updated 2/28/2006 10:55:20 AM ET 2006-02-28T15:55:20

Guests: Trent Lott, Susan Molinari, Steve McMahon, Thomas Kean, Michael Smerconish, Jim Zogby, Howard Fineman, Roger Simon

CHRIS MATTHEWS, HOST:  Tonight, the port deal sits on death row.  The president now has just 45 days to save the deal and his prestige as the country‘s number one defender against terrorism.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.  Tonight a brief stay of execution for President Bush, but the day of judgment is coming. 

Under heavy political pressure, Dubai Ports World announced it will seek a 45 day national security review of its plan to take over operations at six U.S. ports, but will the deal brokered by Senate Majority Leader Bill Frist and the White House only delay an election year showdown? 

Tomorrow the Senate Commerce Committee will hold a full hearing on  D.P. World‘s purchase and the security of terminals at U.S. ports.  More on this in a moment from Senator Trent Lott who sits on the Commerce Committee. 

And later why did Senator Hillary Clinton say President Bush‘s chief political strategist Karl Rove spend a lot of time obsessing about her.  But first, HARDBALL‘s David Shuster has this report. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  After defending the deal for a week, President Bush has gotten a reprieve from Republicans in Congress and the Arab port company in question.  Late Saturday night, Dubai Ports World negotiated with Senate Republican John Warner, who ran a possible deal by Senate Majority Leader Bill Frist.

Then with the lawmakers on board, the company announced it was volunteering to undergo a 45 day government review of its application to take over some U.S. port operations. 

MICHAEL MOORE, DUBAI PORTS WORLD:  You realize that if we gave people time, we could explain our story, we could let them understand who and what we are, that we‘d be able to allay any concerns, any legitimate concerns, about security. 

SHUSTER:  The move has quieted some of the Republican outcry against the deal in The House. 

REP. PETER KING, ® NEW YORK:  I don‘t see any purpose to go forward and force a confrontation with the president because the main purpose of the legislation was to bring about this 45 day investigation. 

SHUSTER:  But in the Senate, a nasty fight with the administration is still brewing.  Eight senators, including four Republicans from across the G.O.P. spectrum, say they will move forward with legislation next week that would require government agencies to give Congress a full report.  But far more importantly, the legislation would also give Congress the final power to reject the deal. 

The action would amount to legislative handcuffs on President Bush. 

And some Republicans say the pressure is still on the White House. 

SEN. LINDSEY GRAHAM, ® SOUTH CAROLINA:  They were incredibly politically tone deaf, they paid a price, and let‘s get this right.  I am not against the U.A.E.  They may be the right company at the right time, but this process has been flawed from the beginning and it needs to be fixed. 

SHUSTER:  Dubai Ports World has tried to fix its own public relations problems by enlisting high profile help like former senate Republican leader Bob Dole.  The former presidential nominee is now leading the group‘s media effort and it was Warner, Dole‘s long longtime colleague, who went on “Meet the Press,” and echoed the company‘s talking points. 

SEN. JOHN WARNER, ® VIRGINIA:  This company is doing business, Tim, with over 30 nations.  It has an excellent record.  It was selected last year among its peer group as the most outstanding terminal operator in the world. 

SHUSTER:  Republican John McCain appeared on ABC. 

SEN. JOHN MCCAIN, ® ARIZONA:  Could I just remind you, 700 United States ships, warships, have visited Dubai.  They have an airfield there that we are using for missions into Afghanistan and Iraq. 

SHUSTER:  Twenty-four out of the top 25 U.S. ports are owned by foreign companies, and President Bush last week said he would not allow legislation to go forward that would block the United Arab Emirates. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I think it sends a terrible signal to friends around the world that it‘s OK for a company from one country to manage the port, but not a country that plays by the rules. 

SHUSTER:  But in a sign of the president‘s vulnerability, Congressman Pete King, despite a satisfaction with the delay, maintains President Bush is playing the race card. 

KING:  Nobody has more regard for President Bush.  I‘ve supported him down the line.  This issue is really wrong and I thought it was inappropriate to say that a person like myself, who lost over 150 friends, neighbors and constituents on September 11, is questioning the United Arab Emirates because of its past record and instead implying that I‘m doing it because they‘re Arabs and Muslims. 

That‘s wrong.  There are real issues here and the White House should realize it. 

SHUSTER (on camera):  Part of what‘s driving the condemnation of the White House is the president‘s own political standing.  Second term presidents by their nature lose some political leverage, and this president‘s approval ratings remain low and so congressional Republicans say a clash with the White House over the port deal maybe inevitable even if it‘s now been pushed aside for 45 days. 

I‘m David Shuster for HARDBALL in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Thank you David Shuster.  Republican Senator Trent Lott of Mississippi is a member of the Commerce Committee which is holding a hearing on the D.P. World purchase tomorrow to assess what it means for port operations. 

Senator Lott also sits on the Senate Intelligence Committee. 

Senator, from all you know, do we have anything to fear from this United Arab Emirates company running our ports? 

SEN. TRENT LOTT, (R-MS) COMMERCE & TRANSPORTATION COMMITTEE:  I don‘t think we know enough yet to reach that conclusion, that‘s why I haven‘t had a whole lot to say even though when I was in my state of Mississippi I heard from a wide spectrum of people very worried about this, from college students to doctors to small—I went to the Hasty Tasty (ph) to get a hamburger and the owner came out of the back where he was cooking to say hey, I‘m nervous about this. 

MATTHEWS:  Was he Arab? 

LOTT:  No he wasn‘t. 

