This is a partial transcript from "Your World with Neil Cavuto," May 31, 2006, that was edited for clarity.

NEIL CAVUTO, HOST: Iran can expect sanctions if it does not end its nuclear program and agree to multilateral talks soon, that coming from a White House official just moments ago.

Meanwhile, Iran calling today's offer to talk from the U.S. nothing but a propaganda move.

Reaction now from America's ambassador to the United Nations, John Bolton. He's here for an exclusive interview.

Ambassador, good to have you.

JOHN BOLTON, UNITED STATES AMBASSADOR TO UNITED NATIONS: Nice to be here.

CAVUTO: What do you make of the propaganda comment?

BOLTON: Well, I hope this is not a real reaction from Iran. I think it's important that they take a very careful look at what Secretary Rice laid out today, because it really is their last chance, in many respects.

She is saying that we're prepared to sit down at the table with Iran if they fully suspend their uranium enrichment and reprocessing activities.

So, that's a major effort on our part to avoid this being a discussion about what's the United States doing wrong and get it back to the real point, which is what Iran is doing wrong.

CAVUTO: All right. They're claiming it is propaganda, though. Is it?

BOLTON: No. I mean, this is very serious.

And you may recall Jeane Kirkpatrick's famous speech in 1984, where she talked about the people who always blame America first.

And there are a lot of people internationally — and the Iranians have been making this point — that, if we don't sit down and talk, this isn't a serious effort.

All right, we've said now, consistent with what the IAEA has said, consistent with what the Security Council has said, that, if the Iranians give up their enrichment activities, then we're prepared to take that excuse away from them and focus on what really the problem is, which is their pursuit of nuclear weapons.

CAVUTO: All right, you say if they give up the enrichment activity. What if they say, we will give up the enrichment activity, but withhold doing so until the talks start?

BOLTON: No, I think Secretary Rice was very clear on this today, that this is a precondition, on which we're not going to compromise.

BOLTON: And it's a precondition consistent with what the five permanent members of the Security Council, the Security Council itself and the IAEA have already said. They have to suspend their uranium enrichment and plutonium reprocessing activities. If they do that, that's a sign they're willing to have serious discussions. And we would sit down with the Europeans and the Iranians and do that.

If they're not willing to do that, the other alternative is clear, too, is that we will move for economic and political sanctions to make it clear to them what their choice is.

CAVUTO: All right. So, we have a twin-channel strategy here, right?

BOLTON: Well, really, we have three channels going.

We have the possibility of diplomatic negotiations with Iran, if they show they're serious about negotiations. We have the track in the Security Council of potential economic sanctions. And we have the activity that we can engage in without Security Council approval, the president's Proliferation Security Initiative to deny Iran sensitive materials and technology, the financial pressure we can apply, and the support for the democracy movement in Iran.

So, there are really three tracks we're talking about.

CAVUTO: You have to verify if they say they're stopping this enrichment activity. You have to verify that, right?

BOLTON: That's correct.

CAVUTO: Who verifies?

BOLTON: Well, I think the IAEA can provide some verification, but we've also got...

CAVUTO: But they keep kicking those guys out.

BOLTON: What we call, euphemistically, our national technical services. We have our own ways of verifying.

We want to be sure that the Iranians are serious. And, in any major anti-proliferation effort, verification is key. So, if the Iranians are really only seeking nuclear power for civil purposes, which is the cover story they've been using, they should have no problem with verification.

CAVUTO: I'm showing my ignorance with nuclear technology, but is there a way to distinguish between enrichment for peaceful purposes and enrichment for sinister purposes?

BOLTON: Well, one way to tell is what level they've enriched the uranium to. Have they gone above what's called reactor-grade uranium?

But, really, their program is much more extensive than enrichment, and I think that's why continuing...

CAVUTO: So, you don't just believe that this is for peaceful purposes?

BOLTON: Absolutely not. There's no way that the Iranians could have engaged in the breadth and scope of the program that they've undertaken unless they had a weapons purpose in mind.

CAVUTO: The reason why I ask that, Ambassador, Iraq's minister had said, foreign minister, last Friday, look, they're free to pursue peaceful technology.

