• This is a rush transcript from "The Journal Editorial Report," May 8, 2010. This copy may not be in its final form and may be updated.

    PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," Times Square terror. An American citizen radicalized in Pakistan. It's a story all too familiar to our friends across the Atlantic. What we can learn from the United Kingdom.

    And what Faisal Shahzad's arrest says about our own anti-terrorism operations here.

    Plus, chaos in Greece helps send stocks into a tailspin. Will that country's debt crisis threaten our own economic recovery?

    Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    First up this week, the Times Square bomber and lessons from the United Kingdom. As authorities continue their investigation into the attempted terror attack in New York City, a clearer profile has emerged of the suspect, Faisal Shahzad. A Pakistani born American citizen, Shahzad has spent a decade in the United States obtaining two university degrees and working in Connecticut as a financial analyst. Until last year, he lived in a quiet suburb with his wife and two children. It's a story all too familiar in the United Kingdom where, in 2005, London's transportation system was attacked by four British nationals, three of Pakistani descent.

    Earlier, I spoke with Melanie Phillips, a columnist for London's Daily Mail and author of the new book, "The World Turned Upside Down: The Global Battle over Truth, God and Power." I asked her what the U.S. could learn from England's experience with homegrown terror.

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    MELANIE PHILLIPS, AUTHOR & COLUMNIST, LONDON DAILY MAIL: Well, I think the main lesson the United States can learn from the United Kingdom is to learn from its mistakes. The main mistake the United Kingdom has made and continues to make is to refuse to accept that what we're all facing in the West is a religious war and Islamic jihad. Britain insists on regarding it as just violent terrorism from particular grievances around the world. It will not accept it is motivated by religions fanaticism. And as a result —

    GIGOT: It has that religious root. What are the implications of that? What is that mean that Britain is not doing, that it should be doing and, by implication, we should be doing?

    PHILLIPS: Well, as a result, Britain is making a terrible a mistake of thinking, amazing as this may seem, that religious fanaticism is a kind of antidote to Islamic terror.

    GIGOT: An antidote?

    PHILLIPS: An antidote. Yes.

    GIGOT: Really.

    PHILLIPS: Yes. It thinks it can use, for example, the extremists of the Muslim Brotherhood to kind of channel the, quote, "idealism" of young British Muslim men, classically, or the people who might be drawn towards Al Qaeda-style terrorism, and divert them into what the British official mind thinks is relatively harmless religious fanaticism. And that is because it cannot conceive that the religious fanaticism actually feeds in at the extremes to violence and terror.

    GIGOT: This with would seem logically, to me, anyway, to actually feed this fanaticism.

    PHILLIPS: Of course. Of course.

    GIGOT: And make more people, who might be on the margins and might be actually happy with British society, more susceptible to that kind of alien nation of jihad. Is that not right?

    PHILLIPS: It is absolutely crazy, but this is what is happening. So the British authorities, and not just the political authorities, but academic authorities turned a blind eye, for example, to the radicalization on campus by groups such as Hizb ut-Tahrir, which purport not to be involved in violence in Britain. But nevertheless, radicalize young Muslims on campus to the jihad, to the idea the West should be overturned, that Britain should become an Islamic theocracy.

    GIGOT: Isn't it difficult for a secular society to fight back against something like that? it means you have to be very, very conscious of religions, and religious ideologies, when we are taught live and let live, anything goes, relative — you know, we are all equal. Particularly in America, we don't have a state religion. What do you do, as a state, to try to fight back against that?