This is a partial transcript from Your World with Neil Cavuto, September 23, 2003, that was edited for clarity.

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NEIL CAVUTO, HOST: President Bush says that it is time that Arab nations cut off all funding for terrorist organizations, but has the administration been trying to conceal information regarding its own links to Saudi Arabia (search) and maybe indirectly Saudi terror?

The Senate’s Governmental Affairs Committee holding a private meeting today on combating terrorist financing. Its chairwoman, Senator Susan Collins of Maine, joins us now from Washington.

Senator, good to have you.

SEN. SUSAN COLLINS, R-MAINE, GOVERNMENTAL AFFAIRS COMMITTEE CHAIR: Thank you. It’s nice to join you.

CAVUTO: Do we know what’s going on with Saudi Arabia?

COLLINS: We don’t in its entirety, but what we do know is there are a number of organizations, including Saudi charities (search), that have been used to funnel money to terrorist groups like Hamas and Al Qaeda (search), and that’s very troubling to me.

It was just two years ago that the president on this very day signed an executive order that was intended to curb the flow of funds to terrorist organizations.

CAVUTO: But are we just looking the other way, or is there something to this?

COLLINS: I think what has happened is that the Saudis keep saying that they’re going to cooperate in cracking down on front groups that are providing funds to terrorist organizations, but the rhetoric really hasn’t been matched by strong action.

There’s been some progress since the bombings in May in Riyadh, but, still, I am a skeptic. The administration has more faith in the Saudis than I do.

CAVUTO: So you think the president’s not doing the right thing with the Saudis.

COLLINS: I wouldn’t say that. I think the interagency task force is very serious about cutting off the flow of funds to terrorist groups, but I think they’re being a little easier on Saudi-related organizations, and they believe by asking the Saudi government to crack down on these charities and other groups that that is the best approach.

I think that the Saudis have such a checkered history when it comes to supporting the funding of terrorist groups that I would prefer to see our administration take tougher action.

CAVUTO: All right. The tougher action -- there’s really no middle ground here, as you know, Senator. I mean the tougher action would be relying a heck of a lot less on their oil or not relying on the oil at all or really making them feel in the pocketbook. Invariably, it kind of hits us in the pocketbook more.

Do we just have to face up to the fact that many of them might just be phony when they say they like us, phony when they say they’re our dear friends, phony when they say they’re looking after our interests? Can we trust them? What do you say?

COLLINS: I think the Saudis for years have played a double game, that they tell Americans and our government what they think we want to hear, but, at the same time, they encourage anti-American, anti-Semitic behavior by their population.

Now there’s been some progress lately with the Saudis cracking down on some extremist clerics, but, still, they have a curriculum in the schools that teaches hate and that is a breeding ground for future Usama bin Ladens.

CAVUTO: Have we ever thought of just cutting them off period? Now I know we need their oil, but no one takes that next step, Senator, to say, look, these guys are zinging us here, and the only way to respond to it is just call a spade a spade, they’re not our friends, they act like schmarmy little worms, let’s just deal with it and move on.

COLLINS: Well, that wouldn’t be the most diplomatic approach that I could put forth…

CAVUTO: But, see, that’s my point, Senator. We’ve been too diplomatic about it, when we know that 19 of the terrorists came from Saudi Arabia, when we know that money is funneled through charities and organizations that support Hamas and Hezbollah, and we just turn the other way.

COLLINS: Look, I think we do need a tougher approach. I don’t think that any country, much less one that claims to be an ally, should receive a pass when it comes to funneling money to terrorist groups that target our citizens.

CAVUTO: So what do we do? I know what you’re saying, Senator, but here’s the rub. We don’t do anything. We express outrage at the fact that they might be pulling these stunts off, but we don’t do anything about it and I think it always comes back to economics. We need them, we need their oil and we put up with this craziness.

COLLINS: Here’s what I think we ought to do. I think that we have very solid evidence against some Saudi individuals and organizations and that we should list them as financiers of international terrorism. That leads to an effort to freeze their assets, to prevent the flow of funds in and out of bank accounts.

I think that would send a very strong signal, and rather than waiting for the Saudis to take action, something that I’m very skeptical that they will do effectively, I think we should act now.

CAVUTO: All right. Senator Susan Collins, thank you. We’ll see where all of this goes. I have my worries. Thank you, Senator. Appreciate it.

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