'Countdown with Keith Olbermann' for Dec. 27

Guests: Hillary Mann Leverett, Richard Wolffe, Dana Milbank, Senator Chris Dodd, Evan Kohlmann

KEITH OLBERMANN, HOST (voice-over): Pakistan, 6 a.m. Friday, December 28. After a day of chaos and rage, extraordinary, even for a nation founded in chaos and rage, its government and ours shout terrorism.

But did not a president who gained office by military coup have the most to gain from the death of Benazir Bhutto?

Which of these stories will you be talking about tomorrow?

BENAZIR BHUTTO, FORMER PAKISTANI PRIME MINISTER: I don't believe that any true Muslim will make an attack on me, because Islam forbids attacks on women.

OLBERMANN: Seventy days after Benazir Bhutto returned to Pakistan, made that statement, she has been assassinated at Rawalpindi. The murderer shooting her, then blowing himself up, killing at least 20 others.

Pakistan's army and its nuclear weapons on red alert. Pakistan's parliamentary elections due, in 12 days, now in doubt.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The United States strongly condemns this cowardly act by murderous extremists who are trying to undermine Pakistan's democracy.

OLBERMANN: But those who undermine Pakistan's, quote, democracy: extremists or loyalists to President Musharraf?

The murders were terrorists. What kind with Evan Coleman. What now of President Bush's $5-billion investment in that alleged democracy with Richard Wolffe. The immediate impact on Pakistan with former National Security Council member Hillary Manlever.

What happens next there and here with Senator Chris Dodd of the foreign relations committee. And why the first place this all could be felt might be the Iowa caucuses, with Dana Milbank.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We mourn her loss.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: This reminds us how we have to redouble our efforts in that area of the world.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I hate for anything like this to be the cause of any political gain for anybody.

OLBERMANN: All that and more, now on Countdown.

BECK: Good evening. This is Thursday, December 27, 313 days until the 2008 presidential election. And this is a special edition of Countdown.

Sixty years after her nation was founded in bloodshed chaos, 30 years after her father's government, the first two civilian administration of her country, ended in bloodshed and chaos.

Benazir Bhutto, Pakistan's last popularly elected leader, and since her return from exile in October, leader of the opposition to General Pervez Musharraf, was assassinated in the city of Rawalpindi Thursday afternoon, local time.

Her death has thrown Pakistan, fragile and critical and armed with nuclear weapons, into even more chaos than usual. Her murderers could be. Anyone from Islamic extremists to Musharraf extremists.

Her assassination could affect everything from the hunt for Osama bin Laden to the Iowa caucuses. Our fifth story on the Countdown will benefit tonight from the analysis of Richard Wolffe, Dana Milbank and, from the foreign relations committee, Senator Chris Dodd of Connecticut.

First, what has happened in Pakistan. The 54-year-old former prime minister returned from exile and turned leader of the opposition. Speaking at an afternoon campaign rally.

When it was over, Ms. Bhutto walking off the stage to get into a bullet-proof SUV, after which point, all might still have been well, had she not emerged through the vehicle's sunroof to acknowledge cheering supporters one last time. It was at that moment that her attacker shot her in the neck and chest before blowing himself up. Mrs. Bhutto was also hit by shrapnel from that bomb.

She never regained consciousness. She was rushed to hospital, taken into emergency surgery and there she died, about an hour after the attack.

At least 20 others were also killed in the bombing. And nine more dead in the rioting that broke out across the country in the aftermath of the news of the assassination.

Pakistan's President Musharraf blaming Islamic extremists for her death. He mentioned al Qaeda, even though it appears Ms. Bhutto herself feared General Musharraf would have her killed. A letter she wrote before her return from exile, suggesting that if she was indeed assassinated, Musharraf should investigate his own security services.

It was followed up with an e-mail, held for several months by CNN, to be read only in the event that she were, indeed, assassinated. In it, she wrote, "I would hold Musharraf responsible. I have been made to feel insecure by his minions and there is no way what is happening in terms of stopping me from taking private cars or using tinted windows or giving jammers or four police mobiles to cover all sides could happen without him."

Here in the U.S., President Bush telling General Musharraf in a 10-minute phone call that he does not want Pakistan to cancel its January 8 elections, Musharraf having postponed the essence of democracy once already.

Before the cameras, Mr. Bush condemning the attack on Bhutto, specifically, and any attack on democracy, general.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The United States strongly condemns this cowardly act by murderous extremists who are trying to undermine Pakistan's democracy.

Those who committed this crime must be brought to justice.

Mrs. Bhutto served her nation twice as prime minister, and she knew that her return to Pakistan earlier this year put her life at risk. That she refused to allow assassins to dictate the course of her country.

We stand with the people of Pakistan in their struggle against the forces of terror and extremism. We urge them to honor Benazir Bhutto's memory by continuing with the democratic process for which she so bravely gave her life.

(END VIDEO CLIP)

OLBERMANN: Mrs. Bhutto, educated at Radcliffe and at Harvard, having returned to Pakistan from an eight-year exile, on October 18. And on that very day, narrowly escaping another assassination attempt when her homecoming parade in Karachi was targeted.

