This is a partial transcript of "Special Report with Brit Hume", April 7, 2004 that has been edited for clarity.

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(BEGIN VIDEO CLIP)

DEFENSE SECRETARY DONALD H. RUMSFELD: Well, now the Iran (search) -- Iranians have been meddling. And it's unhelpful to have neighboring countries meddling in the affairs of Iraq. And I don't think the Iraqi people are not going to want to be dominated by a neighboring country, any neighboring country.

(END VIDEO CLIP)

BRIT HUME, HOST: If that comment about Iraq sounds familiar, it might be because you heard something quite similar two nights ago on this broadcast from Fox News military analyst, retired Air Force General Thomas McInerney, who joins me again tonight.

Welcome back.

LT. GEN.THOMAS MCINERNEY (RET.) U.S. AIR FORCE: Thanks, Brit.

HUME: Nice to see you, sir. Well, you did mention that the Iranians were involved. How deep an involvement? How much of a problem?

MCINERNEY: Well, they're very deeply involved. And you may have remembered in some of our talks before, that when we having all the problems up in the Sunni Triangle (search), we're seeing Iran is meddling down south. And they're laying in.

They've got well over three to 400 Iraqi -- Iranian intelligence agents down there. So they are feeding money to Sadr and they will continue. And this will get worse for a while until we really get a good handle on it and take Sadr down.

HUME: Talk to me about the military situation, as you see it now, in Fallujah (search) and down in the south, and around Karbala. And of course, also in Ramadi. What do you see?

MCINERNEY: The situation is we've got two areas of concern, two primary areas up in Fallujah, which the Marines are working on. And they're being successful and they're doing it very skillfully, but with force and they've suffered casualties. And that's a separate issue.

Down south, we have the Sadr cleric and what's he's been doing in his Mehdi army. Now, we're kind of putting that...

HUME: Let me just stop you for a second on this question of the Mehdi army.

MCINERNEY: Yes.

HUME: What sort of an army is it?

MCINERNEY: Well, they're rag-tag thugs. But they call themselves an army. But they're not really an army. They're not really well trained or anything, but they intimidate people.

HUME: Right. So in other words, they're a threat to the Iraqi people around them more than they are to coalition forces?

MCINERNEY: Correct. And we will deal with them. And we will deal with them after the 12 of April, after this very -- the second holiest day in the Shiia religion is going on next Monday. And after that, then we're going to have to deal with them because they own -- they have moved in and seized some of the government buildings in Najaf.

And so it's very important that we take them on at the appropriate time. But because of the pilgrimage, we've laid off on it.

HUME: Because you have got all these civilians in these holy cities.

MCINERNEY: That's correct. And a lot of Iranian civilians that have come over, tourists that have come over; so that place is jammed down there right now. And we have got to handle that very skillfully. But that's what I mean; their time will come.

HUME: What are you hearing about Ramadi? That's where we took casualties yesterday in some number. At least a dozen Marines were killed. The fighting apparently continued up there today. Was that compound actually overrun? What happened?

MCINERNEY: Not to the best of my knowledge and that still isn't clear. The reports are not out, and Secretary Rumsfeld and General Myers today didn't clarify that. And I think they really want to get a clearer picture. I haven't got that clearer picture yet and I haven't heard anybody that does.

HUME: So, but as far as we know, the U.S. Marines are still in charge of the compound there.

MCINERNEY: The Marines are still in charge up there and they've got it under control. And so again, there are two separate areas they're working on. They had to use a 500-pound bomb, a laser-guided bomb up there in...

HUME: Ramallah -- not Ramadi but Fallujah, right?

MCINERNEY: Fallujah. And they didn't hit the main mosque, but it's a very significant event, Brit. We send a signal to them that in accordance with the Geneva Convention (search), if you fire from a mosque, then we are authorized to attack that mosque and they fired mortar fire and RPG's. That's pretty significant.

HUME: Well, apparently what they hit was the outer wall of the mosque, right?

MCINERNEY: That's correct. That's correct.

HUME: They didn't hit the building itself. And that all obviously was by design.

MCINERNEY: That's by design. And see, they're being very skillful on what they do in Fallujah. The Marines -- but they're using an iron fist, but it's very directional.

HUME: Now, you hear from Americans, I see it in the e-mails, you hear it from various people that we ought to just level the place. Or perhaps that we ought to be much more aggressive, many more troops needed.

That perhaps we lack sufficient force to either carry out this mission or to maintain control once we have. What is your take on that?

MCINERNEY: Yes, I don't believe that take. I believe what they're doing -- we have the forces. We're not looking at large numbers of forces out there. And although they're around in six different places in the country, it's not large numbers.

Up in Fallujah, it's not large numbers. We have the force. We have the firepower. It is very important how we do this. And I believe what I've seen so far; they're doing it the right way, so they don't antagonize the general population. They do not enable the majority of the Shiias to turn toward Sadr with sympathy. And so they're doing it very skillfully. It is very crucial how we do this.

HUME: How much more of this can we expect?

MCINERNEY: Well, it's going to get worse. And now when I say worse it's going to be more intensive fighting and I think it for two, three, four weeks.

HUME: All right. Tom, thanks very much. Glad to see you.

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