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Petraeus on Iraq, Panel on Immigration Bill

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace. A top American general says security forces control only 40 percent of Baghdad, next on "Fox News Sunday."

Today, the commander of U.S. forces in Iraq, General David Petraeus, makes his first appearance ever on a Sunday talk show.

In our exclusive interview, we'll ask him about the troop surge in Iraq. What has it done to curb the violence and to promote political reconciliation?

And we'll ask him about his report to Congress this September which some say will either make or break U.S. support for the war. General Petraeus, only on "Fox News Sunday."

Then immigration reform gets new life in the Senate. Will it pass this time? We'll ask our Sunday gang, Brit Hume, Mara Liasson, Charles Krauthammer, and Juan Williams.

And our Power Player of the Week says the world is flat, all right now on "Fox News Sunday."

Good morning and happy father's day from Fox News in Washington. Here's a quick check of the latest headlines. General Ray Odierno, the number two U.S. commander in Iraq, says American and Iraqi forces have full control of only 40 percent of Baghdad. He says in the rest of the city, they either lack control or there's a high level of violence.

Meanwhile, the military I.D. cards of two missing American soldiers have been found. They were discovered during a raid on an Al Qaida safe house.

And former Army General Antonio Taguba, who led the investigation into events at Abu Ghraib prison, says he believes senior officials were involved in directing the abusive interrogations.

He also tells the New Yorker magazine he was forced to retire early because of his pursuit of the case.

Joining us now, the top U.S. commander in Iraq, General David Petraeus.

General, let's start with the latest news. It was announced yesterday that U.S. forces found those two military I.D. cards of the missing American soldiers. Do you have any new leads on where they are?

MAJ. GEN. DAVID PETRAEUS, U.S. ARMY: Chris, we are evaluating the materials that we found in the house with those cards. I would not characterize any of those, however, as particularly hot leads.

We continue the effort in that particular area and in some other areas in Iraq, and we will not give that up.

WALLACE: This week you finally got your full complement of forces in Iraq. How is the surge working so far? And to some degree, do you feel as if the operation is only now beginning?

PETRAEUS: We actually do. In fact, a lot of what we have done to this point has been so-called shaping operations for what we have just recently launched in the last 48 hours and some additional operations that we'll launch over the next 48 or so hours.

That's not to say that we have not used those forces as they have come in, but we just recently got the fifth and final Army surge brigade, the Marine Expeditionary Unit, and our combat aviation brigade, which add considerable combat power.

And they are enabling us now to launch operations into sanctuaries, areas in which we have had very little coalition force presence other than raids in recent years.

These are areas where Al Qaida has established car bomb factories and other bases from which they have issued forth and then moved into Baghdad to attack targets, often indiscriminately.

WALLACE: But how is the surge working so far? General Odierno, your number two, said this weekend that he believes that you have control over only 40 percent of Baghdad. Is that accurate?

And how do you feel it's going in terms of clearing out and securing Baghdad and Anbar province?

PETRAEUS: Well, I think, Chris, as I mentioned to the press yesterday, we're ahead of where we thought, I thought, we would be at this point in time, and then we are behind where we might have been in some other areas.

Anbar province is an area that, as you'll recall, was assessed to be lost less than a year or so ago by the military intelligence folks that were in Anbar province.

There's been a stunning reversal out there as tribes have said that whoever opposes Al Qaida is with us, "We want to fight Al Qaida. Will you help us, coalition forces?" And we have, indeed, done that.

And then they have been tied into the ministries of interior and defense so there's a linkage to the Iraqi government.

In Baghdad, there are certainly some neighborhoods -- as General Odierno said it yesterday, there's about 30 percent of the neighborhoods about which we have real concern. These are the areas of the fault lines between Sunni and Shia.

We are focusing on them quite intently, and the additional forces will enable us to conduct additional operations in those areas.

Outside of Baghdad, the Baghdad belts, as they're called, south and north of the city, are areas into which we are now going in much greater force, again, areas in which Al Qaida has had some sanctuary in the past.

And then in Diyala province, an area to which some of the Al Qaida fighters have moved as they have been pushed out of Anbar and out of some of the Baghdad neighborhoods, is an area that requires considerable additional attention over the coming weeks, and it will get that as well.

WALLACE: General, the Pentagon issued its quarterly report this week, and it indicated that there has been no measurable progress so far. Let's take a look.

The Pentagon said the total number of weekly attacks on Iraqi civilians, Iraqi forces and U.S. forces actually went up from the last month before the surge to the first three months of the surge.

And the Pentagon report concluded the aggregate level of violence in Iraq remained relatively unchanged during this reporting period.