In an interview after that attempt, Mrs. Bhutto telling NBC News why she was willing to die for her country.

(BEGIN VIDEO CLIP)

BHUTTO: I can only say that I feel saving Pakistan by saving democracy is worth putting my life on the line. This is my country. I've seen what happened to Afghanistan, where the Taliban took over. I saw what happened in Iran, when there was a revolution. There were millions of refugees. Homes are destroyed. Dictatorship came. And it's decades, decades since that happened.

Both events happened in the '70s. I don't want the people of Pakistan made into refugees. I don't want people of Pakistan to live in fear that some terrorist is going to come knocking on the door and kill them inside.

(END VIDEO CLIP)

OLBERMANN: Benazir Bhutto's coffin carried from the hospital. The facility was then attacked by her furious supporters. Her body taken to the airport in Islamabad. And the funeral will be tomorrow at Larkana, at sundown local time, roughly 9 a.m. Eastern Time.

Let's turn first to Hillary Mann Leverett, the former National Security Council director for Iran and Persian Gulf affairs, who left the Bush administration last year.

Great thanks for your time tonight.

HILLARY MANN LEVERETT, FORMER NATIONAL SECURITY COUNCIL DIRECTOR, IRAN AND PERSIAN GULF AFFAIRS: Thank you for having me.

OLBERMANN: Chaos already evident in the wake of the assassination? One would hope that - not really believe that it's likely - that this is going to be the extent of the unrest. What is - what's the worst-case scenario? Is it civil war? And what's the best-case scenario.

LEVERETT: I think a very bad case scenario, of course, is civil war. But the critical problem for the United States is the opening this provides to al Qaeda to deepen and broaden its support in Pakistan. As you said, a country with nuclear weapons but also a critical Muslim country at the heart of the Muslim world.

You will have - Al Qaeda will have the opportunity of a lifetime to entrench itself in the Pakistani state.

COOPER: But if there is any connection to al Qaeda or even if there's just a perceived one, this was just a traditional Pakistan political hit job, would there not be a significant backlash of the kind that Ms. Bhutto spoke about in that interview with Ann Curry even after her passing?

LEVERETT: Well, it's a backlash in a way, because it's provoked this kind of chaos, this specter of chaos, which al Qaeda feeds on. It feeds on the chaos and the growing - the growing sense of anti-Americanism within Pakistan.

You're now going to have all of the Pakistani military and intelligence services focused internally, rather than in dealing with the threat from al Qaeda. And that's what I see as the most significant problem for the United States right now, is that al Qaeda will be left unchecked in the western province of Waziristan, unable to really gain ground, really deepen and infiltrate its - its whole presence at networks throughout Pakistan.

OLBERMANN: President - General Musharraf already had declared a state of emergency ahead of the elections because of a perceived general threat to his power. It would seem whoever caused this today. Musharraf certainly can claim it's terrorism, claim that it needs more clamping down on democracy and any deficiencies in his democracy. He can, and others who defend him, can dismiss them as temporary events, temporary setbacks.

How likely is it now that the January 8 parliamentary elections are going to proceeds as scheduled?

LEVERETT: I think it's likely. You have President Bush coming out today. His response was that Pakistan needed to proceed with these elections.

It was quite a remarkable response, because the leading contender - the leading party for those elections, their - their head has just been killed. So that's - they're not really contending the elections anymore. And the other party has vowed to boycott.

So we know what the result of these elections are going to be. They're going be resounding support for Musharraf, even if it's not a popular election in our sense of the word.

And the president has seen and done this before. He called on the Palestinians, similarly, to call elections and then Hamas was elected. There's no secret. There's no doubt he's going to benefit from these elections.

Even if Musharraf does tighten the state of emergency, I think that it's in his interest to have the elections and for President Bush to push him in that regard, knowing what the result is going to be. We've seen this bad movie before.

OLBERMANN: Her letter before he returned from the exile in Dubai and this e-mail revealed today, in which she said, basically, that she would hold - almost from the grave, she's holding Musharraf responsible. How does that resonate in that country?

LEVERETT: I think a little further, it will intensify the sectarian divisions. Benazir Bhutto had a base of support. But she also was very unpopular. She was twice prime minister and literally twice chased out of office on corruption sponsors. She was one of the key sponsors of the Taliban on the eve of their hosting of al Qaeda.

She certainly had opposition. And this may - this may bolster her constituency. But I think what it will do, it will bolster other constituencies, as well and further the divide, further the chaos.

And coming back to your first scenario, civil war, I think that's what we're pushed toward.

OLBERMANN: And what's our best-case scenario? The former U.N. ambassador, Bill Richardson, who even though a Democrat was entrusted by President Bush, at least the unofficial diplomatic talks with North Korea, said on his campaign trail today - let me quote it exactly - "President Bush should press Musharraf to step aside, and a broad-based coalition government, consisting of all the democratic parties, should be formed immediately."

Leaving aside the possibility of that actually happening on the ground in Pakistan, is that the best course of action for this country right now, to press for that to occur?

