updated 11/11/2005 10:19:32 AM ET 2005-11-11T15:19:32

Guest: Evan Thomas, Richard Durbin, David Frum, Jane Mayer

CHRIS MATTHEWS, MSNBC HOST:  Want someone to blame for the bad intel that got us into Iraq, the bogus claims, the shaky sources, the talk of mushroom clouds?  Here's Ahmed.  That's Ahmed Chalabi, back not by popular demand, but for mutual purpose.  With the same folks he used and used him to ignite a war that most Americans now believe was not worth the cost.  Let's play HARDBALL.

Good evening.  I'm Chris Matthews. 

Ahmed Chalabi, the long-time traveling salesman for the Iraq war is back in the U.S. this week.  This time, as a candidate for prime minister. 

Tonight, we resume our HARDBALL special report, going inside the CIA leak investigation.  We'll have an in-depth look at Chalabi's role in giving the U.S. bogus intelligence in the lead-up to the war.  It was just 18 months ago that American forces stormed Chalabi's Baghdad home and accused him of conspiring with Iran. 

Now he's in Washington meeting with the vice president, the secretary of state, and the secretary of defense.  We will have much more on Chalabi later in the program, as well as the latest on Scooter Libby's defense fund, Karl Rove's fate, and abysmal poll numbers for President Bush. 

But first, let's get the latest on Wednesday's al Qaeda suicide bombings in Amman, Jordan, that killed dozens and wounded hundreds more. 

Roger Cressey served on the national security council under both President Bush and President Clinton.  And Andrea Mitchell is NBC's chief foreign affairs correspondent.  I'm going to start with Andrea.

Who did this dirty work in Amman?

ANDREA MITCHELL, NBC CHIEF FOREIGN AFFAIRS CORRESPONDENT:  There's really very little question according to U.S. intelligence that it was al-Zarqawi, Abu Musab al-Zarqawi, who is the top leader of the insurgency, and had been warned by al Qaeda leaders.

In fact, by al-Zawahari, the No. 2 to Osama bin Laden, only last July in a letter, that was intercepted by American intelligence, warned to start using Iraq as a base, to spread out to other areas, such as Jordan, Lebanon, Saudi Arabia, and other neighbors of Iraq. 

So, that is the most likely person, according to his own claim of responsibility on a Web site.  That's what U.S. officials at least believe to be true. 

And now today, Chris, we are learning of yet another really awful outcome from this.  Not that any of the deaths are not important, but key Palestinian leaders are also among the dead.  The head of Palestinian intelligence and other Palestinian moderates working with Mahmoud Abbas were in the hotel bombings. 

MATTHEWS:  Well, that brings up the whole question of the identity of al-Zarqawi.  Let me go to Roger Cressey.

Roger, this guy grew up in a Palestinian relief, refugee camp near Amman.  He obviously has that Palestinian mentality.  He is now based in Iraq. 

What has changed here in his role?  It looks like to me like a couple of things.  He has united with bin Laden now.  He has a base of operations where he can move freely.  We can't catch him in Iraq, and he now is able to bring that trouble in Iraq into Jordan. 

ROGER CRESSEY, MSNBC TERROR ANALYST:  Well, what's changed, of course, is that Iraq is now a base of operations for him.  He was a localized thug leading up to the Iraq war.  We knew about him in the late 1990s. 

But now he has a global following.  But more importantly, he has an operations capability in Iraq, which allows him to recruit, to train people, to conduct operations in Iraq, and now obviously outside. 

And the Jordanian operation is something he has been trying to do for years now.  And now, of course, he is successful.  This is going to allow him to generate even greater support in the Sunni extremist movement, and allow him to generate greater support from fund raisers, as well as potential recruits. 

MATTHEWS:  So Andrea, the unintended consequence of us going into Iraq is, this guy now has a nest, right? 

MITCHELL:  Absolutely.  We have not heard on video from a fresh statement from Osama bin Laden in more than a year.  We have heard, of course, from his deputy, al-Zawahiri, in messages that have been deemed contemporaneous, current messages.

So bin Laden is, if still alive, is less operational and al-Zarqawi becomes the leader of terror threats world-wide.  He now has become a much more potent fact and certainly a threat to U.S. forces there, and also U.S.  allies around the region. 

MATTHEWS:  Roger, the president has promised, and many people have made this case, to support the war in Iraq, it will allow us to fight them, as they put it, over there rather than here. 

It seems like there's no real border on the potential of al-Zarqawi's actions here. 

CRESSEY:  That argument is flat-out wrong, because it assumes there's a limited gene pool.  That if you kill one, we have reduced the overall numbers. 

No, there have been more that have been created since we have gone into Iraq, No. 1. 

No. 2, this global Sunni extremist movement has been revitalized by the Iraq war.

And No. 3, Iraq is now a strategic opportunity for people like al-Zarqawi, but also for the core al Qaeda leadership who see in Iraq an opportunity that's instability, to ultimately overthrow the Iraqi government and begin the process of creating the Islamic caliphates that al-Zawahiri talks about in his letter to al-Zarqawi. 

Moreover, the operational tempo of the Sunni extremist movement has been very high in recent years.  We have had attacks in Europe, the Middle East, Africa and Asia.  Thankfully, we have not had one in the United States, Chris, but there's been a lot of death and destruction overseas. 

MATTHEWS:  Andrea, before the war, there was a separation, at least in method, and perhaps in philosophy between Iraqi people, the people under Saddam Hussein, and the al Qaeda religious zealots. 

MITCHELL:  Exactly. 

