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Sec. Rice, Sens. Graham & Reed, Roundtable

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. Iran's top leader threatens to use oil as a weapon against the U.S., next on "Fox News Sunday".

World powers offer Iran a way out of a nuclear showdown. Will the ruling clerics make a deal? We'll find out from Secretary of State Condoleezza Rice.

New allegations of U.S. military atrocities in Iraq. What's the fallout for America's mission? We'll ask two key senators, Republican Lindsey Graham and Democrat Jack Reed.

And Al Gore is back. But is he pushing a cause or starting a campaign? We'll poll our panel, Brit Hume, Susan Paige, Bill Kristol and Juan Williams.

Plus, our Power Players of the Week offering a lifetime's worth of wisdom, all right now on "Fox News Sunday".

And good morning again from Fox News in Washington. We begin, as always, with a quick check of the latest headlines.

Iran's supreme leader, Ayatollah Khamenei, said today his country would disrupt oil supplies if the U.S. makes what he called a wrong move and attacks his nation. In the past, Iran has ruled out using oil as a weapon.

In Baghdad, parliament postponed its session today because of a continued split over who should hold two key jobs, the ministers of defense and interior.

Also in Iraq, a brutal attack this morning outside Baghdad. Twenty-one people, many of them high school students, were dragged from their vehicles and killed. Four Sunni Arabs in the group were spared.

With a major new diplomatic initiative for Iran and new problems in Iraq, we're joined now by the secretary of state, Condoleezza Rice.

And welcome back to "Fox News Sunday".

CONDOLEEZZA RICE, SECRETARY OF STATE: Thank you, Chris.

WALLACE: Ayatollah Khamenei's threat to disrupt oil supplies if the U.S. makes a, quote, wrong move against his country -- your reaction.

RICE: Well, I think that we shouldn't place too much emphasis on a threat of this kind. After all, Iran is also very dependent on oil revenue. I think something like 80 percent of Iran's budget comes from oil revenue, and so obviously it would be a very serious problem for Iran if oil were disrupted on the market.

But I don't think we should really place much emphasis on this at this point in time. What we should place emphasis on is Iran's opportunity to find a way out of this impasse.

WALLACE: All right. Well, let's talk about the impasse and your diplomatic move this week. Top Iranian officials from that country's president on down say they welcome talks about the nuclear program, but they want it without any preconditions, that they would not stop their uranium enrichment program first.

Do you regard that as a rejection of the offer that the U.S. and other world powers made this week?

RICE: Chris, we understand that it may take a little time for Iran to assess the situation. In short time they will be presented with the actual proposals that the E.U. Three and others have been considering. And I think we have to give that some time.

I would note that the conditions that we outlined are not American conditions. They're conditions of the IAEA board of governors, conditions of the U.N. Security Council presidential statement and, indeed, a condition that was set by the Europeans when the negotiations broke down.

Iran needs to suspend its enrichment and enrichment-related activities and come back to the table, but that's not an American condition. That's a condition set by the international community.

WALLACE: So you don't regard this as a rejection.

RICE: Well, I think we just have to wait and give this a little time.

WALLACE: You say you want to wait for Iran to actually get the offer.

RICE: Right.

WALLACE: When will they get the offer?

RICE: Well, in the next few days, I think the offer will be made clear to the Iran. I think there will be an envoy to Iran from the group that put this together, from the Europeans.

But the important thing here is that it's a major opportunity. It's sort of a major crossroads for Iran, and it's perhaps not surprising that they will need a little bit of time to look at it.

But the fact is there are two paths, and we hope they're going to choose the path that is a path away from confrontation and toward a solution. WALLACE: One concern is that Iran will drag out the diplomacy, as, in fact, they have for years, while they continue their uranium enrichment program. In the offer, is there a specific deadline as to when Iran has to give an answer?

RICE: We will not allow Iran to drag this out. This really has to be settled not in a matter of months. This program has been moving along.

But one reason, Chris, that you want to be sure that there's a suspension of the activity is that you don't want the negotiations to be used as a cover for continued progress along the nuclear front.

And so this package is put together in a way that guards against a kind of extended set of negotiations while the Iranian program continues. It's also put together in a way that gives Iran a pretty clear choice of what choice it can make.

WALLACE: If I may press the question, is there a specific deadline?

RICE: We have made very clear and will make very clear that the international community is not prepared to wait while Iran continues down this path. The Iranians will get the proposal. They obviously need some time to look at it.

But no one among these six powers is prepared to let this simply drag out with Iran continuing to make progress on its nuclear program.

WALLACE: There's a natural deadline. All of the world leaders that were involved in these negotiations -- in fact, even more -- will be meeting in St. Petersburg for the economic summit on July 15th. Do you expect an answer by then?

