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July 16, 2006

Condoleezza Rice, Sens. Allen & Dodd, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. The war between Israel and Hezbollah expands and intensifies, next on "Fox News Sunday".

From the Middle East to Iran to North Korea, there's a world of trouble. As President Bush meets with other leaders at the Russian summit, we'll explore the diplomatic and military options with Secretary of State Condoleezza Rice and with key senators and presidential hopefuls, Democrat Chris Dodd and Republican George Allen.

Plus, a former CIA officer and her husband sue the vice president and other top officials for allegedly punishing them for criticizing the Iraq war. We'll discuss the fallout with our panel, Fred Barnes, Mara Liasson, Bill Kristol and Juan Williams.

And our Power Player of the Week says protecting the environment is the mission of his famous family, all right now on "Fox News Sunday".

And good morning again from Fox News in Washington. Let's get right to our top story, a dramatic escalation of Hezbollah attacks against northern Israel and a vow from the Israeli prime minister that there will be far-reaching consequences.

Fox News correspondent Mike Tobin is in Haifa, Israel, the site of a deadly rocket strike today.

Mike?

MIKE TOBIN, FOX NEWS: And immediately following this rocket strike, we heard the language intensify from the Israeli government, saying this is no longer an intense conflict, Israel is at war.

The defense minister, Amir Peretz, just laid out his conditions to stop the Israeli offensive into the south of Lebanon and that is if Lebanon implements U.N. Resolution 1559, which calls for the disarmament of Hezbollah and calls for Lebanese forces to be placed along the border with Israel, creating a buffer zone. He also demanded that the kidnaped Israeli soldiers be returned.

The intensification coming after the rocket strike here in this grain garage that went through the ceiling, impacted the ground there, shot shrapnel all through this grain garage, killing a -- critically wounding one, injuring more than 21.

Following this attack, Israel has been blasting messages into the south of Lebanon and sending them out through the media urging civilians to get out of the south of Lebanon because an intensified Israeli attack is coming. The defense minister says they will stop every source of fire regardless of whether it comes from within the civilian population.

Chris, back to you.

WALLACE: Mike Tobin reporting live from Israel.

Mike, thanks.

And we're joined now by the Secretary of State Condoleezza Rice, who's attending the G-8 summit in St. Petersburg, Russia.

Secretary Rice, thanks for taking time out to talk with us. How do you view the current situation in the Middle East, as the kind of cross- border conflict that we have seen over the years or as something more dangerous that has the potential to create a regional conflict?

CONDOLEEZZA RICE, SECRETARY OF STATE: Well, we certainly view the situation with great concern, and the president is having discussions with his counterparts here about that. We're concerned about the rising civilian casualties. We're concerned about the general atmosphere in the region.

But I would say that what is really happening here is that extremists have revealed their hand. They are demonstrating that they cannot tolerate the forward march of democratic moderate forces in the Middle East.

They are trying to destabilize the young government of Lebanon by, in the case of Hezbollah, using Lebanon's territory to attack Israel without the knowledge of the Lebanese government.

In the case of radical elements of Hamas, as President Abbas was making some progress toward getting Palestinian leaders to move toward quartet conditions and to engage Prime Minister Olmert, radical elements have acted out. And of course, they're doing this in conjunction with sponsors in Damascus and in Tehran.

So what we really have here is extremist forces making very clear what the situation is, and we therefore have to work hard to stabilize and to promote a set of platforms on which moderate forces can stand.

WALLACE: Well, let's talk about precisely that, because some of the allies that you're meeting with at the summit in St. Petersburg are talking about an immediate cease-fire, but the Israelis are talking about a bombing campaign that could take weeks to basically rewrite the facts on the ground and put Hezbollah out of business in southern Lebanon.

Does the U.S. want to see, in effect, a solution to the problem so it doesn't just paper it over and six months, a year, down the line we're in exactly the same situation?

RICE: Well, that's a very important point, Chris. First of all, Israel has a right to defend itself. No country would sit and continue to receive rocket fire against civilian populations and not try to do something about it. What we have asked of the Israelis is that they act in a way to avoid innocent civilian casualties, to avoid the destruction of civilian infrastructure, because there does need to be another day. Israel will need to have those moderate allies in Lebanon and in the Palestinian territories in order to create a stable peace.

But what we don't want to do is to have a cessation of violence that is not going to last for more than the next time that Hezbollah or Hamas decides that they're going to launch a rocket into Israel or abduct an Israeli citizen.

We need to deal with the fundamental underlying conditions here, and that means to isolate the extremists. That means to get back to the framework in Lebanon of Resolution 1559 which was aimed at protecting the sovereignty of Lebanon and disarming unauthorized armed groups, and, in the case of the Palestinian territories, to get back on the road to a two-state solution with President Abbas and the Israelis.

WALLACE: Secretary Rice, you talk about obviously the danger of civilian and collateral damage. At least one American reportedly has been injured. What is our government doing to get those 25,000 Americans who are in Lebanon out of harm's way?

