This is a partial transcript of "The Big Story With John Gibson," July 7, 2006, that has been edited for clarity.

JULIE BANDERAS, GUEST HOST: A Japanese newspaper is reporting that when the North Koreans launched that long-range missile earlier this week their target was the waters near Hawaii. But the Pentagon says it's hard to tell exactly what the target was because the Taepodong-2 failed too early after its launch. So today President Bush said that if the launch had gone well, the U.S. would have had a reasonable chance of shooting down the missile.

Joining us now is editor at large for U.S. News and World Report, David Gergen. He is also a former presidential adviser in the Clinton, Reagan, Ford and Bush 41 administrations.

Thank you so much for being here.

DAVID GERGEN, U.S. NEWS AND WORLD REPORT: Thank you, Julie. Good to see you.

BANDERAS: All right, so now we know that we could have stopped it but we still don't know exactly where it was headed. Do you find it interesting that the only source of saying it was headed to Hawaii happens to be out of Japan? Why Hawaii?

GERGEN: I don't think anybody knows why it was headed in that direction. What we do know is the North Koreans are trying to show off. They're trying to demonstrate that they have some muscle to give themselves a bigger place in this game.

And what we also know is that Japan has been the toughest about this. Of all the nations that, you know, have been lining up with the United States to put strong sanctions on the North Koreans to condemn this at the U.N., the Japanese are taking the lead. That's very unusual for Japan.

As you know, they normally are very mute in diplomatic discussions and they've always had a very tiny military since the Second World War, but they are coming out of the box on this one.

BANDERAS: We don't know where the source is coming from, all we know is that it was printed in a Japanese newspaper. But, obviously, the U.S. has great interest in Hawaii without a doubt.

GERGEN: Of course.

BANDERAS: Is this perhaps a way for Japan to really get our attention perhaps to convince us that if sanctions don't work, China and Russia don't get on board, that we take military action?

GERGEN: That's possibly true. There is also another report out of Japan today that the North Koreans may be putting another missile in place of just this kind to possibly do another launch, another test in the days to come, in the next few days. So we'll have to watch that very carefully.

But I think the hawkish nature of this, the Japanese response, is both encouraging to the Bush administration because they are looking for allies. They are looking for some way to crack the Chinese and the Russians to get them to line up in a solid phalanx against North Korea and the Japanese are helping out on this a lot.

BANDERAS: All right. So you were a former presidential adviser. So let me ask you, what kind of advice do you think President Clinton got when he made that deal with North Korea in 1994 by promising them nuclear energy plants which, of course, later backfired when North Korea fired its first long-range missile just four years after that deal?

GERGEN: Well, I happened to be involved in some of those conversations. I was actually in the administration when the president decided to go forward with that.

BANDERAS: Right.

GERGEN: And I have to tell you, my first response when I heard the plan was I am very uncomfortable with this. It sounds like they are blackmailing us. In fact, we are going to pay them off not to do something bad.

But as you began to look at the options, they were so terrible in terms of what you could actually get done with the North Koreans, I came around reluctantly, as I think the president and others did, to say well, this is the least bad of bad options, and we ought to, you know, play it straight through and see where it gets us. It's going to at least buy us some time, and let's see what else can develop.

I think it did buy time. The North Koreans did violate eventually. I think we have learned not to trust them over any period of time. They believe that we violated. I think they are in far more serious violation of the accord.

But what it does mean is that this is a rogue nation in North Korea, and it's exactly why President Bush has been supporting some sort of missile defense plan. Whether that's going to work or not, as the president said today, I think that still remains to be seen.

BANDERAS: He says diplomacy will take time. David Gergen...

GERGEN: Yes, it will.

BANDERAS: ...thank you so much.

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