• This is a rush transcript from "Your World With Neil Cavuto," January 14, 2009. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Well, is Israel worried about bin Laden's threats?

    That is what I asked the former Prime Minister Benjamin Netanyahu during an exclusive chat.


    BENJAMIN NETANYAHU, FORMER ISRAELI PRIME MINISTER: Well, it's not new. He has marked Israel as the extension of the United States. We're the small Satan. You're the great Satan. And he wants to annihilate us both.

    I think he wants to start with Israel. But, from his actions on September 11, he's — he works in parallel.

    Video: Watch Part 1 of Neil Cavuto's exclusive interview | Video: Part 2

    This is the kind of hate and fanaticism that we're encountering from the Hamas, because there is no real difference between the Hamas and Al Qaeda. They're brothers in hate and in violence. And it's what we're up against. Ultimately, Israel will have to remove this militant Islamic terror base from its — from the environs of Tel Aviv.

    It's basically like having an Al Qaeda base next to New York City. You wouldn't tolerate it, and neither do we.

    CAVUTO: Still, global sympathies seem to swing, as this drags on, toward the Palestinians. Senator Hillary Clinton, who is up for secretary of state, in her confirmation hearings yesterday, Prime Minister, described the tragic human costs borne by Palestinians, as well as Israelis.

    Are you sensing maybe a different tone from an Obama administration?


    I think that you could hear the concern for the — the tragic loss of innocent lives on the Israeli and Palestinian sides from Israelis. We're the ones who are concerned with — with any civilian that is killed and put — is put in harm's way.

    But this, I think, is brought squarely on Hamas' shoulders. And I heard pretty much the same from — from Senator Clinton, because Hamas is both firing on civilians and hiding behind civilians.

    So, the Israeli army has to — is faced with a very, very difficult task. I mean, what do you do when thousands of rockets are fired on your cities from terrorists who embed themselves in homes and schools, put their weapon caches in mosques, their R&D labs for producing explosives in universities?

    A serious and responsible government tries to minimize civilian casualties while it targets as precisely as it can the terrorists. But under no circumstances do we want to give immunity to the terrorists, because you know they will do it again and again, and not only against us. They will do it to others. They will do it against you as well.

    CAVUTO: So, you didn't read anything into Mrs. Clinton's saying that the price being paid by Palestinian civilians, as well as Israelis, must only increase our determination to find a just and lasting peace agreement?

    NETANYAHU: Well, I would say that we all share that desire for peace.

    But I don't think you can make peace with somebody who is — who is out to destroy you. You can make peace with an enemy, only if that enemy wants to relinquish the war and embrace the peace. That's what we did with Egypt under the late President Anwar Sadat. That's how we had peace with Jordan, and have it, because of the valiant efforts of the late King Hussein of Jordan. And this is continuing with both countries.

    But, in the case of Hamas and its patron Iran, they openly declare, both of them, their desire wipe Israel off the face of the earth. Iran is racing to produce a nuclear weapon to that end. And, so, with people who want to destroy you, you have no — there is no compromise. What compromise could we make with them? The method of our destruction? Of course not.

    So, in the case of this forward terrorist base of Iran's next to our cities, ultimately, that regime will have to go. And the minimal thing that we have to do now, as — as we approach the question of a cease-fire, is to ensure that this enclave is not resupplied by Iran with long-range missiles that can hit every part of our country.

    And I think that's a minimal goal...

    CAVUTO: But what if — what if that...

    NETANYAHU: ... that all Israelis share.

    CAVUTO: OK. I — I apologize, sir.


    CAVUTO: But what if part of that agreement...

    NETANYAHU: Go ahead.

    CAVUTO: ... calls for the U.S. opening up contacts with Hamas, as president-elect Obama has promised to do, which, by the way, would be a first for a U.S. president? How do you feel about that?

    NETANYAHU: Well, I heard the — the president — the secretary of state-designate, Hillary Clinton, say very clearly that the United States will not negotiate with Hamas, unless it abandons the goal of destroying Israel and renounces terror. And I don't think they're about to do that. So, I don't think that's an issue.

    The issue really is to enable Israel to complete its objectives — its minimal objectives — of creating some kind of defense against the future rocketing of its cities.

    I think there is another issue that will be perhaps the single most important issue facing incoming president-elect Obama. And that is the decision to prevent Iran from acquiring nuclear weapons, for two reasons.

    One is that they intend to use those weapons directly against us. And the second is — and you can imagine what would happen to these Iranian bases on the Mediterranean, one in Gaza and one in Lebanon, with Hezbollah, if its proxy terrorists also enjoy a nuclear umbrella. I mean, the prospect of having a militant Islamic regime committed to Israel's destruction, a sworn enemy of the United States, having nuclear weapons, which it can give to its proxies, is something very, very frightening indeed.

    And, even if it doesn't give it to its proxies, the fact that it will wield a nuclear sword over the heads of the United States, of Israel, and many other countries, is something that should give halt to anyone concerned with the peace of the world. I think this is the biggest and most fundamental challenge facing the United States and the world.

    CAVUTO: You know, sir, incoming Vice President Joe Biden had said that it wouldn't at all surprise him if Barack Obama were tested in his first few weeks in office. Do you think that will indeed be the case, and — and that Al Qaeda, maybe with the release of this tape, is signaling that?

    NETANYAHU: Well, I have no doubt that the terrorists and their patrons — or the terrorist states and their proxies — will continuously challenge the leadership of the United States.

    But, from my two conversations with president-elect Obama, I could see that he understood this threat. He — he said that he was absolutely committed to making sure that Iran would not acquire nuclear weapons. And I think this was very important. He was also equally adamant about resisting terrorism.

    He was in Sderot, one of the towns that has been most pelleted by these rockets over the years. And he said, if my two daughters were sleeping in a house that had been rocketed there, he would do everything in his power to prevent it.

    Well, Israel is now doing not everything in its power, because we're using only a fraction of our power, but everything that we can legitimately do to — to prevent future rocketing. And I expect that the incoming American administration will — will remain steadfast in its support for this battle against war criminals and terrorists, who — who are — who see both of us as their enemies.

    And they're right to see both of us as their enemies, because we represent the forces of civilization, and they represent the forces of darkness.