RICE: Well, you know, Chris, that I'm not one for time lines and specific schedules. But I think it's fair to say that we really do have to have this settled over a matter of weeks, not months. It really can't be...

WALLACE: That would be almost -- that would be more than a month, so would that be a reasonable time?

RICE: Well, I think we will see where we are by that time. But let's just step back now and give the diplomacy a little opportunity to work.

It's not a good time to think about precisely what deadlines there will be, but it is a good time to think that this is a tremendous opportunity for Iran and it's an opportunity Iran should take and take soon.

WALLACE: You keep talking about, both this week and also this morning, the fact that this is not just a U.S. offer. This is a world offer. I want to talk to you about how much agreement there is.

Have the five other nations who made this offer -- and specifically, I'm talking about Russia and China -- have they made a specific commitment to impose sanctions if Iran rejects this offer?

RICE: Well, I think you saw in what Margaret Beckett said, the British foreign secretary, when she chaired this meeting, that the international community has developed two paths, not one, two paths, one path with a set of very positive incentives; another, the path that the international community would have to go. As she put it, we would have to go back to the Security Council. There would be no other option.

Now, we have agreed as a diplomatic matter to talk about neither of those paths in detail. I think that only makes sense. It's only fair that Iran should have the first crack, if you will, at seeing what is there.

But there should be no confusion, and I think there should be no confusion given what was said out of this meeting, that there are two very clear paths.

WALLACE: Well, but I want to ask you about that, because I read also what the foreign secretary, Beckett, said and she was talking about, you know, we'll have to go back to the U.N. Security Council. That's pretty broad.

Do you have a specific commitment from China and Russia that they will impose sanctions?

RICE: Chris, we are absolutely satisfied with the commitments of our allies to a robust path in the Security Council should this not work. But we are not going to talk about what is on either of those paths because it's very important now to give this some time to work.

The Iranians shouldn't have to read in the newspaper what is being offered to them. They do deserve the opportunity to hear that directly from the European envoy who will go, and that's what we're going to do.

WALLACE: There are plenty of doubters about your new initiative, and I want you to take a look at this comment in a Wall Street Journal editorial this week. Here it is. "Perhaps the most dispiriting part of this new diplomacy is the signal it will send to Iran's internal opposition. The regime is wildly unpopular, but it will use this implicit U.S. recognition to show that it has earned new world respect."

Secretary Rice, by offering this regime a set of circumstances under which the U.S. will sit down, aren't you undercutting the popular opposition inside Iran?

RICE: Chris, in many ways, this is a natural follow-on. The decision to join the talks is a natural follow-on to the decision that the president took more than a year ago to fully and completely back the negotiations.

It was a time in which we ourselves said that we would make some steps like supporting Iran's right to an application to the WTO. That was a decision the president made over a year ago. This is a natural follow- on because if the negotiations are going to succeed, if that track is going to have a chance for success, it's pretty obvious that the United States has to be at the table.

But what this is not is an offer of a grand bargain somehow with Iran. This is not an offer to let...

WALLACE: But if you're sitting down...

RICE: ... bygones be bygones and to forget the record of terrorism or the human rights...

WALLACE: But if you sit down with the regime -- let's say they agree, and you sit down with the regime, you can't be trying to destabilize and overthrow them at the same time.

RICE: Chris, we are trying to change Iranian behavior here, behavior that would be quite dangerous to the international community, the acquisition of an Iranian nuclear weapon. We aren't confused or have no illusions about the nature of the Iranian regime.

But we understand that the international community has a pathway ahead to stop the dangerous development of an Iranian nuclear weapon. I would just remind that, of course, we have some experience in this regard. We were able to get the Libyans to give up their weapons of mass destruction.

We maintain negotiations with our partners with the North Korean regime. When it is a matter of trying to stop a nuclear weapons program, it makes sense to give the diplomatic route as much opportunity for success as possible.

WALLACE: Let's turn to the situation in Iraq. When that country announced a new government two weeks ago, you told me to be patient with the fact that they had not yet agreed on a defense and interior minister. Let's take a look at what you had to say.

(BEGIN VIDEO CLIP)

RICE: Let's give them three or four days or five or six days to come up with the best possible interior ministry. You know, the five days that they will take to vet people more thoroughly, to make sure that they have the right person, will be well worth it.

(END VIDEO CLIP)

WALLACE: Secretary Rice, it's two weeks later and almost six months since the election, and today the parliament had to postpone its session because the various factions still can't agree on an interior and defense minister. Are you troubled by that?

RICE: Well, obviously, this is a very tough process of coming to determine who will take these very important ministries, defense and interior.