MATTHEWS:  Where was al-Zarqawi in that?  Is he closer to Saddam or was he closer to bin Laden, or was he totally separate? 

MITCHELL:  He was really his own operator.  He had, well, actually, after the war, he was responsible for the assassination of American diplomat Lawrence Foley in Amman. 

He was really, as Roger is suggesting, a localized thug.  Jordanian background, but now, as a matter of convenience or a marriage of convenience, he is certainly now associated with al Qaeda.  And more closely associated with al Qaeda than Saddam Hussein. 

MATTHEWS:  So he is one of the people, thugs or otherwise, who have taken advantage of the craziness going on in Iraq to go in there and establish a base where we can't catch him.  What is the latest on our sense of where he is there, Andrea? 

MITCHELL:  We don't have a real sense of where he is.  I think he moves around rather freely and has enough loyalty inspired among the insurgents, and probably among some of the Saddam loyalists as well, who are rallying around him now because he is such a potent force against the United States. 

MATTHEWS:  So now there's a unification going on between bin Laden's troops, bin Laden's forces, in this case, al-Zarqawi who has joined that movement, and the insurgent forces.  The people in the country of Iraq itself, which simply don't like the invader, us, coming in. 

MITCHELL:  Sure.  It's an alliance of previous rivals or enemies who can come together against the United States because of how we are perceived now, at least from these rejectionists and insurgent groups. 

al-Zarqawi is far more secular, of course, than Osama bin Laden, so they don't share any of the religious fanaticism or very much of very much of the religious fanaticism. 

He is also now clearly, if he is indeed, responsible for this, it's clear that he is attacking Palestinian targets, Palestinian moderates.  There were very few Americans victims in this bombing and that suggests that another part of their operation is to attack the growing negotiations, the crucial timing of these negotiations between Israelis and Palestinians, which are really at a key moment now. 

MATTHEWS:  Roger, why don't people call this guy a Palestinian?  Why is he constantly referred to, al-Zarqawi, as a Jordanian? 

CRESSEY:  Jordanian by birth, and so has...

MATTHEWS:  You mean he was born in the country of Jordan. 

CRESSEY:  Exactly. 

MATTHEWS:  But he is a Palestinian, grew up in refugee camp.  His mentality, and I think we may be getting at something.

Andrea says some of the targets of bombing yesterday were Palestinian moderates trying to bring peace between Israel and the Palestinian people. 

Here's a guy who clearly doesn't want that peace to happen. 

CRESSEY:  Well, you got to step back with al-Zarqawi.  Now that he has greater capability and greater respect within this extremist movement, he is going to try and pursue more ambitious agenda. 

Overthrowing King Abdullah and the Hashemite monarchy has been one of his core objectives for years now, to the extent that he can do anything that further undercuts the ability of Jordan and Israel, to conduct relations, or do anything to complicate the Palestinian-Israeli peace talks.

As Andrea mentioned, he is going to do that.  But his job, No. 1, still is to destabilize Iraq, destabilize King Abdullah in Jordan; and in the process, kill as many Westerners and Americans as possible. 

MATTHEWS:  Was the  United States invasion of Iraq and the situation we created there the best thing that ever happened to this guy? 

CRESSEY:  I think it's given him an opportunity that he has taken advantage of.  Much like many people in al Qaeda have taken advantage of.  The problem is, as you said, Chris, is unintended consequences. 

We set in motion a series of events that frankly we have no control over anymore.  Even after Iraq is stable, even after the U.S. military leaves, this network that al-Zarqawi has created, the bin Laden network and the Sunni extremist movement, will still be around.

So that we are going to have to deal with the ramifications of this for literally years to come. 

MATTHEWS:  Have we made the term Arab unity real? 

CRESSEY:  Well, I think there is still a division within the Arab world.  There are some people who really argue that what al-Zarqawi and his people are doing is fundamentally wrong. 

The problem is, those voices are not strong enough.  We also have a number of people who believe that this is part of a process that should be pursued, which is dealing with these corrupt, in their view, regimes in the Arab world that support the U.S., that keep their people down. 

And as a result, don't follow the true tenants of Islam.  Our challenge, then, when we talk about the war of ideas, is how do we give support to the voices of moderation in a way that doesn't automatically make them tarnished by association with the United States?  It's a real difficult job. 

MATTHEWS:  Boy, it's subtle too.  Thank you very much Roger Cressey. 

Andrea Mitchell is going to be staying with us for awhile on HARDBALL.

Coming up, the president's sagging poll numbers, and what he has to do to turn them up. 

And later, inside the CIA investigation.  We are going to keep looking at that and some of the bogus intelligence came from Ahmed Chalabi.  He told members of the Bush administration what they wanted to hear to get the war started.  You're watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  At President Bush's request, White House staffers took ethics classes this week.  Karl Rove, who remains under investigation in the CIA leak probe, was one of the staffers in the so-called ethics refresher. 

Meanwhile, we learned that staffers are free to contribute to Scooter Libby's defense fund, even though their boss, Andy Card, asked them not to have any contact with Libby himself.  Andrea Mitchell is NBC's chief foreign affairs correspondent, Evan Thomas is assistant managing editor of “Newsweek” Magazine.

Evan, so let me get this straight, they are taking ethics classes in the wake of the investigation but they are not to have any contact with Scooter Libby, who is the first indictee, maybe the last, but they are allowed to contribute to Scooter's defense fund.  How does that work?  How do you get the money to Scooter him without talking to him? 

EVAN THOMAS, NEWSWEEK:  In an envelope. 

