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ERIN BURNETT OUTFRONT

Interview with Representative Peter King; U.S. Breaks up Major Terror Plot; Interview With Sen. Robert Menendez

Aired October 11, 2011 - 19:00   ET

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


ERIN BURNETT, HOST: And we're on the "Frontline" in Mexico where authorities first learned of the plot to assassinate the Saudi Arabian ambassador, Adel Al-Jubeir. The nation's ambassador for nearly five years confident of the king, we know him.

And the "Bottom Line" on the two Iranian men arrested in connection with the plot, one of them a U.S. citizen appeared in a federal courthouse today.

Let's go OUTFRONT.

I'm Erin Burnett and OUTFRONT tonight a major terror plot on U.S. soil foiled. A senior administration official tells me that this was quote, "international murder for hire". Here's what we've been told. Two men charged in an alleged plot to assassinate the Saudi Arabian ambassador to the United States.

Both are Iranian. One is also a naturalized U.S. citizen who is in custody and identified as 56-year-old Manssor Arbabsiar. Now Arbabsiar appeared in a federal courthouse in downtown Manhattan this afternoon. He did not enter a plea. But according to the complaint that we read, Arbabsiar planned for someone to kill the Saudi Arabian ambassador at one of his favorite restaurants in Washington, D.C.

He told an informant that mass casualties didn't matter, saying quote "if the hundred go with him (EXPLETIVE DELETED) them." The plot itself is a work of intrigue. It began this spring when Arbabsiar met in Mexico with a DEA informant posing as a member of one of Mexico's biggest and most violent drug cartels.

Over the next few months, Arbabsiar got the informant to agree to assassinate the ambassador for a fee of $1.5 million. Now he also planned to pursue other violent missions on American soil including an attack on the Israeli Embassy in Washington. With help from Mexican government, Arbabsiar was arrested at New York's JFK Airport on September 29th. He confessed.

Now, U.S. officials have been talking throughout the day saying that what is perhaps most important here is the direct link that could exist to the Iranian government to the very highest levels. Apparently the -- Arbabsiar's cousin was a big general in the Iranian military in its Revolutionary Guard Al-Quds unit, which is essentially a foreign Special Forces division. It could go to the top of the Iranian government. And Arbabsiar also gave officials and the FBI a lot of other information. Peter King is on the inside of this. He's the chair of the Homeland Security Committee in the House. Congressman King thanks so much for being with us tonight. It is an amazing story no matter how you look at this. When did you learn about it?

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE: Actually, I just learned this morning. The FBI contacted me under the law they dealt with the Intelligence Committee, I believe the chairman and ranking member of the Intelligence Committee. But I was briefed on it this morning and you're right.

This is -- to me it's really historic in a terrible sense of the word. The Iranians have crossed a red line. I mean if this had been carried out, you're talking about an act of murder carried out by a foreign government on our soil of a foreign diplomat. Basically this would have been an act of war.

I mean this is -- this really goes beyond anything that I'm aware of that's happened before. Certainly something as flagrant and this notorious and has raised this whole, to me, the relationship between the United States and Iran to a very precipitous level.

BURNETT: Well I want to ask you, Congressman King, Dianne Feinstein telling our own Kate Bolduan just a few moments ago -- I'm just reading off my BlackBerry -- that it's surmising on her part, before a country would go after an ambassador of another country, in a third country just like this, that they would have had the acceptance of the government, I don't see how this could be done any other way. What is your information or sense here of how high this does go in the Iranian government?

KING: Well, again, I'm just surmising also. But I also know that Chairman Rogers of the Intelligence Committee, he basically has the same opinion as Senator Feinstein and that's mine as well that you could not have planned something of this magnitude without the very top levels of the Iranian government knowing it, the supreme leader, the president. This is such -- again, this violates all international norms, violates international law. Basically, you're talking about an act of war. I think we have to -- the United States has to really consider taking very significant action.

I don't think sanctions alone are enough. I think we should consider actually deporting or removing the Iranian officials at the U.N., the staff at the U.N. Also the Iranian intersection here in Washington because we can't allow this to go without a strong reaction by us, otherwise we'd be encouraging the Iranians and others to realize that it's open season here in the United States. We can't allow that.

BURNETT: And I mean from the complaint that the government has filed here, that the quote that they have -- Arbabsiar giving to an informant is quote "they want the ambassador killed. If a hundred go with him (EXPLETIVE DELETED) them." That clearly indicates that they were willing to have mass civilian casualties. KING: Absolutely. I mean they -- it's bad enough to go after the ambassador, any ambassador. But also to run the risk and not care about killing hundreds of Americans, innocent people, again, this is an act of war if it had been carried out. And to me they were plotting an act of war, so I think we have to avoid -- and I agree with Governor Kean. It's one thing when it's al Qaeda, which is an international movement and it's evil, but it's not officially sanctioned by a government. To have a government which has an army, which has an armed forces, which has people in charge, for them to take or contemplate or plan an action such as this, we have to have a very strong response.