I would note that even in the absence of filling those positions, Prime Minister Maliki, who has been acting himself in the security portfolio, has held meetings with General Casey and with Ambassador Khalilzad about how to deal with the security situation in Baghdad. He's declared a state of emergency in Basra. He's moving ahead in any case on these matters.

Of course, they need to get this settled, but they will get it settled. I really do believe that they'll get it settled in the next few days. But the important thing here is that they get it right.

And when they get it right, and they will get it right, everybody will forget how long it took them. What will matter is that they have the very strongest and most integrous defense and interior ministries.

WALLACE: Finally, Haditha. This week, new Iraqi Prime Minister Maliki said the killing of Iraqi civilians in that town is not an isolated event.

I want to put up what he said. "This is a phenomenon that has become common among many of the multinational forces. No respect for citizens, smashing civilian cars and killing on a suspicion or a hunch. It's unacceptable."

Secretary Rice, is the prime minister right?

RICE: The prime minister is speaking to the concerns of the Iraqi people for greater security, and he obviously is concerned about reports that concern us as well. The president made very clear that these reports are deeply troubling.

But let me say just a couple of things, Chris, quickly. First of all, I talked to Prime Minister Maliki. He knows the importance of having coalition forces there until his own forces are capable of carrying out security missions, and indeed, overwhelmingly American forces are respected for what they are doing.

These are our sons and daughters and husbands, people who are putting their lives on the line every day for the Iraqi people, taking terrible sacrifice and putting their lives on the line.

When there have been any suggestions of misconduct, those suggestions are thoroughly investigated with due rights for the accused, but thoroughly investigated, and people are punished. So whether it is Haditha or what happened at Abu Ghraib, I can assure you that the investigation will be thorough and that people will act on what is learned.

But Prime Minister Maliki understands that he needs the coalition forces there.

WALLACE: What do you think of his very broad indictment of U.S. troops? He said that this is common, killing on a suspicion or a hunch. What do you think of his broad criticism of the role of U.S. troops who, after all, liberated his country?

RICE: Well, first of all, this was in a much longer set of comments. And I know now Prime Minister Maliki. I know what he thinks of the importance of American forces there.

Iraqis have told me themselves that there are neighborhoods in which people will not open the door for the Iraqi police, which is why they need a good ministry of interior, but they will for coalition forces.

We have had some bad incidents and there continue to be allegations of others which will be investigated. But overwhelmingly, American forces there putting their lives on the line every day, protecting Iraqis, helping to liberate them -- that is appreciated by the Iraqi people and by the prime minister.

WALLACE: Secretary Rice, we're going to have to leave it there. We want to thank you for coming in on a very busy week.

RICE: Thank you very much, Chris.

WALLACE: Up next, Senators Lindsey Graham and Jack Reed on what happened in the small Iraqi town of Haditha and what it means for the U.S. mission in that part of the world. We'll be right back.

(COMMERCIAL BREAK)

WALLACE: Joining us now to discuss the latest events in Iraq are two military veterans who are key members of the Senate Armed Services Committee. South Carolina Republican Lindsey Graham is in Pittsburgh today, and Democrat Jack Reed is in his home state of Rhode island.

Senators, welcome back to "Fox News Sunday".

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Good morning.

SEN. JACK REED (D), RHODE ISLAND: Good morning.

WALLACE: As members of the Armed Services Committee, what have you been told about what happened in Haditha and whether or not there was a cover-up?

Senator Graham, why don't you start?

GRAHAM: Well, I spoke with the Marine Corps yesterday. The allegations are that some Marines used deadly force inappropriately, violated the rules of engagement, the law of armed conflict, that some officers may have had direct knowledge of this activity and failed to report it, that other people in the chain of command should have known and failed to do anything about it, a dereliction of duty allegation.

So you've got allegations of criminal misconduct, allegations of dereliction of duty, and it is a rule of law environment that we operate in in the military. I'm a JAG officer still in the Reserves. Everyone's presumed innocent, but the allegations are serious. They're unnerving. And they're being investigated.

And if it is true that our Marines killed innocent civilians, noncombatants, out of revenge, they will be severely dealt with.

WALLACE: Senator Reed, same question. What do you know and what do you think about it?

REED: Well, essentially, Senator Graham's summary is very accurate. It's a very serious incident. It involves the conduct of individual Marines, small unit, and also the conduct of their superiors in apparently trying to cover it up.

If these allegations are true, the conduct is absolutely unacceptable. It dishonors the uniform and it vastly complicates our mission in Iraq. At the heart of this mission is trying to persuade the Iraqi people that we're there to help them, not to give them the impression that we are an occupying force and, indeed, an occupying force that is operating outside the law of war and the standards of the American military.

WALLACE: Senator Reed, your Democratic colleague Congressman Jack Murtha has over the last few days tried to draw a link between what happened in Haditha and a need to pull all U.S. troops out of Iraq. I'd like you to take a look at what he had to say.