MATTHEWS:  There are so many people in this country come from other countries and work here.  I just wonder, when you get on that committee tomorrow, you know it‘s the Emirates, they‘re from a friendly Arab country, you know this deal has been worked up for a long time, that they purchased this company from the British company.  What‘s to learn in 45 days that will change anybody‘s mind? 

LOTT:  I believe the American people are a lot smarter than we give them credit for.  Number one, they are viscerally concerned about whether our ports are secure.  We have convinced them, the war on terrorism is ongoing it‘s serious, we‘re threatened.  They have a feeling that maybe the ports are very hard to secure, which obviously, they are. 

The second thing is the very idea that some company owned by foreign government, maybe any government, would be running our port in New Orleans, or Gulfport or Philadelphia or New York City.  They want to be reassured about this. 

MATTHEWS:  They didn‘t raise hell about Britain. 

LOTT:  Well, there is one difference there.  This British company is a private company.  There is a little bit of difference when it‘s a private company from Singapore, Japan.  Now I‘ve had real problems with Chinese companies running the port of Long Beach in California. 

MATTHEWS:  Are people less afraid of communists now than they are of terrorists? 

LOTT:  Well, you know, communists have not been terrorizing people and killing innocent men, women and children around the world, so maybe so. 

But the idea that it‘s a government owned company adds an extra layer, particularly if it comes from a company - a country that has had terrorists. 

MATTHEWS:  Senator, we know all this.  What‘s to be gained by 45 more days of discussion.  Why don‘t we just have an up or down vote on whether we should get the deal? 

LOTT:  I don‘t think we know it all yet.  I think as representatives of the people, we need to know more.  I know very little.  I‘ve had nobody in the administration talk to me, not that they should make a particular effort to talk to me or anybody else, but I‘d like to know the details.  I‘m from a coastal area, I care about port security.  I‘m on the committee of jurisdiction.  I want to know what it was the federal review process.  Was there is a security concern expressed by the Coast Guard.  I need to know that.  And I want to know a lot of the details about how these things work. 

Now actually, they run terminals in these ports.  They don‘t own and operate most of the ports, they have a terminal part of a port.  And I understand, for instance, that they still would not be in charge of security, but we need to know these things. 

I have not jumped out there being critical of it.  I think the 45 day period to learn more is good.  Congress may still, you know, Chris, we may want to take a look at the broader picture.  Do we want all of our ports in America being run by foreign companies or even foreign countries.  So in a broader sense, we may have wants to take a serious look at this. 

MATTHEWS:  Let‘s that you can about the—you mentioned visceral, the gut reaction.  If you‘re flying in an airplane over New York, like a lot of people do, you look down and see all the harbors and ports and say to yourself, they‘re all now run by an Arab company.  Don‘t you have a different image than if you heard it was a Dutch country?  Don‘t people say this is tricky.

Every time you go past the port of New Orleans or the port of Philadelphia, all these guys in South Philly, I just imagine the guys in South Philly, looking over at the port, yes, that‘s run by the Arabs now.  And if something goes wrong, doesn‘t the president get blamed now because it‘s his deal? 

LOTT:  He could.

MATTHEWS:  Any time in the next 20 years, as long as this deal lasts, as long as this deal lasts, if anything happens at any port, if there‘s any bad news about terrorism, doesn‘t he get blamed?

LOTT:  To be impugning people‘s motives, when as a matter of fact we‘ve convinced people there‘s a real concern about terrorism and by the way, most of the terrorists‘ acts have occurred by Arabs or at least Muslims, and people—so they have a concern. 

The idea that a country where some of the terrorists have come from, and has had somewhat of a checkered past, although they‘ve been supporting this in the war on terror, I think you need to acknowledge that.  And by the way, I think we need to be careful about how we launch out there for domestic political reasons.  We do need to weigh the ramifications in other parts of the world.  We can‘t on the one hand be saying—

MATTHEWS:  What‘s the worst that‘s going to happen if we kill this deal, if the Congress kills the deal? 

LOTT:  Well, you could run that string out.  It could be very unfortunate. 

MATTHEWS:  They could kick our military people out of the port over there. 

LOTT:  Hundreds of American ships go in to that port in Dubai.  We have air rights, we have an air base there.  It could influence, in an adverse way, the entire region.  I think you should not just wipe that off.

MATTHEWS:  Let me ask you a crass political question.  Is it better for President Bush, if you were his best friend and you were advising him politically, if you were Karl Rove for a minute, an unsightly consideration.  And he said, Senator, you have been around a long time, I want to ask you a question. 

Am I better off letting this Arab company, state-owned company, run those ports and getting the deal and taking the risk, nothing goes wrong in the next years of the years of the contract, or am I better off cutting it now, cutting my losses?  What‘s the safer political position for me? 

LOTT:  Well, the safer political position might be to go ahead and cut your losses and say, you know, we cannot go along with this takeover by the UAE company, the British company.  That‘s political. 

But you know, Chris, it‘s one thing to play politics and partisanship and even let your fears run away, but when you‘re dealing with international situations, you do need to be careful.  I don‘t want to use, you know, a scary term, but we are shooting with real bullets here. 

MATTHEWS:  I know.  What about—is this a profile in courage for the president if he sticks to this?  Because as you suggest, there‘s not a whole lot of political points in going with the deal. 

LOTT:  It may be a courageous—but I don‘t think he‘s handled it very well.  I personally was offended when he came right...

MATTHEWS:  (INAUDIBLE) told.

LOTT:  Well, no, look...

MATTHEWS:  He would have told!

LOTT:  Well, maybe that, but when he said before he even knew—we didn‘t know all the details and what we might do, he said I‘ll veto the bill.  That‘s kind of like, hey, in your face, I‘ll veto...

