This is a partial transcript from "The O'Reilly Factor," April 1, 2004 that has been edited for clarity.

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BILL O'REILLY HOST: Now for the top story tonight. What specific strategy should be used in Fallujah?

Joining us now from Washington, Lieutenant Colonel Ralph Peters (search), author of the book, "Beyond Baghdad: Post-modern War and Peace." All right, colonel, I'm putting you in charge of the U.S. Marines who I -- you know, anytime now are going to go in there. What would you do?

LT. COL. RALPH PETERS, U.S. ARMY (RET.): Well, as you observed, we're paying the price for not declaring martial law and coming down hard in the beginning a year ago. Didn't have enough boots on the ground.

Now we face the problem. What would you do? We made a mistake yesterday. I understand why they didn't go in yesterday. They didn't go in because they were worried about ambushes, didn't want to go pell-mell as the general said today.

But the message that sent to the bad guys was that we are afraid to go in. That's how they read it. Well, you got to make up time. You need to go in heavily. And you need to permeate the town, saturate it with Marines (search) and call in the Army. If you have to call in -- if you have to strip away Paul Bremer's bodyguards you do it.

They need to feel the U.S. presence. Now you don't kill people indiscriminately, but we need to make up for the imbalance in the past when we try to use all velvet glove and no male fist . You take privileges away from the whole city and you make them earn them back. And in the meantime, you come down hard on the terrorists.

Bill, even in Fallujah, there are people that don't support the terrorists, but what would you do? You may not support them, but hey, they're in control in that city. And we're on the outskirts appearing to be afraid to go in. Sometimes you take risks.

O'REILLY: Listen, I agree with you. And I think most -- 90 percent of the people watching you right now, colonel, say we don't understand why the U.S. military, the Pentagon, has been so reticent in going into a place that they know beyond a doubt is the source of about 90 percent of the terrorism. This is where they're hiding out.

Now as you said, by not going in yesterday, now they're emboldened again. Now let's assume that tomorrow -- let's assume tomorrow, the U.S. Marines go in. What do they do? Search every house? Round up people? What do they do?

PETERS: Well, what they do specifically will depend upon the intelligence they have. Certainly they'll search a lot of houses. And you've got a lot of people on tape. Look for the people you've got on tape, killing people, desecrating the bodies, etcetera.

But you really -- and I can't stress this enough, Bill. You have to have cops on the beat. Every time a resident of Fallujah turns around, I don't care if they're going to the latrine, they need to see U.S. troops. And they haven't seen them.

Immediately after the war, the war didn't touch Fallujah and Tikrit. It really didn't. The Sunni Arab supporters of Saddam never really felt beaten. And in the occupation that we pretended wasn't an occupation, didn't declare martial law, they never really had a sense that we were serious.

Now we need to make up for lost time. So get in there, stay in there. Don't retreat. You've got to show strength, resolve, determination, call it what you will. You cannot shut down.

O'REILLY: All right, now the dissenters took the hard line that I'm taking and you're taking say whatever we do in there, al Jazeera is going to put on their propaganda network. And then they'll hate us more in the Middle East. They'll hate us more in Iraq. So that we have to go in and we have to do it half-heartedly. We can't go in with martial law or barbed wire or kicking in doors because they'll hate us more. Do you buy any of that?

PETERS: No -- yes, Usama bin Laden might get mad at us. No, I don't buy it. Look, success is always forgiven, however grudgingly, but an American failure is remembered and haunts us for years even -- and you know, we've had bipartisan failures.

President Reagan in the shadow of Vietnam pulled us out of Beirut after the Marine barracks were bombed. President Clinton declared defeat in the face of victory in Mogadishu, did nothing after the Africa bombings, the Cole bombings, other incidents.

And I was in the Pentagon in the executive's office of the president then. The Clinton administration did nothing. You've got to lean forward. You've got to swing. And sometimes you take some hits. Don't worry about what your enemies -- whether or not your enemies love you. Impress your enemies with your determination, resolve and the pursuit of justice.

O'REILLY: All right, a town of 200,000 people there.

PETERS: Three hundred thousand, yes.

O'REILLY: Our research says about 200,000.

PETERS: OK.

O'REILLY: I mean, you might be right, but that's what our research says. Right now...

PETERS: A high birthrate.

O'REILLY: About 200,000 people in that town. Put barbed wire around the town and in and out, ID cards, martial law, what do you do?

PETERS: That's a very good question, because as we both know, it's easy to sit here and criticize.

O'REILLY: Right.

PETERS: On a practical level, yes, you make an example of it. You close it off. And instead of trying to reward them by building more playgrounds, you ration electricity. Start with half an hour or an hour a day. Make sure it gets to the hospitals, etcetera. Ration water. And make them earn it back. And the world will scream. The world will cry out and complain no matter what we do.

We need to win. And you know, God help us, Donald Rumsfeld and his wonder boys wanted to pretend this was all -- magically going to go away. It's not going to go away, especially in an election year. In this election year, our enemies, as we saw in Spain, they're going to try to embarrass us in Iraq and hit us here at home. Bill, we both wish the world were otherwise, but sometimes you've got to fight and fight hard and not stop fighting.

O'REILLY: Yes, well, listen, I spoke to the Marines before they left Hawaii in November. And I know they can do the job.

PETERS: You bet.

O'REILLY: It's not a matter of the U.S. servicemen can't do the job, and women. It's a matter of the will to win in the Pentagon. And I have not seen that will to win after the war. I saw it before. But in the occupation after, I have not seen the will to win. Are you seeing what I'm seeing?

PETERS: I'm seeing exactly what you're seeing. Donald Rumsfeld does some things very, very well, but he, and especially his cabal of whiz kids, who never served in uniform themselves, and whose kids don't serve in uniform, they always know better than the people in uniform. And it's sad. And we're paying a price for civilian vanity. All right, yes, I love civilians. I am one now.

But our military can do the job. But they've got to know they've got the backing. Look, sometimes things go wrong. Sometimes innocent people get killed. And instead of court-martialing people, you suck it up and move on. I'm not talking about mass atrocities. I am talking about rationally, judicially, but aggressively doing what needs to be done.

O'REILLY: Well, this is a crossroads in Iraq right now...

PETERS: You bet.

O'REILLY: the next couple of days.

PETERS: You bet.

O'REILLY: And we'll see what happens.

Colonel, always a pleasure to speak with you. Thank you very much.

PETERS: Thank you, Bill.

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