RICE: Chris, we are following this hour to hour. The ambassador is fully empowered to make recommendations to us about what needs to be done to protect American life. We have contingency plans should we need them for evacuation.

We've already allowed authorized departures of some of our personnel in the embassy. We're watching this hour by hour. I'm getting reports every few hours about the situation there. We're going to do what we need to do to protect Americans.

WALLACE: Secretary Rice, you talked about the fact that it is not just Hezbollah and Hamas, but also their sponsor states of Syria and Iran.

I've talked with top Israeli officials over the last few days who absolutely believe that Iran is behind all of this and that it is no coincidence that within 24 hours after the west put new pressure on them to stop their nuclear program that their proxy, Hezbollah, attacked in Israel.

Do you believe, as the Israelis do, that, in fact, Iran is orchestrating all of this to send a message that if we make trouble for them, they can make trouble for us?

RICE: Well, I don't know what message Iran intends to send. I do know that it is very clear that there is an Iranian hand behind -- indeed, Iranian financing behind Hezbollah and perhaps some of the radical elements of Hamas, that they've made common cause with Syria in which the radical elements of Hamas reside and in which Hezbollah also has offices and infrastructure, and that they're all -- Iran, Syria, Hezbollah, Hamas -- trying to destabilize democratic and moderate forces, trying to throw the region into chaos, and they can't be allowed to do that.

I would just note that the Saudi statement in this regard pointed the finger just a couple of days ago directly at these extremist elements, who, when progress was being made in the Palestinian territories, when progress was being made in Lebanon, decided that they had to disrupt that process.

And so as we look at today's current events, as we are concerned about the growing civilian casualties, we also have to look at these underlying circumstances and say to extremist elements you are not going to succeed in destabilizing this region and you're not going to succeed in taking away the chance for a moderate and democratic future for the Middle East.

WALLACE: Secretary Rice, as you well know, secretaries of state over the years, going back to Henry Kissinger, have in this kind of a situation gone to the region themselves, engaged in personal shuttle diplomacy to try to work out some kind of deal.

Any thoughts on your part about going directly personally to the region and, if not, why not?

RICE: Well, I'm thinking about it, as you might imagine, and assessing it every day, Chris. And I certainly stand ready to do so when I believe that I can make a difference.

But it's also important to recognize that others have a role to play here. We have a U.N. mission that is in the region on behalf of Secretary General Kofi Annan. That was an idea that came out of conversations that we had with the secretary general.

We have also the regional states that are playing a very important role. The G-8 here is discussing ways ahead. We first need a way ahead. Let's recognize that simply going in and shuttling back and forth, if you don't know where you're trying to go, is not going to help.

And we are working and discussing with others what kind of framework would really allow us not just to get out of the immediate crisis, as important as that is, but also to lay a foundation so that we don't have continual further crises, because I just want to repeat a cessation of violence is crucial, but if that cessation of violence is hostage to Hezbollah's next decision to launch missiles into Israel or Hamas' next decision to abduct an Israeli citizen, then we will have gotten nowhere.

WALLACE: Secretary Rice, I want to read you what our very own Bill Kristol has written in the latest issue of The Weekly Standard about the way that the U.S. has handled Syria and Iran. And let's put it up on the screen, if we can.

"We have done a poor job of standing up to them," meaning Iran and Syria, "and weakening them. They are now testing us more boldly than one would have thought possible a few years ago. Weakness is provocative." In fact, Secretary Rice, have our threats but lack of action emboldened Iran and Syria? RICE: I don't believe by any stretch of the imagination that Iran and Syria misunderstand that the United States and its allies have a different vision for the Middle East than they do. And that's what has them alarmed.

That is why they are striking out, because when we succeed in a different kind of Middle East, a Middle East in which you have a stable Iraq that is democratic and multi-religious and pluralistic, when you have a different kind of Middle East in which you have a Lebanon, as it is now, devoid of Syrian forces but, in fact, stable and democratic, it's going to be a different kind of Middle East.

When you have a two-state solution with Palestinians and Israelis living side by side, it's going to be a different kind of Middle East, and it's going to be a Middle East, by the way, in which there is no room for the kind of extremism that Syria and Iran represent.

That's why they're striking out. It's not a matter of weakness. It's a matter that they believe we're going to succeed and they're determined to stop it. We're determined that they won't.

WALLACE: Secretary rice, I certainly agree that no one in that area doubts our vision. The question is whether or not they doubt our will and our resolve to enforce, if you will, that vision. You were on our show, on this show, on June 4th...

RICE: Well, Chris, let me just -- yes. But, Chris, I have to answer that point because, of course, if we do not have the will, then they will succeed.

But the president of the United States has made very clear that this is the work of a generation. What happened to us on September 11th showed the American people that we have to have a different kind of Middle East, and we're determined to have a different kind of Middle East.

