This is a rush transcript from "On the Record ," May 23, 2007. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, HOST: Secretary of State Condoleezza Rice: We talked to the secretary of state at the President Ronald Reagan Library here in California today. And Secretary Rice went "On the Record."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Madam secretary, nice to see you.

CONDOLEEZZA RICE, SECRETARY OF STATE: Nice to see you, Greta.

VAN SUSTEREN: What a beautiful environment, the Reagan Library.

RICE: Oh, it's fantastic. Great history, great person. It's wonderful to be here.

VAN SUSTEREN: What brings you here?

RICE: Well, I am such an admirer of Ronald Reagan, and of course, of Nancy Reagan, as well. She's been a friend. And when I decided that I wanted to take my counterpart from Australia out of Washington, I thought the Reagan library would be a perfect place to come and talk about the freedom agenda, talk about what we're doing to defend freedom. It seemed like the perfect place to do that.

VAN SUSTEREN: All right. While you are out here giving the speech and showing the ambassador around, I assume you're watching the hot spots in the world?

RICE: I'm, of course, keeping my eye on all of the hot spots all around the world, yes.

VAN SUSTEREN: Lebanon?

RICE: Yes.

VAN SUSTEREN: What are we going to — is there any role for us in Lebanon? The Palestinians are now trying to leave the area, trying to find safety. Is there anything we can do to help?

RICE: Well, we've been very supportive of the government of Fouad Siniora. It's the elected government of Lebanon. It's a democratic government. It's a government that is trying to do the right things to establish sovereignty and democracy for Lebanon. And so we have been supportive of their efforts to deal with this very extreme terrorist group that is operating in these camps. We've helped to — we have helped with a number of other international actors to reform and strengthen the Lebanese armed forces. And hopefully, they will prevail. I think it's very important that the Lebanese government be able to deal with this situation.

VAN SUSTEREN: When you say we are helping, what are we doing? I mean, as a practical matter, how do we help? We just receive phone calls and say, yes, we're with you, or what do we actually do?

RICE: Well, some of it is political support because this is a government that is very much under fire from extremist forces and also from some of their terrible neighbors, like Syria and Iran. Syria occupied Lebanon with its forces for 30 years. And thanks to work by the United States, France, the Security Council, Syria was essentially expelled from Lebanon a couple of years ago, and Lebanon now has sovereignty. So we've helped in that way.

We've also helped economically. I went to a conference in Paris that raised over $7 billion for this Lebanese government, and the United States has given generously to Lebanon. We have a $770 million package for Lebanon in this latest supplemental. So we really are great supporters of the Lebanese people because the Lebanese government is making the right choices for democracy.

VAN SUSTEREN: Is Syria behind this? Are they stirring up the current trouble? I mean, do we have, you know, 100 percent level of confidence that they're the ones that are helping to fund this?

RICE: Well, we can't be certain who's behind it, but it's clearly — these are clearly parties that do not want to see the Lebanese government succeed and that want to cause trouble, in these very desperate Palestinian refugee camps, where people don't live very well and where there is extremism. But whether there are foreigner — foreign influences involved here, I can't say. But Syria has been a source of conflict and a source of trouble for Lebanon for decades.

VAN SUSTEREN: It seems that most of the trouble in the Middle East sort of winds itself back to one sort of core issue, which is the Israeli-Palestinian issue. Agree with me, I mean, that's sort of the genesis of a lot of the trouble?

RICE: Well, it is a core issue, but I think we're seeing that what we really have going on, even in that case now, is a real struggle between extremism, on the one hand, and those who would use political means and more a moderate responsible course, on the other hand. And that's really what we're seeing. We're seeing it in Lebanon. We're seeing it in Iraq. We're seeing it in places like Afghanistan. We're seeing it in Pakistan. And we see in the Israeli-Palestinian conflict that there's someone like Mahmoud Abbas, who has renounced violence, who believes in the political course. And he fights on a daily basis militants from Hamas and other organizations that want to use violence rather than politics to resolve differences.

