This is a rush transcript from "The O'Reilly Factor," September 10, 2007. This copy may not be in its final form and may be updated.

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BILL O'REILLY: The top story tonight, another view of this. Joining us from Washington, Republican Congressman and presidential candidate Ron Paul.

Do you fear Iran intruding on the whole Persian Gulf if the United States, as you asked for in the debate last week, left the region? Do you fear that?

REP. RON PAUL, GOP PRESIDENTIAL CANDIDATE: Well, I fear that they might want to do that, but I think our policy is leading to that. Everything that we do enhances the Ahmadinejad crowd in Iran. There is a dissenting force in Iran. And everything we do to undermine that government — we have our own CIA over there now trying to undermine that government. In doing that, we bring all their people together. So the ones who wanted to dissent and oppose him, are - you know, they lose their power to do so.

So I would say our policy is doing everything conceivable to enhance Iran. Just the whole invasion of Iraq has helped Iran.

O'REILLY: Well, that may or may or not be true.

PAUL: They're the ones - well...

O'REILLY: It may or may not be true.

PAUL: ...I think it's true.

O'REILLY: I mean, it's a debatable issue. I'm not going to say it isn't true, but it's a debatable issue.

But look, as we saw in the summer war last year, Iran can arm and finance a force like Hezbollah and cause a lot of trouble. And the United States didn't have anything to do with that at all.

So I think that in our national security situation, we have to assume that Iran is an aggressive nation, that it wants to injure the United States, and it's going to use surrogates to do it.

Now if you have an Iran actively seeking nuclear weaponry, as you do, and if you have the ability of that country to hand it off to a Hezbollah or an al Qaeda or anybody else, you withdraw from the region, you give them carte blanches to do what they want, do you not, congressman?

PAUL: See, I think you're concerned about the wrong country right now because more than half of the al Qaeda that are committing suicide in Iraq right now are Saudis. And nobody even talks about it...

O'REILLY: OK, look, I'm concerned about all the things...

PAUL: Please let me answer.

O'REILLY: But they're seeking a nuclear weapon, when a country's seeking a nuclear weapon that's a danger to the USA, a stated danger, and you want to withdraw from the theater, that gives them carte blanche to do what they want, does it not?

PAUL: Well - well first off, you know, you have Pakistan. And they're not exactly the most pro Western...

O'REILLY: Yes, but I'm talking about Iran, congressman. I'm not talking about Pakistan at this point.

PAUL: Well, why don't you ever let me, you know, answer the question?

O'REILLY: Because you're not directly answering the question, sir.

PAUL: Because — no, I do not fear them as you do, as many do, because they want another war. They want to spread this war. This has been the plan by the neo conservatives to have this major overall — this revamping of the whole Middle East, precisely the reason the al Qaeda is growing. The al Qaeda is growing because of our policy. Our national security is threatened because of our policy. And it makes it much worse.

So I see the Iranians is acting logically and defensively. We've been fighting the Iranians since 1953. We overthrew their government through the CIA in 1953. We were allies with Saddam Hussein in the 1980's. And we encouraged him to invade...

O'REILLY: All right, so I just want to — we do not need a history lesson. But I do want to get this on the record.

PAUL: You have to understand.

O'REILLY: I do understand the...

PAUL: You have to understand.

O'REILLY: But we don't time to do the history lesson tonight. I just want to get this on the record. You don't fear Iran, even though Iran has demonstrated it can start a war, which it did last summer with its Hezbollah surrogates?

PAUL: Bill...

O'REILLY: And it stated that it wants to do damage to Israel, wipe it off the face of the earth.

PAUL: OK.

O'REILLY: And he's developing a nuclear weapon. And you don't fear them?

PAUL: Yes, I worry about it, I'm concerned about it. But what I'm saying is the very policy that you advocate is encouraging that. What I'm saying, Bill, is this, that put it in perspective. They don't have a weapon. They're not likely to get one in 10 years, according to our CIA.

O'REILLY: That's not true.

PAUL: Just think about...

O'REILLY: That's not true. I mean, everybody says it's five years or less. And without us in the theater, it's going to happen a lot quicker.

PAUL: How come we got through the Cold War when the Soviets had 40,000 of them?

O'REILLY: Because it was a mutual destruction.

PAUL: I was in the Air Force...

O'REILLY: It was mutual destruction. Now you can handle any weaponry or any kind of thing to surrogates, who will do your killing for you. Look, if you don't think Iran is sponsoring terrorism, you're living in the land of Oz, congressman.

PAUL: Well, so is Saudi Arabia. What are you going to do about Saudi? What are you going to do with Pakistan?

O'REILLY: It's not a government policy in Saudi Arabia. It's just a failure to do any effective policing. It's a policy in Iran to wipe out Israel...

PAUL: It's our policy...

O'REILLY: ...to attack USA.

PAUL: It's our policy of preemptive, deliberate invasions of foreign countries and occupying these countries that has jeopardized our safety. This blowback principle is what caused 9/11. And we have to come to realize it. If you keep living in this dream land of saying that they attack because we're free and prosperous, believe me, we're never going to get...

O'REILLY: Well, if you think that we — if we withdraw off the Gulf, if we get our people out of there, there's not going to be any more terrorism, then you're living in the dream land. You didn't even want to go into Afghanistan to punish those people, did you?

PAUL: You're wrong, Bill, you're wrong on that. I voted for that. So you be careful on your quotes. I mean...

O'REILLY: Well, in the debate you said you don't want to be there — you don't want to be in Afghanistan.

PAUL: Well, they didn't do what we were supposed to. We were supposed to go after Osama bin Laden. We let him go into Pakistan.

O'REILLY: We didn't let him go anywhere. He escaped in there. That's war.

PAUL: Yes.

O'REILLY: That's what happens in war.

PAUL: I know. But what did we do? We went in to doing exactly what Bush said he wouldn't do, into nations...

O'REILLY: All right, let me — I only got — I got one more question. We're in Afghanistan now trying to have that country stem back the Taliban tie. Are we doing the wrong thing there?

PAUL: Right now, we're doing the wrong things because we didn't do what he was authorized to do...

O'REILLY: All right.

PAUL: ...as president, ignored going after Bin Laden. And we don't need to be a nation, Bill. We need to defend this country and defend our national security. And our national security interests are not served by the policy that we're following in the Middle East.

O'REILLY: All right.

PAUL: It's undermining our national security.

O'REILLY: That's what we got to...

PAUL: We have to come to realize it.

O'REILLY: We got it. And we appreciate the lively debate. Thanks for appearing tonight.

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