This is a partial transcript of "The Big Story With John Gibson," Nov. 22, 2004, that has been edited for clarity.

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JOHN GIBSON, HOST: Terrorists in Fallujah leaving behind evidence of their brutality: our troops finding about 20 sites where hostages were apparently held, tortured, and murdered. They found rooms with things like knives and bloody black hoods.

Former Coalition Provisional Authority (search) Advisor Dan Senor (search) joins me from Washington to talk about the discovery and other news out of Iraq.

So, Dan, did we find the beheading rooms? Is that what happened?

DAN SENOR, FORMER SENIOR ADVISOR TO COALITION PROVISIONAL AUTHORITY: It sure looks like it, John. What we found is this sort of, mini Taliban operation inside of Fallujah. It sort of, bolsters the rationale for going in there. You had a real base of operations.

You saw what looked like the beheading rooms or the torture chambers; the Marines discovered one room where there was an American SUV with some explosives that appeared to be being set up for a suicide bombing mission. Another room was a classroom setup, where there were materials for instruction on terrorist attacks.

So, you had building after building with these rooms that clearly indicate that it was a base of operations; a base for hostage taking; a base for launching terror attacks. And what you also had in the city at large were intimidation campaigns. So, people saw this was going on, but they were terrified to wind up themselves, in one of the torture chambers, so they kept their mouths shut.

Now that the terrorists are gone or killed or captured, the facilities exposed, the Marines have been gathering a tremendous amount of intelligence from locals now, who are no longer intimidated and willing to talk.

GIBSON: What sort of intelligence do you mean? Are you dangling the possibility that what we've learned in Fallujah will lead us to Abu Musab al-Zarqawi (search)?

SENOR: What I'm saying is it is very difficult for people like Zarqawi to operate without a base of operations, to organize the attacks, to plan them. What we see now is they had serious facilities; they had real infrastructure in Fallujah.

It's hard for them to orchestrate these attacks repeatedly, as consistently, as comprehensively as they have without these facilities, without this infrastructure. Everyone in these communities knows this infrastructure is there. They turn a blind eye to it because they're scared.

And now that the terrorists are basically gone from Fallujah, for the most part, people are willing to talk. So, it will help prevent the recreation of this terror infrastructure in Fallujah, and makes it harder for it to set up elsewhere, because it takes time.

And so, it really means that the terrorists here are on the run.

GIBSON: Dan, we're seeing reports in the papers that our military leadership is so excited about the success of Fallujah, that they want to press on. They think they can actually eliminate these insurgents. Why was Fallujah such a success? What is it that was so successful about it?

SENOR: Well, a few things. One: as I said, we've seen the evidence that this really was a sort of, terror safe haven, a base of operations. And now that's been wiped out. Two: we've sent a message to the terrorists that we're not going to be on defense over and over; that we were willing to go on offense.

And, three: this operation was at the behest, was under the orders of an Iraqi government, a sovereign Iraqi government under an Iraqi prime minister. It was an Iraqi prime minister that was going on Arabic television explaining the case for why we needed to go into Fallujah.

There's an Iraqi prime minister, who was in your earlier report, is engaging the press regularly, engaging the Iraqi community regularly. It is so important for Iraqis to see that it is Iraqi leaders and the Iraqi security forces, some of whom played a prominent role in the Fallujah operation, are really front and center here.

GIBSON: You mean instead of somebody like you?

SENOR: Well, I wasn't doing the fighting. But the point is...

GIBSON: No, but I mean you were the spokesman for a while.

SENOR: Right.

The point is, is Iraqis need to see that they're being engaged by their fellow citizens. There's a rift, John, right now between the Zarqawi type, the foreign professional terrorists that have come into the country and the domestic insurgents. The domestic insurgents are Iraqi citizens by and large. They aren't these foreign terrorist that have come into the country.

And Iraqis, by and large, are a proud people. They have a tremendous sense of national pride. And when they're confronted by their own leaders and they're confronted by their fellow citizens who are in uniform, they are more reticent to take them on than when it's being done by occupation forces.

GIBSON: OK.

Now, we heard Prime Minister Allawi say this was a watershed event for Iraq. Now watershed event's a big deal. Why?

SENOR: Because, the foreign fighters have been confronted head on in an operation that was conducted successfully. It had Iraqi security forces in a prominent role and it was at the instruction, it was at the order, as I said, of an Iraqi government leadership.

This is the first time that there's been a real head-on confrontation between an Iraqi government and Iraqi security forces and these insurgents and these terrorists and it's been conducted successfully. They have been basically run out of the city. This infrastructure has been discovered. It's going to be that much easier to conduct these elections late January in that part of the country, because of this operation.

It really is an important development.

GIBSON: Now Dan, meanwhile, U.S. troops today discovered a couple of headless bodies in Mosul. And that sort of, fits with the report that at the end of last week, the insurgents showed up at a public square, out of the sight of American troops that weren't there, took a couple of Iraqi troops out of the car and beheaded them in public, in front of everybody to show them what they would do.

So, is the next problem Mosul? And is that going to be as big a problem as Fallujah?

SENOR: No, I don't think we should be Pollyannaish here. There's going to be violence in the other parts of the country and the insurgents are going to and distract us or orchestrate attacks elsewhere.

But to launch the sort of, consistent, comprehensive attacks that the terrorists have been doing, they need the base of operations. They don't have that in Mosul; they had it in Fallujah. They were able to operate there with impunity for a long time. That's not the case with Mosul.

Now, that's not to say that there aren't going to these incidents that we're going to have to deal with and they're tragic. But it's not this consistent campaign that has been able to be waged here.

GIBSON: Dan Senor used to be the CPA spokesman. Dan, it's always good to see you. Thanks a lot.

SENOR: Good to be with you.

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