MATTHEWS:  What are they trying to do there?  Is it part of this pretense, and part of it defense? 

THOMAS:  It's easy to ridicule. 

MATTHEWS:  Yeah.  I think I just did.  Because it does contain both elements of apology—in other words, we're going to teach everybody here ethics, at the same time, we are all going to lawyer up Scooter to make sure he doesn't get hurt. 

THOMAS:  The basic mode of the White House has always been never complain, never explain.  It's an unnatural act for them to do anything that's defensive or apologetic.  And so this is the first time they have even tried to do anything defensive.  And I don't think they are very good at it.  I mean, it's not in their nature. 

MATTHEWS:  Why traffic school?  Why are they going back to school?

THOMAS: rMD+IT_rMDNM_ It sort of sounds silly and pathetic.  And I don't think it's in their nature.  They're nature is to just be defiant and go about their business and to say to heck with you and everybody else. 

MATTHEWS:  There's a funny column today by Chris Buckley in “The New York Times” today, Andrea, sort of—a wonderful satire on the idea of Karl Rove attending ethics class.  I mean, what do you think of this?  Is this something the White House hopes that we will take seriously?  Are they taking it seriously?  Do they really mean it?  Has the president said, we are going to lay down the law around here, no leaking to the press stuff you shouldn't be leaking, it's illegal.  We are going to clean up Iraq.  Is that what's going on? 

MITCHELL:  Well, I think they want to be able to say that they have told people to follow the rules and take these ethics classes.  Chris Buckley is a  very good satirist.  And there's a lot to satirize here. 

But the fact is that Karl Rove still has his security clearance.  He is giving a major speech tonight.  He is still at White House events.  He is still operating as though he is not under suspicion, and still under threat of some sort of legal action.

So the president clearly does not want to separate himself in any official sense from Karl Rove.  And there's a great deal of affection from those who know Scooter Libby for Scooter Libby.  He was a very important player, as you know, inside the White House. 

So there's mixed feelings.  You know, these people worked closely together for many, many years.  And they are certainly not cutting them loose. 

MATTHEWS:  Let me ask you about loyalty within this administration.  George Bush is noted for his loyalty.  He only fires people when it's really good P.R., like firing Lindsey, and O'Neill from the economics beat over there at the White House.  Is the lobby strong, up or down?  I see Scooter Libby is facing 30 years.  He may not serve.  But he hasn't talked yet.  He is not saying who gave him orders, even though the record shows he did get orders from the vice president.  Not only did he get the name of this undercover agent, Valerie Wilson, but he was told what to do with that information with regard to the press, but he ain't talking. 

THOMAS:  And I bet you he never does.  I mean, maybe he would testify at his trial, but I would be shocked, if he made a deal and tried to roll over on Cheney.  For one thing, I doubt there's anything really to roll over on. 

MATTHEWS:  But Cheney would be the star witness, the way the prosecution has been set up here. 

THOMAS:  That's true.  We could easily see Cheney on the stand unless there's some executive privilege thing I don't understand. 

MATTHEWS:  Let's start with the president of the United States.  I've got to get on to politics.  Andrea, you can start. 

We saw in election, Virginia the other day, I think it was going against the Republican candidate before the president weighed in, and I think he went in there at the last minute, maybe helped out the Republican candidate in the end, because if you look at the numbers the upticked at bit in terms of actual turnout. 

He may have helped a little bit, but he lost.  And he is going to take the hit for that.  Is that fair? 

MITCHELL:  Well, it's not entirely fair because that was a really badly run campaign.  But this was a candidate who chose some issues that just didn't play well, even in a red state.  And in fact, the president's desire to go after a dreadful trip in Latin—South America showed that they felt it was important for him to at least show the flag even at the last minute. 

Look, there could be another practical explanation, by the way, for ethics classes.  Look at the NBC News poll—the NBC News/Wall Street Journal poll, 8 out of 10 people said that the charges against Scooter Libby are serious.  An extraordinarily large number, more than 60 percent, knew who Scooter Libby was.  This is unprecedented for a vice presidential aide. 

This is beginning to have an impact.  The numbers on George Bush in terms of his competence, in terms of his appointments, even with the relative success of the Alito nomination coming after Harriet Miers, this is all going very negatively for them.  So they needed to do something.  These poll numbers are really pretty dreadful. 

MATTHEWS:  The poll number jumped out at me that 80 percent of the people believe other people besides Scooter Libby were involved in this underhanded behavior. 

THOMAS:  I think people always assume the worst.  But there's a big difference between what people assume and what you can prove in a court. 

MATTHEWS:  No, they believe in it. The believe, and doesn't the White House have advantage in clearing the air? 

THOMAS:  This is not a White House that goes about clearing the air. 

MATTHEWS:  They like murkiness? 

THOMAS:  Yeah, they like—especially Cheney.  They like murkiness, sure.  It's worked up until now—worked out pretty well for them.

MITCHELL:  They want to fight back.  And the biggest clue to that is Scooter Libby hiring Ted Wells.  Any plea negotiations that took place, and there were some, evaporated before the indictment.  They failed before the indictment.  And when you hire a lawyer like Ted Wells, you are fighting back.  He is, by the way, brought in Barbara Comestock, who is a very well guarded. 

MATTHEWS:  Yeah, but they're—excuse me, Andrea.  They are in there to defend Scooter Libby.  That doesn't mean they are going to defend the White House.  There may be a conflict of interest here, right? 

MITCHELL:  Oh, absolutely.  I am just saying that this is a very combative group right now on both sides. 