General, why shouldn't we back home view that as disappointing?

PETRAEUS: Well, the aggregate level is about the same. We actually have borne the brunt of much more of that, as have Iraqi security forces, and civilians a good bit less.

In fact, one of the metrics that we track, which is sectarian murders and executions in Baghdad, went down -- by months, it was down to about a third -- by the end of April, it was down to about a third of where it was back in January.

It did come back up as we announced in the month of May a little less than half. That is trending back down again.

The fact is that as we go on the offensive, the enemy is going to respond. That is what has happened. Car bombs have been coming steadily down. And as I mentioned, sectarian executions in Baghdad in particular have come down.

So again, certainly it is a mix, and that is what I've tried to convey with my assessment, that we're ahead in some areas and we need to do some serious work in others.

WALLACE: Senate Majority Leader Reid this week questioned your credibility after you gave an interview in which you said you saw, quote, "astonishing signs of normalcy in Baghdad such as soccer games and open markets." And here's how Senator Reid responded. Take a look.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, D-NEV.: We're now back up to 1,000 attacks a day in Iraq. And for someone, whether it's General Petraeus or anyone else, to say things are great in Baghdad isn't in touch with what's going on in Baghdad, even though he's there and I'm not.

(END VIDEO CLIP) WALLACE: General, the argument seems to be that we're getting spin out of Baghdad and not the straight talk as to what the situation is there. Your response.

PETRAEUS: Chris, I've tried hard to be forthright all along in this endeavor. My testimony before the Senate in January, again in April, when I did a VTC in the middle of that as well, with every congressional delegation and with the press, I have tried not to pull punches.

I base my assessments, what I offer, on personal observation, walking around Baghdad, driving around it, flying around it. The fact is that there are signs of normalcy throughout a good bit of Baghdad. There are tens of thousands of kids that will be out there tonight playing soccer.

In fact, we flew around the city on the way over here today, since they'd lifted the curfew, just to see how things were going. There's traffic all over the streets. The markets are reopened and so forth.

That is not to say -- and in fact, in that interview I followed and also warned, for example, that the mosque bombing could spark new violence. I have tried hard to present both the good and the bad.

But I will not shrink from announcing that there is some good out there, if you will, that there is some normalcy, nor will I shrink from acknowledging that there is plenty of bad out there, as I did with the fact that we have to really focus on 30 percent of those Baghdad neighborhoods.

And there's certainly not much normalcy in some of those neighborhoods which are under the threat of both Al Qaida and then extremist militias.

WALLACE: So how do you feel when you hear a senator here in Washington say that you're out of touch with what's going on in Baghdad?

PETRAEUS: Chris, as I said, I am just going to present what I see. I am going to provide a forthright assessment. That's the same thing that we'll do in September.

And frankly, we've got more than enough work out here to keep us occupied and to keep us focused and busy.

WALLACE: Let's talk about who's responsible for the situation in Iraq. In recent weeks, the president has been emphasizing the role of Al Qaida. Let's watch.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: The primary reason for the high level of violence is this. Al Qaida has ratcheted up its campaign of high profile attacks.

(END VIDEO CLIP)

WALLACE: But again, the Pentagon quarterly report tells a very different story, and let's put that up. It says, "Much of the violence is attributable to sectarian friction."

And as you pointed out, there was a substantial jump in sectarian violence in May. Isn't the Sunni-Shiite conflict much more responsible for the violence in Iraq these days than Al Qaida, sir?

PETRAEUS: I'm not so sure about that, Chris. In fact, Al Qaida is the Sunni violence. Al Qaida is the face of what is happening on the extremist Sunni side.

They are carrying out the bulk of the sensational attacks, the suicide car bomb attacks, suicide vest attacks and so forth.

This is, I think, all of the individuals in the intelligence community -- General McCrystal, the head of our Joint Special Operations Command -- all of us feel that the central front of Al Qaida's terror war is focused on Iraq.

So I think it is appropriate to emphasize the role that Al Qaida Iraq is playing and the role that they play in provoking and giving excuses to the extremist militias of the other side, of the Shia side, as a justification for what they are doing, ostensibly, to protect the Shia people, but then in their own turn carrying out violence of their own.

There is no question but that there is sectarian violence between, again, Al Qaida, certainly between some other Sunni insurgent groups and these extremist militias.

And that is, in fact, what we are trying to try to break the cycle of, the cycle of violence that can really damage a neighborhood, the cycle of violence that, in fact, tore the fabric of society in Iraq and particularly in Baghdad, and especially in the mixed neighborhoods, during the latter part of 2006 and into the early part of this year, with really enormous damage as a result.

