Following is a transcribed excerpt from Fox News Sunday, Jan. 5, 2003.

TONY SNOW, FOX NEWS: The South Korean government is working on a compromise plan to ease the nuclear tensions between the United States and North Korea. And while the settlement calls for both sides to make compromises, President Bush has insisted that there is only one solution to the impasse.


PRESIDENT BUSH: We are working with friends and allies in the region to explain clearly to North Korea that it's not in their nation's interest to develop and proliferate weapons of mass destruction. We expect for the Korean Peninsula to be nuclear-weapons free.


SNOW: So, what next? Joining us to talk about more on this, as well as the continuing conflict in Iraq, is the senior Democratic on the Senate Armed Services Committee, Carl Levin of Michigan. Also here with questions, Fox News contributor Mara Liasson of National Public Radio.

Senator Levin, first let me get you to assess the South Korean proposal, which is that the United States somehow would guarantee security for North Korea and at the same time North Korea would promise to abandon nuclear programs, including uranium and plutonium enrichment, we would get energy supplies, U.S. oil and Chinese oil, back in, and presumably get out of this mess.

SEN. CARL LEVIN, D-Mich.: Well, it may or may not be an advance. We ought to not prejudge it. We should do what we have not done enough of, which is to work with our allies, the South Koreans, to work jointly with them.

We've behaved much too unilaterally. We've made announcements as to what our positions are without consulting with them. We pulled the rug out from under their current president just before he came to Washington, at the beginning of the Bush administration, by saying we're going to no longer negotiate with North Korea, when those negotiations had already taken place and had had some successes.

So, I think what we ought to do is welcome South Korea making these kind of suggestions, saying we want to cooperate with our allies, and end this appearance that we have too often created, that we're the senior partner and that South Korea's the junior partner.

SNOW: Well, if South Korea is in fact an equal partner, why is it behaving like a junior partner in deferring to the United States? Because the plan does not explicitly call for North Korea to consult South Korea. I'm perplexed by this.

LEVIN: Well, we don't know what the details of the plan are, but we should welcome South Korea being involved this way, making suggestions.

Instead, the administration, at least half the time, has said we're not going to have any discussions with North Korea, we're just simply not going to talk with North Korea. That is wrong.

SNOW: Which raises the question, James Kelly, who's the assistant secretary of state for Asian affairs, is going over there probably next week. Do you think he should, as he did last October, meet with the North Koreans?

LEVIN: I think we ought to be willing to talk to the North Koreans. We've cut off those talks. We said we're not going to talk unless our conditions are met. We always ought to be willing to talk, particularly in a situation as dangerous as that.

That does not imply capitulation. It doesn't imply concessions. It just simply means face-to-face we're going to discuss the differences -- and they are major -- that we have with North Korea, in order to avoid miscalculation, in order that they can hear from us face-to-face what our problems are with their behavior.

LIASSON: Senator Levin, President Bush says -- the administration says they're following a policy of tailored containment for North Korea. Do you understand what that is, and do you think it's the right approach? And how is it different than the situation in Iraq?

LEVIN: It's just a phrase. Not only don't I understand it, but more importantly the South Koreans don't understand it, weren't consulted. And when they heard about it through the media, they said that they were skeptical about it.

Now, that is not partnership. That is not dealing with friends and allies as equal partners. That's making these announcements and these proclamations, these new policies unilaterally, and then hoping that the South Koreans will be supportive.

Their response was very specific, that they were skeptical of that kind of a policy. These are our allies, we ought to be dealing with them as allies and not as junior partners.

MARA LIASSON, FOX NEWS: Do you see a difference between North Korea and Iraq? The president certainly seems to.

LEVIN: Well, there's a lot of differences...

LIASSON: In terms of the crisis it presents the United States?

LEVIN: I think there's crisis in both places, and suddenly now the administration says there's no crisis in North Korea. Well, there is a crisis in North Korea.

First of all, they've been the major proliferator, much more than Iraq. They've proliferated missiles. And these are very, very dangerous proliferations. North Korea has been a proliferation regime. We know they have weapons of mass destruction, all three types. They've kicked out the inspectors.


