Why the U.S. Must Keep Its Distance on the Revolt in Egypt

This is a rush transcript from "On the Record," February 4, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Right now President Obama is calling for change in Egypt. He is not telling President Mubarak to step done.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: -- will be determined by its people. It is also clear there needs to be a transition process that begins now. That transition must initiate a process that respects the universal right of the Egyptian people and that leads to free and fair elections. The details of this transaction will be worked out by Egyptians. My understanding is that some discussions have begun.

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VAN SUSTEREN: You heard him calling for Egyptians to make a smooth transition of power. Is this even possible? Ed Walker, the former ambassador to Egypt, joins us live. Good evening, ambassador.

EDWARD WALKER, FORMER U.S. AMBASSADOR TO EGYPT: Good evening, how are you doing, Greta.

VAN SUSTEREN: Good. Ambassador, I was reading aljazeera.com and there's a reference that talks about Washington's coup d'etat as though this is our revolution and not Egypt's. What should we be doing? How closely involved we be? You've spent a lot of time in Egypt. Should we stay away, get involved, what?

WALKER: I can tell you, the three young men you had on are the people who are the future of Egypt. Those young men were saying they don't need our help. They have a very clear idea where they want to take Egypt.

And anything we do to try and capture or take over this rebellion on the part of the people will be counterproductive. And I think the president understands that and that's why he is saying it is up to the Egyptian people.

VAN SUSTEREN: Charles, our reporter, was just talking about how diverse the protesters are. If there were a leader, when you have diverse protesters, it is hard to get a leader if there is no leader that adds to the case and the lack of direction, lack of certainty or even a common goal. Is there a leader, in your mind, or is one going to emerge?

WALKER: No, there's no leader in the sense you are talking about. They are a diverse group with different interests, but they have one interest in common, change -- change in the regime.

They seem to be will -- change in the regime. They seem to be willing to accept the idea that the established military leadership can have a major role in leading the country out of this crisis, whether it is Omar Suleiman, they respect these people, and you saw that when the field marshal showed up at the Tahrir Square.

So they haven't excelled or eliminated all possibility of people who are associated with the former regime of having a part in making the transition. But I think it is very clear they don't want to have those same people be the future leaders of Egypt.

VAN SUSTEREN: Who is likely -- I know it's almost an impossible question, but who is going to end up leading this country? What makes -- as you look at this, can you give us some guidance? What do you think is going to happen?

WALKER: First, there's going to be a transitional period when the military ensures the security of the country and ensures again the kind of violence that you have seen the last couple of days. I think the military feels a great responsibility to the people of Egypt and does not seek to establish a military dictatorship.

Then you start looking around for political people. People who have been involved before or who has some credibility among the population. One person whose name has come up repeatedly, a friend of mine, the foreign minister, and he was ousted by Mubarak because he was too popular. He seems to have some sense of what the people want. Maybe that's one solution. There may be others.

VAN SUSTEREN: Should Israel be really worried tonight?

WALKER: Israel should be very worried, because the future of Israel is going to depend -- not entirely obviously, but to a great deal on where this whole operation goes. Israel depends on that security treaty with the Egyptians, we depend on it. We depend on the Egyptians. Both of us have a vast stake in what happens in Egypt.

But neither of us can dictate it. And we have to be sensitive, particularly to the period after a transition takes place to help the new leadership. And I think that's a message the Israelis have to take into account.

VAN SUSTEREN: How bad is the economy? I suppose 160,000 foreigners leaving isn't going to help and all the embassies clearing out and people fleeing the country, but how rough is this economy?

WALKER: It is a serious problem, $310 million a day, losing that is not small change. They've had a downgrading of their standards to the -- to less than positive and there is considerable expectation that the growth of the country will go down from five-point-something to 3.7 percent over the next year, so yes it is serious. It is not going to help the question that has triggered this is the fact of the joblessness.

So we all are going to have to pull on the oars to try to restore the economy and provide those jobs that are so important for the future stability of Egypt, when the next government takes over.

VAN SUSTEREN: Ambassador, thank you.

WALKER: You bet. Thanks a lot.