VAN SUSTEREN: When you look at the map of the Middle East, it's almost like if you fix something here, there's an outbreak here of another problem. And so I'm trying to get a sense of it. Is a solution ever — as a practical matter, do you ever expect that this will be resolved? Because every time you move a piece, you get six more problems.

RICE: Well, there's a reason that these are all interconnected, and it is because the extremists, who know that if there's a different kind of Middle East, a Middle East in which people are resolving their differences politically, then their cause is going to be irrevocably hurt. It's the reason, Greta, that they're fighting so hard in Iraq. They know, these extremists know, that if the Iraqis manage to resolve their differences by political means, democracy takes hold there, then their backward-looking extreme version of how politics ought to progress in the Middle East will be defeated.

And it's why, for the United States and for the free world, a success in Iraq is so critical. And it's why, if we were to precipitously leave Iraq and leave behind a government unable to defend itself, the extremists would have won a major battle in the war on terrorism and you would start to see chaos through the this whole region because you're right, these issues are all linked. They're all a part of the same puzzle.

VAN SUSTEREN: One thought, though, is that the extremism begets extremism, in the sense that, you know, the popular opinion — I haven't been to Iraq, so I don't know if this is true or not — is that things are getting worse and that it's a breeding ground. It's almost a recruitment program in terms of our, you know, military effort to fight extremism. Is — you know, is diplomacy ever a possibility in terms of talking with our enemies?

RICE: Well, there is no doubt that the extremists have decided to make a stand in Iraq, Al Qaeda in Iraq, for instance, trying to use the difficult circumstances there. But I think it's fair to say that if they were not fighting in Iraq, they would be fighting someplace else.

VAN SUSTEREN: Yes, but that's — I mean, that goes back to the whole sort of — you know, the mushroom cloud statement, which, of course, you know — that you — that was a statement you made that — is that, you know, we hear that and we get scared as Americans. I mean, and, you know, that was a terrifying thing when we heard our secretary of state say it, or our national security adviser. You know — you know, is it — I mean, are we really, like, scaring ourselves more than we should and we should sort of look at other ways to do this?

RICE: Well, unfortunately, we live in a world in which every day, the extremists get up, trying to figure out how to deliver a decisive blow, as they would call it, against the United States. That's simply the world in which we live.

I was really struck when Prime Minister Blair said in the Rose Garden that every day, we get up and we make a choice about what kind of world we're going to live in. And that is absolutely the case because every day, the terrorists and the extremists get up and they've made their choice. And their choice is to try to destroy the basis of the civilization that we have. Their choice is to have a world in which tolerance is not possible, in which difference of opinion is not possible, in which women are repressed. That's their choice. And our choice every day is whether or not we're going to fight them.

I know that it is not a soothing statement to make. But on September 11, I think we learned in a very devastating way what happens if you're not always focused on the choice that you're making every day. And our country was not mobilized to fight the terrorists on September — before September 11. We now are mobilized. They're fighting back. I think it was entirely predictable that when we started to go after them, they would start to fight back.

But we only have a choice to fight them. We also have a choice to use diplomacy, to use our great values to begin to change the circumstances in which this extremism exists. It's why, Greta, I'm spending so much time on the Israeli-Palestinian conflict. It's why we're spending so much time on education and on democratization in the Middle East because, ultimately, the answer to terrorism is to change the circumstances in which it arose.

VAN SUSTEREN: And I think that probably every American is probably with you. No one wants terrorism. No one wants extremism. Nobody wants that. I think that the probably — and not to rehash old things — is whether or not, you know — you know, Iraq was the answer or it was simply Afghanistan and going after bin Laden. And I don't mean to rehash that.

(CROSSTALK)

RICE: ... a good question.

VAN SUSTEREN: And it's a whole sort of question of, like, you know, strategy and, you know, what options we have.

RICE: Right. And I think it's a fair question. Would we have been able to deal with the terrorist threat by simply dealing with Al Qaeda and their base in Afghanistan? There are people who believe that that was the course to take.

But the president and his advisers believed that what happened on September 11 was not just that Al Qaeda, an organization, attacked the United States, but that they were attacking from a base that was not just Afghanistan but a broad base of the conditions for extremism in the Middle East. And that meant that — threats where you might have a marrying of terrorism with weapons of mass destruction. It meant that a place like Saddam Hussein's Iraq, that had been a major source, if not the major source of instability in the Middle East, that we finally had to deal with that threat. And I think we would do that again.