MATTHEWS:  Bring it on. 

LOTT:  Well, Hey, look, man, I‘m a Republican, I support this president, you know.  I have a visceral adverse reaction to all of this.  But when you threaten me before you even give me the information, my attitude is if you do that under these conditions, I‘ll vote to override your veto, because I‘m not going to be just shoved aside.  I do represent people that are worried about this legitimately. 

MATTHEWS:  You think the president‘s trying...

LOTT:  Shouldn‘t I try to find out what the deal is before...

MATTHEWS:  The president had a good political pitch, he won the presidency, he got reelected.

LOTT:  Sure, yes.

MATTHEWS:  He led the country very well for all these months in the war against terrorism.  Maybe he was a little off there.  Do you think he‘s lost his pitch politically, he doesn‘t have a sense of what‘s going on?  I look at Harriet Miers, he put up for...

LOTT:  You know what I said about that.

MATTHEWS:  He handled the Katrina very badly, late.  And now this thing, he seems to be off at the switch there, off base there.  What‘s going on there? 

LOTT:  Well I think each one of those is a separate set of facts.  I think in this case, he really is trying to look at the broader international ramifications, as the president of the United States, the commander-in-chief, should.  And he obviously is very concerned about the war on terror.  But it—I mean, this looks like, you know, maybe he is not doing enough in the security area.  And we need to find out exactly what was done.  I fear, Chris, that this was done by lower level assistant deputy secretaries of various departments. 

And—but when I do hear that the Coast Guard maybe raised some concerns, that really—that causes me concern, too.  But I don‘t think he‘s lost his antenna.  But, you know, he‘s been making some curious choices sometimes, and I would wish that he had let more of us speak to him about these things before reacting. 

MATTHEWS:  So it‘s Curious George then?  OK.  Thank you very much, Senator Trent Lott. 

Coming up, more on the politics of the port deal with former New York Congresswoman Susan Molinari and Democratic strategist Steve McMahon.  And later on this program, an exclusive interview with Thomas Kean, former chair of the 9/11 Commission and former governor of New Jersey. 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, will the delay in the port deal save President Bush from political disaster?  When HARDBALL returns.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Will the 45 day review period for the Dubai ports simply allow President Bush to simmer longer until being brought to a boil? 

Susan Molinari was a Republican congressman from New York, and Steve McMahon is a Democratic strategist.  Welcome to both.

Susan, you know how these ports work.  You used to represent that area of Staten Island, right in the middle of the Hudson there.  Is this a hot issue that ain‘t going away, no matter how many delay periods we have? 

SUSAN MOLINARI ®, FMR. U.S. CONGRESSWOMAN:  This is a hot issue.  One of the things I think that happened was that the administration—when this got announced, more members were back home, so they were hearing from I forgot the name of the restaurant that Senator Lott was at, but Happy Dappy or whatever it is.  They heard from their constituents before they heard from the president. 

MATTHEWS:  It‘s a (INAUDIBLE) business.

MOLINARI:  So it has now become...

MATTHEWS:  It‘s a talk radio issue, too, I can tell you that.

MOLINARI:  That‘s exactly right.  But let me just tell you one other thing that is still an unknown here.  In talking to some members of the House and House leadership, they‘re not only looking for a 45 day review done by the same agencies, done the same way.  They want to have a significant amount of input into the questions that are asked and the timetable for providing those answers.  That has not hit a boil yet here in our nation‘s capitol.  The members are coming back tomorrow. 

MATTHEWS:  Is this an attempt by the Dems and the Republicans who are critical of the president to simply simmer this in a pot for a while before they bring it to a boil?  rMD+IT_rMDNM_Is anybody going to change their minds? 

I‘m going to ask you a simple question.  You first, then you.  We‘ll hear Schumer in a minute.  No surprises from Chuck Schumer coming up here.  They‘re all going for this.  Simple question.  A year from now, will the Emirates company, state-run company from Dubai, be running these ports or won‘t it? 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  No. 

MOLINARI:  I don‘t know yet.  I think the next two weeks...

MATTHEWS:  OK, it is—if it is running them, how is that a plus for the president? 

MOLINARI:  It shows his leadership.  It shows his command in an international world.  It shows that Republicans, even though his numbers are down right now, are still willing to take his leadership...

MATTHEWS:  Doesn‘t it put the monkey on its back?  If anything goes wrong with the ports...

MCMAHON:  The gorilla.  It‘s a gorilla, Chris, not a monkey.

MOLINARI:  Well, and that‘s what being the president of the United States is.  So, I mean, clearly, that‘s a line—that‘s his job. 

(CROSSTALK)

MATTHEWS:  He‘s got to take it.  Let‘s take a look at Charles Schumer here.  He said Sunday he wants Congress to have a chance to evaluate the port deal.  This is what I‘m skeptical about, that they want to evaluate it.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK:  The devil is in the details.  To do the 45 day investigation, keep it secret, and then just send it to the president who, after all, has already come out for this deal, would be sending the report into a black hole, and nobody would know the significance of what was said. 

(END VIDEO CLIP)

MATTHEWS:  So the point there is that the president of the United States is it still going to make the decision after all the 45 days of juggling around with this thing. 

MCMAHON:  Actually, I think the point there is just the opposite.  I think the point there is Congress thinks that it still has a role in the constitutional government.  And 17 percent, according to a Rasmussen poll, only 17 percent of its constituents believe this is a good idea.  As Democratic strategist, you know, when you hear about this 45 day thing, you go, hot diggity dog, we‘ve got 45 more days of this.

