This is a partial transcript from "On the Record," July 24, 2006, that has been edited for clarity.

GRETA VAN SUSTEREN, HOST: At this hour, anything could happen right before our eyes. Rockets explode on Israeli towns, and some Israeli soldiers are dying while others fight in ground raids in Lebanese villages. What can Israel do?

Joining us here in D.C. is Israeli ambassador to the United States Danny Ayalon.

Welcome, sir.

DANIEL AYALON, ISRAELI AMBASSADOR TO THE UNITED STATES: Thank you.

VAN SUSTEREN: Why do they hate you so much?

AYALON: Well, that's a good question. I think they're brainwashed, pretty much, and they are being used by other forces, like Iran, who wants to push their agenda.

And actually, they just don't hate us, they hate the moderate Arab countries. They hate you, as Americans. They hate everything, which is Western. They hate everything, which is not extreme radical Islamist.

And they see Israel as, let's say, a bastion of Western civilization in the heart of the Middle East. They would like the entire Middle East to become Islamic, as a springboard to make Europe Islamic, central republics of Asia, and ultimately, the United States. Well, we will not let them, will we?

VAN SUSTEREN: Well, I suppose — I mean I've seen what Israel is willing to, you know, settle for.

But the bottom line is they still exist, even under what you're proposing. They're just disarmed, but they still exist. And they have a mission to destroy you. That seems like maybe a short-term resolution, but what about the long term?

AYALON: Well, the long term really is to take Lebanon and give it back to the Lebanese. If there is a regime in Lebanon with a solid political structure, with military capabilities, with the monopoly only governed by a central power in Beirut, then they can take care of Hezbollah.

If Hezbollah becomes a political party, is it desirable? No. But we will let the Lebanese take care of them.

And I believe when all the dust is settled, the Lebanese themselves, certainly the Christian, Maronites, the Druze, the Shiites, and most of the Sunnis and most of the Shiites, would put the blame squarely at Hezbollah? And I think this is the dynamics that we want to see after it's all done.

VAN SUSTEREN: So you think the evolution would be that Hezbollah, the political and the military, eventually sort of be phased out of the Lebanese government and Lebanese culture? That's what you think is going to happen.

AYALON: Absolutely. And also to detach Lebanon and Hezbollah from the influence of Iran and of Syria.

VAN SUSTEREN: How do you do that?

AYALON: Well, first of all, by winning this war. And we have to win this war. And I tell you, Greta, I'm quite dismayed at some calls. Basically, I hear it at some of the U.N.

On the one hand, they call us for an early ceasefire. At the other hand, they call for, quote, unquote, "restraint." Well, that doesn't go together. It takes us long because we are restrained.

VAN SUSTEREN: Actually, I mean, frankly, I mean, I can understand why you'd be disappointed. With 1559, you got nothing out of that one.

AYALON: Right.

VAN SUSTEREN: And that was a U.N. resolution. So I mean, I'm not surprised, you know, that your country is disappointed with the U.N. — I think a lot of people are — because that wasn't enforced.

AYALON: Absolutely. And by the way, there was a previous resolution, 425 from 1978, which we completed our part of the bargain when we pulled completely out of Lebanon to the last square inch. We got a clean bill from the U.N. with the international border recognized.

VAN SUSTEREN: Being right, though, isn't always necessarily, you know, the solution because the problem is, is that you, you know, being right on this, you've still got the problem, is that there are so many civilians who are being killed in Lebanon, is that, you know, the public opinion isn't necessarily going to way away from you as more civilians are killed. You agree?

AYALON: Greta, this is a very good point. You know, in modern wars, any war, especially when you fight a very cowardly organization like Hezbollah or al Qaeda, these terror organizations, which specifically hide behind civilian targets, part of the considerations of any operation of the commanders in the field is the media.

There has never been a media as a factor in military planning before, but now it is. And you are right. And we should not neglect this war because they are waging a P.R. or a propaganda war against us, and we have to be ready for it. And it is...

VAN SUSTEREN: But even if the media weren't there, when all the dust has settled and they see the numbers, you know, who died and who didn't, it can be devastating if it turns out that there are a tremendous amount of civilians who died in the war.

AYALON: Yes, but it will not be. Although every civilian, you know, is a loss and we regret it, many civilians in Israel die. There are more civilians in Israel who died than soldiers in this war. But still, we have to understand that some of the rules are being imposed and enforced on us by the Hezbollah.

And we have been very, very careful. In fact, you know, we are using a fraction of our firepower because we do not want to cause any undue damage. We are going specifically after Hezbollah targets.

And I have to tell you that if Hezbollah is sitting in homes and in mosques — and we see that. They have caches of rockets and Katyushas in mosques and in homes, whether it's in Beirut, in what is called the "forbidden city."

Hezbollah confiscated the entire southern part of Beirut, calling it the "forbidden city" because nobody could go in and out, even government, police.

So we are taking only Hezbollah now. There are some civilians, who, in their homes, have launchers, who have communication rooms and other things. We have tried to warn them before we took them on. Twenty-four hours we gave them notice at the risk of compromising the mission itself, because when we pre-warned them, Hezbollah was also pre-warned and kind of left and came back.

So any casualty should be — is the responsibility of the Hezbollah, and I believe by and large, the Lebanese do understand it. By and large, the people in the Middle East will understand it.

VAN SUSTEREN: Ambassador, thank you, sir.

AYALON: Thank you.

Content and Programming Copyright 2006 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2006 Voxant, Inc. (www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.