And it's hard work, and sometimes it's violent, and sometimes it is difficult. And unfortunately, we lose American life in bringing about that different kind of Middle East.

WALLACE: You were on the show back on June 4th, and I asked you at that time how long Iran had to respond to the offer that had been made to the west, both carrots and sticks, for them to stop their nuclear program.

Let's listen to what you had to say at that time. Here it is.

(BEGIN VIDEO CLIP)

RICE: I think it's fair to say that we really do have to have this settled over a matter of weeks, not months.

(END VIDEO CLIP)

WALLACE: Secretary Rice, that was six weeks ago. Iran still says that it won't meet any deadline, and we are now going to the U.N. Security Council to ask them once again to stop their nuclear program. Is that, in fact, a show of strength?

RICE: Chris, I believe I said weeks, not months, and we would make a decision as to whether or not we were on the negotiating track or whether or not we were going to the Security Council. We made that decision in Paris and, in fact, we're on our way back to the Security Council.

I think you will see a resolution that makes mandatory the Iranian suspension, and we will see whether or not the Iranians, indeed, recognize how isolated they are. They are completely isolated now. The Security Council is going back to work, and that happened in a matter of weeks, not months.

WALLACE: One final question. We have a couple of minutes left, Secretary Rice. The U.N. Security Council yesterday passed a resolution condemning North Korea's launch of those seven missiles on the 4th of July, but the U.S. had to back down on its call for any reference to Chapter 7, which would make any kind of resolution of that sort enforceable by military action.

And in fact, North Korea now has rejected the measure and they say that they are going to boost their, quote, deterrent. In fact, do you see any chance that this resolution is going to change North Korea's behavior?

RICE: Well, first of all, this is the first resolution, Chris, since 1993 on North Korea, and the Chinese voted affirmatively for a resolution that demands that North Korea stop its activities that are jeopardizing international peace and security.

The Chinese voted affirmatively with the rest of the Security Council to require member states to take steps to prevent North Korea from obtaining dangerous materials. This is a very strong resolution. It is binding on member states.

And it says to the North Koreans you're isolated, come back to the six-party talks. Now, I'm not surprised that the first reaction of the North Koreans is to reject it. That's the way that the North Koreans are.

But they've got to be a little surprised at the strength of the resolution. They've got to be a little surprised that the unity of the community was maintained.

And by the way, we are, of course, engaged in other activities outside the Security Council, including checking illicit activities of North Korea through financial measures, through a proliferation security initiative denying North Korea certain kinds of materials, and we're going to continue to do those, too.

And North Korea, of course, is not confused about the security balance on the Korean peninsula. We have a strong deterrent force there. We have strong alliances with South Korea and with Japan, and we'll continue to pursue those as well.

WALLACE: Secretary rice, we want to thank you so much for joining us in the middle of the G-8 summit. We're going to let you go back to work. Have a successful summit and safe travels.

WALLACE: Up next, we'll explore the challenge for U.S. policy around the world now with two key members of the Senate Foreign Relations Committee, George Allen and Chris Dodd.

We'll be right back.

(COMMERCIAL BREAK)

WALLACE: So what choices does the United States have for dealing with problems in the Middle East, Iran and North Korea? For answers, we bring in two of the top foreign policy voices in the Senate, Republican George Allen and Democrat Chris Dodd.

Senators, welcome back to "Fox News Sunday".

SEN. GEORGE ALLEN (R), VIRGINIA: Thank you, Chris.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: Good to be with you.

WALLACE: What outcome do we want to see come out of the Middle East? As you both just heard Secretary Rice say, the U.S. does not want to see an immediate cease-fire that would leave Hezbollah in place, in power in southern Lebanon.

Senator Allen, should U.S. policy be to let the Israelis keep fighting to rewrite the situation on the ground?

ALLEN: U.S. policy should be, number one, stand with your friend, and Israel's a wellspring in the wilderness. And any country, particularly Israel, has the right to defend itself and to protect its citizens as we do.

The recognition for our country and actions need to be based on reality. Hezbollah is a terrorist organization. It is armed by Iran. It is paid for by Iran. And it is directed by Iran. It is interesting to note that the rocketry, the weaponry that is going into Haifa and other places in northern Israel is from Iran.

There's also a question -- where did Iran get this weaponry? From China. So we need to recognize that the United Nations -- it's not just us and Israel. The United Nations in Resolution 1559 said all foreign fighters are supposed to be out of there as well as disarm the militias, and Hezbollah needs to be disarmed. Otherwise, they'll strike again.

WALLACE: Senator Dodd, green light to Israel to take care of Hezbollah?

DODD: Well, I don't know green light, but certainly we have to begin any discussion of this recognizing that what has happened over the last several days occurred because of Hezbollah and Hamas -- highly provocative, despicable actions -- the invasion and raiding into northern Israel. So you begin there, clearly.

It seems to me, however, you need to go beyond just understanding the friendship, which is important, but for Israel's benefit and our own, we have missed, I think, over the last number of years the ability to really engage in the kind of diplomatic efforts in the Middle East.