MATTHEWS:  You know what the beauty of this is, if you‘re really a Democrat like this guy?  You know what the beauty is?  Forty-five days from...

MOLINARI:  It means you finally have an issue?

MATTHEWS:  No, it means the same day that you pay your taxes, April 15, you watch our ports being taken over by an Arab-run state and that‘s the question.  Do you think this will sell? 

MOLINARI:  I think the difference is the administration has to get out there and I think they‘ve lost a valuable week, in terms of news, about, you know, the arguments that we heard Senator Lott talk about, Senator McCain talk about, Senator Warner talk about.  What is the impact?  You talk about the gorilla on the president‘s back. 

MATTHEWS:  I said monkey, he said gorilla.

MOLINARI:  Monkey, gorilla.  You say monkey, I say gorilla.  What if this deal goes down by the United States Congress and now all of a sudden our troops have to stage from someplace else?  What if all of a sudden, more of our United States military is in harm‘s way on the other side?

(CROSSTALK)

MATTHEWS:  That‘s what happens if we get bumped out of those ports over there in Dubai.

MCMAHON:  That‘s what the president and the Republicans are trying to spin, but the fact is that they‘re operating just fine where they are now and there‘s no reason to believe that anything is going to change. 

MOLINARI:  Well, except that they were dissed.  There was some major international dissing.

MCMAHON:  Senator Lott also said something that I think is really significant here and that is, The people are ahead of the politicians on this one and 83 percent of them have already made up their mind.  I don‘t think that George Bush or anybody—

MATTHEWS:  Which poll is that? 

MCMAHON:  Rasmussen.  It‘s a poll that was reported on this network.  I don‘t think that George Bush or all of the Republicans in the Congress could change their mind once they‘ve made it up on something—you reap what you sow and the president has been trying to scare people—

MATTHEWS:  I don‘t think Rasmussen was a Republican, was he?

MCMAHON:  I don‘t know, but it‘s been widely reported.

MATTHEWS:  I‘m curious to see—

MCMAHON:  By the way, there was an AP story that just came out about an hour ago and the AP story said that, according to the Coast Guard, the U.S. Coast Guard warned the administration that it couldn‘t be sure that this company, this government, wouldn‘t cooperate with terrorists again.

MOLINARI:  That came out at Senator Susan Collins hearings today.

MATTHEWS:  I want to make a story (ph) about why Karl Rove and Hillary Clinton are going at it.  Hillary Clinton says that Karl Rove is obsessing about her.  I think she‘s trying to get the heat on her—her schedule doesn‘t call for this attention right now.

MOLINARI:  Yeah, right—exactly.

MATTHEWS:  We‘ll be right back to talk about that battle royal between the White House and Hillary Clinton, about two years early.  And that‘s going to be our hot topic when we come back with Susan Molinari, who represented Staten Island.

MOLINARI:  That was my ferry going by in the picture.

MATTHEWS:  That‘s why we got it up for you.  And Steven McMahon, who knows everything.  Back with Steve in a minute on HARDBALL.

(COMMERCIAL BREAK)

(BEGIN AUDIO CLIP)

SEN. HILLARY CLINTON (D) NEW YORK:  Karl Rove spends a lot of time obsessing about me.  He spends more time thinking about my political future than I do. 

(END AUDIO CLIP)

MATTHEWS:  That was New York Senator Hillary Rodham Clinton, saying something nobody listening now believes that anybody could care more about her political future than she does.  That was her talking on Albany radio this morning.

We‘re back with former Republican Congresswoman Susan Molinari and Democratic strategist Steve McMahon.

First of all, do you assume and accept that nobody thinks more about a politician‘s political future than the politician? 

MOLINARI:  Absolutely.

MATTHEWS:  Okay, tight.

Steve McMahon, it seems like she‘s falling for the White House bait.  Karl Rove wants to engage in an early conversation with Hillary Clinton to wear the public out about her for the next couple of years, right? 

MCMAHON:  I think that‘s  probably—

MATTHEWS:  It‘s too early. 

MCMAHON:  My guess, she probably sent that little shot across the bow and I don‘t think she‘s going to engage in an early debate with Karl Rove or anybody else.  She‘s busy being the best senator she can be and getting reelected, and that ought to be enough to keep anybody occupied, I would think.

MATTHEWS:  Do you think she did a good job at the Coretta King funeral? 

MCMAHON:  I think she did a great job, Chris. 

MATTHEWS:  Are you working for her?

(CROSSTALK)

MATTHEWS:  I don‘t know anybody else that thought she did a good job. 

Maybe Bill did, I don‘t know.

MCMAHON:  Look, she may run for president—

MATTHEWS:  Is she ready for prime time?

MCMAHON:  Yeah, she‘s absolutely ready for prime time.  She‘s polarizing—

MATTHEWS:  Let me go with the Karl Rove thing.  This comes out in a new book by Bill Sammon—he‘s a pretty good writer.  And he‘s got this new book called, “Strategery,” which is kind of a joke that even the president apparently likes, which is the Will Farrell joke on Saturday Night Live.  Here are some quotes from Karl Rove in this new book:  “For somebody who is philosophically very liberal”—that‘s Hillary Clinton -- 

“she‘ll be a very cautious candidate at times.  That cautiousness will serve her well a lot of times.  For example, her cautiousness had her vote for the Iraq war.  Her cautiousness has led her to do things to sort of try to position herself as a centrist.”  Is that working?

MOLINARI:  What, that she‘s positioning herself...

MATTHEWS:  That she‘s very carefully made herself a hawk on the war, a centrist on policies. 

