This is a rush transcript from "The Journal Editorial Report," December 23, 2006.

PAUL GIGOT, FOX HOST: This week on "Journal Editorial Report," Rwanda, Darfur and oil-for-food — Kofi Annan says good-bye after a decade as U.N. chief. We'll examine his legacy.

And getting tough on Tehran — Iranian voters deal a blow to the radical regime. Will the Security Council follow suit?

Plus, a crisis in North Korea that Kim Jung Il doesn't want you to know about. And the people here in America who are making a difference.

But first, these headlines.

(NEWSBREAK)

GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.

Secretary General Kofi Annan is preparing to step down after a decade at the United Nations, signaling a big transition at an institution that plays an increasingly large role in American foreign policy.

Earlier this week I spoke with Claudia Rosett, journalist in residence with the Foundation for the Defense of Democracies. And I asked her what Annan's legacy would be.

CLAUDIA ROSETT, JOURNALIST IN RESIDENT, FOUNDATION FOR DEFENSE OF DEMOCRACIES: His legacy is a U.N. that is much larger, much more prominent on the world scene, much more corrupt and much more dangerous.

GIGOT: Wow. When you say larger and more corrupt and more dangerous, what do you mean?

ROSETT: The U.N. under Kofi Annan's watch has expanded greatly in one area after another. Peacekeeping has become this vast boom business.

GIGOT: Some 20-some different peacekeeping operations around the world.

ROSETT: Eighteen, employing something like 90,000 peacekeepers at this point, a graft-ridden operation. That's where the peacekeepers, sex for — rape scandals came from.

They've also greatly expanded on the aid front. And again, it's a big issue whether this is actually helping poor people or helping the U.N.

And they are, once again, sort of front burner in the major crises of the hour — the North Korean nuclear crisis, the Iran nuclear showdown. And on these fronts, the U.N. is not helping us. In fact, it offers a sort of false hope. It is actually standing in the way of real solutions at this point.

GIGOT: I want to get to that. But let's talk about this corruption issue. We had the oil-for-food scandal, which some people have called the largest bribery scandal in the history of the world. A lot of talk after that of reform. Has there been any reform? Has it led to any changes at the U.N.?

ROSETT: No. No, actually it hasn't. There has been a great deal of talk. But if you look at — there is no greater transparency. In fact, the archives of the investigation itself have been deep-sixed back into the U.N. legal department, which won't answer any questions at all from the press about this sort of thing.

You still can't get at Kofi Annan's personal affairs, even when they involve public money. There is really no level on which there has been a significant improvement. And it is not for lack of some decent people trying.

You know, Chris Burnham passed through the Management Department, a U.S. official, and I think really did make an effort to fix things. John Bolton really tried to bring some reform. It is like...

GIGOT: As U.S. ambassador.

ROSETT: Exactly, as U.S. ambassador. And it is like trying to move mud. And it hasn't moved.

GIGOT: Who has blocked the reform? Because at the time the Volcker Report — Paul Volcker report came out on oil-for-food, there was a lot of talk that Kofi Annan could have been in jeopardy. But the United States — had the United States government spoken up, they might have pushed him over. And he might have had to resign. But they didn't. They kept quiet. He survived. And he promised reform. No reform. Who blocked it?

ROSETT: That was a terrible tactical mistake by the State Department, a terrible mistake. Senator Coleman had it right when he wrote in the "Wall Street Journal" that Kofi Annan is too discredited and compromised to effectively lead reform at the U.N. And that's just how it's played out. Kofi Annan stayed.

In fact, the Bush administration protected him. They, far from attacking him, as many have said, they protected him. And the result has been — you know, for many reasons, but Kofi Annan is the man who, in the end, carries the ball more than anyone else.

Member states don't want reform. The secretary himself doesn't want reform. There are so many vested interests there. There's such a network of cronies, special angles, people padding their own pockets, people pushing their own agendas, that really — the only thing that they've called reform was the Human Rights Council which, of course, has already become notorious as an outfit devoted solely to condemning Israel.

GIGOT: Yes, well, that's the only thing they've condemned. Is there any way you can drive reform at the U.N.? I mean, remember Jesse Helms, the former Senator? He tried to do it and, in fact, said to Kofi Annan, when he started as secretary general, if you try it, I will be your partner.

Now, the Congress has tried. Henry Hyde tried a little bit. But is only some outside pressure going to do that, like from the U.S. government, withholding dues?

ROSETT: Actually, I think, at this point, the only thing that would begin to do it, would have a chance of doing it, would be serious competition in the way of going to other institutions, starting other institutions, forming coalitions that would actually be aimed at achieving the things that the U.N. pretends to do. A coalition that would genuinely stop the Iranian bomb program, mot the not the false hope of the U.N.