MATTHEWS:  Evan, what is the White House going to do?  If you could point to one or two things in the next couple of week, have they got anything up their sleeves to enhance their public image right now?

THOMAS:  No.  But what they ought to do is say good-bye Karl Rove and really do something dramatic.  But I don't think they're going to do that.

MATTHEWS:  Can the president handle that disconnection?  Can he live without Rove? 

THOMAS:  No, and so I think Rove is safe. 

MATTHEWS:  Conjoined twins, right?

THOMAS:  Right.

MATTHEWS:  OK, are the conjoined twins, Rove and the president?  Can he operate without Rove? 

MITCHELL:  He can operate without Rove, but right now, I think Rove is there to stay, until something else happens.  I think you are going to see some White House changes, though.  I think you're going to see a new chief of staff.  It's sort of in the cards for Andy Card to go over to treasury. 

A lot may still be happening the next couple of weeks, and then they believe after the Christmas break, you know, he is overseas.  They hope that they get a good trip with the president leaving for Asia tomorrow, and then they have the State of the Union and other platforms from which to try to relaunch. 

MATTHEWS:  I think the president should become chief of staff.  I think he should take over the White House, take it away from the vice president's people, begin to run the show, like the boss.  I think it would be better for the country.  Anyway, thank you, Andrea Mitchell.  Thank you Evan Thomas. 

When we return, the Bush administration fights back against its critics, defending the use of intelligence leading up to this war in Iraq.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The White House is feeling the heat over its use of prewar intelligence on Iraq, obviously, and today National Security Advisor Stephen Hadley stepped up to defend the Bush administration's case for going to war with Iraq. 

NBC News chief White House correspondent David Gregory was at the briefing.  David, are they admitting now they used false intelligence or bad intelligence to drive us into war, the White House? 

DAVID GREGORY, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT:  Stephen Hadley is admitting that much of the intelligence they had before the war was wrong, in his words.  That's a follow-up to a question that I asked that we will hear in just a minute. 

But I think what is striking, this occurred during a briefing on the upcoming trip to Asia by president, and it was Steve Hadley, the national security advisor, who took it upon himself to launch the sort of preemptive strike, if you will, because of so much criticism from Democrats now, and sort of more agitation to put this issue front and center. 

And the White House, reflecting some of the pressure they are getting from conservatives to fight back a little bit more on the war, are taking on Democrats on this question of prewar intelligence.  And what Hadley said was not new, but the argument was, look, we were working on the intelligence that we had. 

It was shared with Democrats, with a previous administration, the Clinton administration.  There bipartisan consensus on the issue that the intelligence told us that Saddam was seeking to acquire weapons of mass destruction, may have some, hasn't accounted for others.  So people agreed on that intelligence, so now for people to say that we are misleading them is simply a hollow political argument. 

Of course, our latest poll, the NBC News/”Wall Street Journal” poll finding that 57 percent of Americans believe the president misled the country about the case for war.  And indeed, the big question is whether or not—not so much whether the administration manipulated intelligence—certainly some have made that claim—but whether the administration, the president, and other key administration officials hyped the intelligence as kind of arguing the case stronger than it was.

And then of course, there's the other aspect of this, which has to do with Ahmed Chalabi, who of course, with the Iraqi National Congress, had a big influence on those who were arguing for years and years that Saddam Hussein ought to be confronted, and indeed the INC came forward to this government with intelligence about Iraq.  That was sort of the basis of my follow-up question to National Security Advisor Steve Hadley.  This is how it went. 

(BEGIN VIDEOTAPE)

GREGORY:  You said the prewar intelligence was clear. 

STEPHEN HADLEY, NATIONAL SECURITY ADVISOR:  Right. 

GREGORY:  It was also wrong, wasn't it? 

HADLEY:  I said it was, I believe, a strong case.  A strong case is what I said in answer to the earlier question.  And a lot of it turned out to be wrong. 

GREGORY:  A lot of it turned out to be wrong. 

HADLEY:  We know that. 

GREGORY:  Why—I'm sorry.  I didn't finish ...

HADLEY:  Third follow-up?  Can this be the last follow-up? 

GREGORY:  This will be the last follow-up. 

HADLEY:  Good. 

GREGORY:  If that's the case, and you are talking about lessons learned, then why is it that Ahmed Chalabi, who was thought by this government to be one of the main peddlers of intelligence that turned out to be flat wrong, why is he now welcomed at the highest levels of this administration? 

HADLEY:  He, as you know, saw many senior officials.  He did not meet with the president.  He was received here because of what he is.  He is one of the deputy prime ministers of Iraq.  He came here representing the Iraqi government. 

(END VIDEO CLIP)

GREGORY:  But, of course ...  

MATTHEWS:  David, he is the one that's picking—go ahead.

GREGORY:  ... he has a special history, as you know, Chris.

MATTHEWS:  David, the president of the United States does not want his picture taken with Chalabi, but doesn't mind his people being seen with them.  How does he slice that? 

GREGORY:  Right.  Well, they say the vice president is going to meet with Chalabi, he met with Mr. Hadley, with Steve Hadley.  He also met with the secretary of state.  That's often the case if the president wouldn't necessarily meet with somebody like this. 

But the argument is, look, he is part of the Iraqi government now whether we like it or not.  Although, they are not saying that.  They're saying he's a dignitary of the Iraqi government.  We are going to meet with him, because whatever happened in the past, we have got to go forward on this, but there's really no acknowledgment of even the government's own feelings about Chalabi, that he deceived them. 