(BEGIN VIDEO CLIP)

U.S. REP. JOHN MURTHA (D-PA): Our troops overreacted because of the pressure on them, and they killed innocent civilians in cold blood. We can't operate -- we can't sustain this operation.

(END VIDEO CLIP)

WALLACE: Senator Reed, are you prepared to say that the events in Haditha are an indication of a bigger problem and that we need to pull all U.S. troops out of Iraq now?

REED: Well, I think the events in Haditha are an indication of the tremendous pressure that our forces are in, our Marines, our Army forces. These are young Marines, young soldiers. They're in a very hostile environment.

They're in a situation where at one moment they're trying to establish rapport with Iraqis by interacting with them, and the next moment there's an explosion and they think that the culprits are among those same people. Tremendous pressure. And also, many of these Marines and soldiers are going back for the second and third time.

So this is not an excuse for what might have happened, but it puts it in context. This pressure, it does frustrate and ultimately exhaust forces. And I think it's another strong indication that we have to begin to rapidly redeploy out of these hostile areas and ultimately as quickly as possible out of Iraq.

There's no time table that might be appropriate to set today, but clearly we have to recognize that this is the beginning, I think, or at least a strong sign of the type of incidents we can expect if we continually stay there without relief.

WALLACE: Senator Graham, do you draw the same lesson? Is this the sign of a bigger problem and does it indicate that, as Senator Reed said, we should now begin rapid redeployment?

GRAHAM: With all due respect, I think it is an event that happens in every war, and really, the test of this event is who are we and what kind of values will we promote.

Ninety-nine point nine percent of the Marines and other people serving in Iraq don't act out of revenge. They act within the rules of engagement. They're there to do honorable service and they have served honorably. To make policy statements about this event I think would be a discredit and a disservice to those who have been two or three times and haven't engaged in this type behavior.

The enemy operates among civilians. It is a complicated environment over there. But if the allegations are true, they will be dealt with in a courtroom and people will be severely punished. They shouldn't be tried in the press.

So I'm not willing to say by any means that this incident is an indictment of our military or our policy to liberate Iraq from the clutches of terrorism. We will deal with this incident as we've dealt with it for over 200 years, in a rule of law fashion.

WALLACE: Senator Graham, I remember when Abu Ghraib broke, you came on this program and you pledged that the investigation would go up the chain of command, it wouldn't stop with the soldiers in the cell block in that prison. A lot of people would say that that didn't happen at Abu Ghraib.

How confident are you that this investigation will go all the way up the chain of command to the effective officers involved?

GRAHAM: I'm very confident, because the Marine Corps' honor is at stake. What happened in November really didn't get reported till February or March. We're going to find out if, one, the facts initially reported were wrong and why were they wrong, did people know better and tell a lie, should people have known better and investigated harder rather than letting it sit, did people actually pull a trigger and kill a child who was innocent of any wrongdoing.

All those things are going to be looked at, and it will go where it goes. The Marine Corps understands it's in the limelight now. And the Marine Corps' honor is at stake. I'm very confident that the military legal system and Marine Corps will handle this appropriately.

As to Abu Ghraib, dozens of officers have had their careers ruined, most, I think, appropriately so. And we will see if Abu Ghraib is a done deal after the prosecution of the dog handlers or there are more people involved. Let's just wait and see.

WALLACE: Senator Reed, President Bush the other day in a joint news conference with Prime Minister Blair was asked what were the biggest mistakes. He talked about some of his language, but he said the single biggest mistake in the Iraq war was Abu Ghraib and that we're continuing to pay a price.

We're talking here allegedly in Haditha about the murder of unarmed civilians, men, women and children. Isn't this even a great deal more damaging? And what impact is it, do you think, going to have on both the U.S. mission in Iraq and on the support for the war at home?

REED: Well, it could have a profound impact both in Iraq and here in the United States. As you talked previously with the secretary of state, you pointed out that the prime minister, Maliki, is suggesting that this might be more comprehensive than just this one incident.

And certainly by talking about the possibility of implications on our policy in Iraq, we're not indicting individual Marines and soldiers who have participated honorably. But we have to be very conscious.

And I think the test will be whether the leadership in the Department of Defense and in the administration does not try to confine these incidents in small sort of compartments and say it was just a few Marines or a few soldiers, but looks to see if this is part of a larger systemic problem. That's the challenge.

I hope it's not. I believe it's not, because I believe, like Senator Lindsey, that the vast majority of our Marines and soldiers are risking their lives to try to do something noble. But we have to take the blinders off. We have to look clearly and dispassionately about whether the situation is there and the training is such that this might be more widespread.

