The following is a partial transcript of the Feb. 25, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Secretary Rice, welcome back to "Fox News Sunday."

SECRETARY OF STATE CONDOLEEZZA RICE: Thank you very much, Chris.

WALLACE: Let's start with Iran and those comments from President Ahmadinejad — no reverse gear in its nuclear program. Your reaction.

RICE: Well, they don't need a reverse gear. They need a stop button. They need to stop enrichment and then we can sit down and talk about whatever is on Iran's mind.

But the international community has been steadfast. We have a Chapter 7 resolution that demonstrates that Iran is isolating itself. It's time for Iran to take a different course, and we hope they will.

WALLACE: Well, you talk about the international community. The members of the U.N. Security Council plus Germany will be meeting in London tomorrow to discuss the idea of further future sanctions against Iran.

Given the fact that it took four months last year to get the Chinese and the Russians to agree to sanctions that Iran has since ignored, can you honestly say you think they will sign on to anything now that will be tough enough to change Iran?

RICE: Well, we're going to consult — I consulted with my counterpart, Sergey Lavrov, the Russian foreign minister, when I was in Berlin, and with the German counterpart. We all agreed that we needed to pursue the Security Council track.

We're leaving open the track of negotiations because the best way to resolve this would be to have Iran come to the table. But, Chris, I think you have to look at what is happening in the debate in Iran and there are people who are questioning whether the policies that Iran is pursuing are indeed isolating, Iooking hard at investment in Iran, at the reputational risk, the investment risk of dealing with a country that is under Chapter 7 status in the international community.

It's very rare to be under Chapter 7. There aren't that many countries that are in that U.N. category.

And I think what we're looking to is that people who don't want to endure that kind of isolation will stop, take a deep breath and give international negotiations a chance by suspending their program.

WALLACE: What is it that you want from Iran? Do you want regime change, or do you want behavior change? If you were to — if they were to clean up their act, as we're now seeing in North Korea, or at least the first signs of it in North Korea, would you be willing to live with the current regime in Iran?

RICE: Well, the proposal that we made along with China, Russia and the E.U.-3 makes clear that if Iran is prepared to forego nuclear ambitions that could lead to a nuclear weapon that we would be prepared to enter into discussions about trade, even about politics.

But Iran also has other activities that it needs to stop. It needs to stop its support for terrorism in places like Lebanon and in the Middle East more broadly.

And it would be a good thing if the Iranian people, who are a proud culture, could have a greater say in how their government is run. But first things first.

What we need to do is to engage Iran on the basis of the international community's standard, which is that they need to stop their enrichment and reprocessing capabilities. And then Iran can re-enter the international community, and I'm quite certain that we can discuss any and every thing.

WALLACE: So as with North Korea, we could live with the current regime if, and it's a big if, they could clean up their act.

RICE: Well, I have no doubt that the Iranian people want to be like other people, capable of carrying out their freedom of having greater pluralism in their politics. All of that is important.

The president has made very clear that around the world we're going to continue to advocate for democracy. We are. However, with Iran, in a situation in which they are in defiance of the international community and they need to change that behavior, then we can talk about everything.

And we'll talk about it with this regime. I've said that I am prepared to meet my counterpart or an Iranian representative at any time if Iran will suspend its enrichment and reprocessing activities. That should be a clear signal.

WALLACE: Let's turn to Iraq talking now about rewriting the 2002 congressional authorization for the use of force in Iraq.

Given that our mission there has changed so dramatically over the last four years, don't they have a point?

RICE: We don't need to do anything but to allow the commanders on the ground — General Petraeus, who's gone out there as the new commander — to pursue the course that he and other commanders have put together and have recommended to the president. That's what we need to concentrate on as a country.

I know it's extremely difficult. And yes, as the president has said, we've now overthrown Saddam Hussein. We are in a different situation, even, some would say, a different war. But the consolidation of a stable and democratic Iraq after the overthrow of Saddam Hussein is a part of what America owes to the Iraqi people, owes to the region and owes to ourselves so that our own security is there.

Chris, it would be like saying that after Adolf Hitler was overthrown, we needed to change, then, the resolution that allowed the United States to do that so that we could deal with creating a stable environment in Europe after he was overthrown. It's a part of a continuum of what we're trying to do in Iraq.

WALLACE: Now, Senate Democrats say that they want to modify the authorizing of the U.S. combat role within a year. If that goes through, would the president feel bound by such a measure?

RICE: Well, I think the president is going to, as commander in chief, need to do what the country needs done. And I can't imagine a circumstance in which people are trying to manage the flexibility of our commanders to do what they think they need to do on the ground, to take on the enemy that they face, when they face that enemy, to send troops to do that, to rely on the Joint Chiefs of Staff and the service chiefs to determine the training levels.

I can't imagine a circumstance in which it's a good thing that their flexibility is constrained by people sitting here in Washington, sitting in the Congress, trying to micromanage this war. I just don't think it's a good thing.

WALLACE: On the ground in Iraq, thousands of Iraqis protested across the country yesterday because Amar Hakim — you can see the pictures there — son of one of Iraq's most powerful Shiite politicians, was detained by U.S. troops along the Iranian border.

Hakim says that American soldiers handcuffed him and that one kicked him. First of all, are any of those charges true?

RICE: Well, the ambassador has apologized for this incident and people on the ground say that they were mistreated.

But clearly, this is someone who probably should not have been put in these circumstances, and we're sorry. Things happen in a region like this, particularly when you're trying to deal with security matters.

But we have an excellent relationship with Abdul Aziz Hakim. I've met with him numerous times myself. We have a good relationship with his people, and I think we'll continue to pursue that relationship.