LEVERETT: I think that's to take Bush's flawed policy of relying on Benazir Bhutto to save Pakistan and to solve the al Qaeda problem, I think it takes that flawed policy to another level.

It's tantamount to if we sent a high-level envoy to Iraq and we told the Iraqis just to form a coalition of like-minded good citizens across various sectarian divides and solve the problem. Otherwise, we're going to cut off military aid and take our troops and go home.

As ineffective as that would be for Iraq, it would be similarly ineffective to do for Pakistan.

This administration, I think, has so mishandled the bilateral relation with Pakistan that we don't have a good option. But we certainly - we don't have an option to force the coalition together. We need to be looking regionally and to look for a cooperative regional security approach that deals with the Pashtun problem. It's not just a Pakistani problem. It goes into Afghanistan, and that's the heart of the jihadists. The jihadist problem can only be solved regionally. A continued focus on either Musharraf, all or nothing, or a coalition that undermines Musharraf is going to continue to spiral the mess in Pakistan out of control.

OLBERMANN: If we can solve Pashtun in six months instead of six - the last 60 years, and we haven't, that would be quite an accomplishment.

Hillary Mann Leverett, the former National Security Council director for Iran and the Persian Gulf, we thank you greatly for your analysis tonight.

WOLF: Thank you.

OLBERMANN: The Bush administration, which has given General Musharraf about $5 billion to fight terrorists and to buttress democracy, what does Mr. Bush do now that Musharraf has failed his two biggest tests to date?

While John McCain says it would be unfortunate if anyone tried to gain political advantage from Mrs. Bhutto's death. Rudy Giuliani does just that.

Senator Chris Dodd will join us, and we'll also get Dana Milbank's analysis of the political events.

You're watching Countdown on MSNBC.

(COMMERCIAL BREAK)

OLBERMANN: The victim herself called for protection against her. This was being reduced by the government of Pakistan. President Bush immediately declared her assassination aw an act by murderous extremists and forces of terror. As the president used the assumption of terror for his own political advantage.

Countdown's special coverage of the murder of former Pakistan Prime Minister Bhutto continues.

(COMMERCIAL BREAK)

OLBERMANN: If President Bush's version of the war on terror and his alliance with Pakistan's General Pervez Musharraf was already wrought with fault lines, today we have all felt the earthquake.

In our fourth story on the Countdown, the assassination of opposition leader Benazir Bhutto and the other consequences of where the Bush administration has placed its faith, along with its investment of at least $5 billion of our money.

No specific word from the president on whether Pakistan's elections should go ahead as scheduled 12 days from now. But the president said the people of Pakistan should continue with, quote, "The democratic process, for which Bhutto so bravely fought."

As we've shown you previously in this news hour, the president punctuated comments with references to, quote, "murderous extremists and the, quote, "struggle against the forces of terror and extremism, as if the source of Bhutto's assassination absolutely clear and proved.

Mr. Bush has cited Pakistan's democracy, as if that had truly existed, even before the assassination.

Thee president did speak with General Musharraf for about 10 minutes today. A senior administration official telling NBC News that Musharraf appears to be making the right moves. He is not talking about canceling or postponing elections or reimposing a state of emergency. A reality check on that presently.

And when a White House spokesman in Texas, Scott Stanzel, was asked if President Bush still has confidence in Musharraf, that spokesman offered a rather underwhelming response: quote, "We're willing to work with him."

Let's turn now to "Newsweek" magazine's senior White House, MSNBC political analyst, Richard Wolffe.

Richard, good evening.

RICHARD WOLFFE, "NEWSWEEK": Good evening, Keith.

OLBERMANN: Underlying the administration's alliance with Musharraf is that assumption that, on balance, he is on the good side of the war on terror.

But Musharraf just failed three huge tests at once. Basically, first he suspended the democracy. Even with that kind of control, power, at best he couldn't protect a leading politician, a leading statesperson of his society from assassination.

And thirdly, now, unless he makes some unexpected and very statesman-like decisions, he is going to benefit politically from that assassination. How can President Bush possibly continue to support this man in the name of this country?

WOLFFE: Well, Musharraf has clearly tested Bush's patience to its limits. But the president still is uncomfortable in saying that.

If you look at the boilerplate language that he used today in his statement, President Bush didn't talk about terrorists; he talked about extremists. That itself within the crenology (ph) confines of the White House is a significant thing.

And he also talked about people undermining democracy in Pakistan. And that could also easily refer to Musharraf just as much as it could to al Qaeda.

Musharraf has tested the two premises of the two Bush terms. If the first term was about terrorism and the second term was really all about democracy, at least according to the high-faluting language of that second inaugural, Musharraf has failed both of those tests.

So really, the time has come for the straight-talking president to speak clearly.

THE SOURCE: As we mentioned, $5 billion in aid to that government from this country. Fight the Taliban; fight al Qaeda. And yet Bush administration officials were telling "The New York Times" on Monday, flying under the radar with the Christmas break, much of the American money was not making its way to front line Pakistani units.

Is this - you know, "He's still the only option there" argument beginning to wear thin, even in the White House? Do they have a plan B?