Chalabi, of course, in Washington yesterday—excuse me—called it an urban myth that he peddled false intelligence, and the Silverman-Robb report said that the INC's intelligence was not a major part of the intelligence package that led to the war, but there are other investigations underway that believe that's not true, that there was a larger percentage of this intelligence that brought in the door by Chalabi's group. 

So—look, this was a controversial figure, and yet he is still welcomed at this White House in the name of, you know, moving forward and doing business with those who are doing business in Iraq. 

MATTHEWS:  Interesting.  Anyway, thank you very much.  David Gregory, good tough questioning of Mr. Hadley, who did admit they shouldn't have put that stuff in the State of the Union Address about nuclear. 

Up next, much more on Ahmed Chalabi's trip to Washington, our series on the CIA leak investigation and prewar intelligence continues.  We're going to have a big package in a minute, and an in-depth look at the bogus information that Mr. Chalabi himself gave to members of the Bush administration to make the case for war.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(NEWSBREAK)

MATTHEWS:  Welcome back to HARDBALL. 

Ahmed Chalabi, a former Iraqi in exile, who told Bush administration officials before the war, what they wanted to hear about Saddam Hussein.  He's back in Washington this week. 

The timing for us on HARDBALL couldn't be much better because as you know, we have been looking into the inaccurate administration reports in the run-up to the war.  And no one played a larger role in bolstering administration claims than Ahmed Chalabi. 

HARDBALL correspondent David Shuster reports. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  He was the trusted ally of administration hawks who fed them bogus information that frightened America into a war. 

Now Ahmed Chalabi is being welcomed again by his White House friends.  Vice President Cheney, National Security Adviser Stephen Hadley and Secretary of State Condoleezza Rice. 

AHMED CHALABI, IRAQI DEPUTY PRIME MINISTER:  It's always more important to look to the future than to the past. 

SHUSTER:  But believing Chalabi in the past has made Iraq, America's future.  Yesterday, for example, they showed up outside the neoconservative American Enterprise Institute, a group that hosted a Chalabi speech. 

CHALABI:  Iraq now is at the threshold of a new era. 

SHUSTER:  In the five years before the Iraq war, the Pentagon paid Chalabi's exile group $39 million for intelligence about Saddam.  In turn, Chalabi produced defectors who claimed Saddam had weapons of mass destruction and wanted to go nuclear. 

The CIA was skeptical, but hawks in the Pentagon and White House snapped up Chalabi's claims and used them to beat the drum for war. 

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES:  We now know that Saddam has resumed his efforts to acquire nuclear weapons. 

SHUSTER:  In the build-up to Iraq, the claims also got splashed on the front page of The New York Times. The paper's editors say reporter Judy Miller relied heavily on Chalabi and on his allies in the vice president's office, including Cheney chief of staff, Scooter Libby. 

All had the same talking points.  Chalabi swore U.S. troops would be greeted as liberators.  Vice president Cheney said...

CHENEY:  ... my belief is we will, in fact be greeted as liberators. 

SHUSTER:  Chalabi's sources said Iraq possessed mobile germ weapons factories. 

President Bush spoke about the factories and said...

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  ... these are designed to produce germ warfare agents and can be moved from place to place to evade inspectors. 

SHUSTER:  A year into the war, with no WMD and insurgency getting worse, an indications Chalabi had gamed the Bush administration.

Just the mention of his name became a touchy subject for supporters. 

Here is Chris Matthews with Donald Rumsfeld. 

MATTHEWS:  If you had to make a quick reaction, if I said the name Ahmed Chalabi, and I said reliable, unreliable, what would be your answer? 

DONALD RUMSFELD, SECRETARY OF DEFENSE:  Oh, look, I am not going to start criticizing members of the Iraqi governing council. 

MATTHEWS:  But, he's an employee of yours. 

RUMSFELD:  He's not an employee at all.

MATTHEWS:  Does he get 350 a month from the Defense Department. 

RUMSFELD:  Come on.  Under the law passed by Congress, his organization, the INC, receives funds to do a variety of things.

SHUSTER:  A month after that interview, Chalabi was bucking White House plans for Iraq's new government, and U.S. forces raided his home, alleging Chalabi was an Iranian spy, and gave that government classified information. 

Chalabi denied the charges, built on his support within Iraq, and stands today as a powerful Iraqi political leader.

He is the secular politician most trusted by religious Shiites.  He also gets along well with the Kurds and the minority Sunnis. 

And when it comes to what happened before the war. 

CHALABI:  As for the fact that I deliberately misled the American government?  This is an urban myth. 

SHUSTER:  Ruthlessly misled might be a better way of putting it, because by most accounts, Chalabi never bothered to examine the credibility of his defectors or their claims before passing them along to Bush administration allies.  And when pressed, Chalabi refuses to apologize. 

CHALABI:  It is not useful for me now to comment on it.  We are not now engaged in this kind of debate in Iraq. 

(END VIDEOTAPE)

SHUSTER (on camera):  But it is a huge debate here in Washington, where Congress is examining prewar White House intelligence claims.  And what puts the White House in a really awkward spot is that Ahmed Chalabi stands a chance of becoming Iraq's prime minister. 

I'm David Shuster for HARDBALL in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster. 

Senator Dick Durbin of Illinois, he's the Democratic whip.  He's the No. 2 Democrat in this Senate.  He's calling on the House and Senate Intelligence Committees to subpoena Chalabi to testify about his involvement in prewar intelligence. 

Senator Durbin, is he a bad guy? 