I don't know what made him say that or to accept them at face value. What did you read into that?

BOLTON: Well, I don't think there's anything, really, more there than the possibility that if, in fact, Iran really were to commit to only peaceful activities, that the Non-Proliferation Treaty allows that.

But the Non-Proliferation Treaty is also very clear. They cannot pursue nuclear weapons. And they're in violation of that obligation right now.

CAVUTO: But what Hoshyar Zebari is saying, Iran doesn't claim that they want to obtain a nuclear weapon or a nuclear bomb, so there is no need that we ask them for any guarantee now, which is before any of these overtures today, Ambassador.

BOLTON: Right.

CAVUTO: But what do you make of that, that even among, ostensibly, a key ally like Iraq, there's division?

BOLTON: Well, there's a lot of rhetorical misunderstanding, I think, in many places about what exactly the Iranians are doing.

And we would rather get away from talking about the rhetoric and start talking more specifically about their conduct. That's why the requirement that they suspend uranium enrichment and plutonium reprocessing before we'll join the talks is so important and why Secretary Rice emphasized it today.

CAVUTO: Larry Eagleburger was here earlier, sir. I'm sure you're familiar with him, the former secretary of state. He says, you know, while we're whistling, to sort of paraphrase, they're building, and that the North Koreans played this game with us during the Clinton years, and promised one thing, didn't deliver. And there was hell to pay.

BOLTON: Yes.

CAVUTO: Are we going to repeat that?

BOLTON: Well, I think Larry's analysis is quite right.

And that's one reason why the Iranians don't have an infinite period of time to respond to this offer. They need to take time to look at it seriously, but then we expect an answer.

And we're not going to be fooled into the pattern that they have followed the past couple years, where they've admitted, quite publicly, that they deceived the Europeans and they used the cover of negotiations to perfect their uranium enrichment and reprocessing. We're — we are not going to permit that to happen.

CAVUTO: I believe, Ambassador, you had an opportunity to meet with your Iranian counterpart today. How did that go?

BOLTON: I spoke with him on the phone to deliver Secretary Rice's remarks.

And we had a courteous conversation. It was the first time I had ever spoken to him. But we wanted to be sure that we transmitted it directly to Iranian representatives. We also went through our Swiss colleagues, who delivered it in Tehran as well.

CAVUTO: But how were you received over the phone?

BOLTON: Well, I called up to say, I have got this document that...

(CROSSTALK)

CAVUTO: "Hi, it's me, Ambassador Bolton. How you doing?"

BOLTON: He said: "Hello, Ambassador. How are you?"

CAVUTO: Really?

BOLTON: I said: "I'm fine, Ambassador. How are you?" And we went from there.

CAVUTO: When you spelled out what was being proposed, what was the reaction?

BOLTON: Well, and he said to go ahead and deliver it, which we did. And I haven't heard from him since then. But I hope they're considering it seriously in Tehran.

CAVUTO: So, he didn't laugh that off the table?

BOLTON: No. But I think his role was to receive it, as my role was to transmit it. So, it was...

CAVUTO: To convey it. Did he say he would convey it to...

BOLTON: He did, indeed. Yes.

CAVUTO: And anything else in that conversation?

BOLTON: No. But it was a courteous conversation. We were very diplomatically proper.

CAVUTO: How are you greeted these days, Ambassador, at the United Nations? You were kind of like the bull in the china shop on this and a host of other issues.

On this issue, on dealing and getting tough with Iran, that was a pretty lonely battle at first. Now more are joining you. We're getting some resistance from Russia and China; to a much lesser degree, France. How's it going now?

BOLTON: Well, I think it's important to depersonalize some of these issues. I get along fine with the other ambassadors. I think they get along fine with me.

I think what's important to be effective as an American ambassador in New York is to represent American interests. And I think there may be some that are still getting used to having a vigorous advocate for American interests. But I think we're making progress.

CAVUTO: Hence that bull-in-the-China-shop analogy, right?

BOLTON: That's what some would say. I wouldn't agree with that.