VAN SUSTEREN: All right. Well, I won't belabor that point and revisit that. I want to switch gears to Iran. Director of the IAEA is reported in the Spanish press — I don't know if this is, you know, correct or not, I don't read Spanish — that with Iran and its nuclear ambitions, it's now not a question of, you know, if, that they are, you know, so far ahead in their enrichment program with uranium, it's really a question of how do we contain them. First of all, are they as far ahead as the director seems to suggest in this nuclear enrichment program?

RICE: Well, we're certainly not in the camp of believing that our goal is to contain Iran's nuclear program. Our goal is to convince the Iranians that their nuclear ambitions are going to be met only with international isolation and with resolve. Of course, they're continuing to improve their capabilities, but it's a matter of continuing to practice and getting better at it because this is actually a complicated thing to do.

VAN SUSTEREN: It's enormously complicated.

RICE: It's very complicated.

VAN SUSTEREN: And I realize that. (INAUDIBLE) to the extent that we snub them internationally, it requires support from others to do, as well.

RICE: And others are beginning to really have — it's beginning to have an impact on Iran. We are using the Security Council and its resolutions to demonstrate that Iran is isolated. Iran is beginning to have difficulty using international financial system. It is having difficulty getting the level of investment in its oil and gas reserves that it needs.

And so sooner or later, Iran is going to realize that the course that it's on is not going to lead to greater international power and authority, it's going to lead to greater isolation. And so from our point of view, to say, Well, all right, it's all over, we'll just now contain, that's not where the international community is. It's not where we and our allies are. And I was frankly a little surprised that the director said that, and in effect, tried to be involved in the diplomacy here.

VAN SUSTEREN: We're at the beautiful Reagan — spectacular, I should say, Reagan Library.

RICE: Yes.

VAN SUSTEREN: You worked for the Reagan administration.

RICE: I was a fellow at the Joint Chiefs of Staff, working on strategic nuclear policy when Ronald Reagan was president. And it was great. I was on the Joint Staff when he and Gorbachev had the famous Reykjavik summit. And I did some of the support work go back at the Joint Staff for that work on ballistic missiles, and possibly the axis of them.

VAN SUSTEREN: Were you ever able to meet him?

RICE: I did meet him, and he was, as you might imagine, just an extraordinary man, tall, and I just remember thinking just very strong. But he was also very funny. He was always telling — he had great timing on the great joke, and he was just a wonderful person to be around.

VAN SUSTEREN: You were quite young at the time, I mean, a bit back then, because you're still young. I don't mean that.

RICE: Thanks.

VAN SUSTEREN: Whatever.

(LAUGHTER)

VAN SUSTEREN: But were you nervous meeting him?

RICE: Sure. Yes. I was nervous meeting him. But he was very kind, very nice, and there were several people there. He took a moment to speak to me, and I've always really appreciated that.

VAN SUSTEREN: You know, I mean, it's — when you look back at the presidency, it's fun to sort of pick out, like, you know, how they've changed the whole course of history. President Reagan really did change the direction dramatically.

RICE: He changed the — President Reagan had just the strongest sense of values and what America could do if it was true to those values. He changed the way I thought about the Soviet Union. I was a young Soviet specialist. I had studied the Soviet Union. I knew Russian. I'd worked on it. I always assumed that we would be forever locked in a struggle with the Soviet Union. The thought that you could challenge the Soviet Union, and ultimately, out of its internal weakness and American power, it would collapse, never occurred to me until I started to read Ronald Reagan. And he succeeded.

VAN SUSTEREN: Do you have a favorite part of the library?

RICE: Oh, well, I haven't seen the plane. I'm going to go look at that. That looks like it may be my favorite part of the library.

VAN SUSTEREN: The 707?

RICE: The 707 here, which is great. But I love the exhibitions, of course, about the end of the cold war, because for me, that's the most important contribution of Ronald Reagan. He knew that America's values and America's strengths could be put to good purpose. And look at those millions of people that are free today.