And if we can answer that no, I think that will help us. And if we don't answer the question, I think we'll find these problems in the future and it will continue to burden our process and progress in Iraq.

WALLACE: Senator Graham, I want to talk -- switch, if we can, to the general issue of the war in Iraq and how it's going.

There was a lot of bad news this week. We saw 1,500 more troops being sent into Anbar province. The prime minister, Maliki, went down to Basra, which used to be one of the oases of peaceful behavior, and declare a state of emergency.

A Pentagon report came out, a report to Congress, that said the number of attacks and the number of Iraqi civilians killed are both on the rise. Is the war in Iraq getting -- the situation in Iraq getting better or worse?

GRAHAM: Well, it's getting both. Every time there's political success in bringing the country together to live as one under democracy, the terrorists ratchet it up because the stakes are high.

The terrorists are coming after anybody and everybody that wants to live in Iraq and work together through a democratic government. They're coming after the judges. They're coming after the politicians, the soldiers, the lawyers. Every institution of democracy is under attack.

And the closer the Iraqi people get to governing their country through the rule of law, through democracy, the more the terrorists fight back and the insurgents fight back.

So the defense minister and the interior minister are hard choices, because they control weapons. They control the police force. They control the army. And right now the groups within Iraq don't trust each other enough to give the weapons over to an opposing side. The reason Haditha and Abu Ghraib are important is because America loses the moral high ground when our troops violate rule of law principles, when our troops act inappropriately. The way we regain the moral high ground is to make sure those involved in Abu Ghraib and this incident, if true, are punished, to show the world that we're different.

The Iraqi government is risking -- literally, the people in it are risking their lives to bring this about, and the terrorists want them to fail. And the closer you get to a democracy, the more terrorist attacks, because the stakes get higher.

WALLACE: Senator Graham, Senator Reed, we're going to have to leave it there. We want to thank you both so much for sharing your Sunday with us.

REED: Thank you.

WALLACE: Up next, our panel weighs in on that new U.S. initiative to get Iran to end its nuclear program. What are the chances Tehran will say yes? Some answers when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And our message to the Iranians is that, one, you won't have a weapon and, two, that you must verifiably suspend any programs, at which point we will come to the negotiating table to work on a way forward.

(END VIDEO CLIP)

WALLACE: That was President Bush explaining a major shift in U.S. policy to talk with Iran if it first ends its uranium enrichment program.

And it's panel time now for Brit Hume, Washington managing editor of Fox News, Susan Paige of USA Today, and Fox News contributors Bill Kristol of The Weekly Standard and Juan Williams of National Public Radio.

Well, after decades of refusing to hold broad talks with Iran, the U.S. announced this week that it will join other countries in discussing Iran's nuclear program if it first agrees to suspend its uranium enrichment.

Brit, how big a deal and what are the chances that it will work?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: Not a particularly big deal. Not really a major policy shift. This is an adjustment in tactics, is really what it was. And there's no real hope in the administration that the Iranians will take this offer and agree to verified suspension of their uranium enrichment.

The whole purpose of this exercise was to force the pace of diplomatic events. There's a belief in the administration that a moment of truth is coming with Iran when it finally does face the prospect of some U.N.- applied sanctions, and that's when we'll find out whether it's possible short of military action to end their military program.

As things were going, Iran was stalling. The U.N. Perm Five had sort of made its position clear, and nothing was happening. So the idea of this was to take one more possible sticking point, the willingness of the U.S. to join these talks, and put it on the table but set this precondition. The key to the whole thing, Chris, is that the allies are said to be on board with the preconditions. This is not a slippery slope toward talking first and then seeing what comes of it. Well, we'll see, but that's what's -- that's the idea here.

WALLACE: Susan, how big of a shift was it, and was it really directed at the Iranians or at our European allies and China?

SUSAN PAIGE, USA TODAY: Well, I do think the real audience may have been Russia and China, not Iran. But I guess I would respectfully disagree with Brit. This is an administration that has not often changed course.

This was a rather public change of course, and it's not one that all the administration hard-liners had signed on to. There are reports that Vice President Cheney was skeptical about this move.

And we saw a speech yesterday by Donald Rumsfeld, the defense secretary, in Singapore in which he had not toned down his rhetoric toward Iran at all, said it was one of the leading terrorist nations in the country.

Now, other American officials may agree with that, but that is not really the language you use when you're try to coax them to the table.

HUME: They're not trying to coax them to the table. That's not what's happening here. What is happening here is they've been given an offer of sorts. There will be no talking unless and until Iran does something the administration really does not expect at this point it will do.

And if it did it, it would be such a total victory that whether we then sat down with them would be secondary.

PAIGE: But if you want to show good faith that you're willing to try diplomatic measures so that when you go to sanctions or even military action, your allies will be with you, it does matter what's happening now.