LEVIN: Suddenly, this administration says there's not a crisis in North Korea, three weeks after saying there's a major crisis in North Korea.

This isn't a policy; this is just lurching from one position to another. It's a serious matter. We ought to be dealing with allies. I'm delighted to hear the president now says we're going to be doing this diplomatically, that we ought to be focusing more on that in both places.

SNOW: Senator, you said something there just a second ago, that they have all three weapons of mass destruction. You believe they have nuclear weapons now?

LEVIN: Yes. North Korea?

SNOW: Yes.


SNOW: OK. And how many?

LEVIN: Well, the reported number -- and I don't want to go beyond that, since I'm a member of the Intelligence Committee -- so I'll go by the media reports that say two or three.

SNOW: OK. And now, the way this unfolded -- help me out here -- Mr. Kelly went over, and he was speaking with the North Koreans last year and he said, "We're willing to extend diplomatic recognition, we're ready to start doing economic cooperation, but there's one problem: You guys have been lying to us. You have been enriching uranium on the side. You shut down your plutonium, but now you're doing uranium. You found a loophole."

Isn't it true at that point that the North Koreans broke off the talks?

LEVIN: I don't think so. I think we said we would not talk freely with them until they change their behavior. We want them to change their behavior, but one way to get people to change their behavior is to tell them why it's essential to do so and to do it directly and not through some third party.

SNOW: Do you think, in cutting off those talks, the United States made things worse?

LEVIN: I think we made a mistake. We've been erratic, and it's very difficult for anybody, including our allies, to understand what our policy is relative to North Korea.

SNOW: What's a bigger threat to us now, North Korea or Iraq?

LEVIN: Probably North Korea is more of a threat because we know they have weapons of mass destruction. They've kicked out the inspectors.

They have used a fourth weapon of mass destruction. Sometimes people say Iraq has used chemicals, which they have, against their own people, and they are clearly a major threat and a major danger. But North Korea has used a fourth weapon of mass destruction called starvation. They've killed a million of their own people through starvation.

They are a very threatening regime. We have 38,000 troops there. They can do major damage to Seoul with 100,000 artillery tubes (ph) within shooting distance of Seoul. That makes them, it seems to me, even more of a threat than Iraq, but I don't want to minimize the danger of Iraq.

The bigger threat, frankly, of all is the terrorist threat. Much greater than either Iraq or North Korea, but this administration seems not to acknowledge that the greatest threat of all is the terrorist threat, but instead has this total focus on Iraq.

LIASSON: So you think the administration has its priorities wrong?

LEVIN: I think that they're all -- they're three major threats: We've got terrorism, number one, and then we have, I think, North Korea and Iraq.

SNOW: Senator, I want to get to all of those. Quickly, to wrap up on North Korea: Should we -- would it be unwise to roll (ph) out a military option if, in fact, North Korea is a greater threat to us than Iraq?

LEVIN: Unroll a military option where?

SNOW: The United States in North Korea.

LEVIN: We have a military option. I don't think we ought to focus on that. The president is right in saying we're not now focusing on a military option in North Korea, and I'm glad he is. He's using a diplomatic approach that is the correct approach. But he ought to be consistent and stay with it and not lurch from one end to the other.

SNOW: Now, a couple of weeks ago when asked about this, the Secretary of Defense Donald Rumsfeld characterized our military capabilities, specifically when it comes to fighting two wars at once. Here's what he had to say.


DONALD RUMSFELD, SECRETARY OF DEFENSE: We are capable of fighting two major regional conflicts. We're capable of winning decisively on one and swiftly defeating, in the case of the other. And let there be no doubt about it.


SNOW: True or false?

LEVIN: I think it's likely, but that isn't the problem with that statement. The problem is that he just said we're capable of attacking North Korea without saying, "That's not in our plans." And so North Korea reads that as something very threatening. Just like our preemptive strike policy. They see that as very threatening to them.

