This is a rush transcript from "On the Record," January 4, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, HOST: The Nigerian accused of trying to blow up Northwest flight 253 on Christmas Day reportedly trained in Yemen. News broke yesterday that the Britain, U.S. and France closed their embassies in Yemen, and today two more embassies closed, Germany's and Japan's.

And there is more news. The White House deputy national security adviser says some prisoners from Guantanamo Bay will still be transferred back to Yemen. Joining us live is former U.S. ambassador to the United Nations John Bolton.

Ambassador, first of all, Yemen sounds like a breeding ground for terrorism.

JOHN BOLTON, FORMER U.S. AMBASSADOR TO THE U.N.: Certainly Al Qaeda has been using it as a base. We have substantial evidence of a number of terrorist operations planned out of there. We know from reports that have been done that a number of people released from Guantanamo Bay have gone to Yemen and been trained there. So I think this has got to be a much more important focus of our attention than it has been over the last several years.

VAN SUSTEREN: Focus, how? We can all sit and wring our hands here. Assuming that he was trained in Yemen, at least given the weapons, it has now visited on our soil.

BOLTON: Not that we are going to find out very much more about it since the Obama administration has read him his Miranda rights and provided him with a court appointed lawyer. It's not very likely he will be talking any time soon. We have been involved with Yemen for some time going back to the days after September the 11th. We have attacked Al Qaeda elements there, we worked with the government. And because of lack of attention Al Qaeda has more recruits there and their operation is bigger. We need to help the government of Yemen to eliminate them, basically.

VAN SUSTEREN: I did a little research, and I had forgotten that a year and a half ago at our American embassy there had been terrorism on our American embassy. So it's not like it showed up with this one incident. This has been going on for quite some time. When you say attention, doing what? What do we do?

BOLTON: I think we were simply focused on a number of things. I went to Yemen in 2003, and I have to say it was under more security, our embassy, our personnel than any other country other than Iraq or Afghanistan. So this threat has been there a long time and it is simply a lack of focus on it. I think what we need to give the government of Yemen more support. We need to participate more directly. We need to eliminate the possibility Al Qaeda can use Yemen as a base. VAN SUSTEREN: Yemen said the last day or so they don't want our help, at least not publicly, because that would be the kiss of death, because if they have any American, western influence it's horrible when you are trying to keep your terrorism at a minimum in your country. So how does Yemen handle the fact that publicly they don't want our fingerprints on our help?

BOLTON: I think the same way we do it in a number of other countries. We say there are no American military personnel there, and there are other personnel from other agencies from the intelligence agencies that are technically civilian. But I don't think the government of Yemen is capable or in some parts of that government willing to do what's necessary to eliminate the Al Qaeda. So either we do it or Al Qaeda remains and grows.

VAN SUSTEREN: Which is worse, Yemen or Pakistan?

BOLTON: At least as far as we know there's no nuclear weapons capability in Yemen. So, obviously, Pakistan falling into the hands of Al Qaeda terrorists would be far worse.

VAN SUSTEREN: In terms of the Gitmo, I suspect you think it is a bad idea to transfer Gitmo prisoners back to Yemen?

BOLTON: It's an incredibly bad idea. One of the reasons you have Gitmo to begin with is because there isn't any really good place to put these people. What we've seen is people transferred back to Yemen, back to Saudi Arabia, back to a number of other places, have gotten out of their prisons, have been transitioned back into civil society and simply returned to terrorism. I think those who have called for a halt to further transfers out of Gitmo are exactly right, at least until we see what's been happening and some of these classified reports are released to the public to be able to consider.

VAN SUSTEREN: I find it stunning that I hear people on TV, part of this administration, past administration, talking about the facts of failing to connect the dots, the agencies were not talking. We heard that in the days and weeks and months following 9/11. And as a passenger I thought all that was now handled. And it is stunning, from a passenger standpoint, it looks like zero was done, because it's so stupid.

BOLTON: Stunning, and that the administration still doesn't get the point. After Secretary Napolitano said the system had worked and then corrected herself yesterday...

VAN SUSTEREN: That's lick "Heckuva job, Brownie," that's their administration's dumb thing to say.

BOLTON: Yesterday the terrorism adviser to the president, John Brennan, said the system worked on every year day other than Christmas. That gives new meaning to the phrase good enough for government work. On this terrorism thing the Obama administration is on it 23/6.

VAN SUSTEREN: It so didn't work and it's so profoundly stupid that it's like — and there isn't a single person who doesn't know it's profoundly stupid and it's scandalous that we still are at such huge risk.

BOLTON: And the response is more bureaucratic than anything else, putting in broad prohibitions and not focusing in on what we need to, which is getting and discerning what the information is that allows us to pick out the people who are real the threats.

VAN SUSTEREN: How about a warning to embassy by the father. A guy buys cash, travels on a one-way ticket, no bags. At that point it should have been clear the guy needed to be checked.

BOLTON: The president made the point exactly correctly. This was a systemic failure. So rather than going around saying actually the system works well. The system failed. We were extremely lucky that the explosive didn't ignite.

VAN SUSTEREN: I'm not confident there was a system. I would take it one step farther. Mexico, it is right on our border, and the violence is growing day- by-day. It is a war down there.

BOLTON: The drug cartels have grown more powerful. We do have in Mexican President Calderon somebody who has agreed effectively to militarize the campaign against the drug cartels. They are in the middle of a major build-up assisted by the United States, not far different really from Plan Colombia, which worked very effectively there. And yet there's already pressure on the Mexican government to back away from this, to reach accommodations with the drug cartels. We have not paid adequate attention to Mexico, and it is something that is far more directly threatening to the United States than Colombia because by definition it is right on our border.

VAN SUSTEREN: Everything I read is the president does want to do something about it, but we went down there some time ago and interviewed Secretary Clinton there and did some stories on the drug cartels down there, and it is stunning how every day some police officer, army person, beheaded, some American tourist is being held up. It sounds like nothing is improving down there.

BOLTON: I think it is getting worse. And I think this does resemble Colombia some years back, that the drug cartels are not simply criminal enterprises. They are approaching the capability of alternative governing systems. They through in a little revolutionary rhetoric to give them a patina of political legitimacy. So I think Calderon is at a very critical point and I think substantial increased American assistance is going to be needed. This has direct impact on our streets within days of what goes on in the drug trafficking in Mexico.

VAN SUSTEREN: Ambassador, thank you, sir.

BOLTON: Good to see you.

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