HUME: Well, the question isn't whether the allies will be with us in the future. The question is whether they're really with us now. And the administration believes that everybody in the Perm Five in the Security Council is either willing by acquiescing or favoring taking Iran before the Security Council and applying sanctions.

Now, of course, sanctions remains, obviously, to be seen. So my sense about this is that the U.S. hasn't gone soft here, and it puts -- this is designed simply to put Iran on the spot.

WALLACE: Also on the panel today, Bill Kristol.

Let me ask you the same question I was asking Secretary of State Rice. How confident are you that if Iran -- if Brit's right and Iran rejects this precondition, doesn't sit down to talks, that the Europeans, Russia and China are all on board to impose sanctions?

BILL KRISTOL, WEEKLY STANDARD: All the administration will say is that all of them are on board to go to the Security Council, that the Europeans are on board to impose very limited sanctions, and after that no one seriously thinks there's any support among -- certainly with Russia and China and probably with the Europeans for serious sanctions.

So this is a -- that's a reasonable tactical diplomatic adjustment. Iran was winning. That's what's been happening for the last year. Iran has been moving ahead on its nuclear program and the E.U. Three, the Europeans, have been failing to slow them down.

It was reasonable to make one last effort, perhaps, but at some point serious decisions are going to have to be made, and this is a very minor, I think, diplomatic zig or zag. We will look back on this as a minor moment...

WALLACE: Well, let me ask you...

KRISTOL: ... before the decision that we really will face.

WALLACE: Before I bring Juan in here, let me ask you to play your scenario out. They say no. The sanctions go nowhere. Where are we headed?

KRISTOL: The president said in the clip you showed Iran will not have nuclear weapons. Supreme Leader Khamenei, President Bush's counterpart over in Iran -- maybe President Bush should become Supreme Leader Bush. I like that.

Anyway, Supreme Court Leader Khamenei, in his speech today, spoke -- I think it was the anniversary of Khomenei's death -- spoke behind a -- what am I trying to say? What do you speak behind? A podium, a lectern or a podium, emblazoned with the words America cannot do a damn thing.

That's what's at stake. Khamenei and Iran do not believe that America can do a damn thing to stop their nuclear program from moving ahead. The president has to prove that either he can rally others to put sufficient pressure on them through sanctions and through other kinds of pressure to stop them or that we're willing to use military force.

JUAN WILLIAMS, NPR: And that's what it comes down to, isn't it, military force? And you have people like the pope talking to Tony Blair already saying, you know, please make this a diplomatic effort.

Given what we've seen take place in Iraq, there is no room on the world stage for another military conflict in which the U.S. would have to play that kind of role, which is why I think that what happened this week was a big deal.

I mean, I think that the idea that Secretary Rice was able to try to rally the European allies to put pressure on Russia and China, to get the president to make those calls to, for the moment, hold off the right wing here in this country that doesn't want to talk at all with Iran, that sees them as real outliers, that says -- the Wall Street Journal editorial page, as you saw -- Chris held that up for the secretary -- which is saying we're undercutting the opposition in the country -- they're saying to the contrary, wait a second, we are trying to engage and make it clear that these people are a rogue state, that they're not fully serving the Iranian people.

That's a different way of thinking. And I think for this moment it creates opportunities that weren't there before this stake, before this play by Secretary Rice.

HUME: Chris, a couple things that are worth keeping in mind here. One is it's not at all clear that the Europeans and even the Russians and the Chinese would not go along with some sanctions.

Nobody thinks that the oil sanction will be used because -- by the way, I have to say, Bill, that if Iran really believes that the U.S. can't do a damn thing, then why is it threatening the U.S. with the oil sanction? Obviously, if it didn't fear that, it wouldn't say that.

Of course, nobody believes in the world realistically that Iran would ever do that because it would amount to the imposition on itself of the strongest sanction the rest of the world could impose; namely, an oil embargo. Stupid. Unlikely.

But there are sanctions, financial sanctions in particular, which Iran would have to be concerned about. And you don't necessarily need the U.N. Security Council to impose them. Individual governments with banking connections to Iran could do it.

So there are things that can be done short even of U.N. Security Council agreement, and that, I think, is where this is going if it's going anywhere.

Now, look. It could come down to the end of the day, Iran defies everybody and nobody does anything. But I don't think anybody will look back and say oh, if only we hadn't agreed -- made that offer to talk to them, everything would be well. It won't have that effect.

WALLACE: Susan, is it your feeling that there's a possibility for sanctions and sanctions that could have some impact on Iran?

PAIGE: Well, I think that is what the U.S. hopes happens, that Iran - - U.S. officials, I think, do not hold out much hope that Iran will agree to talks with preconditions. They hope that the allies hold strong with the preconditions and don't push the United States to talk anyway.

