This is a rush transcript from "Hannity & Colmes," September 25, 2008. This copy may not be in its final form and may be updated.

ALAN COLMES, CO-HOST: Yesterday, Sean sat down with Secretary of State Condoleezza Rice and asked her about Iran's growing threat, the state of Iraq and her meetings with foreign dignitaries this week at the U.N. Take a look.

(BEGIN VIDEOTAPE)

SEAN HANNITY, CO-HOST: This is your 81st meeting of the week. So you've had a very busy week here.

CONDOLEEZZA RICE, SECRETARY OF STATE: Well, by the time I finish I will have had something like 80 meetings. But the U.N. G.A, General Assembly, is a great place to see everybody. Everyone comes. You can get together in different configurations, so it's helpful.

Videos: Watch part one of Sean's interview with Secretary of State Condoleezza Rice | Part 2

HANNITY: That's a lot. That's an awful lot of meetings. But this will be a fun one.

So let's start, obviously, with Iran.

RICE: Yes.

HANNITY: Let's start with some of the comments of Ahmadinejad. He said the power of the U.S. is waning and the state of Israel will fail. He said the oppressive power of the U.S. is in decline. He said the regime of Israel, which is the core of aggression, is nearing its end. And he also went on to say that Israel should be eliminated from the universe.

RICE: Well, of course, these are not things that the leader of any country, particularly a country with great people like the Iranian people, should say. And it just reminds us who he is. It reminds us the nature of the regime.

And, by the way, the Iranians need to know that, of course, the United States stands strong, stands strong with its friends, will defend its friends, will defend its interests. And I really don't think the Iranians, despite Ahmadinejad's comments, I don't think they're confused about that.

HANNITY: But they — these comments are repeated continually. He denies the Holocaust. He's threatened to wipe Israel off the map. He continues to repeat these statements.

So, the question, I'm thinking, all right, if these comments were directed at the United States of America, I think I know what our reaction would be. If we thought that this was a real, imminent danger, we would probably react, probably preemptively. And that now puts a moral dilemma and a quandary on Israel.

What should they do? And what will we do if they decide to strike their nuclear facilities?

RICE: Well, the very fact that we talk about such things demonstrates how destabilizing it would be if Iran were to acquire a nuclear weapon. And that's why we are working so hard to make certain that they don't.

Now, we believe, and the Israelis have said, that they believe this is best solved diplomatically. We're working diplomatically to do it.

And by the way, it's not just what we do through the U.N. Security Council. It's also the fact that through the sanctions that the United States and, increasingly, the European Union is applying without the Security Council, if you will, the Iranians are suffering from a lack of the ability to use the financial system. Companies are leaving Iran. I think the Iranians are really paying a cost for this.

But the language of Ahmadinejad is really awful. It's disgraceful.

HANNITY: Could we blame — and I know I'm putting you in a tough position. But in light of those very specific threats, in light of, you know, you mentioned the economic opportunities that would be available to Iran, if they decided to join the world community. They have rejected them repeatedly. So if Israel feels that it is in their national security interest to act, can we blame them?

RICE: Well, I wouldn't speculate about — about such things. We're going to work with the Israelis. We talk to the Israelis about this all the time. We reassure them that the United States intends to defend its interests, to defend its friends. We have a network of security cooperation throughout the gulf region.

I today just met with the Gulf Cooperation Council, which are the states of Saudi Arabia, Bahrain, Oman and others. The United States have plenty of capability to defend its friends and to defend its interests, and I think the Iranians know that.

HANNITY: What about this issue — now this is — I'm bringing you a little bit into a political arena. And I know you'll resist a little bit here. But it's come up as an issue in principle.

Is it wise to negotiate with the leaders of these rogue nations? Is it — should we do so? Should we do so without preconditions?

RICE: Well, I think you always have to have the right conditions. I cannot imagine walking into a room with an adversary when you don't have some leverage that you've developed over time, or walking into a room with an adversary when you don't have plenty of help.

When we walk into the room with North Korea, we have plenty of help at the table: China, Japan, Russia, South Korea.

HANNITY: We have multilateral talks that served us well up until maybe this last week.

RICE: But as the North Koreans have done things that, frankly, we would prefer they didn't do, I have been consulting with the Chinese, with the South Koreans. I talked with my Russian counterpart just a little while ago.

And, in doing so, we are able to mobilize the entire neighborhood, if you will, all of the states of northeast Asia, to tell the North Koreans stop this reversal, get back to the table, agree to verification principles. That's why it's important to have conditions, if you will, that are ripe before you talk to an adversary.

HANNITY: Well, what about — Senator Obama had made the statement — now, the Soviet Union your area of expertise, the former Soviet Union. And he said, "Well, Iran, Cuba, Venezuela, compared to the Soviet Union, these are tiny countries. They're not a serious threat." Do you agree with that assessment?

RICE: Well, I'm not going to speak to Senator Obama's comment. I don't actually remember precisely what he said. And I don't...

HANNITY: That's a direct quote. I've used it a lot.