BURNETT: And Chairman King, I am a little confused because obviously, you know sanctions. The U.S. imposed more financial sanctions today. That was a part of what they did. But from the statements we have very careful to make a point that there's been no shift in military preparedness or ships or anything in the Persian Gulf. Why is it, given what you're saying that we seem to be explicitly backing off the military side?

KING: Well, I don't want to be getting out in front of the president. I'm saying that I would support whatever action the president wishes to take as commander in chief. I think we should certainly consider some at least signs of military activity by us -- you know movement of troops or carries whatever -- something to indicate how seriously we're taking this. And as I said, another measure we could take also would be to remove from the country the Iranian officials at the U.N. and in Washington.

That would also send a strong signal. But I agree, we should not be, I don't think, automatically saying we're not going to have a military action. I think everything should be kept on the table when you're talking about a potential attack against the United States, an act of war.

BURNETT: And let me ask you what this means in terms of the next steps here, vis-a-vis Iran's nuclear program, which just seems at least in terms of the media or discussion to have been a little bit on the back burner. Is this something now that we should become more aggressive on?

KING: Again I -- without going into all the details, people at various levels of the government, high levels of our government are very concerned about the Iranian nuclear program and this maybe would prompt even more so. But I believe that we are very concerned about it and that's really as far as I'll go. But I -- we cannot ignore the reality of that. And there are -- the people in our government and in other governments know how serious it is and I'll just leave it at that.

BURNETT: All right. Well thank you very much, Chairman King. We appreciate your taking the time, giving us all that information. Thanks again.

KING: Erin, thank you very much.

BURNETT: All right. Good to see you, sir.

And OUTFRONT next, the U.S. citizen arrested claims his cousin is a quote, "big general in the Iranian military". Iran, though, has come out and said allegations of its involvement is a fabrication. We're going to get to the bottom of that and what America can do to retaliate. We're also going to let you know about Adel Al-Jubeir, the alleged target of the plot, the ambassador at the center. And what Defense Secretary Leon Panetta told us about the ongoing threat of homegrown terror.

(COMMERCIAL BREAK)

BURNETT: It reads like the pages of a Hollywood script. That's how FBI Director Robert Mueller described the alleged plot cooked up by Iran to kill the Saudi ambassador to the United States. But when Iran spoke they said just like a movie, it is made up and this is the quote CNN received from the Iranian government.

Quote, "This is a child's story. From our perspective, this is a fabrication." Jamie Rubin is former assistant secretary of state during the Clinton administration joins us now. Frances Fragos Townsend, CNN national security contributor and former homeland security adviser to President Bush is with us.

And we want to start with a fundamental question of whether senior government officials in Iran really knew what was going on. I know there's some complexity here. The government obviously says no, but Iran expert Reza Aslan came OUTFRONT earlier. Here's what he said.

(BEGIN VIDEO CLIP)

REZA ASLAN, AUTHOR, "NO GOD BUT GOD": Iran gains nothing and certainly cannot afford open confrontation with the United States. So the accusation that this alleged plot can be traced directly to the highest levels of Iran's government I think deserves a good bit of skepticism.

(END VIDEO CLIP)

BURNETT: What do you think, Jamie, Iran gains nothing, doesn't go to the top?

JAMIE RUBIN, FMR. ASST. SECY. OF STATE, CLINTON ADMIN.: I think one shouldn't be skeptical the way Reza Aslan suggested. I think one should work on the assumption that this high level Special Forces group that's been responsible for terrorist acts in Iraq against U.S. forces, back against U.S. forces in Saudi Arabia in 1995. The same group from the IRGC, the Revolutionary Guards wouldn't take such a dramatic step of what Peter King called a potential act of war without assuming they had the approval at the top. So I would switch the burden of proof in this case not to be skeptical about it, but to assume that the supreme leader, Khamenei, would have in some way authorized his people to continue this covert war against Saudi Arabia through this method of a crazy scheme involving the DEA informant. BURNETT: And what about the IRGC, the Revolutionary Guards? I mean I know the numbers are all over. You know we've done reports somewhere between 30 and 80 percent of the economy is controlled by them. I know that's a big range. But obviously you can get numbers all over the map. But so the first thing the U.S. has done, Fran is to come out and increase sanctions, which we already had a lot of sanctions. Is that the best we can come up with?

FRANCES FRAGOS TOWNSEND, CNN NAT'L SECURITY CONTRIBUTOR: Well, I think you also heard Secretary Clinton in her statement indicate that they're going to the U.N. Security Council. They've not yet called an emergency meeting. They're begun to brief allies. The British have come out and said that they -- they're going to support the U.S. investigation. They'll support this -- the imposition of sanctions. But the real question when you go into the Security Council is Russia and China. Will this be enough? Will the facts of this case push them to be more aggressive and support sanctions against Iran?

