Israel-Russia: Handshakes over Iran, Tensions over Hamas

Israeli-Russian relations continue to run along a knife edge. President Shimon Peres used a reception with Estonian President Toomas Hendrik Ilves on Monday to praise Russia for adopting a more aggressive policy on Iran. He praised Russian President Dmitry Medvedev, speaking at the G-20 meeting in Toronto, for noting the “worrying” US assessments that Iran could build a nuclear weapon within two years.

“There is no doubt that this declaration cannot be taken lightly, because until now, Russia had doubts about Iran’s seriousness and ability to build a nuclear bomb,” Peres said. “Therefore, Medvedev’s declaration is a serious change, and Israel appreciates this development.”

Israel Analysis: Dark Clouds Over Netanyahu Before Washington Visit (Yenidunya)

However, in a meeting in Israel on Tuesday, Foreign Minister Avigdor Lieberman reportedly told his Russian counterpart Sergei Lavrov that West Jerusalem opposed Moscow's recent advances toward Hamas.

Lavrov countered that it was impossible to ignore the Islamist organisation's popularity amongst Palestinians, particularly in Gaza. He continued: "Russia is doing the right thing by contacting Hamas."

Faced with the Hamas-Palestine issue overtaking the goodwill from its stance on Iran, the Kremlin is using another tactic now by bringing in the members of the Arab League. Before moving to the West Bank, Lavrov said at a press conference that the Quartet mechanism --- the US, UN, European Union, and Russia --- needed to be expanded to be more effective.

Which is another way of saying to West Jerusalem: the ball's back in your court.

Turkey Inside Line: Israel's Unmanned Planes, Iran's Uranium, Trouble with the EU, and More

Turkish-Made Drones to Take Over from Israeli Herons?: Turkish sources stated that the design, detail production, and assembly of the Turkish MALE (Medium Altitude Long Endurance) Unmanned Aerial Vehicle have been completed and first test flights will be carried out done in the second half of 2010.

[youtube]http://www.youtube.com/watch?v=FRQtM6xzRDI[/youtube]

Turkey Video Special: Prime Minister Erdogan’s 50 Minutes on US Television (29 June)

Director-General Muharrem Dortkasli said, "We can sell this vehicle for use by many friends and allies. That is our project."

Turkey's Call for Implementation of Iran's Nuclear Swap Deal: Turkey has called on Iran and Western powers to implement the nuclear fuel swap agreement, starting talks as soon as possible.

On Monday, responding to Iranian President Mahmoud Ahmadinejad’s remarks that Iran would not join discussions until late August, Turkish Foreign Ministry spokesman Burak Özügergin said:

If they do not sit down and talk, we will be in a worse-off situation this time next year. Time is working against a solution.

We would like this swap deal to be implemented and for negotiations to be held to resolve outstanding issues to secure a peaceful settlement to the dispute over Tehran's nuclear program.

Visa Requirements Lifted with Indonesia: On Tuesday, following a meeting between Turkish President Abdullah Gül and Indonesian President Susilo Bambangu Yudhoyono, agreement was reached to lift mutual visa requirements.

The approach on visas has been a major foreign policy strategy for the Erdogan Government. Requirements have been lifted with Syria, Pakistan, Albania, Jordan, Lebanon, Qatar, Russia, Iran, and other countries.

Turkey and Indonesia also signed eight agreements including cooperation between defense industries, cultural exchange programmes, and sea transportation . The two presidents agreed to increase the trade volume from the current $1.5 billion to $10 billion in the medium-term.

Turkey-EU Relations: Diplomatic sources expect the next chapter of European Union negotiations, focusing on food safety, veterinary safety, and phytosanitation, to be opened at an intergovernmental conference in Brussels on Wednesday.

There are 35 chapters that Turkey needs to fulfill to attain EU membership. Twelve have been opened, but 18 of the other 23 have been blocked, including eight relating to Ankara'ss failure to open its borders to EU member Cyprus.

Turkish Foreign Minister Spokesman Burak Özügergin said:

We expect consistency from the EU. You don’t open negotiation chapters but then say, [The] axis is shifted." The EU should be coherent.

There are 18 chapters which are blocked and we expect Belgium's rotating EU presidency to remove defects caused by the EU in the following period. The EU should consider where it wants to go with Turkey. Turkey recognizes EU membership as a strategic target.