MOLINARI:  No.  Because then she has that tin ear that allows her to say things like, calling things—saying Republicans are running things like a plantation or comparing vouchers to, you know, creating right wing fascist schools.  She makes these statements that are so polarizing on the other side that obviously get to the more moderates in the Democrat Party too that have to make them cringe, to say that they‘re not sure which Hillary is real. 

And I think in politics, of all the mistakes you can make, presenting an unclear view of who you are is the biggest mistake. 

MATTHEWS:  The big shot here—the big shot here—we only have a couple seconds—the big shot here from the White House is, she doesn‘t have spontaneity.  She has to craft her words, she‘s got to think ahead, she‘s got to be cautious and careful.  Does she have grace under pressure, Hillary Clinton?

MCMAHON:  I think she does.  She‘s polarizing, as Susan point out, but she‘s also very smart.  She‘s definitely ready for primetime.  She may well be the nominee, and if she is, she‘s going to be quite competitive.  The White House should be careful what they wish for.

MATTHEWS:  Have you seen her operate under pressure where she‘s done something that‘s really spontaneously smart, like the way the president handle 9/11 on 9/14, when he went down in the rubble and said we‘re going to get the people that knocked down these buildings, reacting to the crowd?  Can she do that, can she shuck and jive, can she move with the crowd? 

MCMAHON:  I think she can do it.  I think she should trust her instincts a little bit more and maybe be a little less careful, because she‘s a very warm—people who know her says she‘s incredibly warm and gracious in person.

MATTHEWS:  I think that‘s so smart.

MOLINARI:  Let me just say one thing—

MATTHEWS:  You don‘t think she should trust her instincts because you think they‘re left wing.

MOLINARI:  I think she did a heck of a job in New York state when she was running for the United States Senate when we were all kind of laughing at her, so I don‘t take anything for granted.

MATTHEWS:  Can you pull a listening tour for president?

MCMAHON:  Rick Lazio lost that election. 

MATTHEWS:  Can you do a listening tour for president?  I don‘t know what I stand for, I‘m waiting to hear from you.  You‘re laughing.  You can‘t—

MOLINARI:  She can‘t do the same thing again. 

MATTHEWS:  You‘re great.  Susan Molinari, thank you.  Steve McMahon.

Up next, how secure are U.S. ports and should a foreign country be running them?  We‘ll ask the former chairman of the 9-11 commission and he‘s also the former governor of New Jersey, Thomas Kean.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET WRAP)

MATTHEWS:  Welcome back to HARDBALL.  Even before the furor over the ports deal erupted, the 9/11 Commission raised the flag on how vulnerable we still are to attack including at U.S. ports. 

In December, the administration got dismal grades for carrying out the commission‘s recommendations including cargo screening.  Former New Jersey Governor Tom Kean chaired the 9/11 Commission. 

Governor, thank you very much for joining.  I have a hot piece of information here.  I want you to react to this.  It moved on the Associated Press late this afternoon.  A Coast Guard intelligence assessment says there were many intelligence gaps, those are the quote marks, intelligence gaps, in an Arab company‘s proposed takeover in some operations at six U.S.  ports. 

An unclassified version of the report said these gaps made it impossible to come up with an overall threat assessment of the proposed deal.  The document raised questions about the security of the company‘s operations, the backgrounds of personnel and whether other foreign countries influence security decisions. 

Senate Homeland Security Committee Chairwoman Susan Collins says the Coast Guard report suggests significant and troubling intelligence gaps.  Your reaction, sir? 

THOMAS KEAN, FMR. CHAIRMAN, 9/11 COMMISSION:  Well, it‘s just another reason why this deal shouldn‘t happen.  And it seems to me it‘s not going to happen, that sooner or later, it‘s going to be killed and the kind of report that you just mentioned is the kind of thing we‘re going to be hearing over the next two weeks, if the president doesn‘t put this one to bed. 

MATTHEWS:  What was your concern after studying this issue on the 9/11 commission.  Let‘s start with ports, cargo? 

KEAN:  My hope is, by the way, that some of these people who are demagoguing this particular issue will concentrating on the real issue that the ports are not secure, we‘re not inspecting enough of the cargo. The ports themselves are not safe enough as far as access and egress, they should—we‘re not inspecting enough cargo really in other ports before it gets to the United States. 

We have to have standards at each port in the United States, and if these Congressional people are so very concerned about this issue, which is important beings but not has important as overall security, if that gets some interested in the issue and they take action in Congress, to give the Coast Guard more money.  Coast Guard doesn‘t have enough money to patrol outside our ports. 

MATTHEWS:  Governor, take me on a trip with one of these containers we see being loaded on the ships.  One of these big things the sizes of box cars.  Who puts the stuff in there, the cargo in there and seals it, in other words, which body is responsible for something getting in to one of those containers? 

KEAN:  It can start in any port around the world and it may take 10 or 11 different stops or more sometimes before it gets to the United States, so it‘s going to happen at some point.  Is that cargo should be inspected and some of it is now, a seal is put on it, the seal is unbreakable and the seal is something that‘s internationally accepted.  And it‘s not opened again until it gets to our port.  That‘s the way it‘s supposed to work.  It doesn‘t work that way with all cargo as yet. 

MATTHEWS:  Is that a government agency that puts that seal on the door of that container to ensure that there‘s nobody getting in or out of it, or is it a company that does that, like the Dubai Ports World that‘s taking over our six ports on the Eastern seaboard? 

KEAN:  It can be a corporation, but the government is supposed to be involved in the putting on of the seal, to know—to have certain standards that are widely accepted. 

MATTHEWS:  Who opens it at our end when it opens in Newark, who is opening that seal, is it a company, a stevedore company? 

KEAN:  Yes. 