BURNETT: And Jamie, obviously China is a big problem here, the biggest buyer of Iranian crude oil and their foreign currency as well. Is this going to be enough to get them onboard?

RUBIN: I think if these set of facts are demonstrated, if additional intelligence is provided to Russia and China, they would have to acknowledge that not only is this a state sponsorship of terrorism but against another party, Saudi Arabia, who both of these countries want to be on the right side of. Saudi Arabia is the largest provider of oil in the world. And this attack is directly on the king's closest adviser; Adel Al-Jubeir is very close to King Abdullah. So I think they'll -- it will put those countries in the uncomfortable position of having to choose between Iran and Saudi Arabia. My guess is if the Saudis are as angry as they should be that they should be able to convince China and Russia to do more than they have up to now.

BURNETT: And why do you think, Fran, the Saudis haven't -- they have put out a brief statement, but they haven't come out with a formal response yet. Why the delay, do you think?

TOWNSEND: Well I do think, look, we understand that this was a plot uncovered by the United States. That the Saudis have been in the receiving mode. Tom Donilon, President Obama's national security adviser, visited the king and briefed him on this. They have kept the Saudis sort of up to speed on the investigation. But I think for the moment, the Saudis are content to allow the United States to make public the details of the case and begin the international action against them and the Saudis and it's typical. It's sort of characteristic of their foreign policy to sit back, see how the coalition is forming and then weigh in once they have a better sense of the support for it.

BURNETT: It is amazing you point out that to force China to pick between Saudi Arabia and Iran would be incredible if the United States could force that to happen.

RUBIN: Well look the battle that's going on publicly, privately, covertly in the religious sphere between Iran and Saudi Arabia has been going on for a very long time. And this, I would argue, is a substantial escalation of that war for influence and power in the greater Middle East area. And because it's so personal, because it involves the assassination of a -- you know the close adviser to the king, I think it will change something dramatic and Iran will be now on the back foot, on the nuclear issue, on the terrorism issue, and if, for example, they were to support another attack on the United States forces in Iraq through some equipment, I think that would increase now the chances that the United States being forced to respond militarily to Iran.

BURNETT: And final word on that. Forced to respond militarily, can we? We've got defense cuts. We've got several fronts already. Do we have the forces and the ability to do that? The government today has made it very clear we're not shifting ships. We're not moving anyone in the Persian Gulf. They're trying to take military off the table, but if we needed to --

TOWNSEND: No, that's right and there's been for years contingency planning for such an eventuality. Yes, there will be great challenges to military intervention in Iran, but you'd be sure the Department of Defense over the last decade has made contingency plans --

(CROSSTALK)

UNIDENTIFIED FEMALE: That's exactly right.

BURNETT: All right. Well thanks so much. Appreciate both of you being with us, Jamie, Fran -- great to see you both in person.

(CROSSTALK)

BURNETT: All right and still OUTFRONT, CNN's national security analyst Peter Bergen gives us more details about the man at the center of this, Adel Al-Jubeir, the alleged target of the plot and Mexico's role. This is actually amazing when you read through the documents and this is where it really gets like a spy novel. One of the most vicious, dangerous violent cartels in Mexico involved. We have that story.

(COMMERCIAL BREAK)

BURNETT: And now more on the target of the alleged assassination plot, Adel Al-Jubeir. Now we know the ambassador. He graduated from the University of North Texas in 1982; he got his masters degree from Georgetown. Now he's not a royal, but he is a very close confidant of the Saudi King Abdullah. He served as an ambassador to Washington for nearly five years. My impression of him, very pro-American, very erudite, very likeable, very casual, especially in contrast with other Saudi officials, helpful to journalists and actually for those of you who think of Saudi Arabia and think of some of the issues like women driving or women's inability to drive there, very pro-woman, understanding of those issues and how big of a P.R. issue they are for Saudi Arabia. In short, an easy guy to talk to.

CNN's national security analyst Peter Bergen knows him extremely well. And Peter what's your impression of the ambassador?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Well, I think a lot of the things that you said are accurate, Erin. I mean I can't claim to know him extremely well. I know him as about as well as several hundred other people in Washington. You know I've had dinner with him both in Washington and his house in Riyadh. He is an extremely intelligent, well-informed, you know a guy who understands the United States very well, studied in the United States, has probably spent more of his adult life in the United States than any other country perhaps except Saudi Arabia at this point.

He is very close to King Abdullah. He was very close to Crown Prince Abdullah before he assumed the monarchy when I visited Riyadh in 2005 for the first counterterrorism conference that Saudi Arabia had had. Fran Townsend was there representing the United States, but it was very clear when you attended the conference that Adel Al-Jubeir was essentially telling Crown Prince Abdullah at the time who the guests were, what they did, really kind of guiding him through basically the people who were attending the conference. He -- you know one thing, Erin that struck me in the indictment, which if you read --

BURNETT: Yes.

