This is a partial transcript from "Hannity & Colmes," July 17, 2006, that has been edited for clarity.

SEAN HANNITY, CO-HOST: We turn now to the former prime minister of Israel, Benjamin Netanyahu.

(BEGIN VIDEOTAPE)

HANNITY: We know Iran and Syria are behind these terror attacks. We know that they have supported these terror groups from the very beginning. Can you win the War on Terrorism without regime change — more specifically -- these two terrorist regimes?

BENJAMIN NETANYAHU, FORMER ISRAELI PRIME MINISTER: Well, ultimately, I think there's a far bigger terror threat hanging over all our heads, and that is if Iran acquires the weapon of ultimate mass terror, that is atomic weapons, this will create a sea change in the world, certainly in the Middle East but in the world.

And I think that President Bush's intention, announced intention that he would not let that happen is very important.

In the interim, I think knocking out a Hezbollah stronghold in Lebanon can do a great deal to push back Iran's aggressive designs. Iran and, of course, Syria, which is a way station for Iran in supplying rockets and other deadly weapons to Hezbollah or to their other proxy, Hamas, in the South.

Israel is now girded with Iranian enclaves, Iranian-supported enclaves, Iranian directed enclaves, and Syria takes a part in helping both Hamas and Hezbollah with logistics and with weapons.

But the important thing I think is to show the kind of resolve that the people of Israel are showing right now. They're united. They're withstanding horrific assaults on our cities. We're losing civilians, but the people are strong.

The opposition is now united with the coalition. We stand together, and we say we're not going to let you win. We're going to prevail.

HANNITY: Mr. Prime Minister, I want to talk about the urgency and the significance of this from a number of different perspectives here. No. 1, the missiles and the rockets that are being fired, as you point out, on Israeli citizens are getting deeper into Israel than they ever have.

The rhetoric, Hitler-style rhetoric, is getting more shrill and more bitter and more talk of, quote, "the annihilation of Israel."

You couple that with the desire and the pursuit of these weapons of mass destruction. Is there an urgency? Is there a difference? Has this taken on a new meaning for Israel in terms of finishing the job and getting to the root cause of all of this?

NETANYAHU: Well, I think so. And I think the root cause is first the desire to destroy Israel. After all, we left every square inch of Lebanon. So they have no reason to attack us. We left every square inch of Gaza. So they have no reason to attack us.

But if you listen to what they say, they're quite open about it. They don't want Israel to exist, period, in any border, regardless of where we are. And that's just the first target. We're the — remember we're the small Satan for the Islamic terror octopus.

Its center is in Iran. But it has these arms, these octopus arms in Hezbollah, in Lebanon, in Hamas, in Gaza and elsewhere. And it really sees you [the United States] as the great Satan.

Iran is arming itself with nuclear weapons right now and with the long-range rockets, long-range rockets that far exceed Israel and ultimately are destined to reach the Eastern Seaboard of the United States.

You're the great Satan. We're just merely your little brother here. We're the little Satan. And Europe, though it doesn't know it, is the middle-sized Satan.

ALAN COLMES, CO-HOST: Mr. Prime Minister, it's Alan Colmes. Thank you so much for coming on our show. We appreciate it very much.

You have Italy, France, you even have the Vatican urging restraint. The president of the United States says Israel has to be aware of its consequences. Should there be no limit to Israel's reaction to Hezbollah and Hamas?

NETANYAHU: There is a limit. We're not using even a fraction of our firepower and we're taking pains as best we can to minimize civilian casualties, which are all incidental and none deliberate.

Obviously, we're showing restraint. Look, when the United States was attacked by terrorists they went and obliterated a regime in Afghanistan and rightly so. And they did other actions and rightly so.

No country can allow its citizens in its cities, its main cities to be rocketed. Imagine what would happen if Chicago, which is like Haifa, you know, our third largest city, Chicago would be rocketed by a terrorist enclave, a state within a state across the border in Canada. Do you think the U.S. would show restraint?

COLMES: The Lebanese prime minister on the FOX News Channel earlier today called Israel "killers", reiterated his desire for a cease-fire, said the attacks are destabilizing his nation's democracy and will lead to further extremism in that region. What's your reaction to that comment?

NETANYAHU: Well, with all due respect, I think the Lebanese prime minister probably cannot say on FOX what he is probably saying to his closest confidants, that he hopes that Israel will win the war against Hezbollah, because his government has no meaning unless it does.

