TWAW: "...what else do we really expect them to say?"

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MICHAEL WARE, CNN CORRESPONDENT (voice-over): These American soldiers might not know it, but they have a bounty on their heads, according to U.S. military intelligence. A senior U.S. military official tells CNN Iran's Quds Force is offering reward money to Iraqi militia who kill GIs. The Quds Force is an elite unit of Iran's Revolutionary Guard.


FOREMAN: Michael Ware on Tuesday with a report that puts Iranian activities in Iraq in a more sinister light than ever before. He also reported that fighters from Lebanon's Hezbollah militia were brought in by Iran to train Iraqi insurgents. Michael joins us now from Baghdad and to discuss this and all the other news out of Iraq, CNN military analyst Brigadier General David Grange, U.S. Army, Retired, in Chicago and senior Pentagon correspondent Jamie McIntyre at the Pentagon.

First, let's get this out of the way. The Iranian foreign ministry in "The Los Angeles Times" on Tuesday responded to allegations that Iran brought Hezbollah fighters to Iraq by saying, "It is another silly and ridiculous scenario brought up by Americans based on a baseless remark of a person. It is a sheer lie, and it is ridiculous." Michael Ware, what's your response to that?

WARE: My response is, what else do we really expect them to say? This is the precise point of using proxies in Iraq. The idea is that inevitably when the people who are working with them are finally killed or captured, you need to be able to sever that link. That's why Iranian Quds Forces themselves, the officers, aren't carrying out these activities. Yes, they're in Iraq. We know that. Many of them have been detained. Indeed, the Iranian embassy is full of them here in Baghdad right now. They're not the ones on the ground with the paramilitaries. It's these cutouts. And indeed, what we know and hasn't been revealed before is that the Lebanese Hezbollah man who has been arrested, this operation's commander, has said that it was indeed the Hezbollah leader, Sayyed Hassan Nasrallah, who personally sent him, not to Iraq but to Iran. There he spent a year training Iraqis ready to go back and fight Americans. It was the Iranians who then said, "Can you go over the border?"

FOREMAN: Let's take a look at the map so everybody has a perspective on this. When we look at Iraq and its immediate proximity to Iran, we're talking about people being trained here, sent into Iraq to fight or in some cases coming in from Lebanon over here where Hezbollah is based and passing through Syria or over Syria into Iraq to fight. These would be the proxies you're talking about in Hezbollah. Jamie, the Pentagon has been saying some version of this sort of thing has been happening for quite some time.

JAMIE McINTYRE, CNN CORRESPONDENT: That's right. And again, just on Friday in the latest briefing from one of the commanders in Iraq, Major General Rick Lynch, again cited the number of Iranian munitions that are found. He was asked if anyone had been detained specifically from Iran. He said no, but he still pointed a very accusing finger at Iran. Clearly he's convinced that Iran is continuing to be what they call an unhelpful influence in Iraq.

FOREMAN: Jamie, broadening the picture out now to the question of the number of U.S. troops there to fight against all of these forces, wherever they're coming from the general also said something fascinating to you in an interview. Let's take a listen to this about the idea of reducing the number of U.S. troops there.


MAJ. GEN RICK LYNCH, CMDR, MULTINATL DIVISION CTR: It would be a mess Jamie. It would be a mess. Those surge forces are giving us the capability we have now to take the fight to the enemy. And the enemy only responds to force and we now have that force. We can conduct detailed kinetic strikes. We can do cordon and searches and we can deny the enemy the sanctuaries. If those surge forces goes away, that capability goes away. And the Iraqi security forces aren't ready yet to do that.


FOREMAN: Jamie, how afraid are the generals that now with General Petraeus in command, they are moving in the right direction, things actually are making progress but that the clock in Washington has just run out?

McINTYRE: Well, you saw that comment from General Lynch. It followed the one on Thursday from General Mixon, his counterpart to the north. There's a united front from front line commanders who are urging patience for the surge. Their biggest fear now is that the surge is going to be successful in the short term and then the troops are going to be pulled out and it's all going to go back to the way it was. That's what they're warning about now, and they say they're not paying attention to what's happening in Washington, but they can feel the heat of the disillusionment in Washington, the impatience with the policy, and they're very concerned that the rug might be pulled out from underneath them just when they think they have a strategy that's working.

FOREMAN: Another big defection this week, Senator Pete Domenici from New Mexico, another Republican, had this to say: "It is the Iraqi government that is failing to make even modest progress to help Iraq itself or to merit the sacrifices being made by our men and women in uniform. I am unwilling to continue our current strategy." Yet another big leader saying we can't wait until the fall to see how the surge is doing. General, how big of an issue will this be for the men on the ground who have been told the surge will be respected by the politicians in Washington at least until September?

BRIG. GEN. DAVID GRANGE, U.S. ARMY (RETIRED): Well, it will be a big deal to the troops if they don't believe that the political leadership, the elected leadership or the people themselves are not behind this current strategy. You know, it amazes me when people say it's time for a new strategy. Well, a new strategy was just implemented. And yet there's some debate going on of not giving it the time it needs to work. There are small pockets of success. Let it run its course a little while. These things don't happen overnight. It is starting to work. They have a good strategy. They have good leaders in there. They're all in agreement. They don't have to pull from one area to another hot spot and back and forth as they used to do. Now they can surge throughout a big area, do something and hold the area and transition to Iraqis and build that confidence. It must be given some time to work.

FOREMAN: Michael Ware, you've had some of the most pessimistic outlooks at times that anything can be done to make things better, but you're on the ground there. You see this so-called surge at work. Would you say to the politicians here, "Yeah, give it until September, see how it works out," or would you say, "Look, we've waited and waited and waited. Maybe you're on the right thing to change now"?

WARE: What I would say is quite the contrary. I would say that, you know, I'm sorry, but American forces took this country. A set of circumstances emerged and whether you like it or not, whether you were for or against this war from the beginning, whether you're for or against the surge now, I'm sorry, America has very little choice but to stay, and for the long-term. I mean, this country is broke. America's enemies are emboldened and stronger. Their spheres of influence are increasing as a direct result of the U.S. presence here and the ongoing war. And what, you want to turn around and pull out and leave it behind to them? If that's what you want to do, I mean, if America wants to pull out now, the question is, is America ready to pay the price?

FOREMAN: General Grange, what do you think that price would be, very briefly?

GRANGE: I think Mike's right on. I think that right now, many of our adversaries smell blood and they have positioned themselves through a very detailed and thoughtful strategy on how to negate the proudness of America to cause us to have to pull out as early as possible and take advantage of that void. I think you would really look at -- again, whether you like the war or not -- you would look at some type of an expanded regional conflict if that in fact happened.

FOREMAN: And Jamie, very, very briefly, what happens if we do start pulling out right away? Is that the sense around the Pentagon, that there would be a much, much bigger problem in the future?

MCINTYRE: That's the argument. But the counter-argument, of course, is that the result is going to be the same, whether the U.S. stays or not and that the U.S. ought to consider cutting its losses and moving out of there, and that no amount of time is going to make that much difference. And of course, the real problem is nobody really knows which one of those scenarios will play out.

FOREMAN: It seems like that's always the problem. Jamie, Michael, General, thank you all.