This is a partial transcript from The O'Reilly Factor, April 10, 2002. Click here to order the complete transcript.

BILL O'REILLY, HOST: In the Impact segment tonight, another suicide bombing today, the first one since April 1. Eight Israelis were killed, 14 people injured.

Saddam Hussein made headlines when he announced the Iraqi government was giving money to the families of suicide bombers, thereby encouraging terrorism, obviously. And guess who else is doing that? Our pals, the Saudis.

With us now is Ambassador Richard Murphy, who served in Saudi Arabia under President Reagan as ambassador there.

So were you surprised they're giving money to the suicide bomber families?

RICHARD MURPHY, COUNCIL ON FOREIGN RELATIONS: No, they're giving money to widows and orphans, which has been a long-standing act of charity on their part, and they're not funding terrorists. That's what your lead-in showed...

O'REILLY: Yes, that's what I said...

MURPHY: ... (UNINTELLIGIBLE)...

O'REILLY: ... that's my opinion, my opinion...

MURPHY: (UNINTELLIGIBLE)...

O'REILLY: ... ambassador, I'll be quite clear to you, is that anybody who gives money to the families of suicide bombers is encouraging terrorism. That's my opinion. Am I wrong, sir?

MURPHY: You're entitled to it, and yes, you are wrong.

O'REILLY: Why am I wrong?

MURPHY: They don't fund terror. I mean, they've been accused of sending hijackers to the planes on September 11. The target of September 11 was the Saudi regime, not the United States. Or at least indirectly, get the United States out of Saudi Arabia so that the regime will fall like a ripe fruit into the hands of the Usama bin Ladens.

They don't fund terror.

O'REILLY: All right. But let's deal with this specific thing of sending money to the families of suicide bombers. All right? Now, you got Saddam Hussein doing that, and you got the Saudis doing that. To me, if you're going to say, Look, we feel sorry for you because you just killed four babies and three little kids, we're going to send you a check because your son or daughter did that, to me, that is an abomination. That's terrible.

MURPHY: They didn't single out the families of suicide bombers...

O'REILLY: Yes, they did.

MURPHY: ... for a few years...

O'REILLY: They're sending, they're sending...

MURPHY: ... (UNINTELLIGIBLE)...

O'REILLY: ... $10,000 to each suicide bomber family, Mr. Ambassador.

MURPHY: You're talking, I think, about the figure that Saddam was giving. The last figure...

O'REILLY: No, I'm talking about the Saudi...

MURPHY: ... I saw was $3,500...

O'REILLY: ... government. No. The Saudi...

MURPHY: All right, (UNINTELLIGIBLE)...

O'REILLY: ... government.

MURPHY: Where'd you get your information, then?

O'REILLY: The information is on the Associated Press...

MURPHY: UPI story?

O'REILLY: ... are they lying?

MURPHY: I think it says $3,500. But that has been going for the last few years to those who lost members of their family, whether engaged in action against the Israelis or not, but as a result of the intifada in the last year and a half.

O'REILLY: All right. I don't — I mean, look, I don't mind them taking sides with the Palestinians against the Israelis. All right? If they want to do that, that's up to them. I do mind them sending money to the families of terror bombers who kill babies. I think that's appalling.

But let's move on.

The United States is now moving some of their military operations out of Saudi Arabia, my sources tell me, because they don't trust the Saudis, because (UNINTELLIGIBLE) they are going to go after Saddam Hussein, just a matter of time, and they don't trust the Saudis to support us in that action. All right? What do you think about that?

MURPHY: The statement I've read was from General Franks, the Central Command sync. He said they have been diversifying their bases...

O'REILLY: Right.

MURPHY: ... of operation throughout the Arabian Peninsula. Qatar is one, one place, Bahrain, we've had the Navy for years, Saudi Arabia, we've had access to that special facilities, to the Sultan Air Base, I think it is, south of Riyadh, state-of-the-art stuff in there. And they are creating an alternative base...

O'REILLY: Yes, because they don't trust the Saudis...

MURPHY: ... in...

O'REILLY: ... to support us going after Saddam Hussein.

MURPHY: Well, that may be, but it's also good military tactics...

O'REILLY: Sure it is. But...

MURPHY: ... not to be — put all your eggs in one basket.

O'REILLY: Look. The problem is that Bandar and all these guys and the Saudis, they say, We're your friends, we're your friends, we're your friends. I don't believe the Saudi Arabians are friends to America. I don't believe that one bit.

MURPHY: Well, are you going to argue they're foes of America?

O'REILLY: I'm going to argue that they're friends of themselves.  They're opportunists. They need our money, they need to send — sell us oil. And they want to keep us as friends, but when push turns to shove, they're not going to help us against people like Saddam Hussein.

MURPHY: Well, name one country that doesn't work for its own interests. Don't single the Saudis out...

O'REILLY: Well, I, I, I, I will name one...

MURPHY: ... (UNINTELLIGIBLE) selfish (UNINTELLIGIBLE)...

O'REILLY: ... I think Great Britain is a good friend to the United States. All right? And I think that they — at least Tony Blair — puts himself in a very precarious position to do what's right. I don't think the Saudi government does what's right.

MURPHY: I'm not putting Saudi Arabia in the category of Great Britain...

O'REILLY: All right. You asked me to name one, and I did.

MURPHY: ... (UNINTELLIGIBLE) — Well, I should have asked you to name three.

O'REILLY: All right. I could probably name three. But let's — again...

MURPHY: OK.

O'REILLY: Do you believe that they're our friends?

MURPHY: I think we got common interests that have been very advantageous to us both, access to the military facilities from the Gulf War days, a common policy of avoiding price hikes or spikes in the oil market, maintaining a capacity to supply, to surge oil production if characters like Saddam Hussein say, We're going to make a political use of the oil weapon. They don't believe in that and we don't believe in that.

O'REILLY: All right. So you think the Saudis would help us on the oil front. If other countries cut back, they would increase production to help us.

MURPHY: They're one of the few in the world that can. They've got about 2 million barrels a day...

O'REILLY: But would they?

MURPHY: ... excess — They have in the past.

O'REILLY: They have, but would they now?

MURPHY: Why not?

O'REILLY: See, it's a different ball game now.

MURPHY: Why not?

O'REILLY: Well, because I think that they're — I think the Saudi governments are very worried about the fundamentalist threat that they have to face, that they — in the kingdom of Saudi Arabia, they have a lot of fanatics and they have a lot of people who would, as you said, like to see them removed. So they're playing both ends against the middle.

MURPHY: All right. So that doesn't mean that they're going to use oil as a weapon against us.

O'REILLY: Doesn't mean, but it doesn't mean they're going to help us.  And I don't know if they're going to help us. I don't — I wouldn't bet on it.

MURPHY: Well, the only ones that are interested in using it are Iran and Iraq. And Iraq has gone ahead and given a cut, it — for, I think, production for one month. And they're not going to see a great advantage to Iraq...

O'REILLY: No, they're not.

MURPHY: ... or to any cause for doing that.

O'REILLY: But I'm just getting the feeling from the — you think that they're our friends, the Saudis are our friends.

MURPHY: I think we've got common interests.

O'REILLY: Yes.

MURPHY: I don't deal in friendship, I deal in...

O'REILLY: You trust them?

MURPHY: ... I deal in interests.

O'REILLY: You trust them.

MURPHY: If our interests coincide, I trust them.

O'REILLY: All right. Mr. Ambassador, thanks very much.

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