Turkey-Russia Competition: Following the G20 summit in Toronto over the weekend, Turkey and Russia have opened a competition to host the bloc’s 2013 meeting.

Arkady Dvorkovich, a consultant to Russian President Dmitry Medvedev, said :

As all we know, the next summit in 2011 will be held in South Korea. The 2012 summit will be held in Mexico. Russia wants to host the 2013 gathering. On Sunday, the Russian government made its application. We know that Turkey has also already applied.

Israel Analysis: Dark Clouds Over Netanyahu Before Washington Visit (Yenidunya)

On Tuesday, Israeli Defense Minister Ehud Barak told Labor Party colleagues that there was close and intimate security cooperation between Israel and the US, with both parties waiting for the next steps in the diplomatic arena to ensure a long-term “special security relationship” and defend Israel’s military superiority in the region. Barak added that only a “decisive Israeli effort” to break the diplomatic stalemate over Palestine “can free Israel from the international siege.”

Later in the day, in a conference at Tel Aviv University’s Institute for National Security Studies, Barak talked about withdrawal and disengagement from Gaza, predicting: “Israel will have to take additional unilateral steps.”

Israel-Russia: Handshakes over Iran, Tensions over Hamas
Palestine Latest: Israel to Use “United Jerusalem” Card against Obama’s Gaza Demand?

In advance of Prime Minister Benjamin Netanyahu's meeting with President Barack Obama, this was a warning to the Government.

There has been speculation that Labor could leave the coalition if Netanyahu failed to control the coalition or to expand it by bringing in the "centrist" Kadima. Barak underlined the significance of the freeze on Israeli settlements in the West Bank,  set to expire at the end of September, and US mid-term Congressional elections in November, saying that the next few months will be “certainly important”.

Despite Barak's warning, Foreign Minister Avigdor Lieberman showed no change in his party's agenda: "There is absolutely no chance of reaching a Palestinian state until the year 2012. One can dream and imagine, but we are far from reaching an agreement."

It is not just Lieberman but also Israeli conservatives hindering Netanyahu's bargaining position. Jerusalem mayor Nir Barkat approved the plan calling for the razing of 22 Palestinian homes to make room for a tourist center in the Silwan neighborhood of East Jerusalem.

According to documents obtained by Haaretz, the department which inspects building plans before  submission to the planning committee found no less than 250 defects in the Silwan plan. Just a week before the plan was approved, Jerusalem city engineer Shlomo Eshkol submitted a list of 30 criticisms of the plan and demanded significant changes.

The Jerusalem municipality's legal adviser, Yossi Havilio, also found that the plan did not meet legal standards. To get around the difficulty, Barkat privately hired a lawyer to oversee the plan on behalf of the municipality.

All of these internal complications arise as US special envoy George Mitchell, before the fifth round of talks due to start on Thursday, has expressed to Netanyahu his wish to see more movement by Israel on core issues.

A senior U.S. administration official told Haaretz : "We want things to move faster." Then he added, "To date there has been insufficient progress."

US Foreign Policy Video & Analysis: CIA Director Panetta from Afghanistan to Iran (27 June)

The Director of the Central Intelligence Agency, Leon Panetta, was interviewed by Jake Panetta of ABC's This Week this morning. The 24 minutes proved a depressing illustration both of the illusions and self-constructed evasions of US foreign policy and the failure of a mainstream media to offer any meaningful interrogation. Tapper would put up a headline question on a topic. After Panetta offered his set-piece answer --- which was usually a deflection or even a half-truth rather than a response to the enquiry --- there would be no follow-up or further consideration.

Three examples....

1. AFGHANISTAN: Tapper's simplistic questions are "Are we winning?" and "Are the Taliban getting stronger?". Panetta's answer is an extraordinary shift: "We are disrupting Al Qaida's operations in the tribal areas of the Pakistan,", which of course says nothing about the Afghan conflict.

Tapper misses/ignores this and puts a set-piece follow-up, "What does winning look like?", allowing Panetta to go on about defeat of Al Qa'eda even though --- at another point in the interview --- the Director of the CIA has said there are no more than 100 members of the organisation in Afghanistan.

2. TARGETED KILLINGS: Asked about the US targeting of an American citizen, cleric Anwar al-Awlaki, Panetta offers the suspect claim, "We have no assassination list" and then makes the startling assertion, "He's a U.S. citizen, but he is first and foremost a terrorist and we're going to treat him like a terrorist." In effect, all questions of law and due process have been swept away by the CIA director in a single sentence.