WALLACE: General, you talked briefly before about the fact that you're trying to split off some of the Sunni insurgents from Al Qaida, especially out in Anbar province, and in fact, you've even gone to the lengths of arming some of the Sunni insurgents to fight Al Qaida.

How do you know -- or do you worry that they are going to end up using those weapons to either attack U.S. forces or to fight their civil war against the Shiites?

And how do you respond -- we understand that aides to Prime Minister Maliki objected strongly about arming Sunni insurgents to Defense Secretary Gates yesterday, so how do you respond to that concern?

PETRAEUS: Well, those are legitimate concerns, and we have the same concerns. We have a good discussion going with the government of Iraq. As I mentioned, the process really is to identify these individuals, try to vet them as best we can. By the way, we do biometric data on all of them. We link that to serial numbers of weapons and so forth.

And then what you want to do is you want to get them linked into legitimate government of Iraq institutions, starting out perhaps as what are called police support units; then, as they prove themselves, getting a ticket to the police academy so they can become full-fledged police, or volunteering for the Iraqi army.

The fact is that over time in any of these conflicts, individuals at some point have had to end up sitting across the table from those who at best tacitly were aware of what was going on against their adversary, and that we perhaps aided and abetted it.

Interestingly, we have a British three-star general -- my deputy is the head of our particular effort here, the engagement and reconciliation cell that we have established in part because they've had some pretty tough experience in this regard themselves, having sat down at tables in northern Ireland and other places with individuals who, say, 10 years earlier were swinging pipes against their lads.

That's been instructive for us. We think that it has been carried out with sufficient safeguards in Anbar province. It has certainly completely changed the dynamics of Anbar province.

And now, by the way, you see a bottom-up political activity that is also ongoing, where city councils, neighborhood councils and so forth are getting elected and are gradually tying into the provincial council which, of course, ties into the government of Iraq.

We're even seeing that in some of the neighborhoods in Baghdad where neighborhood councils had ceased to exist because of the security threat, and they are now coming back to life as well.

Again, those are legitimate concerns. They are legitimate discussions with Prime Minister Maliki. He supported strongly what was going on in Anbar province.

It gets much tougher when you get into the mixed neighborhoods near Baghdad in the Baghdad belts, and we're all working together to try to ensure that there are safeguards so that we're not arming individuals who eventually take up arms against the government.

WALLACE: General, we have to take a quick break here.

But when we come back, the September deadline for a progress report on the surge. What can we expect? And can we rely on the Iraqi government to hold up its end of the bargain? Back with General Petraeus in a moment.

(COMMERCIAL BREAK)

WALLACE: And we're back now with more of our exclusive interview with General David Petraeus, the top U.S. commander in Iraq.

General, let's turn to the political situation in Baghdad. Back when you were being confirmed by the U.S. Senate, you said the point of the surge was not to win a military victory, but to give the Iraqi politicians time to reach out in national reconciliation. Let's take a look.

(BEGIN VIDEO CLIP)

PETRAEUS: The objective will be to achieve sufficient security to provide the space and time for the Iraqi government to come to grips with the tough decisions its members must make to enable Iraq to move forward.

(END VIDEO CLIP)

WALLACE: Now, that was five months ago, and since then the Iraqi politicians have failed repeatedly to meet benchmarks for political reform.

Hasn't that part of your surge strategy, trying to give the Iraqi politicians some breathing space -- hasn't that failed, sir?

PETRAEUS: Well, there certainly have not been real substantial achievements in that regard so far.

However, the oil framework law and also now the oil revenue law are pieces of legislation in which the Iraqi leaders are very much coming to grips right now.

In fact, we helped bring down from the Iraqi Kurdish region last night the top negotiator, and we're at the stage where supposedly there are two sentences that must be resolved.

So I think it's time to see now if these important laws can go forward, in addition to some of the other smaller achievements that they've had in terms of the higher electoral council, the budget and so forth. WALLACE: We understand that Secretary of Defense Gates basically gave the Iraqis a September deadline. He said we really have to see some measurable political reform by September. True?

PETRAEUS: Actually, not quite so blunt. In fact, Secretary Gates had a very good session with Prime Minister Maliki.

In fact, he started off by complimenting the prime minister and the other leaders with whom he met on their response to the Samarra mosque bombing. They were united in that effort. They were decisive.

And we think their response in ordering rapid steps to be taken has, in fact, helped hold down the level of violence to well below what took place in the wake of the February '06 bombing.

And in fact, I should know that yesterday there was an agreement with UNESCO and the government of Iraq to rebuild that Samarra mosque.

