This partial transcript of War on Terror, October 2, 2001, was provided by the Federal Document Clearing House. Click here to order the complete transcript.

RITA COSBY, HOST: Today the U.S. gave NATO proof that Usama bin Laden helped orchestrate the attacks on America in a move to get full support of all NATO allies. With that evidence in hand, NATO secretary general reaffirmed the Article 5 declaration that an attack on one NATO member is an attack on all. But what does that mean for the U.S. when it's time to strike back?

Joining us now from Washington, former U.S. special envoy to the Middle East, Ambassador Dennis Ross, now a counselor at the Washington Institute for Near East Policy.

Ambassador Ross, thank you very much for joining us.

AMB. DENNIS ROSS, FORMER MIDDLE EAST SPECIAL ENVOY: A pleasure.

COSBY: I want to ask you, Ambassador, what signal does this send, having all the NATO allies come out and make a cohesive statement today?

ROSS: Well, it demonstrates very clearly that we're not alone. It demonstrates that the Western alliance, NATO, is staunchly in our corner and, in fact, feels that this is a threat that is a threat not simply to the United States but to all of them. That's why they are invoking Article 5.

COSBY: Today the Taliban came out -- in fact, just a few moments ago -- and said it wants to make a direct appeal to talk specifically to the U.S. It also wants to see proof that Usama bin Laden is responsible. Should the U.S. take advantage or reflect on any of these gestures, or should we just say "No negotiations, that's it"?

ROSS: I think the president was very clear. You know, you could take these gestures more seriously if we didn't hear one story one day, a very different story the next.

COSBY: That's what I was going to ask you. Are these even realistic gestures?

ROSS: Well, I think it's pretty hard to take any of them as being serious because tomorrow they'll say something different. The reality is, they know what they have to do. They've been trying to avoid doing it. I think that Prime Minister Blair was very clear today, and I think he reflects very well on what needs to be done, and he certainly is reflecting, I think, what President Bush feels.

COSBY: Obviously, the alliance seems very strong, with the statements coming out today. Do you think we may see some cracks in the alliance should we strike some targets, say, outside of Afghanistan, or say Iraq?

ROSS: There is no question that it is easier to maintain a wider coalition when you're dealing with someone like Usama bin Laden and the Taliban. Here you're dealing with an individual, a network, a group, a government that are seen as being beyond the pale. They are seen as being irrational. They're seen as embodying evil. It's a lot easier to generate a very wide coalition in such a circumstance.

If we end up having to deal with other states that are sponsoring terror, it will probably be harder to maintain such a coalition. Now, does that mean you won't see NATO hold together? No. I think that NATO has established a kind of cohesion on this, and I think it will probably be something that lasts.

COSBY: I want to ask you -- today there were a number of well- publicized reports that the Bush administration was on the verge of endorsing the creation of a Palestinian state before the September 11th attacks. Were you surprised by this? And what affect would that have on the peace process?

ROSS: Well, I knew that the Bush administration was considering an initiative. I certainly am someone who is in favor of a very active American approach. There's a deterioration that we continue to see. I don't think the parties, if left to their own devices, can resolve things. The question is, what is the best way for us to be active?

I don't think the Bush administration had made a decision on the idea of recognizing a Palestinian state. Personally, I think the issue of statehood is something that is appropriate to put on the agenda, and we could do that. But there's a big difference between putting it on the agenda, where the parties will then negotiate what statehood would mean, and going ahead and recognizing a state because the reality is we don't know what that state is, in terms of borders. We don't know what that state is, in terms of attributes. We don't know where sovereignty starts and where it stops. The fact is, this is an issue that has to be negotiated. It's not something that should be declared.

COSBY: Are politics behind this word coming out, too, in the sense it would be nice to have some cohesion and some solidarity amongst Arab states? It certainly sends a positive message to them.

ROSS: Well, again, I don't know how much this is being driven by the administration and how much it reflects a kind of speculation. There's no question the administration was considering an initiative. As I said, I think an initiative being active is appropriate. The critical thing is, just what is the initiative designed to do? At a minimum, there's no doubt that a number of our friends in the Arab world and in the Muslim world would like to see that there's activity on the issue of the Arab-Israeli conflict. It would make us feel less defensive, perhaps, in terms of being part of the coalition.

That said, they know very well that this is a threat to them. Terror is a threat to them and has to be dealt with. Whether we can do something to ease the situation between Israelis and Palestinians, something that I would favor, is one issue. But the fact is, we have to confront terror. We have to wage war with it. And I don't think we can suddenly decide to say, "Well, we'll only do it if it's conditioned on something else."

COSBY: I want to ask you -- what kind of a role do you think that PLO chief Yasir Arafat will play in this? And the reason I ask is today the military wing of the PLO, Hamas, the Palestinian Hamas, came out and they claimed responsibility for an attack on a Jewish settlement in which two teenagers were killed. Can Arafat have control of his own people?

ROSS: Well, I think that Arafat has to exert control over his own people.

COSBY: Is he going to do that, though?

ROSS: Well, if he doesn't, then he runs the risk of putting himself in a position where, in fact, he is seen as -- as acquiescing in terror.

COSBY: What options does he have, though, too, because certainly, he's going to face a lot of internal strife.

ROSS: Well, all I can tell you is every time he's chosen to crack down on Hamas and Islamic Jihad, he's done so. He's done so effectively. Can he control every incident now? No, probably not. But can he make it clear that if anything happens, he will come down on these groups like a ton of bricks? Yes, he can.

In a situation like today, where there was an incident of this sort, where there was a direct challenge to his authority, he has to act against it. If he does not act against the challenge to his authority, that authority will be further eroded.

COSBY: Do you really think he's in control, though? I mean, do you think he really is running the ship, or are these terrorists really taking control of the country for him? He didn't seem to come out today and condemn everything.

ROSS: Well, let's put it this way. If they come to embody the cause of the Palestinians, that cause is going to be discredited. What has always been important to Yasir Arafat has been the cause of Palestine. That has been synonymous with him. If he does not act, if he lets them become the dominant force, then everything he's stood for is undercut.

If he wants to be with the rest of the world, he cannot acquiesce in terror. He cannot allow the Palestinian authority to become a safe haven. In fact, it has been a safe haven for the last 12 months for two groups that are prepared to carry out terrorist acts. Anyone who's carrying out terrorist acts is going to discredit the cause that ostensibly they are carrying it out for.

COSBY: All right. Well, let's hope that everybody gets that message. Ambassador Dennis Ross, we thank you very much.

Copy: Content and Programming Copyright 2001 Fox News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2001 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, Inc.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.