BERGEN: -- that it refers to a restaurant in Washington --

BURNETT: Right.

BERGEN: -- where the attack was supposed to happen. I mean senators were going to be there, 100 to 150 people being killed potentially. I think that very much corresponds to Cafe Milano in Georgetown where you know I've met Ambassador Jubeir on a number of occasions in the past. So the universe of restaurants in Washington where somebody like this would go routinely and they correspond to the indictment really does suggest it was Cafe Milano in Georgetown.

BURNETT: Oh, wow, Cafe Milano in Georgetown and I want to just -- for those, Peter, who are just tuning in -- just to read to them out of the complaint. The words used when talking about killing as you said possibly 100 casualties from Arbabsiar, was quote, "If the hundred go with him, (EXPLETIVE DELETED) them", which was obviously just an indication of how little they cared about casualties.

Can I ask you, Peter, why you think the Saudi government has not yet come out with a more detailed or formal response from Riyadh, just a very short statement that the ambassador released?

BERGEN: I mean that is routine for the Saudis. I mean this is often that they aren't -- as Fran indicated earlier -- you know if they don't quite know what the right response is or haven't formulated one, this is not a government that is routinely making available statements to journalists. Sometimes you'll see something come out of the Ministry of the Interior, which is the most important ministry in the country in terms of national security. But these are pretty infrequent. I mean this is not a government that is routinely giving press conferences. So they'll bide their time and wait and produce a fuller statement when I think more facts are known.

BURNETT: You said it very diplomatically, not known to giving press conferences, to say the least. Peter Bergen, thank you very much. We appreciate it. And again, Peter's reporting or sense is that a possible location for the restaurant which was not named in the complaint could have been Cafe Milano in Georgetown.

Well coming up, the former governor of New Jersey and the chairman of the 9/11 Commission, Tom Kean, joins us. I'm going to ask him if he's surprised by this attack and if he expects more in the future.

And then Senator Robert Menendez, a member of the Committee on Foreign Relations, when did he know about the threat and how will it affect America's relationship with rival Iran?

And Manssor Arbabsiar, he's a naturalized American citizen. How serious is the homegrown terror threat? OUTFRONT back in a minute.

(COMMERCIAL BREAK)

BURNETT: We continue to follow the breaking news of a foiled terror plot on American soil. But now tonight's "OutFront Five", five other stories making news today. First, the U.S. Senate defeated President Obama's $447 billion jobs plan, which included the millionaire surtax.

All Republican senators voted against, along with two Democrats, Ben Nelson of Nebraska, Jon Tester from Montana. The vote though not official yet, Democratic (INAUDIBLE) won't arrive in D.C. for the vote until around 9:00 tonight. Even with her expected yes, the final tally will be 51-48 shy of the 60 needed to pass.

Number Two: An Israeli soldier who spent more than five years in captivity close to being released. Israeli Prime Minister Benjamin Netanyahu tells CNN he brokered a deal to have Hamas release Gilad Shalit in the next couple of days. Hamas says in exchange for his release more than 1,000 Palestinian prisoners will be freed.

Number three: Kansas City firefighters searched the backyard well today in the search for Lisa Irwin. Police say they found no sign of the baby after receiving an anonymous tip which led them to the backyard of a vacant home. Baby Lisa was born 11 months ago today and was last seen October 3rd.

Number four: GOP frontrunner Mitt Romney picking up a major endorsement today from Chris Christie. It got overshadowed by the terror attack news. But the New Jersey governor said Romney is the best prepared candidate to beat President Obama in the election. Christie last week ended all talk of his own candidacy.

And, number five: it has been 67 days since the U.S. lost its top credit rating. What are we doing to get it back?

(BEGIN VIDEOTAPE) BURNETT: And now, international murder for hire. That's how a senior administration official described to me the planned assassination of the Saudi Arabian ambassador to the United States by an Iranian American.

Tom Kean chaired the 9/11 Commission and in preventing future terror attacks in this country. He's also the former New Jersey governor.

Great to have you with us, Governor Kean. And let me ask you that question. I know that the U.S. officials have been working on this for a few months. But does an attack of this nature which seems out of a spy novel, so -- full of intrigue, does it surprise you?

TOM KEAN, FMR. CHAIRMAN, 9/11 COMMISSION: It totally surprised me. It's uncharacteristic of the Iranians or anybody else. The idea of assassinating somebody using criminal money, drug money from Mexico to actually do an assassination in this nation's Capitol, that's pretty close to an act of war. I mean, you don't go in somebody else's capital and blow up anybody.

