This is a rush transcript from "On the Record," Sept. 20, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Iran is threatening to destroy Israel and it is more terrifying as Iran gets closer to having nuclear weapons. Iranian president Mahmoud Ahmadinejad said any Israeli attack against Iran means elimination of the Zionist entity from the world map. Ahmadinejad is here in New York, and so is Israeli defense minister Ehud Barak. Mr. Barak just met with Secretary of State Hillary Clinton, Secretary of Defense Gates and national security adviser General Jim Jones. So what happened?

Minister Barak joins us live. Good evening, sir. Welcome to the United States.

EHUD BARAK, ISRAELI DEFENSE MINISTER: Thank you.

VAN SUSTEREN: So why did you meet with Secretary of State Clinton and Secretary of Defense Gates and General Jones?

BARAK: Oh, we have many issues on the table, from the Palestinian negotiations going over the (INAUDIBLE) of the end of the moratorium and then the QME, qualitative military edge (ph) for Israel, as well as the original issues from Syria to Iran.

VAN SUSTEREN: All right, now, from what I understand, sir, one of the issues is to what extent the United States is willing to supply or help or sell to Israel these bombs that are sort of -- the bunker-busters, right, those big bombs?

BARAK: Oh, we had such bombs in our arsenal for a long time. And we have many American kind of munitions, including (INAUDIBLE) munitions and a huge volume of pre-positioned munition spare parts in Israel.

VAN SUSTEREN: It seems to me that those bombs are particularly important. And I don't want to be an alarmist or anything, but with everything that Ahmadinejad says about what he wants to do to Israel and in the light of the fact that we hear so much that they're moving towards nuclear weapons, they're doing all their design, everything, underground, that I immediately become suspicious when I see that your country has an interest in those bombs.

BARAK: Oh, no. We're not interested exactly right now with any kind of concrete type of munitions. But basically, I don't think that we have to be frightened by the declarations of Ahmadinejad. At the same time, we have to take Iran a determined movement toward nuclear military capability and it's insistent on cheating and defeating the whole world -- we have to take it seriously. I believe that the whole world has to take it seriously.

And nuclear Iran will be the end of any non-proliferation regime. It will be -- it will start a arms race toward nuclear capacity among several members of the Middle Eastern community. It will give a tailwind to all global jihad, al Qaeda and whatever, the Khutis (ph) in Yemen or the Somali bandits, and so on. And it will end up with intimidation of neighbors around the gulf.

So it's basically very bad issue (ph) beyond the direct threat to Israel. And I believe that the world has to deploy against it beyond sanctions. Sanctions might not suffice, and we have to start consider what follows if sanctions won't work.

VAN SUSTEREN: All right, which is what I was going to ask you because sanctions -- I mean, I know, for instance -- I've read that South Korea -- they -- who are our good friends, as Israel (INAUDIBLE) good friends, is they have -- they -- they dragged their feet in going along with the sanctions. And when they finally did do the sanctions, they wouldn't even shut down an Iranian bank in Seoul, even though we asked them to. So it seems to me that the sanctions have lots of holes in them when countries do that, even our good friends. So I'm not -- I don't think sanctions are going to work, do you?

BARAK: No, I don't believe the sanctions (INAUDIBLE) would work, but it's too early to put any further steps into concrete terms. Basically, we believe that no options should be removed from the table. We recommend this policy to friends, and I believe that it becomes more and more accepted by leading players around the world.

VAN SUSTEREN: How long does the world have? How long before Iran has nuclear weapons?

BARAK: Technically, probably, they can reach it within a year-and-a- half, or two, if they decide to break all rules. Probably it might take a little bit longer. But the real challenge is that beyond certain point in time, whether they reach nuclear bomb or cannot reach it, they will become immune against any kind of attack because of the redundancy within their systems -- too many sites, too many caves dug in to (INAUDIBLE) too many protection, too many centers of activity.

VAN SUSTEREN: Mr. Barak, if you will stand by for a moment, take a quick break. We have much more with him next.

(COMMERCIAL BREAK)

VAN SUSTEREN: Israeli defense minister Ehud Barack is back with us. Sir, now, more than anything, I'm sure you feel like I do, you wish sanctions would work. And in light of the fact that there's high risk that they will not, what is your timetable? And what do you intend to do?

BARAK: I don't think that it's proper to discuss it over the TV. We recommended to all our friends not to remove any option from the table. We do it ourselves, and we mean it.

VAN SUSTEREN: If you have to do something, do you do it alone or do you do it with us and with other countries?

BARAK: I repeat, it doesn't make sense to discuss it in front of cameras.

VAN SUSTEREN: You know, I -- let me try one other way. One to ten scale, how serious a problem, ten being the worst for Israel, is this right now in terms of how serious you take what's going on?

BARAK: It's probably the highest priority in terms of sincerity (ph), but not just for Israel. I believe that even for this administration, for this country, it will be part of the way the history will judge this period, this administration, when it comes to the end of its term, whether Iran turn nuclear under a different administration's watch or not.

VAN SUSTEREN: Is Iran supplying Hezbollah with weapons to be used against Israel?

BARAK: Oh, of course, both Iran, as well as Syria. Syria's providing them with extremely advanced weapon systems.

VAN SUSTEREN: Which is sort of interesting because Russia is also supplying weapons to Syria.

BARAK: Yes.

VAN SUSTEREN: So I mean, it really is sort of a lousy situation. You got Russia supplying Syria, Syria supplying Hezbollah, Iran supplying Hezbollah, and Iran going nuclear.

BARAK: Yes, the world is short of perfect. And I spent some time with Sergukov (ph), the Russian minister of defense, as well with Prime Minister Putin, tried to convince them not to send those weapons to the Russians. They are now -- to the Syrians. They are now sending the junt (ph), which is extremely effective short (ph) (INAUDIBLE) weapon.

Probably with the dimensions of Russia, it's just a defensive weapon, but when you put it in a corner of the Mediterranean, it becomes extremely offensive weapon that can risk (ph) anyone, both (INAUDIBLE) even your vessels when they are coming to the eastern part of it. And we tried to convince them. Until now, we've failed. I hope that they will reconsider it. They also provide them with the best, most advanced anti-aircraft missile systems. We hope that they will consider these, as well.

VAN SUSTEREN: In terms of the peace process, the freeze on settlements that's been -- the 10-month moratorium ends within a week or so. What's the -- what can you tell me is the latest on that?

BARAK: It's not easy. For us, it sounds bizarre to consider stretching (ph) it because we basically did it as an unprecedented gesture. Never happen in the history of this country, of our country, to put an end to it for (ph) including private project for 10 months. For nine months, the Palestinians scorn it and ridiculed it as something which is nonsense.

The last month, it became sine qua non. It's the only thing upon which the whole -- the whole peace process stands. For us, it's almost inconceivable to stop it. And -- but at the same time, should admit that during the freeze itself, we started about 950 new units. And before then, we used to build probably twice the pace and the same Abu Mazen negotiated with us.

We found it extremely complicated politically to think about putting an end to it, but still we believed that a way should be found in a respected (ph) manner without humiliating Abu Mazen, without trying to corner Israel into a way to find a formula under which we can keep negotiations because negotiations are extremely important. We cannot afford missing the opportunity. And continue it toward a peace agreement between us and the Palestinians.

VAN SUSTEREN: Sir, thank you. And good luck, sir. And I hope you come back.

BARAK: Thank you.