WALLACE: I mean, I understand that, sir, but you know, we here back in the states look and we see the oil law has not been passed, the constitution has not been amended, they have not held provincial elections, they have not brought Sunnis back into the government.

I mean, really, the glass is not half full.

PETRAEUS: Chris, I don't think anybody's satisfied with where they are, and the Iraqi officials are foremost among them. They're grappling with really basic issues here. We're talking about issues that will set the course for this country for years and decades to come.

Our own experience as a country, in fact, shows how difficult it is to resolve some of these very difficult issues.

They recognize fully that our ability to help them in the future depends on the progress that they show over the course of the next few months. They're keenly aware of that.

And I think they are going to do everything they can to try to inject hope into places like Washington and elsewhere to show that the Baghdad clock can indeed move a bit faster so that you can put a bit of time back on the Washington clock.

WALLACE: Well, let's start talking about the Washington clock. Less than a month ago, President Bush was talking up the importance of this progress report that you're going to be delivering to him and to Congress in September.

Let's put it up on the screen. Mr. Bush said, "I see it as an important moment because David Petraeus says that's when he'll have a pretty good assessment as to what the effects of the surge has been."

But now, sir, a number of top administration officials are downplaying the September report. Are you backing away from how much you're going to be able to say in September? PETRAEUS: I am not. In fact, Ambassador Ryan Crocker, my diplomatic wing man here, and I will go back in September and we'll provide a snapshot of where we are at that time, and it will be a forthright assessment of what we've achieved and what we haven't achieved.

I'll talk, obviously, about the security aspects of the situation and he will address the political and economic ones.

We also owe it, we think, to the decision-makers at one end of Pennsylvania Avenue and those who provide advice and consent and resources for the policies at the other end some sense of the implications of the various courses of action that might be under discussion at that point in time.

There are some very serious centrifugal forces here in Iraq, and I think we all need to have very clear eyes about what can happen, what the implications of various options are and, again, just to assess those correctly.

WALLACE: Well, let's explore that. General Odierno, your number two, said this weekend that the Washington politicians need to give the surge more time.

Do you think by September you're going to have a reasonable and a realistic sense of how the surge has gone, whether, in fact, it is working or not working?

PETRAEUS: I think we will have a sense of that, Chris. I've said that all along. I started saying that back in January. I think we'll have had by then our forces in the mix for a good several months.

We'll have some sense of how we have done in these various sanctuaries that Al Qaida has had in the past that we are now entering for the first time in which we will endeavor to stay.

We'll have a sense of how we've done in some of these tough neighborhoods in Baghdad and how we are doing, also, all of this in partnership with our Iraqi security force counterparts in Diyala province and in some of the other areas of the country.

WALLACE: So you think by then that the policymakers in Washington -- the president, his administration, members of Congress -- can make a reasoned decision as to whether or not to continue with this strategy?

PETRAEUS: Well, what I've said, Chris, is that at that point in time, the ambassador and I think we can provide a reasonable snapshot of the situation at that time and how things have gone in the surge, both in the security and then in the political and economic arenas.

And it is, obviously, up to the policymakers and to the legislators to determine the course ahead.

WALLACE: Do you feel a sense of pressure? Do you feel that September deadline pressing in on you? And does it affect the decisions you make?

PETRAEUS: Chris, we've got a fairly heavy rucksack we're carrying out here, but thank goodness for all the tremendous troopers out here who, in truth, are really carrying the heavy burden of this.

We've got a lot of great help in taking this forward and we also have some wonderful partners on the Iraqi side.

But we do see that time staring us squarely in our eyes, and we're focused on it, and we're going to try to do all that we can with what we have between now and then.

WALLACE: There are reports that you and General Odierno would like the surge to continue until at least early 2008, that if it's going to work, it needs to continue into early next year. Is that true?

PETRAEUS: We've got a number of different options that we have looked at, Chris, and it really is premature at this point in time to try to prejudge that.

Again, I would suspect that late in the summer, early September, that we will provide some recommendations on the way ahead up our chain of command as well.

WALLACE: But you surely don't think the job would be done by the surge by September, do you, sir?

PETRAEUS: I do not, no. I think that we have a lot of heavy lifting to do. The damage done by the sectarian violence in the fall and winter of 2006 and early 2007, as I mentioned, was substantial. And this is a tough effort.

WALLACE: So then it would be fair to assume that the enhanced troop levels would continue for some months after that and into 2008.

PETRAEUS: Chris, again, premature right now. A number of options out there. And not about to announce what we might do here today, I'm afraid.

WALLACE: Well, you can't blame me for trying, sir. There are also some...