GIGOT: A coalition of the willing?

ROSETT: Exactly.

GIGOT: Let's consider an issue like Darfur in the Sudan, that horrible tragedy unfolding in Africa, where Kofi Annan has talked so much about a genocide taking place. That it is a moral imperative for the U.N. to act. And that the U.N. has simply not acted. Why has that been blocked?

ROSETT: Well, because the U.N. deals with the government of Sudan as a sort of respected sovereign government. In fact, the U.N. is the leading engine in the word today for legitimizing murderous tyrants and in sort of seeking a permission from the government of Sudan to send in troops to help with the problem there.

Well, the government of Sudan is complicit in the genocide. This is a fatuous exercise beyond description. Of course, it won't help. It's sort of much the same way they colluded with Saddam Hussein to try and organize things in Iraq.

GIGOT: And China plays a role on the Security Council, and Russia, on blocking any particular Security Council action against Sudan as well?

ROSETT: Yes. In fact, the Security Council itself, where you have five members wielding vetoes over anything that is going to be done, includes China and the backsliding Russia. Russia, the Polonium murder ring.

GIGOT: Polonium.

ROSETT: Right, whatever. Both of them — in recent times. And so if that is, as Kofi Annan likes to describe it, the executive committee of the U.N., you have a disaster. You have people sitting on your executive committee, the Security Council, who represents countries that are not at all interested in what the free world is all about.

GIGOT: All right, Claudia, it is a shame. But thank you so much for being here. And we hope to see you again.

ROSETT: Yes. Thank you.

GIGOT: When we come back, Iranian voters deal a blow to Mahmoud Ahmadinejad. If only the international community would show the same resolve.

Plus, the humanitarian crisis that nobody is talking about. Tens of thousands of North Korean refugees living in the shadows. Find out what some Americans are doing about it when the "Journal Editorial Report" continues.

(COMMERCIAL BREAK)

GIGOT: Iranian voters made their displeasure with President Mahmoud Ahmadinejad clear last week, voting to reject his allies in local elections. So why can't the international community get tough too?

Late this week, the U.N. Security Council was still debating a resolution imposing weak sanctions on the rogue nation nearly four months after its August 31 deadline for Tehran to stop enriching uranium.

Joining the panel this week, "Wall Street Journal" Columnist and Deputy Editor Dan Henninger, Deputy Editor Melanie Kirkpatrick and Foreign Affairs Columnist Bret Stephens.

Bret, you were following this the debate at the U.N. this week and got a look at the language in this resolution. Are these going to be the kind of sanctions that have a chance of stopping or changing Iranian behavior?

BRET STEPHENS, WSJ FOREIGN AFFAIRS COLUMNIST: No. In fact, they are worse than useless. They are actively harmful. The worse part about the sanctions resolution is that it carves out a special exemption for a so- called light-water reactor that Russia has been building for Iran for the past ten years, and is scheduled to be fueled and ready to go next October.

And there is an idea that these kinds of light-water reactors cannot be used cannot be used — cannot be diverted for purposes of making bombs. But that's probably wrong. I have spoken with various nuclear experts, who point out that this light-water reactor will generate about 330-kilos of spent fuel which can be reprocessed into plutonium that is usable for about 60 Nagasaki-type nuclear weapons. It can very easily be diverted to that purpose. And the uranium fuel rods can also be diverted to be used in Iranian centrifuges.

GIGOT: But if that's the case, why would the U.S. agree to this? Because our stated goal is to prevent Iran from getting a nuclear weapon.

STEPHENS: Well, it is a bit of a mystery. But I think part of the problem is that the State Department has decided to put consensus between us and the other members of the Security Council, especially Russia and China, which have been very obstinate in the negotiations — have put a kind of consensus as the key goal. That is to say, they want the whole world to agree on, quote, unquote, "sanctions," even if there is no teeth with it.

GIGOT: And Russia is selling that nuclear plant to Iran for about $1 billion dollars or so. So in Russia — the State Department wants Russia on board with the sanctions so they are agreeing to make this concession to Russia. That's essentially the trade that's going on?

STEPHENS: That's right. And they are also selling the anti-aircraft missiles that will be defending that plant.

GIGOT: What about the argument that this is at least an incremental step, Dan? We're getting — moving ahead at least with some kind of sanctions. At least Iran isn't getting away scot-free from rejecting that deadline.

DAN HENNINGER, WSJ COLUMNIST AND DEPUTY EDITOR: I think the problem with that way of thinking is that the Iranians know it is a bluff. I mean, the Iranians are playing hardball. And they know that they can sit there and simply say we will ride it out, because there is no credible threat behind it.

