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Special Report

Middle East Peace Talks Are Back On; Steve Hayes' Wild Card

This is a rush transcript of "Special Report With Bret Baier" from August 20, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SECRETARY OF STATE HIL LARY CLINTON: I ask the parties to persevere, to keep moving forward, even through difficult times, and to continue working to achieve a just and lasting peace in the region.

(END VIDEO CLIP)

CHRIS WALLACE, ANCHOR: Secretary of State Clinton announcing today the Israelis and Palestinians have agreed to re-launch peace talks here in Washington on September 2.

Let's bring in our panel, Stephen Hayes from The Weekly Standard; Erin Billings of Roll Call and syndicated columnist Charles Krauthammer.

So, Charles, direct peace talks between Israel and the Palestinians after almost two years and perhaps the most intriguing development is that all sides agreed to a one-year timeline for the talks. What do you think are the chances for any kind of a breakthrough?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, I think the one-year deadline is completely artificial and it means practically nothing because we've had those deadlines before.

The problem is this: I think most people misunderstand the position of the Israeli government right now. They think of it as a right-wing government. In fact, it's not only a coalition government in its composition, it is in its ideology.

It is willing to cede the West Bank, that's a national consensus, under conditions -- meaning, guarantees or military controls that Jordan Valley, demilitarizing the Palestinian state and a swap of land. But it's willing to create a Palestinian state on almost all of the territory of the West Bank. This is new, historically that a Likud government would do that.

The problem now is the same as it was exactly a decade ago when that was essentially offered by the Israeli government under Labor government at Camp David here under the Clinton administration. The result was it was offered and shockingly generous. The Palestinians said no, made no counteroffer and started the second intifada.

The problem is Israel is ready for an final status agreement that will end the conflict under this government. The problem is the Palestinians appear not near there and I'm not sure Abbas has the power and authority under which to deliver, even if he wanted to.

WALLACE: Of course, that's Mahmoud Abbas, the head of the Palestinian Authority and they only control the West Bank. Hamas is in control of Gaza.

Erin, I have talked to senior administration officials some time ago who believe that you're never going to get the two sides together and the only chance for a settlement is the U.S. will have to come up with the own plan to get both sides to negotiate from that. Do you think it's a good idea or bad idea?

ERIN BILLINGS, DEPUTY EDITOR, ROLL CALL: Well, that's exactly what Hillary Clinton said they weren't going to do today. They said they were going to allow the Israelis and the Palestinians to set the terms, and then the U.S. will play a brokering role or try to help facilitate, enable a deal.

You know, I think everyone I talk to says, wow, a healthy skepticism. Certainly we all want to be cautiously optimistic that this can be achieved. But when you hear what they said today, when you hear what George Mitchell and Hillary Clinton said today, I don't know that the ball has really moved. The same issues persist. I mean, we still have issues of the borders and refugees and security. I'm not --

WALLACE: And East Jerusalem.

BILLINGS: And East Jerusalem. And I'm not sure if there has really been -- the fundamental issues are the fundamental issues, those have not changed. So whether the players are of a different mindset and whether Netanyahu can deliver on his side and Abbas on his, I'm not sure. Are they willing to make concessions that are necessary? I'm not yet convinced. But we'll see.

WALLACE: Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: It took two years to agree on a dinner and we're going to have Middle East peace in a year? I mean, please. It's just silly. And I think that most people who are listening to it agree that it's silly.

The question, picking up on what Charles said earlier, is whether the Obama administration is going to be willing to push the Palestinians to do things they haven't done in the past, given concessions made or offered or at least agreed to by the Israelis. And I think the answer is no. We've got no indication whatsoever that the Obama administration wants to push the Palestinians. And we know given the president's agenda, priority of outreach of reaching out to the Muslim world, that he is not inclined to ruffle feathers.

WALLACE: In the rest of the segment I want to turn to another issue. And interesting story on front page of The New York Times today that alleges that the Obama administration has persuaded the Israelis that Iran is having trouble with its nuclear program and that it is at least a year away from a breakout and it's trying to get the Israelis to stand down from any military action.

One, do you believe the story? And two, how much faith do you think the U.S. or Israelis should have in our intelligence in this matter?

HAYES: Well, I believe that the Obama administration tried. And one of the reporters on the story, Mark Mazzetti, is one of the best national security reporters in the country.

But I think, if I'm not mistaken, there were not Israeli sources in the story. I don't think he had any real confirmation that Israelis accepted the case that the Obama administration made. And I think there is good reason to believe they probably haven't. The concern is if Bushear goes forward --

WALLACE: That's the first nuclear power plant that they're going to start fuelling up this weekend.

HAYES: Right, allegedly fuelling up this weekend. And potentially or allegedly, reportedly, with a green light from the Obama administration via the Russians, who are going to provide the rod.

The question I think is, how much faith are we willing to put in three parties that have not been, lived up to the word, the Iranians, Russians and the IAEA?

WALLACE: Less than a minute left. Charles, you get the final word.

KRAUTHAMMER: Look, the Israelis are looking at this reassurance and remembering that three years ago the Bush administration issued an intelligence consensus report which said that Iran had abandoned its nuclear program three or four years earlier, which was obviously wrong at the beginning and which has not been rescinded.

Now, why if they had that wildly wrong a report, which is a consensus of all the intelligent services, would they accept this a year later today? And I would add, a year is not a long time. It's a very short time. Any Israeli, I think, would be alarmed over information that there's going to be a bomb in one year.

WALLACE: All right, we have to take a break here. You voted this week for the first topic in our Friday lightning round on our homepage at foxnews.com/specialreport. The winner is up next.