BURNETT: That's --

KEAN: It's a tremendous risk.

BURNETT: I wanted to ask you about that because, obviously, Eric Holder, the attorney general, has stopped from fully implicating the highest levels of the Iranian government, but others like Diane Feinstein are saying she doesn't see any other way that it could have happened. If the highest levels of the Iranian government were involved, we would have to go with military action, wouldn't we?

KEAN: Well, we got to find out first what happened. You know the Iranian government is not autonomous. There's a high ayatollah and then there's a leader and there's a bunch of other people. And they're not all together.

So, whether this is done by a faction in the Iranian government without the knowledge of the rest of the Iranian government, it just seems so strange. I mean, there are -- they're known as professionals in the intelligence world. We don't like what they do. But they're known as professionals.

And the idea that they would attempt something like this, use huge amounts of money brought in from criminal activity in Mexico to try and assassinate somebody in the nation's capital is crazy. It makes no sense to me and I don't understand it.

BURNETT: So where do we go from here do you think, Governor Kean? Especially since you've looked into so many of the threats to the United States, so many of the terrorist threats. If this is out of left field from you, what do you think is next?

KEAN: Well, it's very different from the other. The other threats we've been investigating come from al Qaeda, come from unorganized terrorists and ungoverned parts of the world. This seems to be attached to a government. And the government is making the plot. The government is trying to assassinate a leader of another government in our nation's capital. I mean, that's what makes so extraordinary and it shows the tensions I guess, between the moderate Arabs, like Saudi Arabia and the radicals in Iran. And that's a tension that we always knew was great, but we didn't think it would spill over into assassinations, particularly assassinations into our own country.

BURNETT: It is astonishing. Well, thank you so much, Governor Kean. We appreciate you taking the time.

KEAN: Thank you.

(END VIDEOTAPE)

BURNETT: Governor Kean using the word astonishing and extraordinary.

Let's bring in Senator Robert Menendez, a member of the committee on foreign relations, to talk about that.

Thank you so much for being with us, sir. I really appreciate talking to you again. You heard Governor Kean with the 9/11 Commission describing this as an extraordinary event. Would you agree?

SEN. ROBERT MENENDEZ (D), NEW JERSEY: Well, it is extraordinary.

But by the same token, this is why I have targeted Iran and the Iranian revolutionary guard in the division that was supposedly trying to carry this out. In the sanctions legislation that is law and in the new sanctions legislation that I've sponsored that has 76 bipartisan sponsors in the United States Senate to consolidate our sanctions law because the Iranians are known to export terrorism and they're in a regional fight from, you know, Sunni-controlled Saudi Arabia versus Shiite-controlled Iran. And so -- in that sphere of influence, they see Saudi Arabia as a major challenge to them.

And so, think of the Machiavellianism of taking out the Saudi ambassador here in the United States and the conflict in the first instance that might have created for the United States in that part of the Arab world. So, I think it's an amazing plot, but nonetheless, the Iranians have shown their propensity to exploit terrorism.

BURNETT: How fully have you been briefed at this point, Senator?

MENENDEZ: Well, we've had a series of briefings but largely in the public sphere, we've asked for the intelligence briefings that follow on here from both justice and the other entities to get a full sense of what's happened. But I have to commend the law enforcement intelligence agencies here because, in essence, we prevented what would have been a plot that was unfolding from ever actually being anywhere near from taking place.

But, obviously, there was a desire. The Iranian revolutionary guard is at the highest levels of the Iranian government. They operate so much of Iran's -- not only military elements but also its economic elements.

BURNETT: Yes.

MENENDEZ: So, for them to be involved here clearly shows that this was in the highest levels.

BURNETT: Let me ask you, Peter King was describing this, you know, if it is at the highest level as an act of war, would you agree with that assessment? And if so, does it mean that military action needs to be on the table.

MENENDEZ: Well, obviously, it didn't take place and this was interceded. I'm not sure that we're talking about a full engagement act of war. But what it does allow us to do is two things immediately. Go into the United Nations and now getting the Chinese and others to finally engage in the full enforcement of the sanctions that the U.N. has passed against Iran, against its nuclear weapon desires. And secondly, it should be moving our legislation now in the Congress so that we can get -- close those loopholes that exist in the sanctions legislation and tighten the noose.

BURNETT: I know you and I have worked on that in prior stories about those loopholes, which are amazing that they do still exist. But let me just ask you this. Do you think that this is possible, Jamie Rubin was bringing this up, that China, which is the biggest buyer of Iranian crude and provider of their foreign currency and really driving their economy, could this force China to pick between two huge crude oil suppliers, Saudi Arabia and Iran and end up really isolating Iran?

MENENDEZ: I think it's a tremendous opportunity for the United States and the world to create that type of pressure. I think it's a great opportunity for the Saudis who were clearly the first instance of who was going to be attacked, through their ambassador, to be part of making that case as well.

