This is a partial transcript from "Your World with Neil Cavuto," July 20, 2006, that was edited for clarity.

NEIL CAVUTO, HOST: We do want to let you know, if you just tuned in here, that we have heard from Hezbollah that it is not interested in releasing those Israeli soldiers, unless there is a swap for Palestinians held.

And, so far, as you have heard from the ambassador, that is not going to happen.

Now, reaction from Israel's former Prime Minister Ehud Barak, who joins me from Tel Aviv.

Mr. Prime Minister, what do you think?

EHUD BARAK, FORMER ISRAELI PRIME MINISTER: I think we are doing the right thing.

A government cannot accept abduction of its soldiers from its sovereign ground. It cannot accept a barrage of rockets on its civilian citizenry. And, so, we were left with no choice but to respond forcefully, to both Hamas in the Gaza Strip and Hezbollah in Lebanon.

CAVUTO: Mr. Prime Minister, Russia today had said that, "Israel's actions have gone far beyond the boundaries of an anti-terrorist operation."

What do you make of that?

BARAK: I think that Russia itself is in a tough struggle against terrorism in Chechnya.

I happened to meet with President Putin about a month ago and shared with him my feeling, even before the beginning of all this series of events, that Russia can contribute a lot by joining hands with the Americans, French, and the British, and so on, in order to enforce full compliance with Security Council Resolution 1559.

In fact, as the ambassador, I would — also would expect Kofi Annan, general-secretary, to take initiative, and lead the permanent members and the G8 into a clear-cut, unequivocal decision to call upon Fuad Siniora in Beirut, as well as young Assad in Damascus, to put an end to it by complying with U.N. Security Council resolutions.

CAVUTO: Let me ask you something, Mr. Barak. You were involved in those negotiations with Bill Clinton in his last days in office that could have secured a lasting peace with the Palestinians, and even laid the framework for a Palestinian state.

The rap at the time was that Yasser Arafat torpedoed that.

If you had struck a deal then, do you think Israel would be where it is now?

BARAK: No.

If we could strike a deal, we would be in a totally different situation, probably well into the implementation of peace with the Palestinians, the same way that we implemented it, short of perfect, but much better than hostility, with both Egypt and Jordan.

But the — as a matter of fact, Mr. Arafat didn't want to sign a deal. He didn't want to solve the issue he called occupation, namely, '67, but '47, namely, the — the very establishment of a Jewish state.

And however close it sometimes seemed to be, you know that the overall volume of a gap is multiplying the width by the depth. It was very deep. He was never there for a real agreement.

So, it's all hypothetical.

CAVUTO: All right.

Mr. Barak, thank you. Very good seeing you again, Ehud Barak, the former prime minister of Israel.

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