This is a partial transcript of "The Big Story With John Gibson," July 27, 2006, that has been edited for clarity.

JOHN GIBSON, HOST: Israeli Defense Force officials say Hezbollah fighters have proved to be a capable military force, so what will it take to defeat the terror group, as Israel said it, in fact, plans to do?

Let's bring in James Woolsey, former CIA director in the Clinton administration, currently a vice president at the consulting firm Booz Allen Hamilton .

So, Mr. Woolsey, first of all, you are going back to your experience in the CIA. I mean, today the cat was kind of out of the bag. The president of Iran sort of said that, look, we will call off Hezbollah when we are good and ready.

So the whole idea that Hezbollah operates independently of Iran and, therefore, Syria now seems to have been exposed as a fiction. That being the case, what does this Iranian president want and what is he using Hezbollah on Israel's border to do?

JAMES WOOLSEY, FORMER CIA DIRECTOR: I think both Hezbollah and Hamas and his nuclear program and his use of Muqtada al-Sadr particularly and some others in southern Iraq, the Iranians sort of regard as chess pieces.

The most precious one, the queen you might say, is the nuclear program and the others are moved around to try to keep us busy, and to protect that nuclear effort. After all, these people invented chess and they seem to be playing it as far as can I tell.

GIBSON: Well, all right. So let's say it is a chess game. So, what is Hezbollah and Lebanon? It's more than a pawn, but not quite a king or a queen. What is it and based on that, what do you expect them to try to do with Hezbollah here?

WOOLSEY: Well, I think they wanted to intimidate Israel and to get Israel used to having more and more kidnappings and rockets fired into it without any substantial response, which is what had been the case up until this kidnapping of these two Israeli soldiers by Hezbollah a week or two ago. I think they didn't expect a very substantial Israeli response.

And now what they are trying to do, they have a senior official who effectively said today that if Israel pushed too hard on Hezbollah, Iran would retaliate. So, I think what they are trying to do is look as if, if Israel holds where it is and doesn't go any further, that they have dictated that, that they have made that halt happen.

GIBSON: How did Hezbollah get to be so strong that it could really put up what appears to be quite a fight against what everybody acknowledges is the best military in the Middle East?

WOOLSEY: Thorough training by Iranian military, $100 million to $200 million a year, and a strong set of fanatic beliefs. I think those three together do a lot.

GIBSON: How could Israel not know what was going on up on its northern border? I mean, they have spy planes and drones, don't they get in the air and look down and see what they are doing?

WOOLSEY: I imagine they knew what was going on. They may have underestimated the numbers, and it's getting easier and easier with technology to do a lot more things underground, to build even factories underground and certainly things like these bunkers, and spy planes can't see through earth.

GIBSON: Can't see through earth, exactly. Former CIA director James Woolsey. Mr. Woolsey, thank you very much.

WOOLSEY: Good to be with you.

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