From 1967 up until the end of the Clinton administration, every administration has remained very, very engaged in the Middle East. This administration, unfortunately, has seen the word diplomacy and negotiation as somehow a favor to your enemies.

And I think, unfortunately, we've allowed this time to elapse over the last several years. The Resolution 1559 was adopted two years ago, and the administration's done nothing, in my view, to really insist that the Lebanese rid southern Lebanon of Hezbollah.

And so this time has gone through without really engaging in the process. Thus, we find ourselves today. Israel certainly has the right to defend itself. What it's doing is absolutely necessary. If Lebanon and Syria were recognized, those soldiers need to be returned and also Hezbollah has to get out of southern Lebanon. Then I think you could bring a cease-fire about.

WALLACE: Senator Allen, we all remember secretaries of state going back to Henry Kissinger shuttling back and forth in the region trying to work these things out. Secretary Rice -- I put the question to her -- said she's thinking about that idea.

Does senator Dodd have a point that there is some failure of U.S. diplomacy, engagement in the Middle East, that plays a part in all this?

ALLEN: The United States has been involved, and our involvement has been supporting Israel. Now, there was a glimmer of hope when that reptilian terrorist corrupt Arafat died. There was great hope with Abu Mazen.

But when I was in Israel -- this was back in February, March of last year, there was concern about Hezbollah and Hezbollah trying to be disruptive. There was actually some opportunity for peace between the Palestinians and the Israelis. And they were very concerned then.

And then just days after I left -- and I spoke with Sharon and Peres and Netanyahu and others. A few days later, Hariri was assassinated. The people of Lebanon rose up against the Syrian occupation. It wasn't just the United States. The French led the effort for the Europeans.

And then also the more rational, moderate Arab countries, whether it was Jordan, whether it was Egypt, Saudi Arabia, told Syria to get out, and they got out without a single boot being put on the ground in Lebanon.

That same approach with the U.S., our European allies as well as the more rational, reasonable Arab countries are the ones that are going to need to be putting the pressure on Hezbollah. And ultimately, of course, they are funded, again -- remember this -- they are funded, sponsored, protected and directed by Iran and Syria. That is our problem.

WALLACE: Senator Dodd, I want to broaden this out but follow up on that point. Let's explore the big picture here. Why do you think at this point -- and perhaps you'll disagree with the premise, but why does it seem that at this particular moment, Iran, Syria, North Korea feel free to thumb their nose at us and the rest of the world?

DODD: Well, a number of reasons. First of all, we have not over the years, over the last five years, done just what I described earlier to you, and that is engage in the kind of consistent, non-stop efforts to build relationships for moments just like this.

WALLACE: Do you think we could build a relationship with Iran?

DODD: No, but you have to build your relationship with allies and others so you have the kind of support that you need at a moment like this.

I can't think of another time in my career of public service when we've been in as much trouble as we are today because of, in my view, not only the actions of people like Hezbollah and Hamas and Iran and Syria, but because we have failed to build the relationships that allow us to have the kind of response in a moment like this that would make them have second thoughts about engaging in the actions they've been engaged in. That's first and foremost.

Secondly, we made a war of choice in Iraq. These are not surprises. Hezbollah has been around since 1983. We've seen them building up. This is not all of a sudden some big surprise that's emerged. North Korea was around. The minute this administration took office, North Korea was there and the problems existed.

They have had a go-it-alone approach in the world. Itzak Rabin had a very good line when talking about the Middle East. He said you negotiate with terrorists as if the peace process didn't exist, and you negotiate for the peace process as if the terrorists didn't exist.

We have treated the word negotiation and diplomacy -- I'll say it again -- as if it were somehow a four-letter word rather than doing the things that Henry Kissinger started in 1967 and every administration has been involved in since, except this administration. And that has contributed to the situation we're in today.

WALLACE: Senator Dodd (ph), let me just take a slightly different look at this.

And you can respond to Senator Dodd in the course of your answer, which I'm sure you will. Are we so bogged down now in Iraq that these rogue nations look at the situation and no longer take seriously the Bush doctrine of preemptive action?

ALLEN: Well, our resolve and willingness to succeed in Iraq does have an implication. The rest of the world is looking. Is the United States going to have -- are we going to be surrendering? Are we going to be retreating? Are we going to be tucking tail and leaving? Or are we going to stick with it and help...

WALLACE: But how do you explain what Iran and North Korea are doing?

ALLEN: Iran and Hezbollah has been a problem since they -- in Lebanon, as Chris said -- that's right -- since 1983, when they hit the Marine barracks. They've been a problem in the 1990s. They hit Israeli embassies in Argentina. They have hit not just the U.S. They've hit European countries and Asian countries as well.

In fact, our administration and the United States is not going it alone. Look, the six-party talks insofar as North Korea -- the reality is the only one who can stop North Korea from doing anything that is untoward and provocative is China.