WOLFFE: Well, Bhutto was the plan B. And actually, she told me shortly before she went to - went back to Pakistan that she felt that Musharraf had really pulled the wool over the administration's eyes in many ways. And most importantly, still hear the White House saying this, that Musharraf was targeted by terrorists and therefore, he was the only thing that stood between Pakistan's nukes and al Qaeda.

And in fact, Bhutto said there was only a single digit support for Islamists in Pakistan. There was this mainstream, broad-based support for non-theocratic parties, such as her own, and that they needed to be given a chance.

Now when it comes to the money side of things, look, beyond Musharraf, there was a bigger issue that this administration really hasn't put effort into dealing with, and that's the relationship between India and Pakistan, two American allies that are no closer now than they were before 9/11.

OLBERMANN: What flexibility does President Bush have, depending on what Musharraf does next? Can he influence the decision on the parliamentary elections on the 8th? What does he - what does he do to stop the postponement?

WOLFFE: Well, he can influence them and he has. There was a lot of behind-the-scenes effort to get Musharraf to restore the constitution. Obviously, once he got his own political stratagem in order. But they can.

I mean, the money is the biggest leverage of all. And Musharraf needs the president's support even though he is, unfortunately, playing both sides in the war on terror.

OLBERMANN: Does this complete a kind of awful trifecta, Richard, of how this administration will be judged historically, when it comes to a country's relationship on the war on terror? We had the right idea in Afghanistan, and we left the field early. We got it completely wrong in Iraq. And now we have obviously sided with the wrong people under the wrong circumstances with the wrong results in Pakistan?

WOLFFE: You know, I'd pull Afghanistan out of those three, in the sense that there has been some progress made. The Iraqi - the Afghan national army is a good institution.

But what this shows, especially with regard to Afghanistan, is that one assassination attempt on Karzai, one successful attempt, and the country that has made progress can be easily destabilized. But look, Pakistan is a case of instability that the administration hasn't come to terms with.

OLBERMANN: Our own Richard Wolffe, senior White House correspondent with "Newsweek" magazine. As always, great thanks for your time tonight, Richard.

WOLFFE: Thank you, Keith.

OLBERMANN: Within hours of the assassination, it was linked to al Qaeda. Did not the interests of terrorists and those running Pakistan coincide?

And perspective from Senator Chris Dodd, in a time of the publics of terror.

(COMMERCIAL BREAK)

OLBERMANN: As morning breaks in Pakistan, a member of the Bhutto family, critical to the history of the nation, itself critical of the hopes of stability in the Muslim world, has been killed. Former Prime Minister Benazir Bhutto assassinated after a rally in Rawalpindi, just 12 days before parliamentary elections in that nation, just 70 days after she ended her exile to lead the opposition there.

The assassination has been blamed on extremists, though it is evident that President Pervez Musharraf, who himself came to power at the barrel of a gun, had much to gain from her death. Is it is terrorism, what kind of terrorism are we dealing with. And did the actual fight against al Qaeda just take a huge hit with her death?

Counterterrorism analyst Evan Coleman joins us, as does Senator Chris Dodd of the foreign relations committee. And in the Iowa caucuses just a week off, which could be seriously impacted by the events in Pakistan.

You are watching Countdown, special continuing coverage of the assassination of Benazir Bhutto. Senator Dodd is next.

(COMMERCIAL BREAK)

OLBERMANN: The president of Pakistan has tonight already blamed al Qaeda. Another prominent political figure of that nation had already twice blamed in advance the president of Pakistan.

Benazir Bhutto, weeks after her return from exile in Dubai, had written in a well-circulated letter that President Pervez Musharraf had reduced security measures for her, not increased them, and that, were she to be killed, she would consider Musharraf to be responsible.

The third story on the Countdown, from Pakistan's critical position to fight international terrorism, to the injection of the assassination into the American presidential campaign.

Few are as qualified to assess the varied ramifications as is Senator Chris Dodd of Connecticut, who will join us in a moment.

First, the fact as we know them. The sunrise looms in Pakistan. The former prime minister turned democratic opposition leader, Mrs. Bhutto, assassinated in the city of Rawalpindi after this political rally, the second attempt on her life since she left exile this fall and returned to challenge the government of Pakistani President Musharraf.

Bhutto apparently shot by a suicide bomber as she stood in her SUV to wave to the crowd. The assassin then blowing up himself along with dozens of others.

The precise cause of the former prime minister's death not immediately confirmed. Her death pushing Pakistani cities into chaos, as well as the nation's parliamentary elections, scheduled 12 days hence. Not to mention Bush administration policy in the region. And of course, most ominously, Pakistan's nuclear weapons.

As promised, Senator Chris Dodd joins us from Des Moines a week out from the Iowa caucuses, which he of course, is standing as a candidate for the Democratic nomination.

Senator, great thanks for your time tonight.

SEN. CHRIS DODD (D-CT), PRESIDENTIAL CANDIDATE: Thank you, Keith, very much. Welcome back.

OLBERMANN: Thank you.

First off, from your vantage point as a senior member on Senate Foreign Relations, what does this country do about what has happened in Pakistan today?