Kofi Annan himself has said the last thing we want is war with Iran. The military option has pretty much been taken off the table. If that's true, then the sanctions have no teeth. Then, Ahmadinejad and the mullahs can simply sit there and wait for this effort to pass.

GIGOT: What about the travel sanctions on some of these Iranian officials, anybody who's involved in nuclear activities or big shots in the government?

HENNINGER: There are exceptions to that.

GIGOT: But won't that embarrass, Melanie, some of these people and send a message to the Iranian people that, look, the international community isn't — you are not — you are not going to be honored with your presence at international functions?

MELANIE KIRKPATRICK, WSJ DEPUTY EDITOR: I think there is something like a dozen officials. That doesn't do a lot of embarrassing. I mean, keep the Iranian soccer team out of the international soccer matches. That could embarrass the country. But a dozen officials, I am not so sure.

STEPHENS: And these aren't the key government officials. We are not talking Ahmadinejad or the leading members of the Iraqi Politburo, as it were. We are talking about Iranians who are specifically involved in their nuclear program and...

GIGOT: I am trying hard here to play devil's advocate. But I'm not succeeding.

HENNINGER: I had this conversation with a good U.N. official once on why they don't have a definition of terrorism. And the reason they don't have a definition of terrorism, the reason why they won't enforce travel sanctions is because the other members of the United Nations are afraid that, if they committed to that, it could be turned around and used against them.

I mean, a lot of the countries that belong to the United Nations are not exactly upstanding citizens. And they don't want these sort of things used against them. They don't want the precedent.

GIGOT: Melanie, let me go back to Claudia Rosett's issue with the Security Council. Are we back to a cold war situation where the Security Council is essentially useless and it can't get anything done? Remember, in the Cold War, the Soviets vetoed everything. Now, they don't veto everything. But it seems like we don't end up with a lot of power anyway.

KIRKPATRICK: I think it is worse than the Cold War because, as Claudia said twice during your interview, it presents a false hope to the world, the false hope that the Security Council can actually accomplish something. And at least during the Cold War, we knew that wasn't the case.

I'm for abolishing the Security Council. I think there is an argument to be made that the General Assembly provides some benefit to the world. It probably makes sense to have 180 countries represented in a big body like that. My guess, though, is that the more fruitful debate goes on in the corridors than in the assembly itself.

STEPHENS: I think part of the problem, too, is that we haven't come to grips with the fact that Russia is no longer a partner of the United States in these sorts of crises. And China is looking out for its own interests. The Chinese are very interested in Iranian gas.

GIGOT: All right, thank you, Bret.

We will be back after this short break.

Coming up, as the six-party talks with North Korea resume this week, one issue was conspicuously absent from the agenda. A closer look at a looming refugee crisis when the "Journal Editorial Report" continues.

(COMMERCIAL BREAK)

GIGOT: When six-party talks resume this week on North Korea's nuclear program, one issue that was likely not on the table was the plight of tens of thousands of North Korean refugees hiding in China. Melanie Kirkpatrick has been following the story for the "Wall Street Journal."

Melanie, you have been following this very closely, writing about it often. What is this condition of these people in China? And how many people are we talking about?

KIRKPATRICK: Tens of thousands for sure. Every relief worker agrees on that. But there could be hundreds of thousands. I saw a Chinese document that was leaked to me that said 400,000 North Korean had crossed the border.

The refugees are in terrible, terrible straits. Many of them are women. And they've been sold as brides to Chinese husbands — farmers who can't get their own brides because there's a shortage of women in China. The men have been forced into labor in agriculture.

And then, there are a lot of children, which is probably the saddest group of people of all. There are children — some who cross the border themselves from North Korea with their families and were separated from them.

And then, there are others, who are children of North Korean mothers and Chinese husbands, who have been rejected by the Chinese. They are not considered Chinese. The North Koreans also reject them. And so they're left to wander the streets or, in some cases, aid workers help them.

GIGOT: And the Chinese government does not want to admit these. It certainly doesn't recognize them officially. What does it do if it captures them? Just send them back to North Korea?

KIRKPATRICK: The Chinese policy — against its agreement under the international convention on the status of refugees — the Chinese policy is to send them back to North Korea.

When they get back to North Korea, they are put generally in a prison camp from which many do not survive. So many people, who are returned to North Korea, die.

GIGOT: What about this Underground Railroad, if you will, this new Underground Railroad where so many Christian activists — American and some Korean — are trying to help these refugees get out and find better homes? How does that work?

KIRKPATRICK: Well, what happens is that these missionaries from South Korea and from the United States, often Korean-Americans, go to Northeast China where the refugees are located. And there is an informal network. And they hook up with people. A lot of these refugees have been put into safe houses that are paid for by contributions in America or South Korea. And then, they are spirited from house-to-house across China, generally to Southeast Asia, sometimes to Mongolia or Russia.