There is no Lebanese sovereignty as long as there is Hezbollah sovereignty in Lebanon. Because, in fact, they are doing anything they want, supported by two foreign powers, Iran and Syria. The Lebanese army doesn't do a damn thing to dismantle them. And in fact, they are running the show there.

So we can speak of the Lebanese government in perhaps in all but name. It's not a government. It is subservient to Hezbollah, and Israel's action to dismantle Hezbollah would not only serve the cause of security for Israeli citizens, it would also serve the cause of Lebanese sovereignty for millions of Lebanese.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

COLMES: We now continue with former Israeli Prime Minister Benjamin Netanyahu.

(BEGIN VIDEOTAPE)

COLMES: You say Israel is united. I understand 2,000 took to the streets of Tel Aviv on Sunday in a very big peace demonstration. Is that accurate?

NETANYAHU: Gee, I didn't notice. I have to tell you that, you know, if you look at all the people I talked to and all the opinion polls, this is overwhelming support for a powerful response.

How would you feel if, for no reason, your homes would be rocketed, your neighbors murdered, maybe your relatives, maybe your own son or your grandmother or grandmother and her grandson? For nothing, absolutely --- not only for nothing, but for declared -- the declared purpose of wiping out your state and your country. I mean, this is a very -- this tends to unite people, believe me.

COLMES: Much has been written, Mr. Prime Minister, about the captured Israeli soldier, which is what touched this off. But the international press has also been reporting that there was a killing of seven family members on a Gaza beach on June 9, after which Hamas called off its cease-fire. Which in your view is the precipitating event here?

NETANYAHU: I think that the tragic loss of a family in Gaza was a projectile that had been there that probably took off. It was not actually an offensive Israeli action or even a defensive Israeli action from all examinations that we took.

But I think there is an asymmetry here. Israel left Gaza. Israel left Lebanon. Why are they fighting us? You ask what is precipitating this? The answer is nothing that Israel does. It's just Israel being there, breathing.

The fact that I'm standing in front of you right now breathing, speaking, as an Israeli citizen, as a citizen of a Jewish state in the heart of the Middle East, that's for them an unacceptable provocation.

And they say that they will -- as they deny the previous Holocaust -- they're preparing a new Holocaust for six million Jews. Now that cannot happen.

HANNITY: Mr. Prime Minister, I think one of the questions for the United States is are we, the United States, going to have to in the future, near future, perhaps in the distant future, be at war with Islamic fascist terror regimes like Syria, like Iran?

And if the answer to that question is yes, we're going to have to be at war and that they're at war with us, that they attacked us on 9/11, you're dealing with these terror groups today.

Isn't it better to make the decision -- for the United States to engage them before they have nuclear weapons?

NETANYAHU: I think that's the crucial passage point. I think all of this, what you see now, is the prelude. It's the promo to the real show.

The fact that Israel is now being rocketed with no provocation by -- right into our cities by these proxies of Iran tells you that, if they had nuclear weapons, these people would have no restraint whatsoever.

They would use that deadly power, the power of mass death, to intimidate and to threaten and probably to kill a lot of people, not only in Israel, but far and wide.

And I think that is a very dangerous development. It is a watershed development that we must not reach.

And therefore, the American official policy that says Iran shall not be allowed to arm itself with nuclear weapons is really the right approach to prevent the greatest terror of them all, something that would make the kind of things we see today pale by comparison.

HANNITY: Yes.

NETANYAHU: So it is important indeed for the future of the world, for the future of America, for the future of peace, for the future of Lebanese, Israelis, Palestinians, you name it, for our common future to avoid -- to prevent Iran, which is the genesis of so much of what you're seeing today, from acquiring atomic bombs.

HANNITY: With the constant call for Israel to restrain itself, do you see similarities? Do you see an analogy with past instances of world appeasement, World War II, totalitarianism, et cetera?

NETANYAHU: Yes, I do. Because I think this unbridled fanaticism is similar in many ways. It's a new Nazism. It's a new form of Nazism. It doesn't put race, but a twisted view of the Islamic religion as its credo. And it's willing to just go to any lengths and to throw out, just jettison any moral restraints and use the most extreme, barbaric force to achieve its twisted goals.

So yes, I see a similarity there, and yes, I see a similarity in the tepid response from some quarters.

(END VIDEOTAPE)

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