Transcript: Fran Townsend on 'FOX News Sunday'

The following is a partial transcript of the July 22, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Well, joining us now to discuss the latest assessment of the terror threat to the U.S. is Fran Townsend, the president's homeland security adviser.

And, Ms. Townsend, welcome back to "FOX News Sunday."


WALLACE: Two years ago President Bush said that we were beating Al Qaeda. Let's take a look.


PRESIDENT GEORGE W. BUSH: We have put the enemy on the run, and now they spend their days avoiding capture.


WALLACE: But the new National Intelligence Estimate out this week says things have changed, quote, "We assess the group has protected or regenerated key elements of its homeland attack capability, including a safe haven in the Pakistan federally administered tribal areas, operational lieutenants and its leadership. As a result, we judge that the United States currently is in a heightened threat environment."

Ms. Townsend, why was Al Qaeda getting weaker two years ago and now it's getting stronger?

TOWNSEND: Well, I think we need to step back for a moment, Chris, and understand what the NIE says in the paragraph just before the one you read is that the U.S. worldwide global counterterrorism operations have constrained Al Qaeda's ability to attack and that Al Qaeda believes that the homeland is now a more difficult target to attack.

That said, there's no question that as we keep them on the run, we've also gotten stronger. We have more capability now to bring them to justice, to capture them, and we've enjoyed quite a bit of success working with our allies like Pakistan.

There's no question that they've stepped back. They've been able to take advantage of the agreement between President Musharraf and the tribal elders in the federally administrated tribal area to find safe haven, to train, to recruit.

And we're working with President Musharraf to take action against that.

WALLACE: But I want to press this, because there was another intelligence report that came out the week before that tells the same story. Let's put that up on the screen.

It was titled "Al Qaeda Better Positioned to Strike the West." The document reportedly says U.S. intelligence analysts have concluded Al Qaeda has rebuilt its operating capability to a level not seen since just before the September 11 terrorist attacks.

Now, NIE, an intelligence estimate, last year reported a downward trend in Al Qaeda. The NIE this week that you were talking about at the White House reports an upward trend. Why?

TOWNSEND: What it says is that it's rebuilt the — three of the four capabilities that you mentioned — top operational lieutenants, its top leadership, and the safe haven.

But let's not underestimate — the safe haven is critical enabler to all those other things. And so the single most important thing that we are now working to act against is the safe haven. That's the thing that's different now.

WALLACE: If our enemies are regenerating their safe haven in Pakistan, under the Bush doctrine of preemptive military action to take out any threat, why aren't we doing everything we can — special operations forces, pilotless drones — why aren't we doing everything we can to take out that safe haven?

TOWNSEND: Well, Chris, just because we don't speak about things publicly doesn't mean we're not doing many of the things you're talking about. First and foremost, we're working with our...

WALLACE: Well, are we doing those things?

TOWNSEND: First and foremost, we're working with our Pakistani allies to deny the safe haven.

But let's remember that the federally administrated tribal area is an area of Pakistan that's never seen the writ of the Pakistani government. It's never extended that far.

President Musharraf has got over 80,000 Pakistani military troops in the FATA and working with us they've sustained hundreds of casualties in this fight.

We're working with them, but the president has been clear. Job number one is to protect the American people, and there are no options that are off the table.

WALLACE: Well, you say no options that are off the table. Have we, in fact, acted on those options?

TOWNSEND: Well, for obvious reasons, I'm not going to detail for you things that are classified and how we behave along with our Pakistani allies.

I will say to you there are no options off the table. The president's committed to the most effective action that we can possibly take in the FATA to deny them the safe haven.

WALLACE: Now, you talk about, "Well, we're going to work primarily with President Musharraf," but as you point out, he agreed to this treaty with some of the militants because, in large part, hundreds of his soldiers were killed.

Does Musharraf have the capability to take out that safe haven himself? He hasn't up to this point.

TOWNSEND: Well, look at all the activity on the part of the Pakistani military since the seizure of the Red Mosque. There's been numerous offenses into the FATA. They've got troops there. They're taking casualties.

And as you just reported when we began, they killed 13 Taliban.

WALLACE: But having said all of that, the fact is, according to the NIE, Al Qaeda and the Taliban have regenerated their powers, a lot of their capabilities in that area.

So he clearly hasn't put a dent in their operations. In fact, they're stronger than they have been in recent years.

TOWNSEND: I think we have to be clear that the NIE is a strategic look about what the intelligence community's assessment is about the threat over the next three years.

They point out that Al Qaeda will be the principal threat to the U.S. homeland over the next three years, and we need to take action against it. We're doing that with our Pakistani partners.

WALLACE: I mean, I guess, like a lot of people, what surprises me is that we have intelligence that indicates — and we're not just talking now about Zawahiri and bin Laden. We're talking about Al Qaeda forces, training camps, Taliban forces, training camps.

I guess a lot of people are asking, "Why don't we take them out?"

TOWNSEND: Well, we are...

WALLACE: As we should have before 9/11.

TOWNSEND: We are taking a whole series of actions using all instruments of national power, whether it's military, law enforcement, intelligence, and we've got greater capability than we ever have in the history of this nation to take the most effective action, and we're doing that.

WALLACE: President Musharraf is now under fire not only from the extremists — and we've seen an increase in suicide bombings in Pakistan — but also from the pro-democracy movement, especially with the reinstatement of the chief justice of the supreme court of Pakistan.

Do we have an independent policy for Pakistan or are we joined at the hip to Musharraf?

TOWNSEND: Well, there's no question, first and foremost, what we care about, what the president cares about, is U.S. national interest. That comes first.

But you've got to — we can't be successful in the global war on terrorism without our partners and allies around the world.