And the fact that China did not stop North Korea from launching those missiles is very telling insofar as the credibility and willingness of China, who provides the sustenance and all of the nourishment North Korea needs to survive. If it weren't for China, North Korea couldn't survive.

In Iran, as far as Iran is concerned, obviously, we're trying to get others in it. If we have embargoes or sanctions, U.S. only, it doesn't work. So we are involving the rest of the world, because if you're going to have sanctions, and you're going to have embargoes, and you're going to have meaningful reactions to whether it's Iran or whether it's North Korea, you do need others.

But north Korea -- China's alone the one that can help, and Russia insofar as Iran.

WALLACE: Senator, let me ask you about that, because clearly, the U.S., the Bush administration, has for the last few years been involved in a diplomatic offensive. We do have the six-party talks going on -- or that we're trying to re-establish with North Korea. We had the three-party talks for more than a year with Iran.

Now we're going to the U.N. Security Council where, quite frankly, a lot of our allies don't agree on specific action to take. So what is the benefit of all this diplomacy? In fact, what kind of message are we sending to these rogue nations?

DODD: Well, again, I come back to the point, Chris, that I think has been made by many others, not just myself, and that is, of course, we're late into this game. Now, look. Having said all of this, obviously, the administration is in St. Petersburg today. I'm not one who subscribes to the notion of going after an administration that's out of the country at the time. But clearly, we're very late in this game of building those relationships. You asked the question a moment ago -- the issue of Iraq. That was the war of choice. We are bogged down there. And clearly, Iran, clearly North Korea and others see this as an opportunity for them to begin to engage in some activities testing our resolve here.

Our capabilities of responding alone to these situations is not there. They know that and we know that. We have to build those relationships. We need to get, if we can, here some resolution of the present situation in Lebanon.

The Israelis have said return those soldiers and make sure that we can do something about Hezbollah moving out of southern Lebanon. I think we ought to pick up on that. We ought to be insisting upon that. Condoleezza Rice ought to be going to the area, going to the region immediately.

Maybe they can leave even from St. Petersburg and bring some of those individuals down and see if they can't get some resolution. This could spin out of control to such a degree that we have a major, major war in the Middle East.

WALLACE: Thirty seconds left. Senator Allen, you get the final word.

ALLEN: Well, the reality -- and so far as Hezbollah, we need to stand firm with our friends, the Israelis. They are protecting themselves. Hezbollah must be disarmed.

If they're not disarmed -- and this may be an occasion to get the Europeans, the French, the Germans, Italians, the British, as well as Russians, China and all the rest, to recognize that if they do not disarm Hezbollah, they will strike again.

But I'm not sure where this is going to lead, but the United States needs to stand strong for a democratic Israel, and we need to stand strong in disarming these terrorists, Hezbollah, because otherwise if we just back down, that will tempt them to hit again and recognize that the United States is not going to stand with its allies. And we must.

WALLACE: Senator Allen, Senator Dodd, we're going to have to leave it there. We want to thank you both so much for sharing your Sunday with us. Always good to have you here.

DODD: Nice to be with you.

WALLACE: Coming up, our Sunday panel on the turbulent times in the Middle East and beyond. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: The short-term solution is for Hezbollah to stop the attacks. The longer-term solution is for nations around the world and nations in the neighborhood to support those who support the advance of democracy.

(END VIDEO CLIP)

WALLACE: That was President Bush addressing the Middle East crisis from the G-8 summit in Russia on Saturday.

And it's panel time now for Fox News contributors Fred Barnes of The Weekly Standard, Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio. There's kind of a pattern going on here.

Well, for the second straight week, Bill Kristol, you have lobbed a Katyusha rocket onto the Bush White House from the pages of The Weekly Standard, as I mentioned in my discussion with Secretary of State Rice.

You say that American weakness has emboldened Iran and Syria, and then you went on to say this, and let's put it up, "Perhaps President Bush can fly from the silly G-8 summit in St. Petersburg, a summit that will most likely convey a message of moral confusion and political indecision, to Jerusalem, the capital of a nation that stands with us."

So, Mr. Kristol, what should our policy be?

BILL KRISTOL, WEEKLY STANDARD: He has my permission to finish the G-8 summit. He doesn't have to fly to Jerusalem or come back here early, though I don't think the G-8 summit will accomplish much. Our policy should be to stand with Israel. They are fighting our enemies.

What did the president say a few years ago? States like these, like Iran and Syria, and their terrorist allies like Hezbollah and Hamas constitute an axis of evil, arming to threaten the peace of the world.

He was right four years ago. He's right today. Israel withdrew from these territories. There was no territorial dispute with Lebanon or, any more, with the Gaza strip. These terrorist groups, backed by Iran especially, and also by Syria, attacked across a border. And we need to support Israel in dealing with Hamas and especially with Hezbollah.

WALLACE: But, Juan, in effect, what I got -- the message I got from the Secretary of State Rice interview is that basically that's the U.S. policy right now, which is to give a kind of green light, within limits, to Israel to take care -- to clean up Hezbollah in southern Lebanon.