SEN. DICK DURBIN (D), ILLINOIS:  He certainly is.  We bank-rolled this bogus conman as he gave us just terrible information leading up to the invasion of Iraq.  You can go through the litany, as your lead-in story did, of things that were just plain wrong. 

He provided us with defectors who were totally unreliable, who gave us information which turned out to be totally false.  Americans lives have been lost because of the advice that he gave us.

And May 20 of last year, the Iraqi security forces with the United States cooperation raided his home in Baghdad, taking out documents because they have charged him with the possible transfer of critical American security information to the Iranians. 

Now this man is being treated like the toast of the town in Washington, D.C. This may be some neocon reunion, but I want to tell you something.  There are a lot of questions that need to be answered about Ahmed Chalabi. 

MATTHEWS:  Well, maybe it should be a large jamboree than that.  Let me ask you this.  We were paying him, and you know this, $330,000 a month to give us intel that would argue the case for going into war. 

Why wouldn't you and other Democrats know if you are going to pay a guy $300,000 a month to tell you what you want to hear, he is going to tell you he's got weapons of mass destruction, come on in? 

DURBIN:  He even bragged about it. 

MATTHEWS:  Well, why did Democrats vote for this authorization of war, based on a guy who had been bought to tell us what we wanted to hear?  Why would anybody believe him in the first place?

DURBIN:  Well, I don't know that we had a specific vote on it, Chris, to be honest with you.  But remember, we are in the minority here. 

Let me tell you, when this fellow was confronted with the fact that he had misled leaders in America and the people of America about WMD and all these other things, he kind of bragged about it, and said, well, we got to accomplish what we wanted to accomplish. 

The American troops went into Iraq and removed Saddam Hussein, and that was my goal. And frankly, this is not the kind of man that we need to be working with.

Twice this week, the FBI has announced that he is under active investigation for selling or giving critical American secrets to the Iranians that could have endangered our troops and our international security.  Why in the world is this man being hosted for lunch with cabinet officials in Washington? 

MATTHEWS:  What is the relationship between the president and the Senate, Dick Cheney and Ahmed Chalabi?  What is their relationship?  Because he always sees them when he comes here. 

DURBIN:  Because throughout this whole invasion of Iraq, there has been one last stop before it went to the president, the American people, it was the desk of Dick Cheney.  He was leading up, what Lieutenant-Colonel Wilkerson has now called this cabal with Secretary Rumsfeld, cooking up some stories about why we couldn't wait to invade Iraq.  And so it's understandable why Ahmed Chalabi would be one of his close advisers.

MATTHEWS:  Did you see me ask the Secretary of defense why he is one of your employees, because the Pentagon paid him $330,000 a month.  He laughed at the idea he was employee.  I mean, most would like to make $330,000 a month from somebody, who then disdains the fact that by saying, oh, that's something Congress did for this guy.  Do you accept responsibility as a senator for having hired Ahmed Chalabi? 

DURBIN:  I can tell you, I am embarrassed by it.  I don't know that we had a direct—we never had a direct vote on the question.  But we were still bank-rolling this man after the invasion of Iraq when it was clear that he told us a pack of lies about WMD, about the threat, we were going to be welcomed as liberators.  We still continued to bank-roll him. 

I am sitting on the Intelligence Committee, where I can't speak publicly about what we are talking about.  But I can tell you there was a lot of consternation in that room. 

MATTHEWS:  What do you think of Steve Hadley who said today, the national security adviser to the president—the Democrats as well as the Republicans bought the intel? 

DURBIN:  Let me tell you, a lot of us didn't.  I voted no.  And I think a lot of us who heard some of these intelligence analyses in the Senate Intelligence Committee couldn't believe what the American people were being told.  That's why we called for a closed session last week in the Senate.  The Democrats stood their ground and said we are going to finally have an investigation and get to the bottom of this. 

MATTHEWS:  Scooter Libby may be headed to jail.  Do you think Ahmed Chalabi should be in jail? 

DURBIN:  Well, at the least, he should be interviewed.  For goodness's sakes, here's this guy, a year-and-a-half after his home was raided by sources concerned about whether he had sold American secrets, comes around here and does this victory lap in Washington, D.C.  And I guess as I said earlier, his motorcade had to speed up past the Department of Justice.  I mean, why didn't they bring this man in for at least some interviews and questions to find out what he did? 

MATTHEWS:  We will continue to ask that question.  Thank you very much, Senator Dick Durbin of Illinois. 

When we return, much more on Chalabi's role in the lead-up to war. 

Our HARDBALL special report continues tonight after this.

(COMMERCIAL BREAK) 

MATTHEWS:  Welcome back to our HARDBALL Special Report.  David Frum was a speech writer for President Bush who now works for the American Enterprise Institute, a think tank that hosted a speech by Chalabi this week.  And Jay Mare is a reporter for “The New Yorker” magazine, and has written extensively about Chalabi, her latest piece in the magazine centers around the death of a suspected terrorist in the custody of CIA interrogators. 

Let me go right now—first of all I want to go with you David, why did you host Chalabi at the AI today, or this week? 

DAVID FRUM, AMERICAN ENTERPRISE INSTITUTE:  Well, AEI has 500 events a year.  And this is one of the most important people in one of the most important regions on the planet.  We are proud to host him.  And he has been someone who has relationships that go back with people at the AEI a long time.  I think the view of many of the people at AEI has been in very imperfect region of the world, he is a flawed human being.  He's the best of...

MATTHEWS:  Would you buy a used car from Ahmed Chalabi?  No, I mean it.  You know what I mean.  Do you trust his word? 