VAN SUSTEREN: Outside is a section of the Berlin Wall, which is, I think, probably, one of my favorites. I have different favorites here. Do you remember where you were when you watched the Wall come down?

RICE: Oh, I sure do. I was in the White House. I was on the National Security Council, working for President George H.W. Bush at the time. And we had known from, oh, the August period, September of 1989, that Eastern Europe was changing quite dramatically. But the idea that the Berlin Wall might actually come down — that just seemed a fantasy.

VAN SUSTEREN: Did you watch it on TV?

RICE: I watched it on TV. I had been in Germany just in October. And I remember coming back and telling President Bush that it seemed to me that Germany — there was a kind of roiling in Germany, that I didn't know how long it was going to be before East and West were starting to move together. But I never dreamed it would that dramatic. It was really quite something.

VAN SUSTEREN: It's an extraordinary library. You have — it's sort of interesting. One of your mentors in school was?

RICE: Josef Korbel.

VAN SUSTEREN: And he is?

RICE: Madeleine Albright's father. That's right.

VAN SUSTEREN: The first — first — your predecessor, or a couple of...

RICE: Yes.

VAN SUSTEREN: Do you talk to the other former secretaries of state?

RICE: Oh, sure. I do.

VAN SUSTEREN: Do you, like, talk about — talk shop, or do you talk about the world?

RICE: Both.

VAN SUSTEREN: Both?

RICE: Both. It's not that big a club.

VAN SUSTEREN: It is a very small club.

RICE: That's right. So we do talk. And it's always good to get people's views. We don't agree about everything, of course. And Madeleine and I sure don't agree about a lot.

VAN SUSTEREN: You're from Alabama.

RICE: Yes.

VAN SUSTEREN: Went to Denver University — not a big football school.

RICE: No.

VAN SUSTEREN: Not a big...

RICE: No football team. No football team.

VAN SUSTEREN: Stanford is not University of Florida, in terms of football.

RICE: They played well.

VAN SUSTEREN: I mean...

RICE: They have a good football team from time to time.

VAN SUSTEREN: OK, now, I'm from near Green Bay, and so I never quite understood. Where do you get your football interest?

RICE: My dad.

VAN SUSTEREN: What was his team?

RICE: My dad — Cleveland Browns, which is still my team. But my dad was a football coach and athletic director when I was born. And I was supposed to be his All-American linebacker. I'm an only child.

VAN SUSTEREN: Well, you did pretty well. I mean, you have to admit, you did OK as a job. I mean, he can't complain.

RICE: Yes, but he was — bless his heart, you know, he already had the football bought. I was going to be named John, like him. And so he had to teach me about the sport (UNINTELLIGIBLE), and I just became — from that high, from, you know, 2 years old, I just loved football.

VAN SUSTEREN: Well, you must have loved Johnny Unitas. He's from Alabama.

RICE: I loved Johnny Unitas. I loved the Colts in those days and loved Johnny Unitas. But Bart Starr was OK.

VAN SUSTEREN: Well, you know, he's OK. But we — I have a — my husband's from Baltimore, so it's...

RICE: Oh, yes.

VAN SUSTEREN: Which is a little bit of a problem.

RICE: Yes, that is a problem.

VAN SUSTEREN: But you really do — you do love football.

RICE: I do love football. I watch it — I will watch it at any time. I could save (ph) (UNINTELLIGIBLE) money (ph) (UNINTELLIGIBLE) actually watch pre-season football games. I love it.

VAN SUSTEREN: Do you TIVO a lot of games?

RICE: I do TIVO football games.

VAN SUSTEREN: And so you hate people who say, Who won?

RICE: Oh, I don't mind. I can even watch a football game if I knew who won. It's all right with me. But I love — really, Greta, the truth of the matter is I love anything with a score at the end. I love hockey. I love basketball. I love football. It's just a great sport. I love sports.

GRETA: Well, it's awfully nice to see you. Thank you very much.

RICE: Good to see you, too.

GRETA: Nice to see you. Thank you.

(END VIDEOTAPE)

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