BLITZER: Leaders around the world listened very, very closely to President Obama's speech about the Middle East today, including top diplomats over at the United Nations.

And joining us now from the State Department, the United States ambassador to the United Nations, Susan Rice. Ambassador, thanks very much for coming in.

SUSAN RICE, U.S. AMBASSADOR TO THE U.N.: Good to be with you, Wolf. BLITZER: A big day, the president delivering major, major speech. Let's get through some of the specifics. Referring to your job in particular, he said symbolic actions to isolate Israel at the United Nations in September won't create an independent Palestinian state. Does that mean, A, you're trying to avoid any General Assembly resolution on a Palestinian state?

RICE: Well, Wolf, obviously, as the president said, you can't vote a state simply by passing a resolution in the General Assembly. A Palestinian state, to which the president reiterated his commitment, living side by side with the Jewish state of Israel, can only be accomplished through direct negotiations, which is why the president today took the important and historic step of framing, from a U.S. point of view, two of the core principles that ought to guide those negotiations and encouraging the parties to return to the negotiating table as soon as possible to begin negotiating on the principle of security for Israel and a Palestinian state based on mutually agreed swaps on the '67 lines.

But in New York, Wolf, as you know, at the U.N., there is a bit of a head of steam building for a resolution that would be designed to declare a Palestinian state. But you cannot create a state simply through a piece of paper. We will not be supportive of efforts that seek to bypass the very crucial and critical step of direct negotiations.

BLITZER: So you'll vote -- the United States will vote against any such United States -- United Nations General Assembly resolution?

RICE: We've been very clear, Wolf, that you -- we are not going to support efforts in New York or Geneva or elsewhere to bypass the absolute necessity of the two parties negotiating between themselves to establish this two-state outcome which is so crucial for Israel, for the Palestinian people, for the United States and our national interests and for the region.

BLITZER: Remind me, back in February, when you raised your hand to veto a United Nations Security Council resolution that basically called on the Israelis to freeze settlement activity, which the United States wants Israel to do -- why did you veto that resolution?

RICE: Well, we've been clear for decades, Wolf, on the part of the United States government that we don't accept the legitimacy of continued settlement activity. But we opposed that resolution for the very same reason that I just described. We cannot resolve crucial final status issues that can only be dealt with through direct negotiations by bypassing those direct negotiations and coming to the Security Council and the General Assembly. It doesn't work as a practical matter.

These are core, tough issues that have been out there for decades, and they can only be resolved through direct negotiations. And that's why I was instructed to cast that veto and did so.

BLITZER: Let's talk about the Syrian leader, Bashar al Assad. How much time does he have to be involved in a transition to democracy before the Obama administration says to him what it said to Mubarak in Egypt, what it says to Gadhafi in Libya, that it's over, it's time for you to go?

RICE: The president was very, very clear today on Syria and said that Bashar Assad has to either lead this transition right away to a credible democracy or get out of the way. We have been very, very clear in condemning the violence that has been perpetrated by the Syrian government against its own people and laying out very specifically the steps that the Syrian government must take if it is to show that it's ready and willing to lead to a genuine transition.

Yesterday, we added to the already very substantial sanctions that we have in place on Syria by designating President Assad himself, and those closest to him, as violators of human rights and freezing their assets. So these are very significant steps, and they show that the patience of the Syrian people is running out, the patience of the international community is running out, and Assad has to act and act swiftly and do the right things, or as the president said, he will find himself only increasingly isolated.

BLITZER: All right, define "swiftly." How much time does he have?

RICE: I can't give you a timeframe, Wolf. But what you can see is with the violence intensifying, the people becoming much more restive, the international community, led by the United States, making very clear that this is not the behavior befitting a credible government and imposing additional sanctions, time is short. And Assad needs to prove that he will either lead a credible transition, or as the president said, get out of the way.

BLITZER: Tell us why it's in America's interests, even at these tough economic times, to be providing billions of dollars in economic assistance to Egypt and Tunisia while cutting so much spending here at home.

RICE: Well, Wolf, we're obviously deeply and responsibly committed to reducing spending in this country and trimming our deficit, but that doesn't mean that we have the ability to simply walk away from the world and not invest in crucial opportunities, like the president outlined today that are transpiring in the vital region of the Middle East and North Africa.

It matters enormously to American national security and our national interests that the democratic transitions under way in Egypt and Tunisia are still young and still fragile succeed. And our ability to invest through debt relief in the case of Egypt, trade agreements in the case of Egypt and Tunisia, and additional forms of effort to spur private sector investment are crucial to shoring up and helping to give foundation to those democratic transitions.

That's in our national interest. And as the president said, we will make those investments, make them wisely, frugally, but do so because it matters to our national security.

BLITZER: Ambassador Rice, good luck. RICE: Thank you very much. Good to be with you.