FRUM:  If my choice is, which of the Baghdad used car dealers would I buy my car from, in Baghdad, he would be my choice. 

MATTHEWS:  Has he been good for America? 

FRUM:  He has been—if we are going to replace Saddam. 

MATTHEWS:  Has he been good for America, has he helped our country? 

FRUM:  Well, he has not had the chance to do as many good as I think he could.  But in that region, he is the best in that country.  He is the best choice America has. 

MATTHEWS:  OK.  Let me ask you the same question.  On reporting on him, I don't want opinion, I want reporting from you, because you are a reporter.  Was he underhanded in the way he presented sources to us, who presented cases about weapons of mass destruction, that our hawks wanted to hear and he played into that hope? 

JANE MAYER, NEW YORKER:  For 15 years, I spent a lot of time watching Ahmed Chalabi.  For 15 years, he has told people in this country anything they want to hear that will get them closer to having a war in Iraq, invading Iraq. 

MATTHEWS:  He saying that if he takes over, his country will be peaceful, there will no more fighting with Israel, he'll be pro-western.  Any audience he meets with, he says whatever you want. 

MAYER:  It will be a democracy.  It will be pro-Iranian, it'll be anti-Iranian, it'll be whatever you want it to be, so long as the U.S. goes to war in Iraq.  And basically what Ahmed Chalabi learned 15 years ago was to get to Iraq, you have to go through Washington.  And he studied Washington politics and he figured out which buttons you need to push. 

MATTHEWS:  Why is he so close to the VP, the vice president?  The Vice President is not an ideologue necessarily.  He doesn't have much philosophy.  He's just a tough guy. 

MAYER:  Power—Ahmed Chalabi is—I mean, he's just one of the world's great rogues.  He can figure out power better than anybody in this country, I think. 

MATTHEWS:  How would we do with a lie detector test?  Would be pass one, because he believes his own stuff?  I'm serious.  Is he an out and out liar, I'm asking? 

MAYER:  I think he must have believed there were weapons of mass destruction.  I do think that's probably true.  But I think that he also told me he thought we were fools to believe every kind of person that he sent our way as an expert.  He said, I am not responsible for those people.  The problem was...  

MATTHEWS:  You mean, there was no warranty on what he was giving us. 

MAYER:  There was no warranty whatsoever. 

MATTHEWS:  Let me ask you, what role do you think he played in the run-up to war?  What role did he play?  Scooter Libby was feeding the “New York Times,” one of your competitors.  He was feeding the “New York Times” stuff.

FRUM:  I think probably his most important role was that he provided hope that there could be a better kind of government in Iraq than either Saddam or—either Saddam or...

MATTHEWS:  The war was fought for the stick, though, wasn't it?

FRUM:  Or some other kind of general.  One of the reasons the United States did not go all the way in 1990 and '91 was the question was, if you got rid of Saddam, what would you replace him with?  When Chalabi came along, it was possible to imagine somebody who was better.

MATTHEWS:  But the United States was urged into this war, basically, not as a matter of choice for the American people.  It may have been a policy choice.  But the American people were confronted with the danger of an atomic mushroom.  That mushroom imagery was what turned it at the end there. 

FRUM:  Well, the president sincerely, sincerely believed that, but he also had other concerns.  I mean, if you are confronted with a nuclearizing state, you have a lot of policy choices.  North Korea is a nuclearizing state, and we are not going to invade North Korea.  You have policy choices. 

MAYER:  I just want to say a little bit more about the man that you think could be the best possible leader of Iraq.  He is a swindler who was convicted in absentia ... 

FRUM:  That's debatable. 

MAYER:  ... in Jordan for collapsing a bank where $300 million were missing.  He is somebody who has a forgery factory according to our own CIA agent, Bob Baer, who was there with him, who saw him faking documents.  He is somebody who has supplied all kinds of fake experts on weapons of mass destruction, which turned out not to have been there. 

MATTHEWS:  What does he want?  Does he want to be the boss of Iraq? 

MAYER:  You know what?  He was—his father—Ahmed Chalabi's father was one of the wealthiest, if not the wealthiest person in ... 

MATTHEWS:  Does he want the oil or does he want the country, or both? 

MAYER: He wants to take the country back.

FRUM:  He wants to be the Silvio Berlusconi of Iraq.

MATTHEWS:  But does he want the oil?

MAYER:  He's got the oil.

FRUM:  He wants to be prime minister of Iraq, and very rich inside Iraq.  That's what he wants. 

MATTHEWS:  But does he want to get rich by grabbing control of the country? 

FRUM:  No.  He wants to get rich by opening—I think he is smart enough and modernized and westernized enough to understand the way for him and his family to get rich is to follow policies that also happen to be good for the majority of people in Iraq and good for the United States.  This is a matter—I don't think we should be idealistic or blind about him but we should say ... 

MATTHEWS:  He sounds like he's going to turn Iraq into the old Belgian Congo, where you have a monarch who just rules the place in his own economic interest. 

FRUM:  If we can live with Hosni Mubarak, he is better than Hosni Mubarak.  If that's the standard, he is better.  He's more liberal.  He's more modern.  He will run a more honest economy, a more open economy. 

MATTHEWS:  Do you think that if he got into office, that there would be no more sort of Arab hostility to Israel, to the west, that general sort of drumbeat that goes on in most Arab countries today?  Would it be more like—would it be more like—it's a very important point.  Would it be more like Egypt, in that sense?  They wouldn't be beating the drum all the time?  Or ...

FRUM:  I think he would be shrewd enough not to charge headlong into the prejudices of his society, and I was never one of those who believed he would sign a peace ...

