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

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JOHN KERRY, DEMOCRATIC PRESIDENTIAL NOMINEE: And according to the Duelfer report (search), if the sanctions had been lifted in the future, he might have wanted to start it up. But ladies and gentlemen, if you're doing good diplomacy, you wouldn't lift the sanctions. This underscores the failure of this administration's diplomacy.

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PRESIDENT BUSH: The Duelfer report showed that Saddam was systemically gaming the system, using the U.N. Oil for Food program (search) to try to influence countries and companies in an effort to undermine sanctions.

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BRIT HUME, HOST: Analytical observations now from Fred Barnes (search), executive editor of the "Weekly Standard," Mara Liasson (search), national political correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer (search). Fox News contributors all.

Well, the president came out today and admitted yes, the Duelfer report proves that the intelligence I had was bad. But he also argued; as you heard a piece of there that said Saddam was using the Oil for Food program for corrupt reasons. Principle among them, the undermining of the U.N. — continuing U.N. sanctions. Senator Kerry argues, look, good diplomacy keeps the sanctions in place, and keeps Saddam in his box.

So who gets the better of that argument?

FRED BARNES, EXECUTIVE EDITOR, "WEEKLY STANDARD": Well, I actually think President Bush gets the better of that argument. Because we already knew from the Kay report that the inspectors were not going to find any weapons of mass destruction. And they haven't. Now, Duelfer did say he didn't know whether there'd been some that might have gone to Syria. But it sounded like he didn't think there were any. But we already know that. We knew that for months. And when it was first revealed, I think it hurt President Bush politically and otherwise.

On the other hand, what has changed is a scandal, this Oil for Food scandal that was I think money wise, probably the biggest scandal in human history, has now become one of the biggest political scandals. International political scandals in an awful long time, where the French officials and other officials are being bribed with Oil for Food money by Saddam Hussein, so they would work and get the sanctions lifted. And certainly the French, the Russians and the Chinese and others were moving in that direction very, very forcefully. It's a gigantic scandal.

And somehow, I don't think Kerry, for all his great skill and diplomacy, would have been able to stop this freight train that was headed toward ending the scandals.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NPR: Yes.

HUME: Ending the sanctions you mean.

BARNES: Or the scandal, for that matter.

LIASSON: Yes. I think that's right. But I think Fred is right in this report reconfirms what we already knew. Although, I think that all the fresh headlines on it, about the lack of weapons and weapons program, probably hurts Bush. It does remind people, even though it doesn't add any new information.

But I think the Oil for Food scandal is something that the president is smart to pick up on, and hammer on. It shows that the sanctions wouldn't work, which now Kerry is arguing a lot more clearly than he ever has, saying that the sanctions would have worked.

HUME: And were working.

LIASSON: And were working. And with good diplomacy would have worked. I think this whole argument about whether or not we should have gone to war is a lot less important for the future than what do you do preempt threats in the future?

HUME: Oh, I agree with that. But the argument at the moment between the two candidates...

LIASSON: Is definitely a hindsight argument.

HUME: ... especially today was that it was a hindsight argument.

Charles.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, look. I think the report on the weapons it was old news. The new news is on the scandal. And it is the biggest scandal in the history of the world in money terms. Saddam made so much money out of that scandal that he ripped off that he was richer than Teresa Heinz, to put in it context.

(LAUGHTER)

KRAUTHAMMER: And what did he do with the money? We know he bought secret police. He bought influence. He bought weapons. And he bought countries. He bought the French. He bought the Russians. He bought the Chinese. But especially the French, about two billion was sent to French journalists, politicians, oil companies, and it was explicitly used.

And this we learned from Tariq Aziz (search), who was a foreign minister, in return for...

HUME: Yes. He talked to Duelfer.

KRAUTHAMMER: He talked to him and told him the money received by the French was in return for opposing the U.S. in the U.N. on Iraq, and lifting the sanctions. The reason Kerry is saying is absurd is that sanctions were collapsing long before this administration. It was beginning to collapse under the Clinton administration. Barely hanging on. And we now understand...

HUME: What was responsible? In what sense were they collapsing? Was it — were they fraying as a practical matter? Because people weren't enforcing them or were they collapsing because the countries that had endorsed them stopped doing so?

KRAUTHAMMER: No. Practical and legal, the French and the Russians and the Chinese were weakening the terms of the sanctions every year. And the Clinton administration acquiesced because otherwise it would have lost the sanctions entirely.

HUME: Well, couldn't they have vetoed that?

KRAUTHAMMER: It could have, but if no body is going to enforce it, it would been an empty veto. And that's exactly what was happening. It happened under the Clinton administration and it was accelerating. And one of the reasons is we now have learned is because the money was used, the corrupt, stolen oil money was used to buy influence in the Security Council.

HUME: Is it evident from what we saw today that we're going to have — that this is likely to be argued out between these two candidates tomorrow night?

LIASSON: I can't imagine how it wouldn't be. I mean this is what Bush is doing every day. He got a retooled stump speech, much tougher, much more pointed, much more like Dick Cheney's than his performance in Miami. And yes, I think you're going to hear this tomorrow fight.

BARNES: Yes. I think he's going to say look, these French, these are the guys you want to send troops? You really think they were going to send troops? These people who are being bribed?

HUME: Well, now there's a report — there's a book out that's saying that Chirac was prepared to send 10,000, 15,000 troops if Bush let the inspections go on longer. Of course, if you let the inspections go on longer what are you going to do with the troops, I suppose?

BARNES: Yes. I'm not going to read that book. I don't believe it.

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