BLITZER: How much of a threat do you see right now from Iran's nuclear program?

SHIMON PERES, ISRAELI PRESIDENT: I see it as a threat to the entire world. I don't think that Israel has to monopolize this threat.

BLITZER: How much time is there, do you believe, before the Iranians actually have a nuclear bomb?

PERES: I don't know. It may be a year. It may be two years. Nobody knows. I am not sure the Iranians know.

BLITZER: Is Israel considering some sort of military action to destroy Iran's nuclear facilities, along the lines of what you did to the Iraqi nuclear facilities back in 1981, and, more recently, a Syrian suspected nuclear facility?

PERES: What Israel hopes for is that world leaders, headed by President Obama, will do whatever possible not to allow the Iranians to have a nuclear bomb.

BLITZER: What if that fails?

PERES: Well, let's see. Maybe it will succeed.

Why start with the failure?

Let's start with the hope.

BLITZER: So far, it hasn't succeeded. They seem to be accelerating their enrichment of uranium.

PERES: I'm not sure. It's partly succeeded.

Why?

Because they have

two problems. One is the enriched uranium and the other is the nature of the present rulers of Iran. What they did already, they split the Arab world so deeply, so meaningfully, that they changed the situation.

Ahmadinejad organized an Arab profound opposition to his policies, to his government. He created a new chance for peace, unwillingly.

BLITZER: Because you're talking about the Arab countries like Israel, who -- who are worried about Iran's nuclear ambitions. PERES: I'm talking about the Arab countries -- most of them are Sunnites -- 70 percent of the Arab world...

BLITZER: Sunni?

PERES: Sunni. They think that Iran is the greatest danger, not Israel.

BLITZER: Which countries are you talking about specifically?

PERES: I can mention Egypt, Jordan, Saudi Arabia, the Principalities, Morocco, who can't have relations with Iran -- most of the Arab countries.

BLITZER: I recently interviewed the vice president, Joe Biden, almost exactly a month ago. And I asked him about Israel and Iran and the possibility of an Israeli military strike. Here's what he said.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: I don't believe that Prime Minister Netanyahu would do that. I think it would be ill-advised to do that. And so my level of concern is -- is no different than it was a year ago.

(END VIDEO CLIP)

PERES: Let me say, look, Israel did not take any decision to attack military Iran. Israel took a decision to coordinate our policies with that of the United States.

The friendship with the United States is an ally -- a most important strategic asset. We are not going to endanger it.

Now, if President Obama thinks he wants to start with engagement, OK. But as long as the president doesn't say all other options are out -- he doesn't say it because he wants that Iran will take seriously his proposal. Even Putin says I cannot agree that Iran will have a nuclear weapon.

The same is with Israel. We don't agree that they will have a nuclear weapon.

You know, nobody suggests you'll start tomorrow with a war. It's nonsense.

Nobody suggests that you will tranquilize Iran unnecessarily.

You want engagement?

OK.

You want economic sanctions?

OK.

You want to limit the distance of the production of the long- range missiles?

OK.

You want to control the situation in the Persian Gulf?

OK.

We should listen carefully. We are a responsible government. We don't have any crazy missions. And we should wait for the situation according to its development.

BLITZER: The defense secretary, Robert Gates, told Congress the other day it probably wouldn't make much of a difference if you or the United States or any one used military action against Iran's nuclear facilities.

He said this.

(BEGIN VIDEO CLIP)

ROBERT GATES, U.S. SECRETARY OF DEFENSE: Even a military attack will only buy us time and send the program deeper and more covert.

(END VIDEO CLIP)

PERES: My answer is this is not a question. Nobody suggests today that we will sit down and decide to declare a war against Iran or not.

The question today, do we have to tranquilize Iran?

Why do you suggest engagement?

This is the only problem to date.

BLITZER: Because all of these comments seem to be sending a signal to the Iranians that, you know what, you probably don't have to worry about that military option.

PERES: I don't know if it's necessary. I think to say we want engagement -- but if you want to go for engagement, we can't guarantee you anything. I think this may be a more helpful approach to make engagement a success.

BLITZER: Do you have a problem...

PERES: This is the only problem to date.

BLITZER: Do you have a problem with the Obama administration reaching out and seeking a dialogue with Ahmadinejad?

PERES: Look, if it will be successful, God bless them.

Who wants a war?

We're not crazy. We don't want that Iran will be a menace to us, to the Arabs, to the entire world.

BLITZER: So you think it's realistic -- it's potentially realistic, that Iran could step back from a nuclear weapons program through diplomatic or political means?

PERES: I won't count it out, because this is not the only thing. There is an opposition against Ahmadinejad already inside Iran itself. We have two problems -- to change the system, to prevent a nuclear war. The combination between the two, that is what makes it so dangerous.

BLITZER: Because he's up for reelection. There are elections coming up in Iran, as you know, in a few weeks.

Does it make any difference, do you believe, who's elected president of Iran?

PERES: What makes a difference is the real state of economy and social conditions in Iran. The fact that the price of oil went down already introduced a deficit in the Iranian budget. They are not terribly rich. There is 30 percent inflation. There is 25 percent unemployment. There are a million youngsters who took to drugs. Young people are leaving the country. It's -- everything is not directions. You know, people think that democracy is 24 hours in four years. It's nonsense.

It's the feeling. It's the attitude of the people, that's what counts.

Finally, I believe the one that will overpower the present rulers of Iran will be the Iranian people. They don't bring them any promise, any message, any hope but dangers...

BLITZER: So you can see...

PERES: ...and hatred.

BLITZER: So what I hear you saying is there could be a collapse of that system from within, sort of like the way the old Soviet Union collapsed?

PERES: Like the collapse that happened already in Iran several times.

Why should they be a Soviet Union?

Iran wasn't always like it. Iran, traditionally, tried to enrich their minds, not the uranium. This is a new experience and a strange one. And a negative one.