MATTHEWS:  So it‘s Dubai Ports World in this case if they take over? 

KEAN:  No, it‘s probably going to be opened by the person it‘s addressed to.  I mean, it‘s—the problem is inspection, we have machines now that are capable of inspecting these things.  The machines are not yet installed in the ports, access and egress is too easy to somebody who is trying to infiltrate it. 

MATTHEWS:  Governor, we only have a minute here, but I think the most graphic example of the problem was this fellow who got himself inside one of these containers and took a trip, you know, he was a stowaway obviously, down to Dallas, and he made—all the way aboard the whole passage down to Dallas and nobody knew he was in there.  I mean, if a human being can get in one of these things, I assume something more dangerous can be put in there. 

KEAN:  I think that‘s true and you and I can walk today into the port of New York.  I don‘t think there‘s any question about that and get in areas where people shouldn‘t get.  That‘s the—those are the problems and these people are looking at this issue should transfer their attention, once this is settled and I hope it‘s settled in the next week, once it‘s settled, they have to concentrate on the really important issue which is how to secure these ports, how to secure these containers. 

MATTHEWS:  Would you allow a state owned company from the United Arab Emirates to run our airlines? 

KEAN:  No.  I don‘t think that these companies should be running—

MATTHEWS:  So you think state-run—what should be the line? 

KEAN:  Well, the line is as far as national security goes.  There are certain things we should be doing ourselves as Americans, and American companies ought to be doing with American supervision of the government in case it‘s very, very secure areas. 

MATTHEWS:  It‘s great having you on. 

KEAN:  It should not be given. 

MATTHEWS:  You‘re a very well respected man up there in New Jersey. 

Formal governor Thomas Kean. 

Up next, why is the U.S. giving the job of operating critical national assets to a foreign company?  The question was just asked.  You‘re watching hardball only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

If you want a sense of what America is thinking about the U.S. port security controversy, just give a listen to talk radio.  Michael Smerconish is the morning host of WPHT Radio in Philadelphia and the author of the upcoming book “Muzzled: From Teeball to Terrorism, True Stories That Should Be Fiction.”

Also joining me is Jim Zogby, president of the Arab-American Institute here in Washington.  Good evening, gentlemen. 

The president is confronted now with a new report.  You can both assess this now.  It came out of the Coast Guard late this afternoon.  It says that there are intelligence gaps in the government‘s assessment of whether to turnover the ports to this company in Dubai.  Senator Collins of Maine said the report raised red flags about the takeover of terminal management at six ports by the company Dubai Ports World. 

Michael Smerconish, your reaction? 

MICHAEL SMERCONISH, WPHT TALK RADIO, PHILADELPHIA:  My reaction is that I was against the deal even before hearing that, but now that I‘ve heard it, it‘s just one more reason that there should be a nail in the coffin of this transaction. 

MATTHEWS:  Now, Michael, the other night on the program—and it‘s

great having you on, I‘d like to have you on every night if I could.  The -

I‘m sure you‘ll note that tomorrow on your show.

SMERCONISH:  I will.

MATTHEWS:  But that‘s true.  But let me ask you this, Michael.  You

said something rather strong last week.  You said that you thought the

issue here was not that it was a foreign company, a guise which a lot of

people are hiding behind.  I think Schumer and the others are saying, oh,

it‘s just that it‘s a foreign government-run corporation.  If it was Dutch

or Belgian or German or French, it wouldn‘t bother me.  I just don‘t want -

and I think you were more clear about where you drew the line. 

SMERCONISH:  I‘m crystal clear about this.  I‘m willing to come on your program and to say what everyone else is thinking, and that is we don‘t want Arab control of our ports.  I mean, the reality is, Chris, that we had foreign control of this transaction and nobody objected.  None of these individuals who have been on your program. 

The beef here is they‘re at war with radical Islam, and the Wahhabi sect in the United Arab Emirates, the same people who denied us the opportunity to take out bin Laden, are not to be entrusted with this responsibility.  There, I said it again. 

MATTHEWS:  OK, I‘m going to give Jim Zogby, who is a fellow communicate at a local church here, and I‘m going to give him a chance for a minute at least to respond to what you just said.  

JIM ZOGBY, ARAB-AMERICAN INSTITUTE:  Well, he‘s hyperventilating and getting lost in his own thoughts here.  I mean, I‘ve read what he‘s written, I‘ve seen what he‘s said.  Frankly, he‘s off the wall. 

MATTHEWS:  How so?

ZOGBY:  It is not a Wahhabi state.  If he‘s ever been to Dubai, he‘ll see it‘s far from a Wahhabi state.  In fact, it is one of the most liberal, one of the most modern, and one of the most progressive areas right now in the Middle East.  Over 500 American companies have their headquarters there.  TrMD+IN_rMDNM_hey are producing products for the world, and they‘re one of the true allies of the United States in the war on terror.  The argument...

MATTHEWS:  Why did they—just to slow you down here—why did they recognize the Taliban government of Afghanistan? 

ZOGBY:  Because we asked them to, that‘s why.  Because we asked them to, because we didn‘t assets on the ground there and so countries that were closely related to us provided us with valuable intelligence during that whole period.  At one point, the Clinton administration turned on that and said, we‘ve got to break it off, we‘ve got to isolate them, and the UAE was slow to do that.

But frankly, as I think “The Washington Post” said last week, if we judged people by whether or not they were committed to the war on terror before 9-11, the Clinton and Bush administrations would fail that test. 

MATTHEWS:  What about the money laundering story there? 

ZOGBY:  The money laundering was happening all over the world.  The Hawalas (ph) are operating everywhere.  Banks are—unfortunately, they don‘t do security checks when they give you an account. 