And there's more. When Tapper tosses up the claim of a United Nations official that the CIA's target killings by drone aircraft in Pakistan may be suspect, Panetta simply declares, "There is no question that we are abiding by international law and the law of war" and then, rather than explaining what law the US is observing, invokes, "Look, the United States of America on 9/11 was attacked by Al Qaida."

Tapper does not follow up on either sweeping statement, despite the political and legal implications.

3. IRAN: Inevitably, Tapper's concern is whether Tehran has The Bomb. And Panetta feeds him with soundbites both vague to the point of irrelevance ("They continue to develop their nuclear capability") and specific to the point of being misleading ("We think they have enough low-enriched uranium right now for two weapons.")

At the same time, Panetta sneaks in one of his few substantial points in the interview: "There is a continuing debate [inside Iran] right now as to whether or nor they ought to proceed with the bomb....We would estimate that if they made that decision, it would probably take a year to get there, probably another year to develop the kind of weapon delivery system in order to make that viable."

Tapper misses the key point --- that the CIA has no firm evidence on the intentions of the Iranian Government --- and thus offers no space to develop the point.

TRANSCRIPT

TAPPER: Good morning. When the President takes a look at the world, he's confronted with threats literally all over the map. In Afghanistan, U.S. and international forces struggle to make headway against the Taliban. Iran moves ahead with a nuclear program in defiance of international condemnation.

North Korea becomes even more unpredictable as it prepares for a new supreme leader. New terror threats from Pakistan, Yemen, Somalia. No one knows these threats better than the president's director of the Central Intelligence Agency, Leon Panetta. He's been in the job for 16 months, and he's here with me this morning, his first network news interview. Mr. Panetta, welcome.

PANETTA: Nice to be with you, Jake.

TAPPER: Now, this was a momentous week, with President Obama relieving General [Stanley] McChrystal of his command. When this was all going down, you were with General [David] Petraeus at a joint CIA-CENTCOM conference. And I want to ask you about the war in Afghanistan, because this has been the deadliest month for NATO forces in Afghanistan, the second deadliest for U.S. troops, with 52 at least killed this month. Are we winning in Afghanistan, and is the Taliban stronger or weaker than when you started on the job?

PANETTA: I think the President said it best of all, that this is a very tough fight that we are engaged in. There are some serious problems here. We're dealing with a tribal society. We're dealing with a country that has problems with governance, problems with corruption, problems with narcotics trafficking, problems with a Taliban insurgency. And yet, the fundamental purpose, the mission that the president has laid out is that we have to go after Al Qaida. We've got to disrupt and dismantle Al Qaida and their militant allies so they never attack this country again.

Are we making progress? We are making progress. It's harder, it's slower than I think anyone anticipated. But at the same time, we are seeing increasing violence, particularly in Kandahar and in Helmand provinces. Is the strategy the right strategy? We think so, because we're looking at about 100,000 troops being added by the end of August. If you add 50,000 from NATO, you've got 150,000. That's a pretty significant force, combined with the Afghans.

But I think the fundamental key, the key to success or failure is whether the Afghans accept responsibility, are able to deploy an effective army and police force to maintain stability. If they can do that, then I think we're going to be able to achieve the kind of progress and the kind of stability that the president is after.

TAPPER: Have you seen any evidence that they're able to do that?

PANETTA: I think so. I think that what we're seeing even in a place like Marjah, where there's been a lot of attention -- the fact is that if you look at Marjah on the ground, agriculture, commerce is, you know, moving back to some degree of normality. The violence is down from a year ago. There is some progress there.

We're seeing some progress in the fact that there's less deterioration as far as the ability of the Taliban to maintain control. So we're seeing elements of progress, but this is going to be tough. This is not going to be easy, and it is going to demand not only the United States military trying to take on, you know, a difficult Taliban insurgency, but it is going to take the Afghan army and police to be able to accept the responsibility that we pass on to them. That's going to be the key.

TAPPER: It seems as though the Taliban is stronger now than when President Obama took office. Is that fair to say?

PANETTA: I think the Taliban obviously is engaged in greater violence right now. They're doing more on IED's. They're going after our troops. There's no question about that. In some ways, they are stronger, but in some ways, they are weaker as well.