DODD: Well, first of all, they've lost a great leader. I've known Benazir Bhutto for 20 years. In fact, I spoke with her just two or three weeks ago. And we had talked with each other, e-mailed back and forth. We had issued some strong statements, urging Musharraf to lift martial law and set the elections, as you pointed out, on January 8.

And so I've lost a good friend, but Pakistan has lost, remarkable. The United Stats has lost a very good fight. And the region now is - and a more precarious than any time in recent memory here this evening. It's very important, I think, that the Bush administration and others are doing everything that can to put as much stability in the midst of the chaos, which is very properly destroyed here.

But the nuclear weapons are the big issue. And I think you've referenced this already. This is more important than anything else.

I noticed today that Governor Bill Richardson suggested Musharraf ought to step down and we ought to cut off aid to Pakistan. I can't think of a worse scenario at this particular point. General Musharraf is no Thomas Jefferson. We all know that. But the idea of getting rid of him without knowing what would replace him, putting somebody in charge of that nuclear arsenal in the middle of this sort of chaos, I think it would be a very, very dangerous step for Pakistan and for us at this juncture.

So stability is key, and postponing the elections are going be absolutely critical at this point. The PPP party, Ms. Bhutto's party here, really has no apparent heir to her that could run as a candidate. So providing some period of time here before the those elections should actually occur is the wise thing to be doing. And then lastly, I did here obviously we need to offer whatever help can to determine who was responsible for the assassination today.

OLBERMANN: It's an extraordinary position to be in, how complicated things are in Pakistan when you hear an extraordinary advocate of democracy such as yourself say we need breathing room and that these elections should not occur as scheduled.

DODD: I do, and I say that regretfully. But if they were to go forward on January 8 here, there is no clear candidate. And Mrs. Bhutto was the most popular political figure in the country. Arguably, General Musharraf is the least popular figure in the country here and therefore, you have a boycott already been suggested by the former prime minister, Shamir.

So this is elections I don't think would mean much at all at this juncture. And to try and conduct them in this environment probably would not work at all.

So I think a delay is a wise step for them to take at this point.

OLBERMANN: Whatever breathing room that would provide, and the reality of the political situation here from the Iowa caucuses, but we're a year and nearly four weeks before the next presidential inauguration.

Everything happening in Pakistan is not going wait for our 45th president to be sworn it. It looks like we've wasted at least part of $5 billion in counterterrorism efforts and aid to Pakistan. We're no closer to bin Laden now than we were in early 2001. And Pakistanis had a share in that at the least.

Musharraf suspended democracy. Now she's basically locked the country down. And the leading pro-democracy spokesman is dead. In all that context, is Musharraf still a long-term answer? Why is - why is president and this country standing behind him? And what does the president have to do right now?

DODD: Well, it's the devil you know and the devil you don't know. And again, this is a country that has a nuclear arsenal capable of causing devastation tomorrow. It's not a question such as Iran where maybe five or 10 years down the road, or Iraq, which doesn't have any weapons at all, as we have learned. But this country has them. And in the wrong here, stabilized in where a rat, which doesn't give any weapons at all, as we now have learned. But this country has them. In the wrong hands here, could destabilize the entire region.

Given the history between Pakistan and India, the axis to Afghanistan and the important of what's going on there, this is not a long-term answer, clearly.

But in the interim there, the short-term answer is not to be looking for an answer. We don't know who would have the control of those weapons and what it could mean.

And clearly, there are those who benefit from the events here today. And certainly, while we don't know that al Qaeda was responsible, it certainly looks at those they're the ones who would certainly benefit the most from this level of chaos where they could possibly emerge here with a radical fundamentalist state in control of those weapons.

So very important right now that we have a mature, sober response to this without jumping too quickly to an answer here, that we don't know what that could mean. I mean, that's what I concerned about, but I'm not arguing for Musharraf, long-term answer. I'm merely buying some time here until we sort this out.

OLBERMANN: Senator, us layman don't have to know very much about Pakistan to know the highlights, if you will: 60 years of independence, 60 years in which politics and violence have seldom been separated there.

Could Benazir Bhutto really have led some kind of coalition? And is there anybody left that country who could take up those cudgels who could lead to some sort of middle path?

CHRIS DODD (D), PRESIDENTIAL CANDIDATE: Well, I think they could have. And this was one area why they were linked to this, the idea of having some sort of a collision between Musharraf and his party and Benazir Bhutto of her party and some real hope.

But she would have emerged as a prime minister, inviting that transitional period we're talking about.

I don't know if anyone can give you the answer to the second part of your question, Keith, here. I don't know of anyone on the immediate horizon. I don't think Shamir provides that kind of alternative at this juncture. All the more reason why we've got to be very careful how we proceed here.

As you pointed out, Musharraf has already faced, I think, four or five assassinations attempts on his life. Benazir Bhutto lost both of her brothers by assassination. Her father was hung by General Zia (ph). Here we've got one coup after another. This is a very, very destabilized situation.

And at the end of all of it, again, we're talking about a nuclear arsenal controlled by the military in Pakistan. It's very important that those relationships be maintained.

