This is a partial transcript of Special Report with Brit Hume, October 16, that has been edited for clarity. Click here to order the complete transcript.

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BRIT HUME, HOST: What does it mean that North Korea has continued its efforts to acquire nuclear weapons? Might they actually have them by now? If they do, what threat do they pose, either directly or by virtue of blackmail, and what can the U.S. and its allies in the Pacific do about it? For answers, we turn to Henry Sokolski, Director of the Nonproliferation Policy Education Center. Mr. Sokolski welcome. Excuse my inability here.

HENRY SOKOLSKI, DIRECTOR, NONPROLIFERATION POLICY EDUCATION CENTER:  It gets easier. It gets easier.

HUME: Well, this is not my first encounter with the word but I should be able to pronounce it by now. Well talk to me a little bit, if you will, about what North Korea appears not to have and how we got to where we are where we didn't seem to know it until just now.

SOKOLSKI: Well, we knew exactly that they had perhaps as many as two bombs built. The CIA announced that in December of this last year in a report to Congress public unclassified. We knew that they had an enrichment program and that they had been at it for several years and we knew that they were procuring centrifuge equipment and even that was sometimes floated publicly.

What we didn't know is that they'd ever admit to it. That's what was stunning and that's what has most of the diplomats in town running around in circles about because they no longer can claim that well, it's not clear that they're cheating. Now it's clear.

HUME: One of the things that I notice is, for example, when the president made his axis of evil speech, former Clinton administration official Wendy Sherman, who was a prominent adviser to President Clinton on those issues, piped up in one forum to say look, that was not helpful and the reason is that we can negotiate with these people and we have a framework agreement with them, and basically to suggest that this was not happening, and so some people didn't know this.

What about all that?

SOKOLSKI: Well, the point again is what's stunning is that we now know and can no longer deny that North Korea cheats and up until now the fiction that has sustained almost our entire diplomatic strategy is that they will comply and can be negotiated with in good faith. That doesn't look so credible right now.

HUME: This administration seemed dubious about that for some time now.

SOKOLSKI: Ambivalent I think would be a more correct term. Half thought we need to keep going and half thought my God we've had enough.

HUME: Well there was a peculiar stall, wasn't there, because of our relationship with South Korea which seemed bent as a nation even on trying to effect some kind of reunification? So first of all, how did all that play out? I mean I think a lot of people think gee, I thought we'd heard about all that and they might have had something going there but we worked all that out. What did we think we worked out?

SOKOLSKI: I think what we wanted to make sure is that we did not get ahead of our allies. Our allies are building reactors that are part of the deal. They have a lot at stake.

HUME: The deal cut when, by whom?

SOKOLSKI: By Mr. Clinton in '94, and essentially what we said is, if you freeze your program and eventually open up to inspections and dismantlement, we will provide you with oil, energy equivalent to all the nuclear reactors you hope to build, plus we will replace those reactors with new, modern, U.S. designed reactors, two of them, and that was the deal.

HUME: And we held up our end presumably?

SOKOLSKI: Well, there are arguments that we haven't, but frankly we did. We started construction of the reactors, let's see, in August of this year and we spent about $100 million the last few years for 500,000 tons of heavy fuel oil we ship every year to them.

HUME: All right, so now that we know this, what do we do?

SOKOLSKI: Two things. You have to make sure that the burden of proof that they're out of the bomb business is on them. If they want to come clean, they should come to us to explain how they're going to do that. Mr. Rumsfeld is correct. We don't send inspectors in. They need to come on bent knee and say please let us prove that we're out of this. We have to give them incentive, though, and that means we have to second, stop bribing them to behave.

HUME: Right. Now, they said in acknowledging this, after being pressed by U.S. visitors, they apparently not only did they own up to it but they did so in a belligerent way and said yes, we got it. We got that and we're working on that and we got some other weapons that are even worse.

SOKOLSKI: Right.

HUME: There's no bended knees here.  What do we do about that?

SOKOLSKI: I think we take it at face value instead of trying to make it sound like, oh well this is a plea for more negotiation. It isn't.  What we have to do is cut off the bribes we were supplying and say no more reactors, no more nuclear technology, no more fuel oil, and we have to go to the U.N. as a bipartisan group of Congressmen pleaded today at a press conference, and get economic sanctions in place and we have to make it very clear to them that if they move militarily with any of this nuclear capability any further than they have, they are going to engage in a military competition and a political and diplomatic one that they will get no further than the Soviet Union did with us when they played that game.

HUME: So, the old containment policy?

SOKOLSKI: I think so.

HUME: Henry Sokolski, nice to have you, I hope you'll come back.

SOKOLSKI: Thank you for having me.

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