And I think we have an opportunity here to change the dynamics and close those back door channels that have been opened to Iran, particularly in refined petroleum products that they desperately need and their financial institutions as well.

BURNETT: All right. Senator Menendez, thank you very much for being with us. We appreciate it.

Senator Menendez, of course, working to close some of the legislation that allows for loopholes for American companies subsidiaries which operate in Iran and also a longtime proponent of more curtailment of Iran's nuclear program.

Let's bring in CNN's legal analyst -- senior legal analyst Jeff Toobin.

Jeff, it was interesting to me when we were looking at the complaint, which I know you read through backwards, forward, every word of it. Not the first time we've seen the U.S. government make significant allegations in terror-related case, take them all the way to trial. 2006, attempt to blow up the Sears Tower in Chicago, the alleged underwear bomber trial right now, which people say is a slam- dunk.

Is this case really buttoned up?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Not clear. There's one big part of this case we haven't discussed yet, and that is the use of the confidential informant. Footnote one -- very interesting part of this complaint says this confidential informant is an accused drug dealer who is currently awaiting some sort of trial in the United States. We don't know. But he was paid by the Drug Enforcement Administration and is our agent.

If this goes to trial, and we're certainly a long way from that, you can be sure that this defendant's lawyer is going to say, this whole thing was cooked up by this guy to work off a beef. That is a part of this case. Obviously, they're taped. Money changed hands.

BURNETT: Yes.

TOOBIN: But you can be sure that's a big part.

BURNETT: It is -- I mean, this is part of what makes it like a spy novel. It is a bit bizarre. It would seem just looking at this from the --

TOOBIN: Governor Kean was saying that. Absolutely, yes.

BURNETT: Why wouldn't you, if you were going to do this, why go through a Mexican drug cartel and try pay them to come to Washington and do it for you? It does seem a little bit derivative, doesn't it?

TOOBIN: It's odd, but crime is odd. And people behave oddly. If you want to do something criminal and really dangerous, why not involve a Mexican drug cartel?

The other part of the case, came up in the Sears Tower case, which you mentioned, you know, in terrorism cases, you never want to wait too late obviously because then the terrorist act could take place. But if you do it too early, as some people said happened in the Sears Tower, the whole case never comes together and the jury doesn't believe that there ever was a serious plan to start with. So, that's an issue that will probably get played out at trial as well.

BURNETT: And especially because it didn't get far enough for them to say perhaps what the exact restaurant was. I mean, we don't have the full details laid out.

TOOBIN: And the money, you can be sure that they're going to put this in the confidential informant. They're going to say he was profiting. It was his idea. He was the one who was trying to get rich, not -- the Iranian government had nothing to do with this.

BURNETT: What does it say that if $1.5 million fee, which is what apparently an ambassador assassination costs, the price for that. Now, there were $200,000 wired. We need a downpayment. The money came immediately.

Is that helping make the case that you got sign off from high?

TOOBIN: Enormously. That is a huge advantage for the government here because that says -- you know, the worry that you have in a case like this is it's just talk. People just blowing smoke, promising things they can't deliver.

Once you have a wire transfer, an actual transfer of a significant amount of money, that shows much more that this was a real thing. Remember, there's that other defendant, this is a two- defendant case. There's the other defendant in Iran, he's never coming back. That guy is never -- he's never going to show up and get fingerprinted in the southern district of New York.

BURNETT: Most likely not.

TOOBIN: But it's another irritant in relations that they are harboring a fugitive.

BURNETT: All right. Jeff Toobin, thanks so much. Appreciate it as always.

All right. And now, let's check in with John King. He's got a look at what's coming up on "A.C. 360."

Hey, John.

JOHN KING, CNN HOST: Hello to you, Erin.

More breaking news ahead on "360." New details exclusive to "360" on just how elements of the Iranian government were allegedly behind that plot to commit murder right here on U.S. soil, to kill the Saudi ambassador possibly in a crowded restaurant in Washington, using explosives.

Erin, Peter King, the chairman of the House Committee on Homeland Security, just said on your show, quote, "all options should be on the table. We're holding Iran accountable." We'll ask our panel just what that means.

Also ahead, the raw politics of a tightening race of a Republican presidential nomination. Herman Cain under attack from a number of African-American leaders for his recent comments about race. And Mitt Romney challenging Rick Perry to repudiate recent attacks on the Mormon faith.

Those stories and much more from Anderson's week-long in-depth look at bullying in our schools. Tonight, the roots of bullying.

It's all coming up at the top of the hour -- Erin.

BURNETT: All right. Thanks to you, John King. We'll look forward to that.

And still OUTFRONT: Manssor Arbabsiar, the terror suspect, a 56- year-old naturalized American citizen, once again, threats against America by a homegrown person.