JUAN WILLIAMS, NPR: I think that's exactly right. And I think it's regrettable. I think that the emphasis on military action is one that feeds into Islamic extremism.

It feeds into terrorist elements not only in Lebanon in terms of Hezbollah, but you know, you have to see this in terms of U.S. policy as impacting our relationships with Iran and the negotiations over their nuclear weapons...

WALLACE: Well, wait a minute. So what would you have Israel do when the Hezbollah comes across their sovereign border, attacks and kills Israeli soldiers and kidnaps a couple of them?

WILLIAMS: You know, to me, this is a conversation in a bubble, Chris. I mean, it's totally alien from the reality of Israel as a terrifically superior military power in that region. There's no question that Israel could win the conflict.

The question is long-term prospects. Are you going to always have Israel at war? Are you going to therefore put the U.S. in a position, given that we're already in Iraq and we are on sort of shaky ground with Iran -- are you going to put us in a position where we have to come in to support Israel with additional military power? Is that the only solution that some people see in the world?

WALLACE: Well, let me ask you about that, Fred, because as I remember, Israel got out of southern Lebanon and got out of Gaza.

FRED BARNES, WEEKLY STANDARD: And it shows what happens when these became areas no longer occupied by Israel. They became areas where terrorists moved in and began firing rockets at Israel, at civilian communities, at incursions across the border. And of course, we've seen those in recent days.

I hope Juan would feel a little differently if we had a terrorist group on our northern border in Canada firing rockets into the U.S. And like the U.S., Israel has a right to its own security.

Right now, a cease-fire would be a huge mistake, because what would serve the U.S., what would serve Israel, what would serve the fledgling democracy in Lebanon would be for Hezbollah to be destroyed as a military operation and as a political force in Lebanon, or at least crippled.

Look, Lebanon can't operate with Hezbollah there with a veto over anything it does, and Israel is not secure with Hezbollah there. The root causes that Condi Rice was referring to when she talked to you, you know, these fundamental issues at stake -- it is this Islamic jihadist group of Hezbollah, Hamas, Syria and Iran. And that's what has to be dealt with.

WALLACE: Mara?

MARA LIASSON, NPR: Yes. Well, the problem is the jihadist groups are no longer guerrilla movements operating independently. They either are the government in the Palestinian territories, they're a very good part of the government with an effective veto in Lebanon, and of course in Iran and Syria -- at least in Iran, they also are the government.

The problem is in terms of an alternative to military action, Juan, there are not going to be any peace talks with Hezbollah. I mean, they don't want some territory. It's not like the Palestinians just wanted the West Bank returned.

Hezbollah wants the destruction of Israel. And I think what the United States is saying to the Israelis now is they have a green light to try to not reoccupy Lebanon, because I don't think that's in the cards at all, but to see if they can cripple Hezbollah just enough to make Israel secure.

WALLACE: Bill, I want to go back to your article, your Katyusha rocket, in The Weekly Standard where you talk about U.S. weakness emboldening Syria and Iran.

Couldn't the argument be made -- and I think that to a certain degree Senator Dodd was making it earlier -- that this shows the failure of the Bush foreign policy that I suspect he would argue that you espoused, the go-it-alone preemptive strategy?

But the fact is we've gotten bogged down in Iraq, whether it was a good mission or not, that the rogue nations know it and they don't take us seriously.

KRISTOL: Look, our cobbling of Iran, if I can use a neutral term like that, over the last six months to nine months has emboldened them. I mean, is Iran behaving like a timid, you know, regime that's very worried about the U.S. or is Iran behaving recklessly and in a foolhardy way?

WALLACE: But isn't that the result of what's happened in Iraq?

KRISTOL: No, it's the result of our deducing from the situation in Iraq that we can't stand up to Iran.

I mean, when we stand up over and over and say Iran is shipping improvised explosive devices into Iraq and killing U.S. soldiers, and Syria is providing a line for terrorists to come into Iraq and kill U.S. soldiers, and that's unacceptable, that's not helpful, and then we do nothing about it -- when Ahmadinejad says provocative things and continues to ship arms to Hezbollah, and we say OK, maybe now we'll give you direct talks, unfortunately that weakness has been provocative. Ahmadinejad feels emboldened. Now, we need to show him -- and I think the administration has done a good job the last couple of days of showing him that he miscalculated. And indeed, this is a great opportunity. I think our weakness, unfortunately, invited this aggression, but this aggression is a great opportunity to begin resuming the offensive against the terrorist groups.

Israel is fighting four of our five enemies, in a sense, in the Middle East: Iran and Syria, sponsors of terror, Hezbollah and Hamas. Al Qaida doesn't seem to be directly involved. We have to take care of them in Iraq.

This is an opportunity to begin to reverse the unfortunate direction of the last six months to nine months and get the terrorists and the jihadists back on the defensive.