MATTHEWS:  Yes, but would he mute them?  Would he mute them? 

FRUM:  He would want peace so he could redevelop his country, so the Iraqis could get rich, and he could get rich. 

MATTHEWS:  And he would get the terrorists out of that country that

moved in thererMD+DN_rMDNM_? 

rMDNM_

FRUM:  I think he would want stability and peace.  He would want the same things we want. 

MAYER:  But, it's just that you sort of assume that he is a popular figure in Iraq.  That's another thing that you ...

MATTHEWS:  Well, we are going to know soon, aren't we? 

MAYER:  He is looked at as a puppet of the U.S., so I am not really sure that it will be convincing show to the Iraqis that ...

(CROSSTALK) 

MATTHEWS:  You know what?  If I thought he was our puppet, and we weren't his, I would be a lot happier.  Thank you very much Jane Mayer and David Frum. 

When we come back, more about the president's slumping poll numbers, and what he has to do to get his second term back on track.  It's still just three years, lots of time to get his act back together again.  This is HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  MSNBC's chief Washington correspondent, Norah O'Donnell, is with me now.  She has been analyzing the numbers from the latest NBC News/”Wall Street Journal” poll and the current report card for the Bush administration is not a good one.  Good evening, Norah.

NORAH O'DONNELL, MSNBC CHIEF WASHINGTON CORRESPONDENT:  Good evening.

MATTHEWS:  Thank you for joining.  Let's go through this.  You've been up on the hill looking at these numbers with members of the Congress.  Let's take a look at that first one.  We were just talking about that devastating number, 57 percent.  Three of our five people say lied. 

O'DONNELL:  Deliberately mislead.  This was one of the most troubling for Republican senators that I spoke with today.  The key thing is Iraq is the number one issue for Americans.  Fifty-seven percent also think it's time to reduce the number of troops in Iraq.  They're deeply concerned.  The majority say they don't think the president is leading it in the right direction and they trust Democrats now more than Republicans when it comes to Iraq. 

MATTHEWS:  Well, the trouble with these numbers, too, it's not just a constant number; it's a vector.  It's learning toward.  All these numbers are going up, the negative ones.  And the positive ones are all going down month by month.  Let's take a look. 

When it comes to the CIA leak indictment, 79 percent of those polled say it's a serious matter.  So they're paying attention. 

O'DONNELL:  They're paying attention.  Sixty-six percent of Americans know who Scooter Libby is.  That is unprecedented for a vice presidential aide.  Seven in 10 Americans believe that Vice President Cheney is personally involved in this matter.  There's also a large number like that around ...

MATTHEWS:  What percent? 

O'DONNELL:  Seven out of 10 percent believe that Cheney is responsible for the situation.

MATTHEWS:  I didn't find—I dug into this and I didn't get that deep.  I thought it was like 80 percent thought somebody—they said he didn't act alone, Scooter Libby.  You're saying that Cheney's now in the—because they read the indictment.  They read how his name kept coming into that thing. 

O'DONNELL:  And Americans want to hear more about this rather than less.  Sixty percent want congressional hearings.  This is a big issue.  Also Americans now favor Democrats more on ethics than Republicans. 

MATTHEWS:  Well, you said that with complete surprise, but I thought there was one interesting number there you may not have gotten to.  They asked how many people have a very positive image of the Democratic Party.  This is how bad the Democrats are doing—eight percent.  The Republicans, nine percent.  So as bad as the Republicans are, they have got a point on the Democrats in terms of who you really like. 

By the way, on Scooter Libby, remember we grew up with that phrase, there's no such thing as bad publicity? 

O'DONNELL:  That's true.  That's true.

MATTHEWS:  Yes, there is. 

O'DONNELL:  You make a great point about—listen, there's a pox on both houses, on Republicans and Democrats.  They both have what we call net negative ratings, which is that they have more negative than more positive.  So while Republicans may be in the tank, and the president has hit rock bottom, the Democrats are not benefiting from that yet. 

In fact, 45 percent said that Democrats lack a clear vision, a clear message.  So even though we see these troubling numbers for Republican Republicans, it hasn't benefited the Democratic Party because why?  They still don't have a message. 

MATTHEWS:  OK, you've covered the White House too.  Big picture question.  So what?  The president has lousy numbers.  How does it affect his ability to govern.

O'DONNELL:  Listen, it's not all that devastating.  Why?  Because other presidents—Carter, Reagan, Clinton—have had lower approval ratings than the current rating that the president has, so he can certainly rebound, but he has to rebound on Iraq.  That is the one—our bipartisan group of pollsters say that's one of the main issues that dragging ...

MATTHEWS:  So it's driving all the bad news.

O'DONNELL:  It's driving all the bad news.  But that was true, too, during the campaign.  When the news was bad ...

MATTHEWS:  I'm just wondering—and the problem is, that's not something he can control.  He can reduce the number of troops.  If he could win the war, he would have won it by now. 

O'DONNELL:  It's intractable, and the news out of Jordan is troubling as well.

MATTHEWS:  Interesting stuff.  Thank you, Norah O'Donnell.

And tomorrow on HARDBALL, our series of special reports continue, as we look at how the administration tried and succeeded in linking al Qaeda to Iraq in the lead up to war. 

Right now, it's time for “THE ABRAMS REPORT” with Dan.

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

END   

Content and programming copyright 2005 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2005 Voxant,Inc. ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.'s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

Watch Hardball with Chris Matthews each weeknight at 5 & 7 p.m. ET

Discuss:

Discussion comments

,