And the role Mexico played in bringing this plot to light. Jeff Toobin touched upon it. We're going to talk about it more. We'll be back.

(COMMERCIAL BREAK)

BURNETT: We do this at the same time every night, our "Outer Circle." We're reaching out to sources around the world.

And first to the Middle East, the center of the story tonight. Saudi Arabia expressing appreciation to the U.S. for stopping the plot to kill its ambassador.

Mohammed Jamjoom is in Abu Dhabi tonight.

Mohammed, how does this help U.S.-Saudi relations?

MOHAMMED JAMJOOM, CNN CORRESPONDENT: Erin, this is important because the U.S.-Saudi relationship has deteriorated lately. Now, while the leadership of both countries maintained that their key alliance is still strong, analysts have been saying that the Saudis have been upset with the Obama administration ever since it distanced itself from former Egyptian President Hosni Mubarak, that they saw that as leading directly to this ouster.

The Saudi ruling family has felt very threatened by the regional uprisings of the Arab spring. But today, with the Saudis showing how grateful they are to the U.S. for their actions, that clearly helps to repair any damage to this relationship moving forward -- Erin.

BURNETT: Mohammed, thank you.

And next to Iran, an aide in Iran's president -- to Iran's president -- denying that the country was involved in the plot to kill the Saudi ambassador.

Reza Sayah is in Islamabad, Pakistan.

Reza, what else did Ahmadinejad's advisor have to say?

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Erin, it's a children's story. That's what the spokesperson for Iranian President Mahmoud Ahmadinejad is calling these allegations by the U.S. Justice Department against Iran. The Iranian's president's office saying this plot is a fabrication by Washington to distract the American public from domestic problems like unemployment. So, a strong, almost mocking denial from Iran.

It's important to remember these are purely allegations coming from Washington. No one has been convicted. Even so, these allegations are sure to ratchet tensions between Tehran and Washington. Many U.S. officials already talking about slapping Iran with tougher sanctions -- Erin.

BURNETT: Reza, thank you. And now to Detroit where a Nigerian terrorism suspect went on trial for his alleged involvement in a plan to blow up a plane on Christmas Day in 2009.

Deborah Feyerick is in Detroit.

Deb, what happened in court today?

DEBORAH FEYERICK, CNN CORRESPONDENT: Erin, the accused underwear bomber looked comfortable and in control, wearing crumpled African tunic. At one point, he was surrounded by his lawyer, the judge, even the prosecutors.

They gave their opening statements saying Abdulmutallab traveled to Yemen where he was recruited in a mosque. He agreed to carry a bomb on board a plane. The condition that he targets, a U.S. passenger jet and that he explode the device over U.S. airspace. Now, prosecutors describe how he ritually purified himself before igniting the device. The passenger next to him, exclaiming, "Hey, dude, your pants are on fire" -- Erin.

BURNETT: All right. Deb, thank you very much.

And now, we are joined on the phone by Mr. Mohammad Khazaee, he is the permanent representative for Iran to the United Nations.

And, sir, we very much appreciate your coming on.

Obviously, we have seen the Iranian government's statement saying that the government was not involved. What more can you tell us?

MOHAMMAD KHAZAEE, AMBASSADOR OF IRAN TO THE U.N. (via telephone): Thank you, Erin.

Actually, although we are used to hear baseless allegations against my country by some U.S. officials in the last two decades, but to be honest with you, I was so shocked to hear such a big lie, if I may say.

Therefore, I felt oblige to answer to the question, not because big lie is being fabricated right before our eyes, but I think also because the -- I don't know how to put it -- this Hollywood script have been so blatant as to insult the common sense of every ordinary people even in United States. Accusing Iran of plotting to murder an ambassador from the Islamic neighboring country in Washington actually is poisoning (INAUDIBLE) by some and one politician is -- who are very experienced in fabricating security threats to terrorize the public in order to advance their political agenda and to quench the thirst for inventing enemies.

We should not forget Iraqi war on what actually happened in Iran, in Iraq, that was based on such allegations in that country as well.

BURNETT: Sir, can I ask you about --

KHAZAEE: Therefore -- sorry? BURNETT: I just wanted to ask you about the names, though, because one thing here in the complaint from the U.S. government was not just Manssor Arbabsiar, but also Ali Gholam Shakuri, which according to Mr. Arbabsiar, is a senior member of the Iranian revolutionary guard corps. Is that so?

KHAZAEE: Look, I do not know the exact name, but my point is that the whole issue is a provocation against Iran. So, the issue is not the name of some people that was, you know, that were accused or that was publicized by the media. In my view and in my government's view, it is the most absurd thing ever to implicate Iran in an assassination plot in the United States.

Therefore, I have to make the statement that we strongly reject this shameless accusation and warn the American public to be vigilant about such well-thought vicious campaigns which are definitely aimed at furthering political pressure against my country. This is the main point.