Thus, I think it - while I understand people's temptation to want to cut off aid here, that could be just the tipping point for us where we end up losing our ability to influence and very well may find that people in control of those weapons who could do a lot of damage to us and to other allies of ours around the world.

OLBERMANN: Senator, let me ask you one last question. Then we'll let you go with our thanks.

Most of the Republicans running for president were quick to blame the assassination today on al Qaeda and interjected to a large degree into their campaigns today. Mr. Giuliani says it shows how we have to win the war against the terrorists. And Mitt Romney said it was another example of radical jihadism.

Is there a difference in the way Republicans and Democrats have been looking at Pakistan and are looking at this right now?

DODD: Well, I welcome their concern about Pakistan. But this is the same crowd that continues to fan the flames that we need to stay in Iraq militarily here. We've been eyeing the wrong ball here. We've been deeply involved, at $10 billion a month, in Iraq. We're not paying attention to the more serious problem.

For weeks, I've suggested that Pakistan was a far more delicate situation than Iraq or Iran. And yet, these supporters of the Bush policy in Iraq have been engaging in that particular effort here, disregarding the serious issues being posed inside Pakistan.

So I - I would suggest here that we better get back to the Pakistan-Afghanistan issue rather quickly here. That's the epicenter of terrorism here. Not suggesting we maintain the military presence that we have in Iraq. That's a dangerous policy, in my view.

OLBERMANN: Senator Chris Dodd of Connecticut on the Senate Foreign Relations Committee, taking some time from the campaign trail to join us from Des Moines. Senator, once again, thanks for your time. Have a good night.

DODD: Thank you, Keith.

OLBERMANN: Affixing the blame, a difficult and dangerous thing, like all else in this story. When in Pakistan, al Qaeda could be present, but a dictatorship in a country with a terrible history of political assassination certainly is present.

And was Mrs. Bhutto not our strongest ally against al Qaeda in Pakistan?

And before the body was cold, which would-be president had already said her death is a reminder that we must redouble our efforts to win the terrorists' war on us? Making political hay of the Bhutto assassination in Iowa as our Countdown special coverage continues.

(COMMERCIAL BREAK)

OLBERMANN: Nothing would be easier than to lay the assassination of one of the two most critical figures in the critical and fractured nation of Pakistan entirely at the feet of al Qaeda and other religious extremists.

But when the victim had said it sure looked like the government was trying to make it easier for her to be assassinated, where does the blame actually lie?

And an unseemly scramble over the body of Benazir Bhutto by Republican presidential hopefuls, each trying to say, "I told you so" firsts and loudest.

That's next. This is Countdown.

(COMMERCIAL BREAK)

OLBERMANN: Even as a president and his would-be Republican successors broadly hinted, without using the actual name, that the assassination of former Prime Minister Bhutto of Pakistan was the work of al Qaeda, comes the bitter realization that the most optimistic interpretation of that hypothesis is that, if that group or other religious extremists did it, and the assassination occurred under the watch of a Pakistani government supposedly determined to root out al Qaeda and the U.S. administration propping up that Pakistani government. And neither of them doing a very good job of it.

And behind that is our No. 2 story on the Countdown, the prospect that Pakistan's and our best chance at destroying al Qaeda there may have died today when Benazir Bhutto was killed.

Despite $5 billion in aid to Pakistan from the U.S. since September 11. The terror threat in that nation has grown. According to American intelligence officials quoted in "The New York Times" this week. Leaders of al Qaeda, hiding in Pakistan have become increasingly active. This year, mounting a record number of suicide attacks inside Pakistan and Afghanistan, according to the National Intelligence Estimate released in July.

Al Qaeda, based in Pakistan, is stronger than it has been in years and is actively planning new attacks.

Evan Kohlmann is one of our counterterror analysts.

Evan, thanks for your time tonight.

EVAN KOHLMANN, COUNTERTERROR EXPERT: My pleasure.

OLBERMANN: Is that an ironic twist here? Accurate, that whoever actually killed her, that she was a better bet against al Qaeda than Pervez Musharraf?

KOHLMANN: Well, it wasn't ironic. I think it's obvious. I mean, the Islamic militants refer in Pakistan to the current situation as the regime of controlled freedom. Because these are purely cosmetic changes that Musharraf has enacted.

Whereas Benazir Bhutto, who they call a pig. They call her Hanazir (ph) Bhutto, Pig Bhutto. When she was in power, she actively pushed against the Arab Mujahideen. She nearly caused the collapse of their movement back in 1993. She kicked them all out. And they were furious at her.

So there's absolutely no doubt she would have done much more than Musharraf. I mean, last week we had a "most-wanted" terror suspect who escaped from police custody. This is the same guy that's responsible for the fact that we can't carry toothpaste when we fly in this country now.

And he escaped from Pakistan police custody, inexplicably. No one has any idea where he went. This didn't happen five ago. This didn't happen three years ago. This happened last week. Where is Musharraf? What is he doing?

OLBERMANN: We know that within the Pakistani version of the CIA, the ISI, there have been factions that have been sympathetic - and more than sympathetic to the Taliban, is there a chance, as long as that's the case, that anybody could get anywhere on a counterterror basis. Musharraf or some successor at some point in the paper. Don't they have this extraordinary built-in hurdle?

