This is a RUSH transcript from "The O'Reilly Factor," January 03, 2012. This copy may not be in its final form and may be updated.
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BILL O'REILLY, HOST: "Personal Story" segment tonight, over New Year's weekend Iran did the following things. They successfully tested a long-range missile. They continued to threaten to close the Straits of Hormuz. That would impact worldwide oil transport. And it has announced that it produced a nuclear fuel rod needed for a nuclear weapon.
Joining us now from Washington with his take on Iran and the Iowa vote tomorrow, FOX News analyst Charles Krauthammer.
So why is Iran saber rattling at this time, Charles?
CHARLES KRAUTHAMMER, FOX NEWS ANALYST: Well, perhaps they wanted to remind us that there's a world outside Iowa. The reason it's doing it now is because of a bill that passed the House and the Senate the president signed on New Year's Eve that compels the president to impose really harsh sanctions on Iran. That's what they're worried about. That's why they did the saber rattling. That's why they threatened to close the Strait of Hormuz.
Now, it shows you how much of a bluff it was that, on the day the president signed it, a big leader in Iran announced, "Well, we're not really going to shut the Strait of Hormuz. We just wanted to show that we would defend our independence."
The sanctions are that we will sanction the Central Bank of Iran, which means anybody who does business with Iran cannot do any with the U.S., which means it can't export any oil. The Europeans will join us in a boycott of Iranian oil. The economy would collapse, and the mullahs might either... they're not going to change their nuclear program, but that they would be in big trouble. That's what they're really afraid of.
O'REILLY: Let me just stop you there. So the Bill that was signed on New Year's Eve by President Obama basically says to the world, if you do business with Iran, if you buy their oil or if you buy anything from that because all the money bank, it's controlled by the government, all of that flow. If you do that, you can't do business with us. All right? You can't... we're not going to buy anything from you, and you're not going to be able to sell anything here.
That's a crusher. All right? But that is reality now. That is in stone. It's been passed. That's what's going to happen to Iran.
KRAUTHAMMER: Except for one thing.
KRAUTHAMMER: Except for one thing. The president managed to weaken the Bill at the last minute, and the Bill includes a kind of waiver that gives the president 180 days... that means until July 1... to study how this will affect the oil markets. The administration does not want to rattle the world economy.
O'REILLY: But it's not going to impose it until July 1. He's got 180 days to think about it.
KRAUTHAMMER: And what he can do then is there's another waiver, where he can say, for national security reasons, he's going to exempt India or South Korea or somebody else.
In other words, the administration has worked to put loopholes in here, and now it's entirely up to the president. Is he strong enough to say, "We're now going to execute the single most important sanction that we can do"? Because if he doesn't, there's only a single option left.
O'REILLY: OK. The Iranians then...
KRAUTHAMMER: Probably by Israel.
O'REILLY: For the Iranians, then, this is a lifeline. They can continue to do what they want, hoping that President Obama won't do the ultimate.
KRAUTHAMMER: And that's what the maneuvers are all about.
KRAUTHAMMER: They're trying to intimidate one man. Not the Senate, not the House. They're trying to intimidate the president. They're trying to warn him.
O'REILLY: It would be to America's advantage if they did try to close the Straits of Hormuz, because then the USA would be justified, and so would NATO, in taking out their entire navy and air force, which they could do... we could do in a week. We could obliterate every... every plane they have, every ship they have, because you can't hide them underground like you can hide your nuclear stuff.
KRAUTHAMMER: That could even expand and extend to attacking other facilities, the missile facilities or even a nuclear facility. The Iranians aren't stupid. They understand that, if they do a closure of the Strait of Hormuz.
O'REILLY: It's over for them.
KRAUTHAMMER: They have breached the most important element of international law. You do not impede international waterways, and they would be crushed. That's why this is a bluff. But it's now up to the president: will he impose the sanctions that we've been waiting for, for three years, for five years, for 10 years that could really change the regime?
KRAUTHAMMER: Or will he not? It's entirely up to him.
O'REILLY: Ninety seconds, who's going to win the Iowa caucus vote?
KRAUTHAMMER: I'll tell you that it's win, place and show, everybody knows: Romney, Santorum and Ron Paul. And I'm not sure it will matter either way, because Santorum has one-in-50 chance of winning the nomination. Paul has zero chance. It would mean that Santorum would become the major sparring partner for Romney in the later states.
The real issue is Newt and Perry. Do they finish fourth or fifth? And do they finish near the top three or not, because that will determine... Iowa never anoints. But it winnows. And this will be a winnowing process. The top three will go on to North Carolina... to South Carolina and Florida. But whether it will be Newt and whether it will be apparent or not...
O'REILLY: Are you surprised that Newt didn't fight back harder?
KRAUTHAMMER: No. Because I think, as Brit Hume said, the reason that he could be the subject of literally hours of negative attacks is because he had hours of negative baggage in his history, unlike any other candidate: apostasies wall-to-wall that were easy to highlight and to cite. And that's the reason there was no way to fight back.
O'REILLY: Conservative apostasies?
KRAUTHAMMER: Apostasies, OK.
O'REILLY: Oh, hypocrisies. Hypocrisies. OK.
KRAUTHAMMER: I'm not sure that he was being hypocritical, but he certainly deviated. He's a guy who's prone to going with the latest idea like global warming.
O'REILLY: But as I said, everybody knew he was a big target. So I was surprised by the -- by the fall. We'll see tomorrow. Maybe the speaker makes a comeback and makes us all look like idiots.
Charles, thanks very much.
KRAUTHAMMER: He and Perry have one chance to do it, and it's tomorrow night.
O'REILLY: Thank you.
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