• With: Maj. Gen. Bob Scales

    This is a rush transcript from "On the Record," September 27, 2011. This copy may not be in its final form and may be updated.

    GRETA VAN SUSTEREN, FOX NEWS HOST: It's war, right next door, in Mexico. The Obama administration doesn't seem to believe it, so maybe they will now, because two U.S. generals just released a report. Major General Bob Scales is one of those generals, and he joins us. Good evening, sir.

    MAJOR GENERAL BOB SCALES, U.S. ARMY (RETIRED): Hi, Greta.

    VAN SUSTEREN: I say it's war. You've been down to the border, prepared the report. Is it war or not?

    SCALES: It's a war, Greta. What we've seen over the last two years is a shift, to use a military term, the strategic content of the cartels to shift their border operations north of the Mexican border one county deep into Texas for three reasons. First of all, to escape the increasing effectiveness of the Mexican military, secondly, to establish transshipment points for drugs and illegal trafficking, and third as a throughput to push those drugs into 270 cities throughout the United States. So this is not just a Texas problem, it's a national problem, because the cartels have a new strategy.

    VAN SUSTEREN: You fought in Vietnam. You've done a lot on Iraq and Afghanistan. How is Mexico, this war in Mexico the same or different from Afghanistan?

    SCALES: It's different for a couple reasons. Over the last two years we've seen a shift in the leadership of the cartels away from mafia businessman, the people who want to make money on drugs, to increasing to these cartels being run increasingly by criminals, just nasty, evil men who kill for the sake of killing. That's different than it's been in the past.

    Secondly, the level of violence is escalating, not just south of the border, but north of the border where hundreds of Mexicans have been found abandoned in these border counties. The violence is escalating. There's shootouts along the Rio Grande. It's getting worse and worse every day, and it will continue to get worse until we do something about it.

    VAN SUSTEREN: In reading your lengthy report that you did with General McCaffrey, there's a copy of a letter dated March 16th, 2010, that was written from the president of University Medical Center of El Paso to the president and basically talking about how even that hospital is receiving 150 survivors and the violence transported across the border, going to the medical center for trauma care.

    SCALES: Right.

    VAN SUSTEREN: It's even bleeding over that way.

    SCALES: It absolutely is. And it's not just in the cities along the border. It's in these border counties that are very thinly populated, where the cartels have established routes of egress into Texas and transshipment points and houses. Ranchers and farmers are having their ranches violated, breaking into their homes, shooting at them. Ranchers are selling their property. Ranch hands are quitting out of fear or from being threatened by the cartels. It's really becoming increasingly out of hand.

    VAN SUSTEREN: It's my impression that's United States isn't taking this seriously, maybe Texas is, maybe Arizona, but the United States is not taking as a country what's going on in Mexico with the level of intensity I think it should. I know Secretary of State Hillary Clinton described it as Colombia 20 years ago and got rebuked by the president. Am I exaggerating this?

    SCALES: I don't think you are at all. I think part of the problem is we haven't done a good job of telling the rest of America how Arizona and Texas affects them directly. Remember now, there are 18,000 cartel members operating in Texas, but their --

    VAN SUSTEREN: There are 18,000 cartel members operating in Texas?

    SCALES: A full army division of gang members, the foot soldiers for cartel --

    VAN SUSTEREN: In Texas?

    SCALES: In Texas, and thousands more in American cities, all in this scheme to distribute drugs throughout the United States. This is not just a Texas problem. This is a national problem. And we need to make the rest of the nation aware of it.

    VAN SUSTEREN: I guess I've always been intrigued by the fact that one of the worst cartels are the Zetas. They are ex-military, essentially the special forces who have gone rogue.

    SCALES: It's very sad, and they're increasingly violent. Two years ago this was a criminal enterprise that was done for profit. Increasingly today it's just sheer, raw violence inflicted on the citizens of Texas, and that's why they're worried.

    VAN SUSTEREN: I don't like to overstate it, but your description, the 18,000 in Texas, the number of people around the city, that it doesn't differ that much in our mind to our thoughts and fears of Al Qaeda originally, having cells around. I mean, this is not flying a plane into a building or a dirty bomb, but this is drugs, which are killing people, and there's violence associated with it.

    SCALES: Not only drugs. Think of the transshipment, very dangerous people by the cartels across the border from places like Pakistan, Iran, Iraq, Sudan, and Ethiopia. They're coming across the border paid for by the cartels. Many of them get across without being registered. This is an insidious problem that goes beyond drugs. It deals in human trafficking, the war on terrorism, on and on and on. This is an American, not just a Texas problem.

    VAN SUSTEREN: Unfortunately it will take some catastrophic to draw the attention.

    SCALES: I do too.

    VAN SUSTEREN: General, nice to see you, sir.

    SCALES: Thank you, Greta.