(LAUGHTER)

WALLACE: There are also some reports that you believe that we're going to need at least 130,000 troops in Iraq through the end of 2008. Is that true?

PETRAEUS: Chris, there's some wonderful mind-readers out there. I'd love to know who they are. But they seem to know what's in my mind better than I do.

Again, our first focus is on doing all that we can as we've truly now launched the surge and we have some reasonable expectations for what we can achieve. Beyond that, we will obviously provide that assessment in September along with, I would suspect, at that time some recommendations on the way ahead. But you're looking out well beyond that, and we're not prepared to address that yet.

WALLACE: Well, let me look out even further than that, General. Some administration officials have talked about needing to make -- and basically squaring with the American public, saying, "Look, this is going to be a long-term commitment," and even comparing it to the situation in South Korea, where we have had thousands of troops for decades.

Do you see this to stabilize and achieve what we want in Iraq as that kind of a long-term commitment?

PETRAEUS: Well, I think the real question, Chris, is at what level. I think just about everybody out there recognizes that a situation like this, with the many, many challenges that Iraq is contending with, is not one that's going to be resolved in a year or even two years.

In fact, typically, I think historically, counterinsurgency operations have gone at least nine or 10 years.

The question is, of course, at what level, how much will we have to continue to contribute during that time, how much more can the Iraqi security forces and the Iraqi government pick up as this goes along. And I think that's the real question. And I'm not sure what the right analogy is, whether it's Korea or what have you.

I think all that the folks in Washington were trying to indicate by that was that there is some possibility of some form of long-term security arrangement over time.

And I think in general that that's probably a fairly realistic assessment, assuming that the Iraqi government, in fact, does want that to continue. And of course, it is very much up to them, and their sovereignty is paramount in all of this.

WALLACE: General, we have less than a minute left. Let's get to the bottom line here. Do you feel that we can still win in Iraq, that we can leave behind a stable, democratic government?

PETRAEUS: Chris, if I didn't believe that, I wouldn't be here. I wouldn't be leading the finest of young American men and women who are putting their lives on the line every day.

In the last two weeks, I've gone to memorial ceremonies, one of which was for four soldiers lost in one unit, another for six soldiers lost in one unit. And I can tell you that as you sit there at that, you obviously reflect on that particular question.

And again, I think that there is good prospect for progress in the months ahead that hopefully can be matched by progress in the political and economic arenas here in Iraq and, again, can give us hope for the way ahead. WALLACE: General, I can't think of a better way to end this conversation. We want to thank you so much for giving us a progress report today. And please stay safe, sir.

PETRAEUS: Thanks, Chris. Good to be with you.

WALLACE: Up next, our Sunday gang on immigration reform. Reports of its death appear to have been greatly exaggerated. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Each day our nation fails to act, the problem only grows worse. I will continue to work closely with members of both parties, get past our differences and pass a bill I can sign this year.

(APPLAUSE)

(END VIDEO CLIP)

WALLACE: That was President Bush at the end of this week promising to keep the heat on Congress to pass immigration reform.

And it's time now for our Sunday group, Brit Hume, Washington managing editor of Fox News, and Fox News contributors Mara Liasson of National Public Radio, syndicated columnist Charles Krauthammer, and Juan Williams, also from National Public Radio.

So immigration reform, when we last met, appeared dead in the Senate, and now they've got a deal to bring it back to the floor.

Brit, what brought it back? And what are the chances that the president will actually get to sign that bill?

BRIT HUME, FOX NEWS WASHINGTON MANAGING EDITOR: Well, I think a lot of people want this bill, and there's a huge vocal group of opponents that may yet prevail in this.

But there are also very powerful forces both in the business community and in some of the ethnic interest groups -- Hispanic organizations want this bill. So there's a lot of pressure for it on both sides, and there's a will to do it, I think, because, you know, I mentioned the White House.

I think it has a real chance of passing the Senate. Now, what it will look like over in the House of Representatives remains to be seen. But I think this bill has a real chance of passing the Senate.

WALLACE: Mara, what do you think brought this bill back from the dead?

MARA LIASSON, NPR: I think what brought this bill back was two things. One is that finally the Republicans agreed to a limited list of amendments. I think each side is going to get 11. That was something that Reid was demanding. He said, you know, I'll only bring it back if there's some agreement on how many amendments each side will get, which he seems to have received now.

Then the other piece of it was to just peel off just enough Republicans to get the support they need for cloture to stop the filibuster, they added a kind of a fund -- I think it's going to be about $4.4 billion.

I'm not sure exactly what form it's going to take, but it's basically earnest money to say, "Yes, the government is actually going to do something about the border right away."

