This is a partial transcript of "The Big Story With John Gibson," July 25, 2006, that has been edited for clarity.

JOHN GIBSON, HOST: Hezbollah doesn't only have an armed wing. It also has a political wing in Lebanon. It controls territory. It has its own courts, prisons and schools.

For a closer look at the terror network's role in Lebanese society, we're joined by terror analyst Eric Margolis, author of "War at the Top of the World." He followed the Israeli army when it invaded Lebanon in 1982.

Hezbollah, describe how it has grown up in southern Lebanon, how ingrained, I guess, it is in the Lebanese society.

ERIC MARGOLIS, AUTHOR, "WAR AT THE TOP OF THE WORLD": Well, I was there right from the initial fighting. Hezbollah grew up resisting Israeli military occupation for 18 years of southern Lebanon, proved the only Arab force that ever managed to force the Israelis to retreat. It was very effective. But it also had — it became a state within a state in Lebanon.

As you said, it controlled social parts of Lebanese life: schools, education, social programs. It ran all the utilities and social programs in southern Beirut, had 14 members in parliament, two cabinet ministers.

And, you know, in a state that's very corrupt, Hezbollah had the reputation for being incorruptible and delivering social services efficiently and honestly.

GIBSON: Eric, somebody told me that you could go to southern Lebanon and find that you had stayed in a Hezbollah hotel, eaten in a Hezbollah restaurant, picked up your clothes from a Hezbollah dry cleaners, taken a Hezbollah taxicab, gone to a Hezbollah movie theater. All that true?

MARGOLIS: Yes, it is. We used to call it Hezbollistan jokingly.

But, you know, look, southern Lebanon is a third of the population of Lebanon. Probably the majority in Lebanon are Shiites. They were downtrodden and ignored for many, many years. The Hezbollah brought them up, gave them political power and economic power, and made them a force to be reckoned with. In the process, they created their own mini-state to southern Lebanon, to Israel's great dismay.

GIBSON: Eric, you know, this often comes up in a discussion about Hamas. Oh, there is the charitable wing and then there is the armed wing and, you know, described always as separate and apart, and you can't condemn the charitable wing for the activities of the armed wing.

Does Hezbollah make the same claim? Or is the Hezbollah military the same as the Hezbollah social services?

MARGOLIS: Well, it really is the same unified movement, which is very ideological, very doctrinaire, very close to Iran in its thinking and very Shia, meaning very hard-line, very determined.

So, but you don't want to go and kill social workers and say they are the same as soldiers. But there is no doubt that it's one organic whole and run very efficiently from the top by Sheikh Nasrallah.

GIBSON: Eric Margolis, author of "War at the Top of the World," thanks very much.

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