This is a partial transcript from Your World with Neil Cavuto, March 3, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Reaction now from the man who shepherded New York and some say the nation and the world through that horror. With us now, I'm happy to say, former New York Mayor Rudolph Giuliani.

Mayor, good to have you.

RUDOLPH GIULIANI, FMR. NEW YORK CITY MAYOR: Nice to be with you, Neil.

CAVUTO: What did you think of this guy's capture?

GIULIANI: I thought it was a very significant step and one that should give us some confidence that the whole effort against Al Qaeda is moving along. It's moving along with patience, deliberation. And if you see it as part of a group of things that have been done, going back to 2001, in September and October when the assets were seized, which really was very significant, and then the people who have been arrested, it shows that they're proceeding the way the government dismantled organized crime.  It reminds me of those efforts back in the '80s where you went after the assets and you went after the key operatives, as many as possible in order to dismantle it. And of course it would take a period of time to do that.

CAVUTO: All right. But we still have fears out there. Do you worry that some people interpret this as a sign, OK, I can let my guard down?

GIULIANI: No, just the opposite. I think that this is a continuum, in other words, this is a step along the way, a significant step, one in which you basically arrest someone who was obviously a significant operative, a guy who had a lot of capability, a lot of expertise, he's not going to be easily replaced. He is going to be replaced but he's not going to be easily replaced. So the vigilance has to continue. And I'm sure there will be other arrests.

CAVUTO: What is your view of the Al Qaeda network right now?

GIULIANI: Well, obviously a lot weakened from what it was before Sept. 11, 2001, financially weakened in terms of assets taken, people arrested, people disrupted, the war in Afghanistan had an impact on it. So it's still an operation that has to be feared. And it's still an operation that is very risky. And there's still a lot of other people to pursue. But I think the government has made a lot of progress. Remember back in September of 2001, the president said this would be a long-term effort. This is not going to get done in a year or two. It is going to take three or four or five years of sustained effort. There will be some victories that will be public and there will be some victories we would never know about. Well, this is one that we know about. This is one that's public.

CAVUTO: The president has been saying, look, just because I'm focusing on Iraq now doesn't mean I've lost focus on Al Qaeda.

GIULIANI: Absolutely. I think the president has kept up the focus on both, which he has to do. The president's focus is on ending global terrorism. You're not going to end global terrorism just in Afghanistan.  You're not going to end global terrorism just in Iraq. You're not going to end global terrorism just by concentrating on Al Qaeda. You have to have a multifaceted approach. And it shows that the effort against al Qaeda has been very, very intense and hasn't lessened just because of the concentration on Iraq.

CAVUTO: But it's interesting, there. You have just recently had your book, Leadership, published in France, you were in France. There's a great deal of opposition in that country. Are you surprised the vehemence this is getting pretty much across the globe?

GIULIANI: Disappointed. Because I remember in the days after Sept. 11, and in taking many of the word leaders to the site of the World Trade Center, to ground zero and their reaction to it. And I remember President Chirac, his reaction to it. I remember Chancellor Schroeder's reaction to it. And they were very, very moved and could very much see that the kind of thing that happened to us could happen to them.

CAVUTO: But apparently neither of those gentlemen saw the connection between what happened there on Sept. 11 and Iraq. That's why they're by and large saying, we don't buy it.

GIULIANI: The connection is there is terrorism. The connection is not necessarily to one event, but it's to those places and those countries that support terrorism and make terrorism possible.

CAVUTO: So that's all that Rudy Giuliani would need to attack Iraq?

GIULIANI: Well, that's what we need in order to try and dismantle Iraq's ability to use weapons of mass destruction, biological and chemical weapons. The president's goal, remember, has been to end global terrorism by political means, economic means, intelligence, counter intelligence and military means only if necessary. So the reality is it doesn't always mean military action. And this particular case, Saddam Hussein still holds the key to avoiding military action.

CAVUTO: Are you surprised, Mayor, that now what, a year-and-a-half after the fact, New York is in worse shape than it was back then and that despite getting earmarked for better than $20 billion worth of federal aid it is running record deficits?