One of the things that opponents of the legislation say over and over again -- "Hey, we've passed border security bills already, but nothing's happening. The money is not being spent." You know, "Nothing is actually happening at the border."

And this is an attempt to put an amendment in or some kind of supplemental spending bill to actually make that happen.

WALLACE: So, Charles, as a skeptic about this bill, does that $4 billion up front -- we're going to spend this money and we're going to start enforcing the border -- does that persuade you?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: No. I remain skeptical, as do a lot of senators, although I do think it will pass. All the president is doing...

WALLACE: Pass the Senate and the House?

KRAUTHAMMER: No, fail in the House. It will pass the Senate. All this is doing is the president's saying we're actually going to put funds behind our promises on enforcement.

That doesn't mean enforcement is going to work. That doesn't mean the government is serious. The $4 billion is a fairly unimpressive sum.

And the problem is that when you ask people in public opinion polls, their main concern is border enforcement. Some of them want legalization, but the ones who are concerned about enforcement outnumber the ones who want legalization about 3-1.

When you ask about the bill itself, you only get a quarter of Americans who want the bill. Half say no. And the problem is there are some people who want enforcement only, and there are some, like me, who want enforcement first.

But they want enforcement. It's the only element of the bill where everybody at least ostensibly agrees. I think what the president has to demonstrate and the ones who want this bill have to demonstrate is that there actually is going to be enforcement, it's actually going to work, before the major legalization provisions are triggered.

And that is not really what happens in the bill.

WALLACE: Juan, you've always been the optimist that this bill is going to actually get through Congress and up to the president's desk. What's your temperature today?

JUAN WILLIAMS, NPR: Oh, I think it has a better chance in the Senate given the kind of collaboration that's now taking place about the amendments and the fact the president came up there and made a big show of his support.

I think the president's more invested in it and more apparently invested to fellow Republicans. That's why you get the Republicans coming forward and looking at this proposition to bring the money in on the security issue.

I still think that the debate is wildly distorted. I mean, basically, everybody's talking about the fences and the security and more detention beds, without talking about the reality of the lives of people who are immigrants to this country, who are simply trying to work their hardest to get ahead, and somehow they're being portrayed as criminals and villains.

I think it's madness, but I think it's a madness that comes as a result of the talk show people forcing this issue in such a way as to make it appear that the bad guy is an immigrant who is operating in the best traditions of American sacrifice and strife to improve his or her family.

WALLACE: Talk show hosts like Brit Hume?

WILLIAMS: Well, no, but I think...

KRAUTHAMMER: It's not talk show hosts. It's a large number of the American people who believe that a sovereign country ought to have a say on who comes into the country, and that you ought to knock on the front door.

That doesn't mean you want to expel or oppress or hurt people who are here illegally. And there are people like me, a large number of Americans, who, if they believed that this was going to be the last cohort of illegal immigrants, that we really were going to get serious and shut the border in the future, would be open and generous in legalizing these people already here.

But if we're not going to shut the border, then this problem is going to appear in 10 years, in 20. We're going to have another cohort of millions of...

WILLIAMS: You know, the big argument here, Charles...

KRAUTHAMMER: ... and legalization demands in the future.

WILLIAMS: ... are things like -- I think the big arguments here on the amendments are going to be things like the touchback provision. Do you have to leave the country? How much do you have to pay?

$5,000 for people who are working as janitors and people who are doing day labor or anything, and people picking our fruit? That's a punitive amount of money.

LIASSON: You know what? That's not going to make the difference in this bill. What's going to make the difference if it passes is something's going to be devised to satisfy Charles' concerns.

Something is going to be devised to say, "Yes, we're going to do something about the border. There's going to be a trigger mechanism, that the other -- the legalization path won't start until there's some measurable improvements."

HUME: What strikes me about this argument that's made by the opponents of the bill is that they can't really dispute that there's a lot of good stuff in here and strong stuff on border enforcement.

And what they say, when you cite that to them, is they say, "Well, we don't believe them," which is the point Charles is making. "We don't believe it."

On the other hand, I wonder if you put the question to them, if this was only border enforcement stuff, would you be for passing that and spending $4.4 billion, and how many more billions of dollars that it might cost to do it -- I assume the answer would be yes, to which my question would be, "Well, why would you be for that if you don't believe it?"

LIASSON: The real problem is the legalization, Charles. You're in the minority of the opponents.

KRAUTHAMMER: The answer is I'll believe it when I see it. I want to see it. We had enforcement provisions in 2006, and the fence -- we've had 13 miles of fence. We had a promise of hundreds and hundreds of miles.

