panel. Meanwhile, though, Israel resumed airstrikes on Beirut today plus, a late development from Hezbollah's leader. Let's go straight to Beirut, where we find senior international correspondent Nic Robertson. Nic, what is the latest?
[Nic Robertson, Cnn Senior International Correspondent:] Well, Paula, it was a half-hour speech by the Hezbollah leader, Hassan Nasrallah. In that speech, he warned of an escalation in Hezbollah's campaign against Israel. He said the war was entering a new phase, a phase that would go beyond Haifa. This is something he spoke about in a speech about a week ago. It is meant or it is interpreted as meaning, here in Lebanon, at least, that Hezbollah will fire missiles on Tel Aviv. That indicates firing missiles of a longer range than have yet been used against Israel, if Hezbollah is capable of it. That's what the leadership of Hezbollah appears to be threatening there, also threatening he also said of going beyond beyond Haifa, at a time and a place of Hezbollah's choosing, again, indicating that they will perhaps ramp up their attacks, even further than this latest escalation. And he told the he told the people watching Lebanese television tonight that the terms of the cease-fire offered by U.S. Secretary of State Condoleezza Rice were humiliating the were humiliating for them, and that they certainly wouldn't be accepting them. And the late this afternoon, after just almost two days of all relative norm normality inside Beirut, the bombs here began to fall again.
[Robertson:] For 24 hours, it had almost been normal in Beirut, 24 hours without bombing. That ended with a massive Israeli airstrike. Huge clouds of smoke rose from Hezbollah's heartland in the southern suburbs of the capital. At the same time, details reached Beirut of the grinding Israeli advance northwards, into Lebanon the mountain village of Maroun al- Ras taken Bint Jbail, three miles, five kilometers, over the border, a town straddling a strategic crossroads, taken. But what is next? Lebanese military sources suspect, Israel intends to advance much farther, another 20 miles north, across the Litani River, into the town of Nabatiyeh, before west to the coast and the port city of to Tyre...
[Unidentified Male:] Hezbollah rocket. Hezbollah rocket.
[Robertson:] ... where Hezbollah still fires rockets at Israel. It is a military operation that, at this rate, could take weeks in the path of that potential advance, this house in Nabatiyeh, where Lebanese officials report seven civilians were killed when it was hit in an Israeli airstrike. And, in nearby Tyre, the injured and displaced continue to flood in from the nearby villages and towns, desperately into need of relief supplies. In Beirut, those supplies began arriving U.S. helicopters bringing enough emergency medical kits to supply 20,000 people for three months, the leading edge of a $30 million American aid program to south Lebanon.
[Unidentified Male:] There is a humanitarian crisis here. We want to address that. The U.N. has appealed to people, to nations, people for support. We want to support that appeal.
[Robertson:] The U.S. aid is being handed over to the International Red Cross to distribute as they see fit. Initially, it is going into storage, mindful that, in the last few days, the Lebanese Red Cross had vehicles hit in Israeli strikes. Well, right now, the Red Cross officials are telling us they're going to leave the medical supplies in that warehouse, until they can get those security guarantees that they can drive the aid safely down to the safe of south of Lebanon, where it is needed Paula.
[Zahn:] Nic Robertson, thanks so much. And we have got a lot more ahead for you tonight on tonight's "Top Story," including the ultimate test for American diplomacy. Can the U.S. help put a stop to the violence? The urgent search for a cease-fire after two weeks of bloodshed, finally, America's top diplomat has a plan to end the violence. But will anyone else agree? Israel has the manpower and the airpower, one of the most fearsome armies on Earth. So, why is Hezbollah still so fiercely fighting? Coverage of our "Top Story," crisis in the Middle East, continues right after this.