I think the fact that we are disrupting Al Qaida's operations in the tribal areas of the Pakistan, I think the fact that we are targeting Taliban leadership -- you saw what happened yesterday with one of the leaders who was dressed as a woman being taken down -- we are engaged in operations with the military that is going after Taliban leadership. I think all of that has weakened them at the same time.

So in some areas, you know, with regards to some of the directed violence, they seem to be stronger, but the fact is, we are undermining their leadership, and that I think is moving in the right direction.

TAPPER: How many Al Qaida do you think are in Afghanistan?

PANETTA: I think the estimate on the number of Al Qaida is actually relatively small. I think at most, we're looking at maybe 60 to 100, maybe less. It's in that vicinity. There's no question that the main location of Al Qaida is in tribal areas of Pakistan.

TAPPER: Largely lost in the trash talking in the Rolling Stone magazine were some concerns about the war. The chief of operations for General McChrystal told the magazine that the end game in Afghanistan is, quote, "not going to look like a win, smell like a win or taste like a win. This is going to end in an argument."

What does winning in Afghanistan look like?

PANETTA: Winning in Afghanistan is having a country that is stable enough to ensure that there is no safe haven for Al Qaida or for a militant Taliban that welcomes Al Qaida. That's really the measure of success for the United States. Our purpose, our whole mission there is to make sure that Al Qaida never finds another safe haven from which to attack this country. That's the fundamental goal of why the United States is there. And the measure of success for us is do you have an Afghanistan that is stable enough to make sure that never happens.

TAPPER: What's the latest thinking on where Osama bin Laden is, what kind of health he's in and how much control or contact he has with Al Qaida?

PANETTA: He is, as is obvious, in very deep hiding. He's in an area of the -- the tribal areas in Pakistan that is very difficult. The terrain is probably the most difficult in the world.

TAPPER: Can you be more specific? Is it in Waziristan or--

PANETTA: All i can tell you is that it's in the tribal areas. That's all we know, that he's located in that vicinity. The terrain is very difficult. He obviously has tremendous security around him.

But having said that, the more we continue to disrupt Al Qaida's operations, and we are engaged in the most aggressive operations in the history of the CIA in that part of the world, and the result is that we are disrupting their leadership. We've taken down more than half of their Taliban leadership, of their Al Qaida leadership. We just took down number three in their leadership a few weeks ago. We continue to disrupt them. We continue to impact on their command-and-control. We continue to impact on their ability to plan attacks in this country. If we keep that pressure on, we think ultimately we can flush out [Osama] bin Laden and Zawahiri and get after them.

TAPPER: When was the last time we had good intelligence on bin Laden's location?

PANETTA: It's been a while. I think it almost goes back, you know, to the early 2000s, that, you know, in terms of actually when he was moving from Afghanistan to Pakistan, that we had the last precise information about where he might be located. Since then, it's been very difficult to get any intelligence on his exact location.

TAPPER: We're in a new phase now of the war, in which the threat can come from within, the so-called homegrown terrorists or the lone wolf terrorists. I'm talking about Faisal Shahzad, the would-be Times Square bomber; Umar Farouk Abdulmutallab, the failed Christmas Day bomber; Lieutenant (sic) Nidal Hasan, the Fort Hood shooter. What do these incidents and the apparent increased occurrences of these types of attacks say about the nature of the threat we face?

PANETTA: I think what's happened is that the more we put pressure on the Al Qaida leadership in the tribal areas in Pakistan -- and I would say that as a result of our operations, that the Taliban leadership is probably at its weakest point since 9/11 and their escape from Afghanistan into Pakistan. Having said that, they clearly are continuing to plan, continuing to try to attack this country, and they are using other ways to do it.

TAPPER: Al Qaida you're talking about.

PANETTA: That's correct. They are continuing to do that, and they're using other ways to do it, which are in some ways more difficult to try to track. One is the individual who has no record of terrorism. That was true for the Detroit bomber in some ways. It was true for others.

They're using somebody who doesn't have a record in terrorism, it's tougher to track them. If they're using people who are already here, who are in hiding and suddenly decide to come out and do an attack, that's another potential threat that they're engaged in. The third is the individual who decides to self-radicalize. Hasan did that in the Fort Hood shootings. Those are the kinds of threats that we see and we're getting intelligence that shows that's the kind of stream of threats that we face, much more difficult to track. At the same time, I think we're doing a good job of moving against those threats. We've stopped some attacks, we continue to work the intelligence in all of these areas. But that area, those kinds of threats represent I think the most serious threat to the United States right now.