If the government will demonstrate seriousness in this and will show results, there will be a large number of Americans who will say, "OK, if the border is actually going to be enforced, let's legalize."

WILLIAMS: No, then it comes down to this argument that they want to label it as amnesty, which I think, again, gets us all the way taken off track, because suddenly we're giving amnesty.

It's not about amnesty. I think it's dealing with reality, the presence of these millions of people in our country who should be made into law-abiding citizens and given a legitimate way to express the fact that they want to be Americans and that they're an essential part of our economy.

WALLACE: Mara, let me ask you a purely political question. How does this play politically for both parties, Republicans and Democrats, better off each party to have a bill or not to have a bill?

LIASSON: I think better off for the Democrats to have a bill. I think for the Republicans, this issue is bad for them either way.

This is an issue that over the long term has put the Republicans on the wrong side of the fastest growing voting block in the country, which is Hispanics, because the rhetoric about amnesty comes off as sounding anti- Hispanic.

HUME: What I don't understand is how can it be that this is such a great thing for Democrats, and yet when it came down to getting that bill pulled off the floor -- and that whole problem had to do with the fact that a deal-breaking poison pill amendment offered by Senator Dorgan, and defeated once and revived and it passed -- that that was -- and that was all the Democrats' effort to try to get that passed. And they picked off some Republicans to vote for it, for sure.

And then it was Harry Reid who pulled the bill off the floor in the first place and basically had to be talked back into doing it, in large measure, by the Republican leadership.

So if the Democrats love this bill so much, why have they been so much in the way of obstruction on it?

WILLIAMS: Because of family reunification...

LIASSON: No, some Democrats, like the AFL-CIO don't like the guest worker program. But I think overall, if you talk to Democrats and they're talking about long range, they think that being on the side of legalization and passing a comprehensive bill is better for their party.

WALLACE: All right. Question, answer, we have to take a quick break.

But coming up, Hamas takes over Gaza, splitting what would be a Palestinian state in two. What does all the fighting mean for peace in the Middle East? More from our panel when we come back.

(COMMERCIAL BREAK)

WALLACE: On this day in 1963, the Supreme Court decided that reading of Bible verses and the Lord's Prayer in public schools is unconstitutional. The justices ruled by a vote of 8-1.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HAMAS SPOKESMAN: There is no chaos and anarchy, and people can walk in the streets in safety, and Hamas is protecting all it, and we are going to have this place secure and safe. This gun battle is finished.

(END VIDEO CLIP)

WALLACE: That was a Hamas spokesman declaring victory in Gaza this week but still making sure to wear a mask.

And we're back now with Brit, Mara, Charles and Juan.

Well, we had a civil war this week and when the smoke cleared, Hamas was in control of Gaza, and the relatively moderate Fatah -- and you have to talk about Fatah in relative terms as being the moderate in the Middle East -- was in control of the West Bank.

First of all, what does this, Charles, tell us about the state of the Palestinians 14 years after the Oslo peace agreements?

KRAUTHAMMER: Well, they're essentially in the throes of a long civil war. And we had stage one this week where the forces of rejection, Islamist extremism, Hamas, a terrorist organization, taking over in less than a week Gaza, where they have always been strong.

They do not command a majority of the Palestinians. A majority really are more moderate. But they have the guys, the weapons, the discipline and training.

And what you have here is a separation out of the Palestinian entity into sort of its pure elements, the terrorist elements, of course, in Hamas, and, as you say, the more moderate Fatah in charge.

But it still has Hamas elements in the West Bank who will challenge it. They are now in hiding. And also they are led by Mahmoud Abbas, who is one of the weakest leaders in one of the worst areas in the world.

But all of our hopes are on him. We have no other choice. We will now open our coffers to him. Israel will transfer taxes. And we'll try to negotiate with him only on the West Bank. WALLACE: Before we get to that aspect of it, Juan, how dangerous to have this extremist Hamas, a proxy for Iran, now in total control of Gaza?

WILLIAMS: It is very dangerous. And of course, you have to worry about refugees from Gaza going over to Egypt and whether or not then you have suddenly support coming from Iran for what remains now of -- you know, for the West Bank. I mean -- for Gaza, I should say.

And what really concerns me is the idea that the U.S. is in the business of promoting and supporting Abbas. And clearly, even with U.S. intelligence and support, we could not stop what was taking place.

And then you also have now the trouble in Lebanon and, of course, your earlier interview with General Petraeus about the trouble that's ongoing in Iraq.

So it looks as if all of these would inspire the radicals in the Middle East to say, "We can defeat American forces. We can defeat pro- western forces," even now as it comes to the idea of lifting the embargo to try to support Abbas.