BURNETT: All right. Well, thank you very much for calling in and making your point, given the Iranian take on the story. Mr. Mohammed Khazaee, which is the permanent representative to the United Nations in New York -- thanks, again, sir. We appreciate it.

And we're going to have more on the terror plot after the break.

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BURNETT: Spoiled plot another example of the threat of homegrown terror. The 56-year-old Manssor Arbabsiar is a naturalized citizen with both an Iranian and the U.S. passport. He lives in Round Rock, Texas.

Again and again we've seen plots against the homeland by one of our own or living among us. Major Nidal Hasan, a U.S. soldier and the Ft. Hood shooter born and raised in Virginia, killed 13 at a military base in Texas. Faisal Shahzad, a Connecticut man who spent nearly a dozen years in this country radicalized after traveling to Pakistan.

In my interview with Defense Secretary Leon Panetta last week, he told me his biggest worry was a lone wolf at home.

(BEGIN VIDEO CLIP)

LEON PANETTA, U.S. SECRETARY OF DEFENSE: The one that worries me the most in my prior job as director of the CIA was the lone individual in this country who is here and suddenly becomes self- radicalized and suddenly goes out, as we saw with the Ft. Hood individual, he suddenly pulls a gun and starts killing people.

(END VIDEO CLIP)

BURNETT: Seth Jones is a counterterrorism expert. He's worked for U.S. Special Operations, now a senior political analyst with Rand. Juan Zarate is former deputy national security advisor for combating terrorism during the second Bush administration. Welcome to both of you.

And, Seth, let me -- let me start with you. Why this now it seems again and again every case is homegrown or naturalized?

SETH JONES, SR. POLITICAL SCIENTIST, RAND CORP: Well, I think one of the things that's changed over the last several years is the ability of a range of terrorist groups overseas to get their messages out on to the Internet, to use mediums like YouTube, Twitter, MySpace, to help radicalize individuals where they don't always need to go overseas to conduct training, but they can radicalize based on downloading lectures by individuals like Anwar al-Awlaki from their own house. I mean, that clearly has been a change over the past two to three years.

BURNETT: Juan, how can we combat it? Because what Defense Secretary Panetta was telling me was -- well, the problem essentially seems to be we can't?

JUAN ZARATE, CBS NEWS SR. NATIONAL SECURITY ANALYST: Well, the first thing I would do is distinguish between the Sunni extremist threat that we've seen in a lot of these individuals have been radicalized, and what this case seems to suggest, which is a bit more like an espionage case, but I would say that you have to have combat this at the community level. You have to have counter-messaging. You have to have counter-messaging on the Internet.

I think one of the reasons that groups outside of the U.S. are trying to recruit U.S. citizens or to enlist them is they're having a harder and harder time actually getting in. And so, that's what makes American operatives all the more attractive.

BURNETT: Seth, so what is your take on what the biggest risks are? I mean, I understand Juan, you know, making a clear distinction on this case with its role with the Iranian factions as opposed to those other cases.

JONES: Well, I think the biggest risk we've seen is an individual like Najibullah Zazi who does some training overseas, but he is an American citizen and has access to a legitimate American passport or a visa and can come and conduct attacks.

One of the things that's been a little disturbing over the past several years, though, has been the unwillingness of a range of Muslim communities to actually out these individuals. I mean, with the Zazi case, again, he was preparing suicide attacks in the New York City subway. He boiled the hydrogen peroxide in the house of his uncle he watched jihadi videos and nobody reported it.

This clearly shows a lack of trust, I think, between a part of the community and law enforcement and government officials.

BURNETT: Juan, final word to you, if you can respond to that point.

ZARATE: Well, I think the trust has gotten better and better over time. And I think you've seen, especially after the Ft. Hood shootings, a number of Muslim American organizations, individuals, imams speaking out against not just violent extremism here but voices of extremism like Anwar al-Awlaki.

I think as well, we've got a problem here with a state-sponsored act potentially as alleged and the ability of an American to actually organize a fairly sophisticated attack. That to me is a worrisome trend, and the ability to do that, whether on behalf of a state or behalf of an ideology -- that's problematic.

BURNETT: All right. Well, thanks very much to both of you. Really appreciate you taking the time.

JONES: Thanks.

ZARATE: Thanks, Erin.

BURNETT: All right. Well, tomorrow, we're going to be getting personal with Michele Bachmann. Questions and answers we want to get for you on OUTFRONT.

And Thursday, Herman Cain making news, surging in almost every poll there is. He doesn't hold back his opinion. We're going to have an interview you haven't seen anywhere else. We're looking forward to that.

Meantime, the breaking news coverage here on CNN of an absolutely extraordinary terrorist plot out of spy novel on American soil continues. John King is in for Anderson Cooper tonight. "A.C. 360" starts right now.