At that point, I think we will move to sanctions. And then the question is do sanctions work or do a year from now, toward the end of the Bush administration, do you face a situation where you have a serious discussion about a military strike.

WALLACE: You know, let's talk about this, because this all goes against a time frame of how long we've got before Iran gets a nuclear weapon or passes the threshold in its nuclear technology. Bill, you and I sat down with a senior Israeli official a couple of weeks ago when they were in town. They seem to think that there's kind of a point of no return by the end of this year, correct?

KRISTOL: Or at least 12 months from now, they're using. And senior American officials do, I think, now believe that they cannot kick this to the next administration. I think that's the biggest development in the last few months, which I think does justify this diplomatic move if it accelerates the time table.

President Bush needs to deal with this threat on his watch. Either we will have diplomatic success, or we'll have success through pressure and sanctions, or we'll be forced to use military action, or we will acquiesce to Iran getting nuclear weapons.

But that will be a decision made by the Bush administration.

WALLACE: We're running out of time in this segment. But, Juan, your feeling that this...

WILLIAMS: No, I think Bill is exactly right. I think that this is now the Bush -- in part, when you talk about the Bush legacy, it's always been about Iraq. Now Iran is front and center. And that's why I think it was a major step.

Iran had sent the letter saying that they were willing to talk but it seemed crazy. Here is Rice getting ahead of Iran and saying now we're putting the ball back in your court and forcing world opinion to come to our side. I think that's a big development.

WALLACE: Yes, and you get the sense that talking -- it was really the last weapon in our quiver, and once we offered that, it's either sanctions or military force.

WILLIAMS: Right.

WALLACE: We have to take a break here.

But coming up, former Vice President Al Gore is out plugging his new movie about global warming. Is he also preparing for another run for the White House? Our panel weighs in on that in a moment.

(COMMERCIAL BREAK)

WALLACE: On this day in 1989, the Chinese government sent tanks and infantry into Tiananmen Square. They dispersed protesters who were demanding democratic changes in the Communist country.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: Here's Manhattan. The World Trade Center memorial would be under water. Think of the impact of a couple hundred thousand refugees and then imagine 100 million.

(END VIDEO CLIP)

WALLACE: That's former Vice President Al Gore discussing what he says is the threat from global warming in his new movie, "An Inconvenient Truth".

And we're back now with Brit, Susan, Bill and Juan. So, Al Gore is back.

Brit, is he pushing a cause or a presidential campaign or both?

HUME: Oh, he's pushing a cause, and I don't think he's organizing a presidential campaign. However, there is, surprising to me, anyway, kind of a major opening in the Democratic Party, because Hillary Clinton, who remains, I suppose, the favorite, if she wants it, has some problems.

The war is the big problem with her. And the Democratic left, the people that nearly made Howard Dean the nominee, are not happy with her. And so Gore doesn't have that particular baggage, and so my sense is that - - and he polls very well in these sort of unscientific surveys that are taken by very popular and active left-wing Web sites.

So if he wanted to get in it, he'd be big right away, and if things continue on their current course, he may remain there a while.

WALLACE: Susan?

PAIGE: You know, I ran into -- my husband and I ran into Al Gore at one of the screenings of this movie, "An Inconvenient Truth". He looked pretty prosperous. He looked pretty relaxed and comfortable. He obviously, I think, has a real commitment to this issue of global warming.

And I think he doesn't need to decide right now whether he's going to run or not. He has the ability to tap a big fund-raising network. He has, of course, tremendous name identification. This is not a decision he needs to make at this point.

WALLACE: Bill, let me make the case -- let me summarize the case for Al Gore, the president. He broke with his party and voted for the Gulf War in 1991 and he was right. This is the case for him -- that he broke with his party and opposed the Iraq war in 2002 and he was right.

And he has been the leader on global warming, which is a big issue among a lot of Democrats. Doesn't he have -- wouldn't he have a lot of resonance on all those issues with the Democratic Party?

KRISTOL: Yes, absolutely. Look, if he gets in the race -- I mean, Senator Clinton so far has stayed on the moderate side. She has not gone antiwar. There's a huge opening for her to be challenged from the left. Gore is the strongest challenger, probably, from the left.

And I think, you know, he can get in the race a year from now. It will be Clinton vs. Gore. I think Warner, Bayh, Feingold -- I think those people start to fade awfully fast. And I believe Gore could beat Clinton in the Iowa caucuses.

I don't think -- the notion that Hillary Clinton should be favored over Al Gore strikes me, at this point, as wrong. I mean, she's got a huge organization. She's got a huge amount of money raised, which Gore doesn't have. But Gore doesn't need name identification.

He got a heck of a lot of votes in 2000, and I think he could be the nominee in 2008.

