This is a partial transcript of "The Big Story With John Gibson," Nov. 16, 2004, that has been edited for clarity.

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(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: We're not fighting with America in Iraq because we are their allies. We are their allies because we believe that their fight against terrorism is our fight too, because if they fail, we fail.

(END VIDEO CLIP)

JOHN GIBSON, HOST: British Prime Minister Tony Blair (search) trying to rebuild bridges between Europe and the U.S. Perfect time for French President Jacques Chirac (search) to mock Blair, saying we owe Blair some big-time favors for supporting the war in Iraq, and Jacques telling Tony not to hold his breath, because the Americans don't usually bother to return any favors.

I am joined now by James Harding (search), Washington bureau chief of the London's Financial Times.

James, I'm trying to figure out who was Chirac insulting more vigorously. He kind of played into this mocking tone about Blair that he's George Bush's poodle, and at the same time saying America doesn't return any favors. How is Blair taking this?

JAMES HARDING, FINANCIAL TIMES: I think Blair is taking it fine. I agree with you, John. It is a really perplexing thing that Jacques Chirac has done, particularly at this time, in that he makes a fair point. He makes the point that Blair hoped to get more out of Bush than he probably has on the Middle East.

Blair came here last week. He didn't get a conference on the Middle East. He didn't get a Middle East envoy. But he got very strong words of commitment from the U.S. president to push as hard as possible towards a two-state solution.

So why now make, as you say, a slap in the face of Tony Blair and a punch on the nose to an emboldened and empowered U.S. president? It's a very, very puzzling thing for Jacques Chirac to do. But then, he's not always played diplomacy in the most straightforward and sensible ways.

GIBSON: He calls, I mean, referring to the French and British relationship, he called it a violent or turbulent love affair between the French and the British. Wouldn't the British, at the very least, arch an eyebrow at that characterization?

HARDING: I think, I think, look, the fact is that I think it's fair enough to say that across the English Channel, things have been stormy over the last few hundred years.

But I think the bigger issue is that this is a big opportunity for the Europeans to come together. And it's worth thinking about this in the European context. There is a battle, clearly, within the European Union for influence and stature. And Jacques Chirac is still fighting that argument. And this is part of what this is about.

But the bigger issue is, this is a great moment for the French to sort of get over their problems with the Bush administration and use the opportunity of the Middle East to work together. And it seems as though, in this particular interview, and in this set of comments, they've rather squandered that opportunity, because, as you say, the point that is most damning is that the Americans are not the kind of people to repay favors.

GIBSON: Well, and he went on to say, That fellow, I forget his name...

HARDING: Yes.

GIBSON: ... and he's talking about Donald Rumsfeld (search), very pointed slap at the secretary of defense, I forget his name. Nobody believes that. Why go to all that trouble to insult the head of the Pentagon?

HARDING: You've got me. I am perplexed about that. I'm completely puzzled by that. But I suppose the bigger issue is the point, is the point, what is Blair getting out of this relationship with Bush? And I think your clip right at the beginning is really apt. I think those people who look for payback, who say Blair is in this in some way to curry favor with the Bush White House, have just got it wrong.

On this, in this case, the president talks about Blair having done what he saw as being in the best interests of the U.K. And I really think that's true. I think Blair believed that Saddam Hussein (search) was a threat and that Saddam Hussein had to be taken out. And he believed after 9/11 it was time to be preemptive, be on the front foot, and that's why he did what he did.

Of course, the one thing he has got from his relationship with President George W. Bush (search) is an absolute hammering in his domestic poll ratings. Bush's popularity has suffered enormously for his friendship with George W. Bush.

GIBSON: Blair's.

HARDING: Yes. Of course.

GIBSON: Yes. Now, by the way, why is it that the most — that Blair needed to get some sort of effort on the Palestinian question? Why is that the make-or-break thing for Tony Blair to get a favor returned from George W. Bush?

HARDING: I think for two reasons. One is, I think that Blair genuinely sees a resolution of the Middle East peace crisis as absolutely essential to both his and President Bush's broader goal of generating democracy and confidence in the U.S. purposes in the Middle East.

And so I think there was an ideological reason for it. There's also a very practical political reason at home, which is that there is a suspicion in the U.K. that the U.S. is not evenhanded in its dealings with the Middle East and with the Muslim world, but it's willing to go into Iraq for a bunch of reasons, but not willing to address a more fundamental grievance...

GIBSON: But James...

HARDING: ... that many people in the Arab world share with...

GIBSON: Doesn't, do the British...

GIBSON: ... remember President Clinton's deal with Ehud Barak (search) and Yasser Arafat (search) that Arafat turned down? What do they want a U.S. president to do?

HARDING: Well, I, you're, you're absolutely right. I think they do. And I think they were very disappointed. The British argument, or to be more accurate, the European argument was that Yasser Arafat did not have a viable Palestinian state. And again, this is the position of many people in Europe that at every stage, the U.S. Will back Israel on this issue rather than the Palestinians.

I think in this particular case, what they are looking for is evenhandedness. And I think that that's what Blair is pressing the U.S. president to show.

GIBSON: All right. James Harding from the Financial Times. James, thanks very much. Appreciate it.

HARDING: Thanks, John. Good to see you.

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