This is a partial transcript from "Hannity & Colmes," Dec. 2, 2004, that has been edited for clarity.

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ALAN COLMES, CO-HOST: "The New York Times" reported today that Iran may be secretly developing a new ballistic missile system that could strike as far away as Germany.

According to an Iranian dissident group, the missile is being developed with the help of North Korean scientists and could have the capacity to carry a nuclear warhead.

This comes at a time when Iran is supposed to be curbing its nuclear ambitions. But is this report reliable?

Joining us now, former chief U.N. weapons inspector David Kay. Let me start with that question. Mr. Kay, is that report reliable? Can we believe it?

DAVID KAY, FORMER WEAPONS INSPECTOR: Well, Alan, you don't know this group. The MEK has a very mixed record. It's provided some accurate — surprisingly accurate results at times.

I guess the — the sad thing is we're now having to depend on terrorist groups of dissidents for our intelligence in Iran. That's not a good situation to be in.

COLMES: According to "The New York Times," in January of this year, your report, the David Kay report, said that Iraq attempted to revive its efforts to develop nuclear weapons in 2000, 2001, but never got as far as Iran and Libya did.

And they also quote you as saying that you're convinced there was not — there were not large stockpiles of newly produced weapons of mass destruction. You didn't find the people, the documents, the physical plants.

Did we take our eye off the ball by going into Iraq with this lack of evidence while these other countries like Iran were developing this capability?

KAY: Well, there are other countries. Certainly, I would put Iran at the top of the list, along with North Korea, that we knew before were developing them.

I wouldn't argue that we took our eye off the ball. I think there were — given the state of evidence we had, which now we know was wrong, it was a compelling case, I think, for moving against Iraq.

We couldn't do — you know, it looked like you had 16 U.N. resolutions that had been ignored. And believe me, I've read the intelligence, not just U.S. intelligence but that from western European countries, from Russia. Everyone believed Iraq had weapons of mass destruction. We were all wrong.

COLMES: But you — but you went in — but your report stated that a lot of those reports were wrong, and you also stated that the bombing in 1998 that Bill Clinton did, the pinpoint bombing, indeed helped eradicate a lot of the weapons that we still believed were there. So indeed a lot of the work that we hoped to have done was done.

KAY: That's indeed true. Iraq, after 1998, essentially its weapons program fell apart, a combination of the bombing during Operation Desert Fox (search ) and the power of corruption.

That was a corrupt regime, the most corrupt regime I think we've ever seen. And it ended up corrupting itself to a point that it could do little more but live off the oil-for-food corruption and build palaces.

COLMES: But shouldn't we have known that? And shouldn't we have then focused our energies on the countries you're now talking about? And why did we ignore Iran all these years?

KAY: We should have known it. But we didn't know it, because we had no human intelligence inside Iraq, just like we have none inside Iran, apparently. And we're having to rely on the MEK, a terrorist group.

HANNITY: For those very reasons — David, by the way, welcome to the show. It's Sean Hannity...

For those very reasons it's always going to be difficult, if not impossible, to accurately determine what it is we need to determine, correct?

KAY: It's always going to be a very difficult challenge. Absolutely right. These are governments that do not want you to discover the truth.

HANNITY: Here is my point then. We knew in the case of Saddam he used the weapons before. — You acknowledged that. — We knew that he did not abide by the cease-fire agreement at the end of the first Gulf War. We knew that he didn't abide by the 16 and then 17 U.N. resolutions. We know that.

You know, it seems to be, David, conventional wisdom that we were wrong. Those weapons never existed. Why am I one of the last holdouts that believe that with all of the build up to the war, the more likelier scenario is he moved them the heck out of there, David?

KAY: Well, I think you're wrong, because I'll take you through the process that we reached the conclusion that didn't happen.

Since we weren't going to go to Syria — the Syrians weren't terribly cooperative — you did what you can logically do if they're -you look to see if any weapons had been produced. Involves equipment, involves physical sites, people, not only scientists but guards, truck drivers and all. If you find no evidence that the weapons were, in fact, ever made, they didn't go to Syria.

HANNITY: But the point is, how — I mean, do you think these people were going to openly tell you? It seems to me he could have...

KAY: I...

HANNITY: ... but if he built them before and used them before and he was so fiercely resistant, it doesn't make sense. If he was so fiercely against letting people check and see if he had them, then he had to be up to no good.

KAY: Well, look, he was up to no good. There's no doubt. He — he continued to import prohibited items. He carried out research programs that he did not report to the U.N. in the weapons areas. He was doing a lot.

But one thing he was not doing is producing large stockpiles of weapons.

HANNITY: How can you say that 100 percent — how can you say that with 100 percent of certainty, when — when he did it before?

KAY: Well, I guess I can say because I spent about a year on the ground. My successor has been there about six months.

HANNITY: But you weren't there during that time, the buildup. You weren't there the year before. You weren't there two years before.

KAY: Absolutely right. I wish we had been.

HANNITY: But that makes — that creates a question mark, doesn't it?

KAY: It doesn't really — look, we had a lot of tools at our disposal when we got there, to dig things up: $10 million, relocation of anyone anywhere, you know, a vast trove of documents. We know more about that weapons program than I think we've known about any other weapons program in the world.

HANNITY: I'm going to be — you haven't convinced me. We're running out of time. You haven't convinced me. I think I'm going to stay the sole hold out.

COLMES: Next time you go, take Hannity with you.

HANNITY: But I respect your opinion. I know — I know how hard you worked on it.

KAY: I'd be happy to take him.

COLMES: Mr. Kay, we'd like that — enjoy that (ph).

KAY: Maybe we'll go to Iran.

COLMES: Yes, that would be informative.

HANNITY: I can hardly wait.

COLMES: Thank you very much for being with us, sir. Appreciate it very much.

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