WALLACE: Well, let me -- because we keep talking about Hillary Clinton, this week -- she had a big week, too. She formally launched her Senate campaign. And in it, she almost sounded as if she were thinking more about 2008 than 2006. And let's take a look.

(BEGIN VIDEO CLIP)

U.S. SENATOR HILLARY RODHAM CLINTON (D), NEW YORK: Stand with me as we push the Bush administration to take responsibility for the mistakes and misjudgments that they have made around the world.

(END VIDEO CLIP)

WALLACE: Juan, Brit was saying part of it is the fact that Gore opposed the war, Hillary is still for it. But isn't also part of Gore's appeal the fact that there are an awful lot of people who are concerned, Democrats, who are concerned that Hillary can get the nomination but can't win, and that Gore might be more electable?

WILLIAMS: Well, there's tremendous concern that Hillary is a polarizing figure. She polls that way. That's what the numbers indicate. But in the Democratic Party -- I was in Wisconsin yesterday, and people were just saying to me you know, it seems like Gore is old news, you know, Gore had his time. It's moved on.

He really has done a wonderful job, it seems, with this movie in terms of a new innovative way for a politician to remain in the mix, to launch himself into discussion. But the key here is the war issue, and you have people -- I think I differ with Bill on this. I think people like Mark Warner, even Tom Vilsack of Iowa, these governors who didn't have to cast a vote and who can now posture themselves and say here's how we would have done the war differently -- those people are very alive.

And I think that people who want to give money to a Democrat would be looking at the Warners, the Vilsacks. Feingold's a little bit tougher, because he did have a vote and he's just been so angry in terms of his opposition to the war.

But these governors can say look, you know, a pox on all their houses, Republican and Democrats, we're coming with new ideas, new energy to this discussion.

KRISTOL: There's something to that, but, you know, you mentioned the war issue, which is kind of an important issue for the next president to let us know his or her views on.

There was an 18-minute video introducing Senator Clinton at the New York State Democratic Convention where she was renominated -- no mention of the war in Iraq. I really wonder if Democratic primary voters want someone who is so cautious and so timid about expressing her opinion on one of the two or three biggest issues facing the country.

WILLIAMS: Well, it has to be played carefully because, you know, it's one of these situations where you want someone who can win in the general election. That's the goal, is to win. It's not just to please the base.

And I think Democrats are hungry to win. I mean, look at what's going on over at the White House, gay marriage -- anything to try to rouse a sleeping base. And I think that Democrats say now is our time to play real politics and really win.

WALLACE: Susan, let me ask you -- go back to Gore for a second, because Democrats since Adlai Stevenson have not been very hospitable to failed presidential candidates. I mean, you think of Dukakis, or Mondale, up to this point Gore. And they're almost written out of the party after they lose.

Do you think that there'd be much interest in the Democratic Party in Al Gore, given the fact that he had his chance and a lot of people think he should have won?

PAIGE: I think it's true that Republicans are friendlier to failed candidates, more likely to come back to them. Reagan sought the nomination twice before he got it. Nixon got renominated and, of course, won the second time around.

On the other hand, what Democrats really want to do is to win. They care about that as much as they care about the war or any ideological issue. And I think if Gore seemed like the guy who could win in 2008, then that would carry the day for a lot of Democrats.

And I think that is one of Hillary Clinton's biggest problems. You know, she's tried to already move from winning the nomination by taking liberal stances that appeal to, say, antiwar activists in the Iowa caucuses to a general election campaign, and maybe that's a switch that she's made a little soon.

HUME: Too early, yes. I mean, she made a -- I mean, look. On political terms, it looks like she made a bet, and the bet was nobody who's deemed soft on national security, and that translated at that moment into the war on Iraq, can be elected president.

She thought she was so golden on the left that she wouldn't have any problems there. And at the time I thought she was, too, just looking at her from the outside. And boy, was I wrong.

I mean, she's in trouble on that issue now, and I think it's the dominant issue. And the fact, as Bill suggested, you know, you get into an 18-minute introductory video and never even mention it -- that's not going to fly.

WALLACE: We have only about 30 seconds left.

Brit, who do you think -- from the Republican point of view, who do you think they would worry about most in a general election?

HUME: I don't have any way of looking at it from a Republican point of view. You know, I just -- I don't. I mean, I have no idea.

WILLIAMS: I think if you go down the middle.

WALLACE: That's a first.

WILLIAMS: If you go down the middle, you get people like, you know, Hillary Clinton, Joe Biden. But I think if you start to look a Mark Warner, who's had success with Republicans, he could be a winner.

WALLACE: All right. We have to end it there. Thank you, panel. That's it for today. See you all next week.

For more visit the FOX News Sunday web page.

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