Most people, you know—I know that these guys, the 9-11 guys from stories I‘ve heard from former President Clinton, et cetera, had American credit cards that they maxed out on.  And so we could charge that American banks also helped fund the terrorism.  Banking is a fluid enterprise and it is not—when they give you money or wire you money, they are not complicit in the act. 

MATTHEWS:  Mike, do you want to say something now? 

SMERCONISH:  He can try to dismiss me as hyperventilating, but the sound byte that I offered to begin this segment are words that were said to me this morning by Secretary John Lehman of the 9-11 Commission.  All I‘ve done is parrot what that man said, with his credentials.

And Mr. Zogby, you need to take a look at page 138 of this document, the 9-11 Commission report.  Because it‘s there that it is detailed how Osama bin Laden was hunting with an Emirati prince in the aftermath of having declared a fatwa against the United States, and we denied the opportunity...

ZOGBY:  Michael, I not only read 130, I also talked to the principles involved. 

SMERCONISH:  As have I, sir.

ZOGBY:  And frankly, what I‘ve understood from them was that the intelligence was dubious and it was a risk not worth taking from our perspective.  We‘d already had, as you recall, the bombing of the pharmaceutical plant in Sudan.  We didn‘t need another crisis in the region. 

SMERCONISH:  Sir, Michael Scheuer ran the bin Laden desk at the CIA at the time, and on Friday I spoke to him and he explained that the trigger wasn‘t pulled on bin Laden because of the UAE, and you know that. 

ZOGBY:  It was pulled because Richard Clarke, after doing a careful intelligence assessment—that was his job, intelligence czar at the White House—concluded that it was too risky for the United States government to make an attack at that point.

SMERCONISH:  Because we didn‘t want to call a prince.

ZOGBY:  No.  Because we simply didn‘t know if bin Laden was there or if, in fact, was a bin Laden camp.  Michael Scheuer  -- you know, it‘s interesting.  People like to point to Michael Scheuer‘s book, but when he starts trashing Israel in about half of his book, nobody wants to quote that part of it. 

Look, this guy has issues and some problems.  And I think he‘s good in some areas and not in others.  But frankly, he‘s a little over the top and I think that‘s one of the reasons why he‘s no longer in the CIA.

MATTHEWS:  How about the madrassas—how about funding these schools where their kids are taught to hate our kids and taught to hate Israeli kids.  True or false? 

SMERCONISH:  Which madrassas are you talking about? 

MATTHEWS:  I‘m talking about those in the UAE...

(CROSSTALK)

ZOGBY:  No, that is simply not true.  Madrassa  -- the word for madrassas, actually, in Arabic, is school.  You went to a madrassa, I went to a madrassa.  Chris probably went to one also.  The madrassas that are the issue that we‘re concerned about are the ones that are in Pakistan on the border with Afghanistan.  Actually the U.S. government asked the Saudis and other Gulf states to help fund those madrassas for one reason: to absorb all the refugees who have left during the Soviet invasion, because it was necessary to find something for them to do. 

Now, the program that they were taught was wrong.  It was dealt with and frankly, the Soviets left, but the Saudis cut funding and it was an important thing to do.  In the UAE, the educational system is quite progressive, which is one of the reasons why they‘ve advanced and modernized to the degree that they have, number one, and number two, why they‘re in the position to buy the port company that we‘re talking about. 

MATTHEWS:  Jim, how many Arab-Americans are there? 

ZOGBY:  About three and a half million.

MATTHEWS:  Why is it so quiet? 

ZOGBY:  They‘re not quiet, actually. 

MATTHEWS:  I haven‘t heard—compared to Michael and the people who are critical of this deal, there hasn‘t been much...

ZOGBY:  You‘ve had them on the show.  This is the first time I‘ve been on the show.  If you invite us more, we‘ll talk more.  The fact is is that we‘ve got letters being written to members of Congress, letters being written to governors and mayors, complaining about the rhetoric that‘s been used about the UAE.  They‘re not involved right now in the port deal itself. 

But the language that‘s been used is shameful, irresponsible, and dangerous and I think damaging to our country‘s standing in the Middle East.  You know, the last allies we‘ve got in the Middle East right now are the business community. 

SMERCONISH:  The Israelis...

ZOGBY:  And we‘re losing the Arab business community. 

MATTHEWS:  Michael Smerconish, thank you very much for joining us tonight.  Jim Zogby, we thank you.  We‘ll be right back with more rough and tumble politics, with “Newsweek”‘s Howard Fineman and “Bloomberg”‘s Roger Simon. 

And a reminder, for the best political debate online, just go to Hardblogger, our political blog Web Site.  Just go to our Web site, hardball.msnbc.com. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER, (D) NEW YORK:  Simply a cooling off period, a time for Dubai Ports World and the administration to simply explain things is not good enough.  We need a full 45 day investigation. 

SEN. HILLARY CLINTON, (D) NEW YORK:  We expect this to be carried out in a rigorous and independent manner with a report to the Congress, giving us the opportunity to exercise our independent judgment. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  Those were New York Senators Chuck Schumer and Hillary Clinton sticking it to the president this past weekend.  Here to dig into the still unfolding port story, as well as the chaos in Iraq and the big 2006 elections, are Newsweek‘s chief political correspondent Howard Fineman and Bloomberg‘s chief political correspondent Roger Simon. 

Howard, I was watching on one of these televisions shows, they talked about the North American native-Americans and how they would torture each other.  What they would do is they would burn you alive but if you yelled out in pain, which they thought was too girlish they would lower temperature in the fire for a while.  All right?  Is that what Congress is doing here?  Slowing this down and letting the president simmer a little longer, but in the end, they‘re going to croak this deal? 