KOHLMANN: Well, it's true that the ISI has undermined various different Pakistani governments, including Bhutto. But that being said, Bhutto was much more enthusiastic and much more eager to crack down on extremism in Pakistan than Musharraf has. Musharraf has been very reluctant to go after the group's insider Pakistan that are at fault for most of this.

Many of the suicide attacks that we've seen have been carried out in Pakistan over the past three years, they are the work of Pakistani extremists. Now, they may be in league with al Qaeda. They may be taking orders from al Qaeda. But they are Pakistani. And those organizations have not been banned.

There's an organization called Jemaah Dredowa (ph), which is on the U.S. list of designated foreign terrorist organizations, which is openly operating in Pakistan. And you even have the Pakistani interior minister saying openly, publicly that this organization is doing good relief work, that they're doing good charitable work. Well, you know what else they're doing? They're taking recruits from western countries, from the United States and the United Kingdom, even this year, taking them in, training them and sending them back in order to carry out terrorist attacks here. So I would say their work is not so good.

And it's inexplicable why the Pakistani government doesn't do more. I think Bhutto was our best chance. And I don't know who there is to replace her right now that is any better.

OLBERMANN: The assassination itself, Evan, that is an act of terrorism, no matter who decided to do it, who carried it out, but is there a way of assigning the blame? This is a nation that has existed for 60 years, at least 30 of them under some former military rule. Her father was deposed as prime minister in '77 and hanged by a military dictatorship. Her two brothers were killed under mysterious circumstances, and that's being generous.

Why is there an assumption this is more likely to be al Qaeda than it is an all-too-familiar Pakistani political assassination? Or maybe the third option, some sort of combination of the first two?

KOHLMANN: Well, it could be a combination, but I think one of the big clues here is the concept of a suicide bombing. It's very rare that you would find someone, other than a religious extremist, who would be willing to give up their life in terms of a suicide attack. And not just one suicide attack, because let's remember, this is the fourth of fifth time that such an attack has taken place, even recently, targeting against Bhutto or a senior member of the Pakistani government. That's a big clue that would tend to indicate the call sign of al Qaeda.

Was it al Qaeda? We don't know until there's an official statement. But it certainly is an indicator.

OLBERMANN: Do you - do you look askance or does it go outside your own experience to say you had a suicide bomber who was evidently carrying some form of automatic weapon, though, who shot first? Isn't that an unlikely combination?

KOHLMANN: I think what's unbelievable is someone like that with a handgun could get so close to Bhutto that he could shoot her and then detonate his weapon.

Clearly, there was a major problem with security here. And I think that's why a lot of people are asking right now, well, maybe al Qaeda was involved. Maybe Pakistani extremist groups were involved.

But what happened to all the security that Musharraf promised Bhutto? What happened to the layers of Pakistani police? And that is - I'm sorry, it's inexplicable.

OLBERMANN: Our own Evan Kohlmann, the international terrorism investigator. Great thanks for joining us tonight, Evan.

KOHLMANN: Thank you very much.

OLBERMANN: A week from tonight, the Iowa caucuses. And if any voter there had not heard of Benazir Bhutto, they probably will by next Thursday. Giuliani and Romney will race to explain why this validates their candidacies. The Democrats seem to step more gently but step nonetheless. Dana Milbank, next on Countdown.

(COMMERCIAL BREAK)

OLBERMANN: Events, wrote Michael Dobbs in his political science fiction novels of a modern-day MacBeth, a British prime minister named Francis Perkett. "Events," he mutters on the way to a gas leak that makes his authoritarian government looking human and a liberal king humane.

Events, he concludes. The politicians' enemy, or in our No. 1 story in the countdown, his best friend, if the politician is a Rudy Giuliani or a Willard "Mitt" Romney, whose world-view divides all events from baseball games to political assassinations into events caused by violent radical jihadists, as Romney put it today. And nonevents. It is a black-and-white simplicity that grows more stark still, what with the Iowa caucuses precisely a week away.

Dana Milbank in a moment. First, the noise from the campaign trail.

(BEGIN VIDEOTAPE)

MCCAIN: Right now, there is significant unrest in Pakistan as we speak. And there are people that are blaming Musharraf for it. That's why I say we're the winners and losers. It seems to me that the winners are the radical Islamic extremists.

GIULIANI: This reminds us of how we have to redouble our efforts in that area of the world - Pakistan, Afghanistan - and make sure that successes that they're proud of are military.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We have to make sure that we are clear as Americans, that we stand for democracy and that we are - we will be steadfast in our desire to end the kinds of terrorist acts that have blighted not just Pakistan but other parts of the world.

ROMNEY: The world is very much at risk by virtue of these radical, violent extremists. And we must come together in an effort in great haste and with great earnestness to help overcome the threat of radical violent jihad.