(COMMERCIAL BREAK)

WALLACE: Every week on the foxnews.com/specialreport page, viewers vote on what topic we should discuss first during the Friday lightning round. Tonight's winner is "Steve Hayes' wild card."

Steve, what is your wild card question and, as Charles likes to say, the correct answer?

HAYES: We're updating a topic that we've discussed here before. I want to know whether the panel thinks that the White House is smart in light of new evidence to continue to run against George W. Bush. It was reported yesterday that George W. Bush is more popular than President Obama in what are called frontline districts, Democratic-held seats that are competitive this year. Is it still wise in light of that for the White House to run against President Bush.

WALLACE: And the correct answer is?

HAYES: The answer is no.

WALLACE: No? That's it?

HAYES: Lightning round. Lightning round.

(CROSSTALK)

WALLACE: Well OK, because I want to say the fact that the Democrats kept it up to date, the DNC put out a new attack ad. And as we mentioned earlier, Vice President Biden launched some new attacks of his own. Let's watch:

(BEGIN VIDEO CLIP)

NARRATOR: Do we put Main Street ahead of Wall Street? Do we hold big business accountable when they have gone too far? Or do we go back to the same Republican policies that got us in the mess?

FORMER PRESIDENT GEORGE BUSH: If you fooled me, you can't get fooled again.

NARRATOR: This fall, our choice is clear.

VICE PRESIDENT JOE BIDEN: This ain't your father's Republican party. This is the Republican Tea Party.

(END VIDEO CLIP)

WALLACE: So, Erin, are Republicans -- or rather Democrats -- are they smart to go after the -- and you didn't see it there with Biden, but he did talk a lot about the Bush administration and the Ponzi schemes, and of course, you see former president being featured in the DNC ad.

BILLINGS: Well certainly Democrats have been over the past couple of months trying to rev up the argument that they are running against Bush. They are trying to make this once again a referendum on the Bush administration and trying to tar Republicans as things of the past.

WALLACE: So, is it smart?

BILLINGS: Is it smart? I don't know. I guess we'll see. They want to be an alternative, obviously. But look, I don't think anyone is really running with Obama, nor do I think Republicans are running with Bush this year.

WALLACE: Now, you are not usually as pithy as Steve was said when he said no, the answer is no. But let's see what you can do, Charles.

KRAUTHAMMER: I'll be slightly less pithy. I saw a "W" on the screen and I waxed nostalgia. I miss the guy intensely.

I think it's a mistake because Bush has negatives on Iraq and the economy. Iraq ended, if you like, this week fairly successful. And the economy Obama purchased with the stimulus. It is his economy, not Bush's. It's not going to work, a big mistake.

WALLACE: Meanwhile, the White House on Martha's Vineyard, Steve, dealing with the fallout from these new polls indicating a growing number of people think Obama is a Muslim, not a Christian. How do you think they are handling damage control on that issue, which is invented and the issue of their own making, which is the president's comments on the mosque?

HAYES: I think they're struggling to find the right line. They want to be sensitive. The president spent a lot of time with the outreach to what he calls the Muslim world. I think given the fact that they have done that for 18 months, it's hard to sort of unwind it now. But I agree with what Charles said last night, we're likely to see him going to church a lot more.

BILLINGS: I agree. And like I said last night, I think we will hear more about Christianity and Obama in the coming weeks.

WALLACE: Charles?

KRAUTHAMMER: I think that'll happen, but I think as well there will be less of this obsessive emphasis over the last year-and-a-half of this outreach to Muslim nations and the Muslim world, which has been the theme of the Obama administration and has yielded no success in any area of conflict thus far and will not.

WALLACE: And finally, because I'm sitting in this chair and I want to talk about it, Roger Clemens indicted yesterday, federal indictment, six counts of perjury, making false statement to Congress and obstruction of justice. Which Steve, raises a real possibility that this man that we were certain was going to end up in Hall of Fame could end up in a federal prison.

HAYES: Yes, I think that's possible.

Look, it seems fairly clear by -- not only because he's going, he is going to be -- he may end up in jail, but it's clear he did not tell the truth. It's obvious to anybody who watched him that day. I think it's become clear and we're likely to see through the prosecution that it's definitive that he didn't tell the truth.

WALLACE: Do you see this as a fatal act of hubris or do you see this as sad and a miscarriage of justice?

BILLINGS: Is it stupidity or arrogance? I mean, he chose to testify, did he not? To me, that is hubris, of course, if he is found guilty.

I don't know. I just wonder if every professional athlete uses performance-enhancing drugs.

WALLACE: I can say that Charles and I do not.

KRAUTHAMMER: No.

WALLACE: But Charles, as somebody who likes to analyze the psychology of these players, the game, you go beyond the game, what was going on? He voluntarily testified before Congress, the chairman and the vice chairman of the committee said to him one thing: Don't lie under oath. Is this totally -- I mean, whether it turns out to be he's innocent or guilty, this whole controversy is of his making.

KRAUTHAMMER: When you win eight Cy Youngs and you're worshipped for 20 years, you get an inflated sense of yourself and you also have a sense that you will take all chances that you must to protect that reputation.

Look, a jury might acquit him. You can't prove perjury easily. There is no documentary evidence.

WALLACE: We don't know that. We don't know what Brian McNamee has in these syringes.

KRAUTHAMMER: We didn't hear about that or see it in the hearings. I'm not sure. All I'm saying it's hard to get a guilty verdict in a court. But in the court of baseball, people who watched him, he did the impossible, seven Cy Youngs. Nobody thinks he did it without steroids. Everybody in the game thinks he's guilty.