And then, if they are lucky, the governments in those countries will agree to send them to South Korea.

Now, we now have — I think it's — we are up to seven, maybe eight refugees who have come to the United States.

GIGOT: That's all? Just that, Melanie?

KIRKPATRICK: That's it. I think, probably next year, we will accept a figure in the hundreds, I am told. But at the moment, it is very difficult to get to the United States.

GIGOT: Now, have any of these rescuers been captured and punished either in North Korea or in China?

KIRKPATRICK: Oh, yes. It is just a terrible situation, whereby, the South Korean or American refugees captured in China are thrown into jail because, of course, it is against the law to help the refugees in China.

Right now, there is an American businessman from Huntington, New York, who has been in jail for three years. And he has two more years to serve in his sentence.

GIGOT: Now, South Korea's role in this is puzzling because part of their constitution says that they must accept refugees from the north, their brothers or sisters from the North. Yet, when I talk to South Korean officials, it seems they are very reluctant really to encourage that kind of refugee flow for fear this would somehow undermine the North Korean regime stability and maybe lead to its collapse. Is that what their thinking is?

KIRKPATRICK: That's their argument. And I think the argument is correct. But that's why I support it. We want the regime in North Korea to collapse. And helping refugees is a way to do it.

GIGOT: Bret, the State Department really doesn't like to talk about this issue too much either. They'd rather focus on the nuclear issue. And that's why the president appointed a special envoy for North Korea and human rights. What's their thinking on this?

STEPHENS: Well, I think the State Department thinks that the most important and most significant issue with North Korea is the nuclear issue. They don't necessarily want other factors to get in the way like the — precisely like the human rights issue.

But as, I think, Jay Lefkowitz, the president's special envoy on North Korea said, human rights is not just a question about ends, it's also a question about means. Pressing the human rights issue is a way of getting the North Koreans to move on other fronts.

GIGOT: Anyway, these people are real heroes, these rescuers. And God bless them this Christmas.

We have to take one more break. When we come back, our "Hits and Misses" of the week.

(COMMERCIAL BREAK)

GIGOT: Winners and losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.

Item one, the man behind many beloved children's cartoons died this week — Dan?

HENNINGER: Yes. That was Joseph Barbera. Died at the age of 94, partner in Hanna-Barbera. This is the group that created cartoons like the "Flintstones," "Yogi Bear" and "Huckleberry Hound."

And it's kind of interesting to compare them to the cartoons that are on today on the Cartoon Channel, and "South Park" and "The Simpson's."

The thing about them is that they — both sets of cartoons made us laugh but, I think, with a difference. The children on the "Flintstones and "Huckleberry Hound" were just that, they were children. But children in cartoons today tend to be all-knowing, sophisticated and really pretty cynical.

Now, I suppose that basically reflects the kind of world we live in today. But if that's true, I think the passing of Joe Barbera suggests the passing of a terrifically wonderful age of cartoons.

GIGOT: All right, Dan, thanks.

Next, ground was broken this week on the Freedom Tower at Ground Zero in Manhattan, again — Melanie?

KIRKPATRICK: This is the third time, by my reckoning that Governor Pataki has shown up for a groundbreaking ceremony at Ground Zero.

Freedom tower is the signature skyscraper that is going up there. It is supposed to now be completed by the year 2011. But it is come in my mind to signify the biggest failure of the Pataki administration, which is the hole in the ground at Ground Zero.

Also last week, besides breaking ground at Ground Zero, the new governor of New York, Governor Spitzer, who will take office in January, said he is going to take a fresh look at the tower.

Well, I don't know if this thing is ever going to get built. In my view, we should take it away from the politicians and hand it over to the private sector. Donald Trump where are you?

GIGOT: All right, Melanie, thanks.

Finally, "Time" magazine's Person of the Year is you and you and you.

STEPHENS: You.

GIGOT: All right, Bret?

STEPHENS: Yes, the "Time" magazine editors made a brave choice including all of us as spectacular special individuals. But they didn't quite mean everybody. And they didn't even mean the six million-odd potential readers of "Time" magazine.

What they were really talking about are the people, like lonely girl, 15, and p-p-p-panic, a 20-year-old woman from Maryland, who's posting her video obsessions with the 7/11 guy on TV.

The people they excluded were the people who were either making news or reporting news. So unfortunately, that means none of us in this room.

GIGOT: All right, Bret, thanks.

That's it for this edition of the "Journal Editorial Report."

Thanks to Dan Henninger, Melanie Kirkpatrick and Bret Stephens.

I'm Paul Gigot. Thanks to all of you for watching. And we hope to see you right here again next week.

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