RICE: Yes, but I'll tell you, Sean, when people comment — ask me to comment on things that I've said, I always say let's look at the whole context. Let's leave aside the specific quote and go to the question that is there.

HANNITY: It's a serious threat.

RICE: Iran is a serious threat. It's a vulnerable country, in that it has its own vulnerabilities. It has ways that we can use our leverage. The Soviet Union, of course, had vulnerabilities, as we saw. It collapsed over time. But, Iran is a serious, serious challenge in the international community.

And by the way, it's not just because it has nuclear ambitions. It's a state sponsor of terrorism. It's probably the — it is the — the kind of financial banker for international terrorism, which is why we've been cutting off access to Iranian banks. It is funding the Hamas.

HANNITY: Hezbollah.

RICE: It's funding Hezbollah. It's clearly a threat.

And, by the way, it also has been a threat to peace and stability in Iraq. But, in Iraq, where we have the forces, we've gone after Iranians whenever we've found them doing things that would harm our forces. We've gone after them. And I think it's had an effect in Iraq.

(END VIDEOTAPE)

HANNITY: And coming up, we'll have more of my interview with Secretary of State Condoleezza Rice right after this break.

(COMMERCIAL BREAK)

HANNITY: We now continue with more of my interview with Secretary of State Condoleezza Rice.

(COMMERCIAL BREAK)

HANNITY: Is it fair to say that Iran has been fighting proxy wars? And by that, I mean exactly what you were just saying, and that is that they're funding Hezbollah? I've read often to the tune of $100 million a year.

(CROSSTALK)

RICE: ... surprise me.

HANNITY: That the Iranian Revolutionary Guard, they are inside Iraq, attacking American soldiers in their efforts. We know, we've documented that. So are they fighting simultaneous proxy wars against the United States, really, and against Israel?

RICE: Well, I think it's a good way to think about it. And of course, it's not just against the United States and Israel, but the activities that they engage in when they support Hamas to take over in Gaza. It goes right at the heart of the possibility of a Palestinian state and right at the hopes of Palestinians.

So they are a terribly destabilizing force in the region. And it's really unfortunate because, again, the Iranians are a great people. It's a great culture. We've tried to reach out to the Iranian people. We're going to keep reaching out to the Iranian people.

When people travel there, they talk about how favorably disposed the Iranian people are to Americans. And so we need to find ways to reach that population through exchanges and anything else that we can do.

But it's a regime that is truly a threat.

HANNITY: You know, when I look at this, there was, for example, in New York this weekend an anti-Ahmadinejad rally. And I thought it was a shame, I thought it was a missed opportunity, and that is that Senator Clinton pulled out when Governor Palin was going to show up and be one of the featured speakers there.

Then we find out the Democratic Party of New York pressured the groups with, you know, IRS investigations if, in fact, they, you know, continued their invitation with Governor Palin. She ended up being disinvited — you know, not invited to the event.

And I'm thinking, well, wouldn't that have been a great moment, an opportunity to show that America is united against a force that denies the Holocaust and is threatening innocent countries?

And was that a missed opportunity?

RICE: Well, in fact, I think people do have a bipartisan view of Iran. I don't know very many people who don't understand that anybody who denies the Holocaust doesn't belong in polite company, so to speak.

Rallies are fine. But the signals we send through the actions that have been taken in our Congress, the signals we send through the actions we've taken in the U.N., the signals that are sent when governments and businesses and banks won't deal with Iran, those are the real signals.

And so I'm glad there was a rally. I don't know about...

(CROSSTALK)

RICE: I don't know about participation in it.

HANNITY: Well, maybe that — but I think it would've been more powerful, because Senator Clinton was going to go. Governor Palin was going to go. And I think it could have been a moment where we were showing the world that we're united.

RICE: Well, any time you can send a message to Iran, you ought to do it.

HANNITY: Let me ask this. I know a lot of Americans, and I include myself in this, have lost confidence. You've spent the better part of this week at the United Nations. You've met with many world leaders this week.

We've lost confidence in their ability to accomplish things of substance. You know, there has been much anti-American sentiment expressed there, anti-Semitic sentiment expressed at the United Nations.

You know, and I'm thinking, the United States, we're about, what, 5 percent of the world's population. We bear the burden of securing liberty and freedom for the other 95 percent. Has it lost its effectiveness and its ability to accomplish the task of peace and stability and the advancement of freedom in the world?

RICE: Well, Sean, the president spoke to that in his speech to the General Assembly. And he was really quite blunt about it. That multilateralism is important and we believe that the U.N. is a critically important institution.

But it can't be about process and bureaucracy. It has to be about outcomes. We've had some good outcomes. I think that the three resolutions on Iran, good outcomes.

Resolutions on North Korea in 2006 that China joined for the first time, good outcome. Democracy fund in the U.N., can you imagine several years ago a democracy fund in the U.N.?

HANNITY: So you think we're making some progress?

RICE: I think we're making some progress. And I'll tell you, I think it's because the president has been willing to go to the U.N. and challenge it to do difficult things. It hasn't always succeeded. But unless you challenge the U.N. to do difficult things, people will take the easy way out.

(END VIDEOTAPE)

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