WILLIAMS: Well, it just seems to me that you want, you know -- to go back to the General Kristol analogy, you just want war, war, war, and you want us in more war. You wanted us in Iraq. Now you wanted us in Iran. Now you want us to get into the Middle East where -- I mean, I think there's a real interesting dynamic at play.

I think it's psychological on the part of Israel and many of its supporters, and I'll throw you in here. Somehow you see Israel as weak and you see Ehud Olmert as weak. And they see the person...

WALLACE: He's the new prime minister.

WILLIAMS: The new prime minister of Israel -- and the defense minister as weak. Everybody is weak in the aftermath of Sharon, and so everybody has to prove what a man they are in the Middle East, including -- you're saying why doesn't the United States take this hard, unforgiving line.

Well, the hard and unforgiving line has been we don't talk to anybody, we don't talk to Hamas, we don't talk to Hezbollah, we're not going to talk to Iran. Where has it gotten us, Bill?

LIASSON: But Hezbollah and Hamas are not asking for talks.

WILLIAMS: Well, somebody should have -- in other words, my sense is - - and this is in response to what you said earlier, Mara. I think that we should have been encouraging -- and we were trying to encourage Hezbollah to become part of a mainstream political movement in the government of Lebanon.

What has happened now in the last few days is that Hezbollah has made a clear decision they're not going to be part of a mainstream government.

LIASSON: They are part of the government.

WILLIAMS: They're going to be a terrorist...

LIASSON: They are part of...

KRISTOL: They are part of the government. They have a cabinet minister in the...

WILLIAMS: No, but I think they're moving...

LIASSON: I think what we...

KRISTOL: Look, Israel pulled out of...

WALLACE: Let Mara talk.

LIASSON: What I think the U.S. is hoping to do and Israel is, is if you can encourage the Lebanese government to finally, once and for all, crack down on Hezbollah, implement these U.N. resolutions.

Now, you have to do it in a way that while you're barraging Hezbollah, you don't also completely undermine and destroy the Lebanese government. So that's why I think you see Israel trying to do something very difficult, which is a calibrated military operation.

WALLACE: Fred Barnes, you have the final 30 seconds.

BARNES: Juan seemed to like what Senator Dodd was talking about, that golden age from 1967 to 2000 of diplomacy and negotiation. Look where we wound up after that.

We wound up with an Iran aggressively pursuing nuclear weapons. We found Israel threatened by terrorists on two borders. We found Syria as a country that's now a client state of Iran and is a haven for terrorists.

Iraq's better, but there's no improvement in the Middle East. It's probably worse off after this great age of negotiation and diplomacy.

KRISTOL: And we ended up with September 11th, 2001.

LIASSON: Well, wait a minute, and also not better off...

KRISTOL: No, seriously. Why did that happen?

WALLACE: So much for the last word. All right. We have to take a break here.

But coming up, some domestic politics. Mr. and Mrs. Wilson sue Vice President Cheney and other top officials for allegedly violating their rights. Is this a legitimate beef or a publicity stunt? Our panel weighs in after this.

(COMMERCIAL BREAK)

WALLACE: On this day in 1945, the world's first atomic bomb was secretly tested in New Mexico. The world learned about the weapon three weeks later when it was dropped on the Japanese cities of Hiroshima and then Nagasaki.

Stay tuned for more panel and our Power Player of the Week.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

VALERIE PLAME, FORMER CIA OPERATIVE: I feel strongly and justice demands that those who acted so harmfully against our national security must answer for their shameful conduct in court.

(END VIDEO CLIP)

WALLACE: That was former CIA officer Valerie Plame making her case for the lawsuit she's filed against the vice president and other White House officials who she says destroyed her career.

And we're back now with Fred, Mara, Bill and Juan. So the Wilsons are seeking unspecified damages, saying that Vice President Cheney, Karl rove, Scooter Libby all conspired to punish Joe Wilson, who was criticizing their Iraq war policy, by outing his wife.

Mara, what do you make of this as a legal matter and as a political tactic?

LIASSON: Well, I think as a political tactic it has to prove its potency legally. In other words, you have to get a through a motion to dismiss.

You'd have to get to the discovery stage for it to be a real effective political tactic, because then, if this lawsuit proceeded to that point, you could depose maybe even the vice president and all these other White House officials and actually, you know, do -- not unlike what happened during the Clinton years, force these top officials to talk about what they did, to try to prove, in effect, what Patrick Fitzgerald hasn't yet proved, which is that there was an actual effort to actually punish them and seek revenge by outing her, not just to discredit him and say oh, he got sent on a junket by his wife. Now, that's hardball. I don't know if that's illegal.

But they're going to have to prove that they intentionally outed her, blew her cover, to punish them. And that, I think, you can only do through the process of discovery, and you've got to get through a lot of legal hurdles to do that.

WALLACE: Fred, as we learned during the Clinton administration, politics by lawsuit can be pretty effective.

