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Transcript: U.S. Amb. to Iraq Zalmay Khalilzad on 'FNS'

The following is a partial transcript of the April 9, 2006, edition of "FOX News Sunday With Chris Wallace:"

"FOX NEWS SUNDAY" GUEST HOST BRIT HUME: Despite intense diplomatic pressure, interim leaders in Iraq have not been able to agree on a government in the four months since the elections were held. So what's the next move for the United States?

For answers, we turn to the U.S. Ambassador, Zalmay Khalilzad, who joins us from Baghdad.

Mr. Ambassador, welcome. Good morning. Let me ask you, first of all, about reports that are out this morning that concern a document, a study that is said to have been done by the U.S. embassy in concert with the military, to assess the overall situation in Iraq.

And the study is said to have concluded that the situation is very serious in terms of stability and progress in five provinces of Iraq's 18 provinces and in a crisis situation in a sixth province.

First of all, what about that study? And what is your reaction to its conclusions?

U.S. AMBASSADOR TO IRAQ ZALMAY KHALILZAD: Well, as you know, the Iraqi constitution delegates a lot of authority to the provinces, and we have decided to assist those provincial governments in terms of building their capacity to deliver on the new responsibilities.

To prepare for that, we commissioned a study as to what is needed in terms of capacity building in the various provinces, and the purpose there is different than your normal military assessment.

When we do assessment on military bases every day, we look at number of attacks. Here, the examination was not only in terms of attacks, but also in terms of institutions, the broader forces at work in terms of stability.

So the goal was what do we need to focus on in terms of different provinces, in terms of the help that they will need. So I think it's a good effort, and we'll put different levels of emphasis in different provinces for helping the provisional governments.

HUME: Why shouldn't an ordinary American reading a report of this say my God, here I'm hearing optimistic projections from the administration that things are improving rapidly in Iraq, and that for all of the violence, things are getting better, now I read that fully a third of the country appears to be either in crisis or, as in the case of the Fila (ph) provinces, in a serious situation?

Why shouldn't people believe that things are deteriorating there based on this document?

KHALILZAD: Well, if they had looked at a similar sort of study a year or two years ago, they would have seen that the situation probably was not as good as now.

I wouldn't worry about the question of terminology. I wouldn't focus on it. What I would focus on, that in one province that is substantial, fighting that's going on — but at the same time...

HUME: And that province, by the way, is which?

KHALILZAD: ... the capacity to — it's Anbar, which is a western province...

HUME: Right.

KHALILZAD: ... where the insurgency and the terrorism has been there for a while.

The other is although they've described it serious, what they mean is that the ability of the local government to do what the local government ought to do is limited, that this — when the system or the centralized system — the local government didn't have to do some of the things that it has to do now. So they will need help.

I think, you know, it's — we want Iraq to succeed, to stand on its own feet, and the provincial governments — some of those places do need our help. It's more about the capacity of the local government rather than a description of the situation over all.

HUME: All right. Mr. Ambassador, let's turn to the question of the formation of a government. This has been going on now for four months. What is the likelihood of success and how soon?

KHALILZAD: I want to say two things on that. Point one, of course, the election results did not become known until the 10th of February.

And then since that time, the parties have been working for the first time — Sunnis, Shia, Kurd parties, are working together to — and they've agreed on a number of things, the program of the next government, processes for decision-making, as well as institutions of the new government. They have not yet agreed on the composition of that government.

Point two is that we are pressing them very hard. The Iraqis are losing their patience as well as the international community. I think we are some...

(AUDIO GAP)

KHALILZAD: ... but it's important, Brit, to remember that what we want is a good government, not a government as soon as possible. We want a good government as soon as possible.

This is Iraq's chance to...

(AUDIO GAP)

KHALILZAD: ... trajectory. I believe that while we press them, we need to also be patient, because these people have not really compromised and have come together ever before in the history of Iraq.

This is the first time that you're getting a democratic government, authoritatively elected people from different communities, compromising, coming to agreement. So we need to press them but also, in my judgment, we need to be patient to make sure we get the right government.

HUME: Mr. Ambassador, talk to us about interim Prime Minister Jaafari. Can you envision a successful Iraqi government forming with him still in power?

KHALILZAD: Well, there is a question with regard to his ability to be effective and to unify. He has been nominated by the largest bloc, as the constitution calls for, but that bloc doesn't have a majority, and he needs, in effect, a two-third vote of the assembly, so he needs the cooperation of the other factions.

HUME: Can he get it?

KHALILZAD: And they have rejected him so far. Well, we'll have to see. So far, he has not been able to do that. Today, the bloc that nominated him met, and they have sent a delegation out of three people to one last time check with the other blocs to see whether they would accept him.

And if they don't, it's assumed that they would look at other candidates. So we're right in the middle of this. And I think in the next two to three days, this issue is likely to be clarified.

HUME: You mentioned that there's been — the international community has been pressuring — I see we have — I hope you can still hear me. Mr. Ambassador, we're having some technical problems which has caused your image to disappear from time to time. But we're still hearing you, and so we'll cross our fingers and keep going here.

Can you respond to the suggestion that's been heard from some Shiite officials, some Shiite politicians, that the visit of Jack Straw, British foreign secretary, and Secretary Rice to press for the formation of a government was actually a mistake and that it backfired? What is your view of that?

KHALILZAD: Well, I think that was helpful, in my judgment. What it indicated to the people here is that the international community, which has a lot at stake here, is helping Iraq to succeed. The people and those countries are losing patience.

They would like Iraqi leaders to come to a decision, to decide on people who will govern the country, that the vacuum that exists now is actually dangerous. It encourages terrorists to provoke sectarian conflict. I think that was useful for the Iraqi leaders to hear. But I know I'm aware of some of the comments that you refer to.

HUME: How worried are you, as you have suggested, that the sectarian violence in Iraq could spread to the larger Middle East?

KHALILZAD: Well, I think that will only happen, Brit, if we leave Iraq, if we abandon Iraq, as some people have called for in our discussions back home. If we were to abandon Iraq, I think that it is likely that sectarian conflict will increase, and that increase in sectarian violence could bring in countries from the region, Iran and others, to take side, and therefore could expand the conflict.

I do not believe that this will happen if we continue to help Iraqis, if a government of national unity is formed, and our forces are here to help them.

HUME: Mr. Ambassador, one final question. You are the man who is to meet with Iranian officials to discuss their role in Iraq. What do you expect from that meeting and when will such a meeting occur?

KHALILZAD: What we have decided is not to hold the meeting until the Iraqi government is formed. We do not want to give the impression that the United States is sitting with Iran to decide about the Iraqi government. The Iraqis will decide that.

So we have deferred that meeting until after the formation of the Iraqi government.

HUME: All right. Ambassador Khalilzad, thank you very much for joining us this morning. Pleased to have you, sir.