WALLACE: Brit, what does this mean for the U.S. and the west and Israel? There's some foreign policy experts who say that they see a possible opportunity in having this split situation, with the relatively moderate Fatah in charge of the West Bank, and that you could support them while basically showing benign neglect toward Gaza.

HUME: A long-hoped-for circumstance in the Middle East has been the recognition among the peoples there that the extremist elements among them, to whom they rally for all kinds of reasons, can lead them to nothing but despair and agony.

We're going to see despair and agony on a grand scale in Gaza. Nothing good can come of this government run by men in ski masks with AK-47s in their hands. They will not manage that small area there. It will not be a thriving place.

It is going to be a miserable place, indeed. Egypt is afraid of the situation there. They're in the process, I guess, of closing the border. The Israelis are certainly not going to be any help to them. Something quite awful is going to ensue there.

Now, whether that spectacle will be enough to let people see what comes with this sort of thing remains to be seen. But that is a possibility at least, and one, obviously, that this administration ardently hopes for.

LIASSON: Yes. I mean, for a long time, the U.S. was trying to isolate Hamas and work with Fatah, and it couldn't do that. There was this unity government formed.

But now the Palestinians have kind of separated themselves by themselves, and we'll see what happens. Now, it's very possible that Hamas gets the resources it needs from Iran to run Gaza, but it will be a real test. I mean, the reason why Hamas came to power in the Palestinian Authority was because Fatah was seen as ineffective and corrupt, and now they have a chance to govern, too, in at least one part of the Palestinian territories.

But if you look overall, it certainly looks like everything that happened this week was a victory for the forces of Islamist extremism.

KRAUTHAMMER: It tells us also a lot about the Palestinian intentions. Palestinians have claimed all they want is a state, dignity, independence. And here in Gaza, they were given complete control -- no Israelis, no settlers, nothing, everything withdrawn two years ago.

And instead of creating a state in a place where they had all the opportunity, they created a terrorist entity whose only objective is to carry on the war. It's going to now import arms over the border, smuggle them in. They'll use Iranian influence and money and will shoot rockets into Israel and will continue a long guerrilla war like Hezbollah.

WALLACE: But, Charles, can the U.S. end the embargo and start dealing with Fatah in the West Bank? Can Israel start giving the tax money that it's withheld, give it to the West Bank, and everybody agree just to let the Palestinians, 1.5 million Palestinians, in Gaza starve?

KRAUTHAMMER: They won't starve. They have U.N. help, UNRRA help, which they have had for 60 years. Israel is not going to shut the border in a way that the food supplies are cut off. The water is coming in.

So it will be maintained in a state of sort of subsistence, but I can't see Israel supporting, funding, a state openly declared to destroy Israel and that is actively attacking Israel by launching rockets into peaceful Israeli towns every day.

WILLIAMS: Well, the question is does Abbas agree to abandon Gaza because that's the Israeli desire. I don't know about that, and I doubt that he's going to -- you paint that as the result of giving Palestinians independence.

I would say, "Listen, there's a long history here of Israelis occupying Palestinian land, of limiting..."

HUME: Juan, Juan...

WILLIAMS: "... economic opportunities," and then you say, "Oh, no." So as a result of the radicals gaining a foothold, all Palestinians are to be condemned. That's not fair, Charles.

HUME: Wait a minute, Juan. Wasn't it the case that it was long argued that things would be better in Gaza if the Israelis got out and got their settlements, the cause of so much anguish, out as well?

WILLIAMS: True.

HUME: They did that. Have things gotten better, Juan?

WILLIAMS: We had an election -- remember, in pro-Democratic terms, we had an election.

HUME: That's right.

WILLIAMS: What you get is Abbas. But you also then got elements...

HUME: No, no.

LIASSON: No, you got Hamas.

HUME: No, what you got was Hamas in Gaza.

WILLIAMS: Hamas, but then you also get Hamas coming in as an element and ruling, actually, the majority of -- that's democracy. That's what we wanted.

HUME: Well, I understand that, Juan. Are things better?

WILLIAMS: And so you've got to understand the local politics of it is not simply Israel versus Palestinians. There are people there who have been pent up in terms of their anger and the sense that they have been stepped on by Israel.

HUME: So as a result of that, they've turned that into a mess that can affect them more than anybody else?

WILLIAMS: They're involved in self-destructive behavior. So are you now going to punish them and say therefore they're not deserving of any kind of help from the rest of the world?

WALLACE: That question will go unanswered. Thank you, panel. See you next week.

For more visit the FOX News Sunday web page.

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