(LAUGHTER)

CAVUTO: Could I ask you this? I'm just curious. If we go on this slow-mo approach with Iran — I know you're trying to dot all the diplomatic I's, cross the T's — but what if none of that works? I mean, there is always what some say is the Israeli option. They dealt with Iraq with this technology, what, 26 years ago.

BOLTON: Yes.

CAVUTO: Is it going to be Israel that settles it today?

BOLTON: Well, I think the president has made it very clear he wants to resolve the Iranian nuclear weapons program through peaceful and diplomatic means.

But he's also said that Iran with nuclear weapons is unacceptable. And I think, when the president says it's unacceptable, I think what he means by that is that it's unacceptable.

So, it's important...

CAVUTO: But unacceptable means that, if it keeps going on, you're going to do something about it?

BOLTON: That no option is taken off the table. And Secretary...

CAVUTO: Military as well?

BOLTON: Exactly. Secretary Rice...

CAVUTO: Unilateral military action?

BOLTON: Secretary Rice made that point again today.

But that's why I think...

(CROSSTALK)

CAVUTO: I'm sorry, Ambassador — that we would act alone, if we had to?

BOLTON: That's why he says no option is taken off the table.

But it's also why the president has reached out to President Putin and other leaders in the past couple of days to say, we're making a significant step here that will be criticized by many of the president's staunchest supporters here at home.

But he's taking this step to show strength and American leadership, and to say he's willing to do something that may be unpopular, even with some of his supporters, to remove all excuses from Iran and its supporters, to say: We went the extra mile. We gave Iran, really, this last chance to show that they are serious when they say they don't want nuclear weapons.

This is put-up-or-shut-up time for Iran.

CAVUTO: Iranian leaders have said that the United States is so, you know, stuck in Iraq and so overwhelmed with its military responsibilities around the world that it can talk all it wants about getting tough with Iran, but that it will never get tough with Iran, because it can't get tough with Iran.

BOLTON: You know, I don't want to get into the specifics of what's possible, and I certainly don't want to deal with the usual Iranian effort to throw sand in everybody's eyes. But I think the president knows what he means when he says he doesn't take options off the table.

And I come back to the point that he has said in public and private conversations, in speeches and conversations with world leaders. It's unacceptable for Iran to have nuclear weapons. He is a man of his word.

CAVUTO: Let me ask you, sir, Harry Reid, the Senate minority leader, has said, well — I'm paraphrasing again — it's about time this administration, which included Iran in the axis of evil, is belatedly responding to this evil, more or less saying, hello.

What did you think of that?

BOLTON: Well, we have been responding to the problem of Iran for three-and-a-half years in a variety of diplomatic channels, in the International Atomic Energy Agency, more recently in the Security Council, and through many other channels as well, to try and build an international coalition, to make it clear to Iran that its progress toward nuclear weapons is not going to be tolerated.

BOLTON: And I think this is another example of the president leading through strength to try and accomplish this.

So, I'm glad that Senator Reid supports the president's initiative.

CAVUTO: If Ahmadinejad came out tomorrow night and said, "We have a nuclear bomb," what then?

BOLTON: Then the situation would change dramatically. It's our assessment that he's not in a position to make that announcement, at least truthfully.

CAVUTO: But we don't know, right?

BOLTON: There's a lot we don't know.

CAVUTO: What's your gut tell you? How close is he?

BOLTON: I think they're still a period of time away. But this is all based on assumptions.

I think the one thing that's not open to question is that Iran is following a strategic decision to get nuclear weapons. Whether you estimate them to be closer or farther away, the basic point is, we need to treat their efforts seriously and stop those efforts.

CAVUTO: So, you're saying more months away than certainly years away?

BOLTON: You know, I think it's subject to assumptions. Reasonable people can disagree. What we don't disagree on is that they're pursuing nuclear weapons. And that's what's got to guide our overall strategic policy.

CAVUTO: OK. Ambassador John Bolton, always very good seeing you — the U.S. ambassador to the United Nations, John Bolton.

Come by more often.

BOLTON: I will do that.

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