TAPPER: All three of those individuals were tied in some way to an American cleric who is now supposedly in Yemen, Anwar al-Awlaki. He has said to be on an assassination list by President Obama. Is that true and does being an American afford him any protection that any other terrorist might not enjoy?

PANETTA: Awlaki is a terrorist who has declared war on the United States. Everything he's doing now is to try to encourage others to attack this country, there's a whole stream of intelligence that goes back to Awlaki and his continuous urging of others to attack this country in some way. You can track Awlaki to the Detroit bomber. We can track him to other attacks in this country that have been urged by Awlaki or that have been influenced by Awlaki. Awlaki is a terrorist and yes, he's a U.S. citizen, but he is first and foremost a terrorist and we're going to treat him like a terrorist. We don't have an assassination list, but I can tell you this. We have a terrorist list and he's on it.

TAPPER: "The New York Times" reported this week that Pakistani officials say they can deliver the network of Sirajuddin Haqqani, an ally of Al Qaida, who runs a major part of the insurgency into Afghanistan into a power sharing arrangement. In addition, Afghan officials say the Pakistanis are pushing various other proxies with Pakistani General Kayani personally offering to broker a deal with the Taliban leadership. Do you believe Pakistan will be able to push the Haqqani network into peace negotiations?

PANETTA: You know, I read all the same stories, we get intelligence along those lines, but the bottom line is that we really have not seen any firm intelligence that there's a real interest among the Taliban, the militant allies of Al Qaida, Al Qaida itself, the Haqqanis, TTP, other militant groups. We have seen no evidence that they are truly interested in reconciliation, where they would surrender their arms, where they would denounce Al Qaida, where they would really try to become part of that society. We've seen no evidence of that and very frankly, my view is that with regards to reconciliation, unless they're convinced that the United States is going to win and that they're going to be defeated, I think it's very difficult to proceed with a reconciliation that's going to be meaningful.

TAPPER: I know you can't discuss certain classified operations or even acknowledge them, but even since you've been here today, we've heard about another drone strike in Pakistan and there's been much criticism of the predator drone program, of the CIA. The United Nations official Phil Alston earlier this month said quote, "In a situation in which there is no disclosure of who has been killed for what reason and whether innocent civilians have died, the legal principle of international accountability is by definition comprehensibly violated." Will you give us your personal assurance that everything the CIA is doing in Pakistan is compliant with U.S. and international law?

PANETTA: There is no question that we are abiding by international law and the law of war. Look, the United States of America on 9/11 was attacked by Al Qaida. They killed 3,000 innocent men and women in this country. We have a duty, we have a responsibility, to defend this country so that Al Qaida never conducts that kind of attack again. Does that make some of the Al Qaida and their supporters uncomfortable? Does it make them angry? Yes, it probably does. But that means that we're doing our job. We have a responsibility to defend this country and that's what we're doing. And anyone who suggests that somehow we're employing other tactics here that somehow violate international law are dead wrong. What we're doing is defending this country. That's what our operations are all about.

TAPPER: I'd like to move on to Iran, just because that consumes a lot of your time as director of the CIA. Do you think these latest sanctions will dissuade the Iranians from trying to enrich uranium?

PANETTA: I think the sanctions will have some impact. You know, the fact that we had Russia and China agree to that, that there is at least strong international opinion that Iran is on the wrong track, that's important. Those sanctions will have some impact. The sanctions that were passed by the Congress this last week will have some additional impact. It could help weaken the regime. It could create some serious economic problems. Will it deter them from their ambitions with regards to nuclear capability? Probably not.

TAPPER: The 2007 national intelligence estimate said all of Iran's work on nuclear weapons ended in 2003. You don't still believe that, do you?

PANETTA: I think they continue to develop their know-how. They continue to develop their nuclear capability.

TAPPER: Including weaponization?

PANETTA: I think they continue to work on designs in that area. There is a continuing debate right now as to whether or nor they ought to proceed with the bomb. But they clearly are developing their nuclear capability, and that raises concerns. It raises concerns about, you know, just exactly what are their intentions, and where they intend to go. I mean, we think they have enough low-enriched uranium right now for two weapons. They do have to enrich it, fully, in order to get there. And we would estimate that if they made that decision, it would probably take a year to get there, probably another year to develop the kind of weapon delivery system in order to make that viable.