(END VIDEOTAPE)

OLBERMANN: And a statement from Senator Clinton, underlying a reminder of her own particular brand of experience. Reading in part, "I am profoundly saddened and outraged by the assassination of Benazir Bhutto, a leader of tremendous political and personal courage. I came to know Mrs. Bhutto over many years, during her tenures as prime minister and during her years in exile."

To Dana Milbank now, national political correspondent with the "Washington Post" and MSNBC analyst.

Dana, good evening.

DANA MILBANK, "WASHINGTON POST": Good evening, Keith.

OLBERMANN: Acknowledging that we necessarily join the candidates somewhat in the mud here. They're talking about this nightmare in their own political context. And we're still at the edge of the quagmire with them.

But dividing this into parties, the Republicans first, the conventional wisdom, this could revivify Giuliani. Is that right? Or will it not come with a little sting, emphasizing that he doesn't have any relevant international experience?

MILBANK: Well, I think first we have to say it's probably a marginal impact overall, while it's an international tragedy. I was with Hillary Clinton when she spoke about it this morning, and the general reaction was just puzzlement in the crowd. And after all, they're not Americans being killed here.

However, it is a marginal benefit for Rudy Giuliani, particularly because he had really not been part of the debate. He's been sunning himself in Florida while everyone is slogging it out here in Iowa and New Hampshire. It's back on his terms, to national security issues. He doesn't really campaign on it, but it helps him.

OLBERMANN: The Democrats, it would seem, is this an assumption that's correct, that it would have less impact in Iowa and New Hampshire for them than it does the Republicans? Or is there some sort of lesser Pavlovian response in the Democratic voter that benefits Hillary Clinton and hurts Barack Obama?

MILBANK: I think it's similar in both cases. So you - it would benefit McCain because of his experience. It would benefit Giuliani because of his 9/11 experience. Similarly, it helps Hillary Clinton over Barack Obama.

Obama was supposed to deliver a new closing argument to his campaign here, saying why his relative inexperience didn't matter. This stepped all over that message today. It really muddied it up for him. Clinton was very discreet in the way she brought it up. But again, a marginal benefit, but it certainly helps the debate more on Clinton's terms.

OLBERMANN: And I don't know if you heard Chris Dodd earlier in the show, but he said something that really - that came as something of a surprise. He was saying with great regret that - he suggested that the - our policy should be to delay those parliamentary elections, which are just 12 days off, to give the party of Benazir Bhutto time to regroup.

Does something like that, even from one of the second-tier candidates, have a chance of resonating in this? Or is your earlier point about it not being a mainstream issue for most of these caucus-goers prevail in the - in the analysis?

MILBANK: Yes, I think so. I mean, you have Biden out there saying thoughtful things, Dodd, Richardson making quite an elaborate proposal today about the sort of new coalition government that should govern Pakistan. None of this is going to be, you know, in the bumper-sticker slogans that are going to decide the caucuses here in Iowa a week from now.

So again, this is really - it's a huge national security issue but relatively marginal in the political world, I'm predicting.

OLBERMANN: And as a last note, Republican voters, any nuance is bad nuance? Assassination equals terrorism equals 9/11? That's all you need to know?

MILBANK: Well, it does help a little bit, but I think larger than the 9/11 terrorism association is experience. Will they want to be embraced by the leader with a great deal of experience?

OLBERMANN: Dana Milbank, national political correspondent of the "Washington Post," doing a great job giving us the headlines of the reaction politically to this. Great thanks, Dana.

MILBANK: Thanks, Keith.

OLBERMANN: Let's recap. It is morning in Pakistan, with both spellings of the work applicable. The government of that nation announcing three days of grieving for former Prime Minister Benazir Bhutto, who was assassinated Thursday afternoon in the city of Rawalpindi, less than three weeks before parliamentary elections in that country are scheduled.

The mourning period announced by President Musharraf, who blamed Islamic extremists for Ms. Bhutto's death and mentioned al Qaeda. Mrs. Bhutto, it seemed, blaming General Musharraf, having sent an e-mail that was to be read only in the event of her death.

At least nine people killed in violence that broke out in the aftermath of the news of the assassination. Opposition leaders, both in Pakistan and here in the U.S., calling for President Musharraf's resignation.

And earlier in this news hour, as I just mentioned, Connecticut senator and Democratic presidential candidate Chris Dodd suggesting, with great regret, that the U.S. should push Musharraf to postpone those January 8 parliamentary elections to give Mrs. Bhutto's opposition party some time to regroup.

Mrs. Bhutto's body was flown from an air base in Islamabad to her hometown of Larkana, where she will be buried with great ceremony and, no doubt, great grief at sundown tomorrow, roughly 9 a.m. Eastern Time tomorrow. She is the fourth member of her family - her two brothers and her father, Pakistan's first truly elected leader - to die violently as a result of their involvement in the politics of their homeland.

That is Countdown for this, the 1,702nd day since the declaration of "mission accomplished" in Iraq. A reminder: please join us tomorrow night for our review of 2007's special comments, 8 and midnight Eastern, 5 and 9 p.m. Pacific. Obviously, if there is breaking news from Pakistan, or anywhere else, we'll again pre-empt that special, as we did this evening.

I'm Keith Olbermann. Good night and good luck.

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