WALLACE: You have also continued to express confidence in Prime Minister Maliki, but he has missed one target date after another for political reform. They still don't have a law to share oil revenue. They still don't have a law to allow former Baathists into the government.

Secretary Rice, are you satisfied with what's going on in the government and political reconciliation in Baghdad?

RICE: Well, I was very clear with the Iraqi leaders when I was just in Baghdad last week that they do need to progress, and progress more rapidly, on the political reconciliation front. Now, it's hard. They're dealing with difficult existential issues about what kind of country they're going to be.

The oil law is not just an oil law. It's a law about dividing the resources of the country and therefore maintaining the unity of Iraq. So t I've been very clear with them. The president's been clear with them that these political reconciliation measures are at the core of success for Iraq.

What I was very impressed with, Chris, when I went out were what I would call some of the inputs now to the Baghdad security plan. Iraqi forces are showing up. The prime minister has been tireless in going out and promoting the Baghdad security plan. He has the support of a broad segment of political leadership.

And I think that on the input side, they are doing what we expected them to do, including, by the way, rules of engagement that are permissive for their forces to do what they need to do, whether it's Sunni or Shia death squads.

These are all very good signs, but the Baghdad security plan is going to have good days and it's going to have bad days, and they're going to have to keep going in this direction.

WALLACE: You've got a lot on your plate, so let me ask you about another trouble spot, which is Russia. Russian president Putin made a sharp attack, a surprisingly sharp attack, on the U.S. recently, saying that we're trying to dominate the world through the hyper use of force.

A top Russian general has threatened to target Poland and the Czech. Republic if we go ahead with plans to deploy our in their countries. Are we headed for new cold war?

RICE: No. First of all, Russia is not the Soviet Union, and we have to recognize that. It's a different place, and we have a different relationship.

We are cooperating with the Russians on a number of fronts, on North Korea, on Iran, in nuclear — trying to prevent nuclear terrorism. We have a lot of areas of cooperation. We're going to disagree sometimes.

I don't think that the relationship is helped by language of that kind, and we've made that very clear, and I thought that Sergey Lavrov — the Russian foreign minister's piece this morning in the newspaper tried to put this in better perspective.

I do think that the missile defense issue — by the way, we've had more than ten formal contacts with the Russians about the missile defense briefings by the head of the Missile Defense Agency, discussions at the NATO-Russia Council. I've talked to Russian officials about it myself.

So the idea that we somehow surprised them about missile defense — and then to go and say these things about Poland and the Czech. Republic — independent countries, NATO members — was, I think, unnecessary and unwarranted.

WALLACE: But let me just ask you briefly about that, because there is some feeling in the community here in Washington that perhaps with the expansion of NATO right to the border of Russia, with now putting missile defenses in those countries, that we either have, one, made the Russians feel threatened or have created a climate where the Russian populace — that for domestic consumption, it makes sense for them to attack us as if we are threatening them.

RICE: I think the expansion of NATO and the expansion of the European Union is, in fact, one of the great stories of the post-Cold War time. It is one that has helped to consolidate a democratic and secure Europe.

And Russia has nothing to fear by having democracies on its borders, democracies that want to trade with it, democracies that have held with it a NATO-Russia Council in which we can talk about difficult issues.

And certainly, when it comes to missile defense, no one would suggest — anyone who knows anything about this — would suggest that somehow 10 interceptors deployed in Poland are going to threaten the thousands of warheads in the Russian deterrent.

Chris, I used to do this for a living, arms control — you know, how many warheads could dance on the head of an SS-18. It's a ludicrous claim. And in fact, what we'd like to do is to pursue with the Russians missile defense cooperation.

WALLACE: We have a couple of minutes left, and I'm not going to let you go without talking about a little politics. What do you think of Barack Obama?

RICE: Well, I know him. I think he's very appealing and a great person. He's on my committee. And we've always had good exchanges. I think he's an extraordinary person.

WALLACE: When you say he's on your committee, you mean the Senate Foreign Relations Committee.

RICE: Yes, he's on the Senate Foreign Relations Committee. That's right, that's right.

WALLACE: Do you think he has enough experience especially in foreign policy to be president?

RICE: Oh, I'm not going to make that choice. The American people are going to make that choice, Chris. And I think it's also going to be a choice based on whether or not the American people think with any presidential candidate that they are capable of carrying out the responsibilities on terms that the American people agree with.

I think it's going to be a question of does that person share my values, does that person seem to represent my interests. It will be the same questions that have been asked about presidential candidates since we began this process.

WALLACE: I want to show you a recent Gallup poll, though. Take a loot 94 percent of Americans would vote for their party's African-American nominee for president, more than would vote for their party's woman nominee or their Mormon nominee.

I suspect you disagree with Senator Obama on some policy issues. But what do you make of the fact that so many Americans would consider him or any African-American seriously as a presidential candidate?

RICE: I think it just shows that we've come a very long way. I do think we've come a long way in overcoming stereotypes, role stereotypes about African Americans. I will say race is still a factor. When a person walks into a room, I still think people still see race.

But it's less and less of a barrier to believing that that person can be your doctor, or your lawyer, or a professor in your university, or the CEO of a company. And it will not be long, I think, before it's no longer a barrier to being president of the United States. And as I often to repeat to people ...

WALLACE: When you say not so long — well, excuse me. I didn't mean to interrupt you.

RICE: No, no, no, I was just going to say I repeat to people all the time, you know, if I serve my full term, we will not have had a white male secretary of state for 12 years — a white woman, black man and a black woman. That's as far as our country has come, even though we can't deceive ourselves. Race is still a factor in this country.

WALLACE: We're going to have to leave it there. Secretary Rice, thank you so much for coming and taking the time to talk with us. Please come back.