But having said that, you know, the president and the international community has said to Iran, you've got to wake up, you've got to join the family of nations, you've got to abide by international law. That's in the best interests of Iran. It's in the best interests of the Iranian people.

TAPPER: The administration has continually said that Iran has run into technical troubles in their nuclear program. Is that because the Iranians are bad at what they do, or because the U.S. and other countries are helping them be bad at what they do, by sabotaging in some instances their program?

PANETTA: Well, I can't speak to obviously intelligence operations, and I won't. It's enough to say that clearly, they have had problems. There are problems with regards to their ability to develop enrichment, and I think we continue to urge them to engage in peaceful use of nuclear power. If they did that, they wouldn't have these concerns, they wouldn't have these problems. The international community would be working with them rather than having them work on their own.

TAPPER: How likely do you think it is that Israel strikes Iran's nuclear facilities within the next two years?

PANETTA: I think, you know, Israel obviously is very concerned, as is the entire world, about what's happening in Iran. And they in particular because they're in that region in the world, have a particular concern about their security. At the same time, I think, you know, on an intelligence basis, we continue to share intelligence as to what exactly is Iran's capacity. I think they feel more strongly that Iran has already made the decision to proceed with the bomb. But at the same time, I think they know that sanctions will have an impact, they know that if we continue to push Iran from a diplomatic point of view, that we can have some impact, and I think they're willing to give us the room to be able to try to change Iran diplomatically and culturally and politically as opposed to changing them militarily.

TAPPER: There was a big announcement over the weekend. South Korea and the U.S. agreed to delay the transfer of wartime operational control to Seoul for three years because of the belligerence of North Korea. Kim Jong-il appears to be setting the stage for succession, including what many experts believe that torpedo attack in March on a South Korean warship. They believe that this is all setting the stage for the succession of his son, Kim Jong-un. Is that how you read all this and the sinking of the warship?

PANETTA: There is a lot to be said for that. I think our intelligence shows that at the present time, there is a process of succession going on. As a matter of fact, I think the....

TAPPER: Was the warship attack part of that?

PANETTA: I think that could have been part of it, in order to establish credibility for his son. That's what went on when he took power. His son is very young. His son is very untested. His son is loyal to his father and to North Korea, but his son does not have the kind of credibility with the military, because nobody really knows what he's going to be like.

So I think, you know, part of the provocations that are going on, part of the skirmishes that are going on are in part related to trying to establish credibility for the son. And that makes it a dangerous period.

Will it result in military confrontation? I don't think so. For 40 years, we've been going through these kinds of provocations and skirmishes with a rogue regime. In the end, they always back away from the brink and I think they'll do that now.

TAPPER: The CIA recently entered into a new $100 million contract with Blackwater, now called Xe Services for Security in Afghanistan. Blackwater guards allegedly opened fire in a city square in Baghdad in 2007, killing 17 unarmed civilians and since then, the firm has been fighting off prosecution and civil suits. Earlier this year, a federal grant jury indicted five Blackwater officials on 15 counts of conspiracy weapons and obstruction of justice charges. Here's Congresswoman Jan Schakowsky, a Democrat from Illinois, who's a member of the House Intelligence Committee.

(BEGIN VIDEO CLIP)

REP. JAN SCHAKOWSKY (D), ILLINOIS: I'm just mystified why any branch of the government would decide to hire Blackwater, such a repeat offender. We're talking about murder, a company with a horrible reputation, that really jeopardizes our mission in so many different ways.

(END VIDEO CLIP)

TAPPER: What's your response?

PANETTA: Since I've become director, I've asked us to -- asked our agency to review every contract we have had with Blackwater and whatever their new name is, Xe now. And to ensure that first and foremost, that we have no contract in which they are engaged in any CIA operations. We're doing our own operations. That's important, that we not contract that out to anybody. But at the same time, I have to tell you that in the war zone, we continue to have needs for security. You've got a lot of forward bases. We've got a lot of attacks on some of these bases. We've got to have security. Unfortunately, there are a few companies that provide that kind of security. The State Department relies on them, we rely on them to a certain extent.

So we bid out some of those contracts. They provided a bid that was underbid everyone else by about $26 million. And a panel that we had said that they can do the job, that they have shaped up their act. So there really was not much choice but to accept that contract. But having said that, I will tell you that I continue to be very conscious about any of those contracts and we're reviewing all of the bids that we have with that company.