And so when you combine a statement that we will preemptively strike a country which is not an imminent threat to us with a statement that we just heard, that we are capable of carrying out these two wars at one time, they become -- in their view, we don't agree with it, we think they're way off the mark -- but nonetheless, in their view, they feel threatened about it.

So the problem with the statement isn't its accuracy, in my opinion. The problem is that it is used boldly and, it seems, aggressively, without putting it in a context which is, "Wait a minute, we have that capability, but that's not where we're at, folks." We're on a diplomatic course with North Korea, so we shouldn't talk about the military option without putting it in the larger context.

LIASSON: Do you think the rhetoric like that from the administration is what caused North Korea to takes its recent actions, to kick out the inspectors and restart that plant?

LEVIN: I think it increases their paranoia. I think it plays right into North Korean paranoia, the language and rhetoric of this administration.

LEVIN: And they've used the rhetoric of this type, this kind of unilateralist, aggressive rhetoric in other places, and that's why Laura Bush, the president's wife, the first lady of this country, on the record has told her husband, "Tone it down, darling."

And you know what? I think the administration would do well to listen to Laura Bush. Tone it down, darlings. The rhetoric is too hot in too many places of the world. It's great that we are strong, that we're the world's only super power, but we've got to use that wisely and not use the rhetoric which is so inflammatory.

SNOW: I want to move quickly to Iraq and also terror. Do you think the president has made the case right now, to your satisfaction, politically, militarily, morally to the American people for war against Saddam Hussein?

LEVIN: No, I don't think that we ought to be saying that we're going to war against Saddam or that it's inevitable. We ought to be pursuing these inspections. We ought to be working through the U.N.

The president finally, finally decided he was going to work through the U.N. It was the right thing to do, and we ought to stay on that course. We should not prejudge the outcome of these inspections. That date of January 27th is not the end date. This is not the fourth quarter of some football game.

These are inspections that are just beginning. We have just begun to share information with the inspectors. That process is just beginning. We have a mass of material, and we've just begun to share that material.

SNOW: Well, here's the thing of most interest. You have pointed out, North Korea has chemical, biological, and nuclear weapons. Do we have solid evidence that Saddam Hussein has all three?

LEVIN: We believe that Saddam Hussein...

SNOW: That's not the same. Do we have solid evidence?

LEVIN: We have evidence, not conclusive evidence that he had chemical and biological weapons. We do not have evidence that he disposed of those weapons, and so we've reached the conclusion that he still has chemical and biological weapons. We do not believe he has nuclear weapons.

LIASSON: Does the administration have to come forward with that evidence to convince the international community if it does want to go to war?

LEVIN: I think it probably will have to. And the more it prejudges the outcome of inspections, it seems to me the less credibility we've got when it comes to that time.

But it is critically important that, if we attack Iraq, that there be an international community behind us, that the U.N. authorize that attack.

It seems to me the risks of proceeding unilaterally, and I define that as meaning without the support of the United Nations, are high risks short terms in terms of casualties in Iraq, the response of Saddam Hussein, the likelihood that he would finally capitulate, and long term in terms of a terrorist response being increased if we proceed without the authority of the world community as spoken through the U.N.

SNOW: Is Al Qaida stronger today than it was on September 11th, 2001?

LEVIN: Stronger, probably, not more scattered, I would say. But it's clearly there and still strong and much too strong.

SNOW: There's some allegations that Osama bin Laden, for instance, may have access to freighters and other naval vessels that could really inflict damage on our forces. Is that true?

LEVIN: I don't know.

SNOW: Do we worry about expanded military capabilities on his part in terms of hitting the United States?

LEVIN: Always.

SNOW: All right. Senator Carl Levin, one last question. A bunch of Senate Democrats are running for president. Are you?

LEVIN: Well, I think that's the news we're going to make here today.


I'm not. And when a Senator is not running for president, that's news. So, you heard it here first.

SNOW: Got any commitments? Have you made any commitments yet to people running or are you -- it's a little early?

LEVIN: I hope Tom Daschle gets in. I think he'd make a major contribution, but I don't know that he will.

SNOW: All right. Senator Carl Levin, thanks for joining us.