GIULIANI: That is really more a function of the economy than it is...

CAVUTO: Even with all that money?

GIULIANI: Sure. The deficit in New York is roughly the average deficit that cities and states are running all throughout the country.  Some have higher as a percentage of their tax base, some have lower. If you see a turn around in the economy and you're going to see a marked improvement in the situation for New York and for...

CAVUTO: But is the way to correct that, sir, raising taxes? Many conservatives have argued that bothers them.

GIULIANI: My approach, facing a similar situation, my approach in theory and philosophy is you're better off lowering taxes. I think you stimulate an economy.

CAVUTO: That's not happening.

GIULIANI: You stimulate an economy. But that's my philosophy.  People have different philosophies and different ways of looking at it.  And I think the president's approach is the correct one.

CAVUTO: Let me ask you about the president's approach because on the economy it is a big concern of his, but he has got this Iraq issue, he has got Al Qaeda. Do you think that his poll ratings, as high as they are, they've come down from those heights, that he's in trouble in a couple years, a year from now actually?

GIULIANI: First of all, I think the president will be reelected, I think he has already proven to be a great president in the way he's gotten us through Sept. 11 and the way he's guided the effort on terrorism where he's remained very, very steady, very focused and very consistent as some of the politicians have moved back and forth. But of course nobody can predict what the political issues are going to be a year from now. The president has a great team. I can't think of a team that would be any better for guiding the country right now.

CAVUTO: Well, there are a lot of people who would love to see you on that team. There had been talk that if Dick Cheney stepped down, you would be a perfect running mate.

GIULIANI: The team we the president has is about as good a team as I've seen guiding the country, and it's guiding the country through one of its most difficult times. So I hope and pray that it stays together. And politically no one knows what the landscape is going to be a year from now.

CAVUTO: But what about for you, the political landscape?

GIULIANI: No one knows that at all.

CAVUTO: You must think about it, right?

GIULIANI: Not really, it's in the future. Right now, the present is the business that I'm in and doing consulting work and investing and also doing a certain amount of lecturing and speaking. And I'm working on a second book so I'm pretty busy right now.

CAVUTO: Your first book is still on the best seller list, chill a while.

GIULIANI: I will. I will a little bit.

CAVUTO: Let me ask you if you don't mind, you risked literally life and limb going down to Mexico when there Colombian terrorist groups who were reportedly after you, to either kidnap you or kill you. You still went. So are you still the kind of hell-bent guy that you were when you were running New York City?

GIULIANI: I don't know if I would describe myself that way. The reality is we're doing a whole engagement for Mexico City with the businesses in Mexico City to try to reduce crime.

CAVUTO: But you knew that there were people who wanted to kill you?

GIULIANI: Yes, I also knew that there was protection and there were ways of handling it and so.

CAVUTO: But you didn't need that grief.

GIULIANI: Well, the reality is that you have to be able to do the things in life that are important, that you feel are important. And I thought we could make an important contribution in Mexico City. And I assessed it and right now it is all working out. So thank God.

CAVUTO: Real quick thoughts, sir, on the new building design for the World Trade Center. You had said, treat it as a memorial. This is anything but exclusively. What did you make of it?

GIULIANI: Yes. I would like to see the plans for the memorial now focused on, to see what's going to be done for a library, museum, interactive exhibit, things that can recapture the importance of the space.  And I still think there's some, you know, room for significant movement in that direction.

CAVUTO: OK. Finally, James Woods, he's going to play you in this Rudy Giuliani movie, what do you think of that?

GIULIANI: I have no idea.

CAVUTO: Are you going to watch it?

GIULIANI: It is not a movie I had anything to do with. And it was done in Toronto rather than New York.

CAVUTO: Right. But he admires the heck out of you. But now there are a lot of controversies about it. Are you going to watch it when it comes out?

GIULIANI: Who knows. Sometimes I do and sometimes I don't.

CAVUTO: Rudy Giuliani, thank you very much, very good seeing you again.

GIULIANI: Thank you.

CAVUTO: The former mayor of New York City, some say the world, Rudy Giuliani.

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