TAPPER: This month, Attorney General Eric Holder announced that Assistant United States Attorney John Durham is close to completing a preliminary review of whether or not there's evidence that CIA agents or contractors violated the law when they used brutal methods, some call it torture, to interrogate terrorist detainees. Do you oppose this investigation? Are your officers -- your current officers, concerned about their legal jeopardy in the future under a future administration and what kind of guarantees can you give them?

PANETTA: Well look, CIA is an agency that has to collect intelligence, do operations. We have to take risks and it's important that we take risks and that we know that we have the support of the government and we have the support of the American people in what we're doing. With regards to this investigation, I know the reasons the attorney general decided to proceed. I didn't agree with them, but he decided to proceed. We're cooperating with him in that investigation. I've had discussions with the attorney general. He assures me that this investigation will be expedited and I think in the end, it will turn out to be OK. What I've told my people is please focus on the mission we have. Let me worry about Washington and those issues. And I think that's -- they have and I think frankly the morale at the CIA is higher than it's ever been.

TAPPER: We only have a few minutes left, but I want to ask, you're now privy to information about some of the ugliest, toughest tactics carried out by intelligence agencies with the purpose of defending our nation, stuff that probably as a member of Congress or OMB director of White House chief of staff, you suspected, but didn't actually know for a fact. How rough is it, and does any of it ever make it difficult for you to sleep at night or run to do an extra confession?

PANETTA: Well, I didn't realize that I would be making decisions, many decisions about life and death as I do now. And I don't take those decisions lightly. Those are difficult decisions. But at the same time, I have to tell you that the most rewarding part of this job -- I mean, we had a tragedy where we lost seven of our officers and it was tragic. But at the same time, it also provided a great deal of inspiration because the quality of people that work at the CIA are very dedicated and very committed to trying to help save this country and protect this country. They're not Republicans, they're not Democrats, they're just good Americans trying to do their job and that, I think, is the most rewarding part of being director of the CIA.

TAPPER: What's the flip side? Sleepless nights?

PANETTA: The flip side is you have to spend an awful lot of time worried about what the hell is going to go on our there and that keeps me up at night.

TAPPER: What -- this is my last question for you because we only have about a minute left -- what terrorist threat are we as a nation not paying enough attention to?

Or forget terrorist threat, what threat are we not paying enough attention to?

PANETTA: I think the one I worry about is, again, the proliferation of nuclear weapons and the fact that one of those weapons could fall into the hands of a terrorist. I think that's one concern. And there is a lot of the stuff out there, and you worry about just exactly where it's located and who's getting their hands on it.

The other is the whole area of cyber security. We are now in a world in which cyber warfare is very real. It could threaten our grid system. It could threaten our financial system. It could paralyze this country, and I think that's an area we have to pay a lot more attention to.

TAPPER: All right, Director Leon Panetta, thank you so much for coming here today. Really appreciate it.

Israel-Palestine Latest: The East Jerusalem Demolition/Settlements Argument

Following this week's "redevelopment" plan --- the demolition of 22 houses in East Jerusalem's Silwan neighborhood --- Israel's Public Security Minister Yitzhak Ahronovitch told the Knesset on Wednesday that Israeli police expects "widespread disturbances" in and around the area.

The UN later  Wednesday called Israel's plan to demolish Arab homes "unhelpful" and "contrary to international law".

"The Secretary-General is deeply concerned about the decision by the Jerusalem municipality to advance planning for house demolitions and further settlement activity in the area of Silwan," UN Chief Ban Ki-moon's press office said.

Gaza Latest (25 June): Iranian Flotilla “Cancelled”; US Says Aid Ships “Irresponsible”; Europe Calls for End to Blockade
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On Thursday, the Parliamentary Assembly of the Council of Europe (PACE) called on Israel to halt the development of new settlements in occupied territories and East Jerusalem.

However, as the end of the current freeze on settlement constructions in the West Bank approaches, the Likud Central Committee voted on Thursday to resume building both in East Jerusalem and the West Bank.

There is one twist in the story: Prime Minister Benjamin Netanyahu did not participate in the meeting, thus escaping for the moment criticism from Washington (for endorsing the renewal) or from the Israeli public (for opposing it).

September will be a decisive month on the issue. Until then, Netanyahu may be looking for the conditions to turn indirect discussions into direct talks, moving the burden of responsibility from settlements to Palestinian participation in negotiations.