HOWARD FINEMAN, NEWSWEEK:  I think they will.  That‘s what I said last week.  I‘m sticking to it.  Ironically, it was the White House and the proponents of the Dubai case who said slow it down.  They‘re the ones whose idea it was to torture this frog one degree at a time. 

(CROSSTALK)

MATTHEWS:  Is there any way out of this but yes or no?  Will this deal go through or won‘t it?  Is there another way out? 

ROGER SIMON, BLOOMBERG POLITICAL CORRESPONDENT:  I get the idea that it won‘t go through. 

MATTHEWS:  That‘s a no.  That‘s one of the options. 

SIMON:  What choice do they have?  Immediate passage a of bill blocking the port take order.  A presidential veto and the override of a veto.  That was one appetizing choice.  The other choice is to delay the pain for 45 days and wait for these doomed reports to come out.  This may be 45 days—

MATTHEWS:  I‘m giving you the Karl Rove—you‘re going to get it in a minute.  You‘re sitting with the president and you say I couldn‘t sleep last night.  I stayed up until 10:30 thinking about it.  The president goes to bed 9:30.  He knows my jokes.  He says, am I better off a year from now or even in November when the elections are coming back?  Having lost this, cutting my losses, losing, the deal is off.  We‘ve got all kinds of problems in the Middle East but the deal is off and I‘m not responsible any more. 

Am I better off sticking to my guns, squeezing it, sustain the veto, squeaking out votes at a time, and having those ports run by the Emirates this fall?  What‘s better for me?  Politically? 

SIMON:  Better for him is to do a Harriet Miers and have UAE pull out.  We really want to do this but we understand it is problematic for Americans.  We don‘t want to cause trouble.  We‘ll pull out and give them something else down the road. 

MATTHEWS:  It is better to cut your losses.  Because? 

FINEMAN:  Because it takes too many steps to explain the possible upside of this to the American people. 

MATTHEWS:  And he is not particularly good at that. 

He is very good at warning us about dangers.  He is very good.  He was excellent at rallying the country to terrorism.  This requires a very subtle, low concept argument. 

FINEMAN:  And it requires a lot of explaining.  As Ricky Ricardo would say.  And it may be right.  As a matter of fact, the guys at the U.A.E.  Are probably the most pro Americans in that whole region right now.  But you have to go through assume steps.  Recognize the Taliban, blah, blah, blah. 

Bush would need a whole presidential campaign.

MATTHEWS:  They‘re ready to 9/11 him, the Democrats.  The minute he tries to be too sophisticated.  They‘ll make it simple. 

Let‘s turn to Hillary Clinton, President Bush and Karl Rove had this to say about Hillary in Bill Sammon‘s new book.  The president said, “She is a smart person, and obviously has got a lot of experience.”  That‘s the high road. “It is helpful, to a certain extent, to have seen the presidency and presidential campaigns firsthand.” 

Karl Rove said, “She is the dominant player on their side of the slate.  Anybody who thinks that she‘s not going to be the candidate is kidding themselves.”

Once again, here‘s Hillary‘s response from today. 

(BEGIN AUDIO TAPE)

CLINTON:  Karl Rove spends a lot of time obsessing about me.  He spends more time thinking about my political future than I do.”

MATTHEWS:  From Karl Rove.  Here‘s this one.  She‘s cautious, she‘s so cautious that it shows in her vote for the Iraq war.  He portrays that as a tactical move.  Her caution has led her to do things to sort of try to position herself as a centrist.  Here it is.  Her personal philosophy and her brittleness are her biggest weaknesses.  She‘s a liberal and she‘s brittle.  Meaning she has to figure out every deal.  She can‘t answer spontaneously or with any kind of honesty. 

SIMON:  When Republicans tell the Democrats who they will nominate, it who the Republicans want the Democrats to nominate.  They would like no better candidate than Hillary Clinton. 

MATTHEWS:  They want her. 

SIMON:  Of course they do.  They‘ve demonized her already.  They‘d rather demonize her in 2008. 

MATTHEWS:  Isn‘t there a chance she could win? 

FINEMAN:  There‘s a chance that any Democrat can win.  If you‘ve got a president with a 39 percent approval rating, with a vice president with a 29 percent approval rating, with a war that‘s increasingly contentious around the country, an economy that‘s increasingly divided between have‘s and have not‘s.  After eight years of one party in and that one party controlling the Congress, there‘s a chance. 

MATTHEWS:  Let‘s all make a bet here.  I think Hillary has a, right now, a 25 percent chance of being the next president.  One in four, it‘s a good three to one bet against her?  Is that a good way of looking at it?  She has the best chance to win the nomination.  She‘s up against a McCain, George Allen or somebody else.  One in four.  Would you give her that much of a chance? 

FINEMAN:  You‘re at Bloomberg.  Reduce it to the numbers.

MATTHEWS:  One out of four to bullish for her.  You would give her less of a chance? 

SIMON:  You can‘t put a number on it because you don‘t know who the Republicans are going to nominate. 

MATTHEWS:  That‘s why we‘re making the bet. 

FINEMAN:  I‘ll put a number on it.  She has a 45 percent chance of winning.

MATTHEWS:  That‘s high.

SIMON:  Can I say 44? 

(CROSSTALK)

MATTHEWS:  No, it‘s 25 percent flat against the field.  That‘s the bet right now.  Three to one bet on Hillary.

Thanks to Howard Fineman and Roger Simon.  Join us again tomorrow night at 5:00 and 7:00.

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   

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