This is a partial transcript of The Big Story With John Gibson, June 2, 2004, that has been edited for clarity.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: We had a relationship with Mr. Chalabi. We had a relationship with a number of Iraqi organizations that were devoted to the overthrow of Saddam Hussein (search), but Mr. Chalabi's future in Iraq is up to the Iraqi people.

(END VIDEO CLIP)

JOHN GIBSON, HOST: National Security Adviser Condoleezza Rice (search) discussing ties to Ahmed Chalabi (search) this morning on "Fox and Friends." She refused to comment on charges that Chalabi may have betrayed America.

The FBI is looking into reports that Chalabi told Iran about the U.S. cracking Iran's top secret communication codes. Mike Baker is a former CIA covert officer. Mike, today's big question, how much damage could Chalabi have done to our national security if he did reveal this secret?

MIKE BAKER, FMR. CIA COVERT OPS OFFICER: Well, if the allegations are true, it could be significant damage. And for a short while now there's been a concern that Chalabi may have compromised what would be referred to as code word information and possibly led on that we may have had access to Iranian code communications.

GIBSON: Mike, maybe you can tell me how this would go down because the newspaper story that made us all aware of this this morning is that Chalabi was talking to a CIA agent who was drunk and revealed to Chalabi that we understood the Iranian codes and could decipher their secret communications, and that is how the secret slipped out.

BAKER: I wouldn't want to speculate on that because right now I'm sure they're doing some significant damage assessment, and they're carrying out an investigation with a variety of people, so I wouldn't want to touch on speculation.

GIBSON: Never mind how it happened. If Chalabi gained the information, and simple information, we can listen, we can read secret Iranian cables and we think Iran is playing a hand in Iraq somehow and they now know that, how does that hurt us?

BAKER: That's a problem obviously because there's always the assumption. Whether it's the Iranians, whether it's us or anyone, there's always the subjects in intelligence that you're trying to read the other person's mail, listen in to their communications. So people work on that assumption and try to protect their communications. If, in fact, this allegation is true, then that closes an avenue of intelligence for us in a major way. It also then puts into play, as I mentioned before, a damage assessment. You'll have to look at our assets at risk, are people's lives at risk who may have been involved in a particular operation for us?

GIBSON: Or, more importantly, are we now blind as to what the Iranians are up to as they try to destabilize Iraq?

BAKER: Well, it would be a significant problem, but I wouldn't say it would be blind to say that that's the only possible source of information would probably be a little too pessimistic.

GIBSON: A little much.

BAKER: Yes, a little much.

GIBSON: Look, if the Japanese knew we broke their codes, we wouldn't have been able to kill Admiral Yamamoto, was it, in the South Pacific. This is a very important bit of business, and we've been keeping an eye on the Iranians as they supported Muqtada al-Sadr (search), as they supported Ansar al-Islam in the north, trying to destabilize Saddam Hussein. So don't we really need to know what the Iranians are up to across the border?

BAKER: We do. A lot of people are getting on board with this now and starting to realize in terms of outside problems in Iraq, Iran is at the very top of the list in a number of ways. They're causing all kinds of trouble inside that country. And it is definitely — from their perspective, their advantage to see a chaotic environment. The last thing they want to see is a Democratic and stable Iraq. If, in fact, Chalabi's activities have closed off one particular avenue of intelligence for us, then, yes, it is a serious situation.

GIBSON: Mike Baker, former CIA operations officer. Mike, it's always good to talk to you.

BAKER: Thank you very much.

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