That means we've got to be good partners and allies even when our partners aren't doing 100 percent of what we'd like them to do, because we need them. Even 20 or 40 or 60 percent of a partnership is better than nothing.

And what you do is you try to work with them to get them to do more and more of what you want, but you don't walk away from your partners, and it's not in our interest to walk away from them.

WALLACE: Let's turn to Al Qaeda in Iraq. The NIE, the intelligence estimate, says — and let's put it up on the screen — "AQI, Al Qaeda in Iraq, is Al Qaeda's most visible and capable affiliate and the only one known to have expressed a desire to attack the homeland."

What evidence do you have that Al Qaeda in Iraq has either the will or the capability to strike the U.S.?

TOWNSEND: Well, we go back to — I would go back to the president's speech at the U.S. Coast Guard Academy in May where we declassified a whole series of intelligence reports going back to bin Laden, tasking Zarqawi, who was then the leader of Al Qaeda in Iraq, to create a cell to focus on external operations; in particular, an attack against the homeland.

Zarqawi clearly welcomed that assignment, if you will, and indicated he had plans for such an attack. Zarqawi is now dead, but we know from the recent capture of Mashhadani that there continues to be contact between bin Laden and Zawahiri in the tribal areas and Al Qaeda in Iraq.

WALLACE: But the number two U.S. commander in Iraq, the U.S. commander in Iraq, General Odierno, was asked about that this week. Let's take a look at his answer.


LT. GEN. RAY ODIERNO, U.S. ARMY: Al Qaeda in Iraq, I think, is struggling with its mission here in Iraq. And currently I think it would be very difficult for them to export any violence outside of Iraq.


WALLACE: Which raises the question is Iraq, as the president says, the central front in the War on Terror, or have we taken our focus off the central front which remains Al Qaeda central in Pakistan?

TOWNSEND: Chris, let me go back. General Odierno's remark suggests that they don't have the capability. I respect that. He's on the ground and he's in the best position to make that judgment.

But we've seen Al Qaeda in Iraq export violence before, like the wedding reception in Amman, Jordan. So we've got to presume that they've got the capability and they have the potential to act on it.

Al Qaeda in Iraq is not — Iraq is not a distraction. We've heard from bin Laden's own words that he views it as World War III, a war of destiny for Al Qaeda that they must win.

And so it is in no way a distraction. It's actually a critical enabler and capability for Al Qaeda central, and we see them extending their influence not only in Iraq, but in North Africa, for example, where they now have Al Qaeda in the Islamic Maghreb.

This is part of bin Laden's plan to try and extend the influence of Al Qaeda.

WALLACE: President Bush, moving to a different area, signed an executive order this week putting new limits on CIA interrogation techniques, the interrogation of terror detainees.

Former CIA director George Tenet and current CIA director Michael Hayden are both on the record as saying that the old program — the enhanced interrogation techniques that we had lived under up till this last year were irreplaceable and had saved lives.

I think Tenet in his book said it was the single most effective policy and program we had had to try to stop the terrorists.

Are we, with this new program, with new limits on interrogation — are we limiting — are we compromising our ability to get information from these very dangerous people?

TOWNSEND: Absolutely not. And what we did over time was look at what did we need for it to be legal, effective and sustainable. We need this program.

You look at the NIE which we were just talking about. General Hayden tells me that nearly half of the references, what people might call footnotes, in the NIE came from detainee interrogations.

Nearly 100 people who have been through that program — only one- third of them had had interrogation enhanced techniques used against them, and they generated 8,500 terrorism intelligence reports.

This is a critical, critical program. But let's be clear. We also wanted to make sure that it was effective. And so the individuals who implement the program at CIA — they go through psychological and aptitude screening. They get 280 hours of individualized training before they begin the program.

It's a team concept. Any member of the team can stop an interrogation. There has to be an interrogation plan that is approved by the director of central intelligence, who gets daily reports on each detainee and each interrogation session. He approves the particular techniques that can be used.

There are individuals who are responsible for looking after both the physical and psychological well-being of the detainees.

WALLACE: But if I may, with all of those safeguards — and we are told — I know you're not going to answer — that waterboarding is now off the table, some of the extreme use of either heat or cold to press them.

With all of those restrictions, are we not going to get the kind of information we used to get?

TOWNSEND: We believe based on our experience and all of General Hayden's listening, if you will, by — with members of Congress on both sides of the aisle — that we've built the most effective, legal and sustainable program.

After all, the people we ask to do the hard work at CIA deserve to know what the rules are and that they're protected as well.

WALLACE: Finally, and we have less than a minute left, the government this week announced that it's going to allow airline passengers to bring back lighters onto airplanes, even though — and I know this — you can't bring a bottle of water through the security still, and you won't be able to.

At a time when Secretary Chertoff is talking about gut feelings about terror attacks, why does that make sense?

TOWNSEND: Well, what we look at is what is the current threat, what are the tactical indications of things we ought to be concerned with.

This isn't about whether or not you bring a lighter. What we're looking for is to make sure that we're keeping off a plane potentially component pieces of an explosive device.

You mentioned liquids. Well, we knew from the August of '06 plot that certain liquids could be used as component pieces, and so that's why we're keeping those off.

We try to focus our screening measures based on what we understand to be the tactical methods of Al Qaeda.

WALLACE: And real quickly, a lighter that can put up a flame — that's not dangerous?

TOWNSEND: We don't believe that that will be part of a large explosive device inside an aircraft, no.

WALLACE: We're going to have to leave it there. Miss Townsend, thank you. Thanks for coming in and talking with us today. Appreciate it.

TOWNSEND: Thank you. Good to be with you.