BARNES: It can be, but I think for them to get this case past a motion to dismiss, they're going to need an activist Bush-hating judge to do it. I think any other judge would throw it out.

Look, we also have to remember that the Wilsons are not some innocent people who were hit by some political drive-by shooting. Look at all the stuff that happened beforehand.

Remember, Joe Wilson denied that his wife had anything to do with his going over to Niger on this trip, and it turned out that the Senate Intelligence Committee uncovered her memo in which she recommends him for it, Joe Wilson being at the time a very fervent foe of the war in Iraq. And he's sent over there.

When he gets back, he circulates among columnists around Washington -- the New York Times, the Washington Post, at The New Republic and so on, and tells his story, finally writes something in the -- a piece in the New York Times.

A natural result is people at the White House and elsewhere -- Bob Novak, for instance -- how in the world was this guy sent to Niger on this mission in which he claimed Vice President Cheney and everyone at the White House got a report from him saying there had been no deal where Iraq had gotten uranium from Niger.

Well, they never heard about it. They never got a report. Joe Wilson has told many, many stories that were untrue from the beginning, and they're still being unraveled.

WALLACE: But, Juan, let me ask you about this, because we know a few things. We know that the president cut out Joe Wilson's column and, in fact, he even wrote on the top of it "did his wife send him on a junket". We know the president agreed to declassify -- pardon?

LIASSON: The vice president.

WALLACE: The vice president wrote on it that -- yes, here it is. The vice president wrote -- trust us, that says or did his wife send him, Joe Wilson, on a junket. We know that the president agreed to declassify part of the National Intelligence Estimate.

None of this may be illegal, but could it be politically embarrassing if you get the vice president, Karl Rove, Scooter Libby facing a tough lawyer in a deposition?

WILLIAMS: Of course. I mean, that's the threat. I mean, I think that's what Fred -- what Mara referred to before.

If you get into discovery here, you have a very embarrassing situation for a White House that is still battling over -- going into the midterm elections, over the war in Iraq, which is the dominant political issue, still battling over the question of weapons of mass destruction.

And to people who are strongly in the Democratic camp, it would look like it's fueling their base by saying here is what the vice president does, and Karl Rove and Scooter Libby have punished people who tried, in their opinion -- Fred has a different opinion, but in their opinion tried to speak the truth, to say there was no weapon of mass destruction in Saddam Hussein's arsenal.

But what's curious about this case -- I'm, you know, sort of from the internal Washington journalistic side -- is I think that Bob Novak came out this week with his column. He's named Karl Rove. I think Rove, the White House, are very angry at Novak, feel that he's broken all trust, that it was a...

WALLACE: I thought Rove had already told us...

WILLIAMS: The lawyer had come out, but Rove, I think, felt it wasn't -- you know, that it wasn't an on-the-record conversation, and it exposes him, and now you're going to have -- I mean, the vice president may have, I think, a stronger case for immunity.

Does Rove have a good case for immunity in this lawsuit? It may be that Rove ends up in the discovery process.

WALLACE: Bill, before we bring you into this, in fact, Fox News contributor and columnist Robert Novak was all over Fox News this week making his first statements about the case and who he got the information from.

One of the things he said was he doesn't think that the White House was trying to hurt Joe Wilson and his wife. Take a look.

(BEGIN VIDEO CLIP)

NOVAK: The information came out to me in the course of -- in the course of an interview by a person who was not -- believe me, not in the business of playing political dirty tricks.

(END VIDEO CLIP)

WALLACE: Bill, what do you think Bob Novak added to our understanding of this whole story?

KRISTOL: Bob Novak released the name of Valerie Plame. He did not learn that from Scooter Libby, it now turns out. So Scooter Libby is the one person who's been indicted, ridiculously, in this case.

The civil suit is a joke. It's not going anywhere. Libby will be acquitted, I believe, early next year. And then I hope he rejoins the U.S. government. He should. It's been a disgrace the way he's just thrown overboard.

I guess he had to step down once he was indicted. But it really is unbelievable to me that he's under criminal investigation. He should rejoin the U.S. government and help President Bush deal with the current threat, a real threat, which is Iran getting nuclear weapons. You know?

I mean, Cheney and Libby wanted to find out the truth about Iraq and their dealings with Niger. What's a disgrace here is that the CIA was so feckless and cavalier. They let Valerie Plame suggest her husband, an out- of-work diplomat, to go over to this country and sip tea with a few people. And then they take that report, which incidentally sort of confirmed that Iraq had had dealings with Niger, and they take that as adequate work. It makes you worry about the CIA. I'd be happier if Scooter Libby were back in there.

They're going to have to deal with the threat of a nuclear Iran. That's the big -- if I could just add, back to the first panel, that is the news of this week when you really think about moving forward. Could we allow this Iranian regime, with its demonstration of recklessness and aggression, to have nuclear weapons?

WALLACE: We're going to have to leave it there. Thank you all, panel. That's it for today. See you next week.

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