SPECIAL REPORT

Is Iran getting the message from President Trump?

This is a rush transcript from "Special Report with Bret Baier," February 2, 2017. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIPS)

UNIDENTIFIED REPORTER: Is military action off the table in Iran?

PRESIDENT DONALD TRUMP: Nothing is off the table.

SUNLEN SERFATY, CNN CORRESPONDENT: Iran understood that they are on notice. This is not going un-responded to.

SEN. CORY GARDNER, R-COLO.: What you have seen from this administration this week is standing up to Iran for the first time in eight years.

HOUSE SPEAKER PAUL RYAN, R-WIS.: I would like to put as much toothpaste back in the tube as possible. I think the last administration appeased Iran far too much.

TONY BLINKEN, FORMER DEPUTY SECRETARY OF STATE: When you talk tough and make what seemed to be open ended threats, then the pressure builds to actually put deeds behind the words.

WILLIAM COHEN, FORMER DEFENSE SECRETARY: Any time you have an interruption of the flow of energy coming out of the Middle East, then the world economy can go into a dive, a deep one.

(END VIDEO CLIPS)

BRET BAIER, ANCHOR: Iran sanctions on the table as the administration says Iran is now a notice after a ballistic missile test and other actions. President Trump tweeting "Iran has been formally put on notice for firing ballistic missile. Should have been thankful for the terrible deal the U.S. made with them. Iran was on its last legs and ready to collapse until the U.S. came along and gave it a lifeline in the form of the Iran deal, $150 billion."

Let's bring in our panel tonight: from Washington Chris Stirewalt, politics editor here at Fox News; Mollie Hemingway, senior editor at The Federalist, and Charles Lane, opinion writer for The Washington Post. OK, Chris, your thoughts on what we're hearing out of the administration and what it means in the big picture?

CHRIS STIREWALT, POLITICS EDITOR, FOX NEWS: When we think about what an eventful couple of weeks this has been, you could argue that nothing is more eventful than the moment we have reached now where one of the central threats to the world stability and world order in Iran, we are having a fight with them over a nuclear program. This gets hot, this gets dangerous very fast. And I think Washington has sort of just snapped its head around to notice this big event is really taking place and this is really happening early in this administration.

BAIER: Mollie, Senator Graham from South Carolina said today that Iran will be and is testing the new president Trump. It is the 3:00 a.m. call that we heard about four years ago, perhaps. Your sense of this?

MOLLIE HEMINGWAY, "THE FEDERALIST": In some ways this is new. In some ways it's not new. This ballistic missile launch that just happened is the latest of about a dozen that have been done since the deal was implemented. And the Obama administration did tell Congress that if they did these launches, it would be taken as a violation of the resolution. But then once they did it during the Obama administration, they didn't treat it as a violation.

What is happening under the Trump administration as they are responding by saying we do acknowledge this is a violation of the agreement. We will take it seriously. And people were very concerned that Trump wouldn't actually do sanctions because of Iran's closeness with Russia. That he's doing it and that these will be announced very soon shows that maybe people have not been predicting accurately his relationship with Russia as well.

BAIER: Chuck?

CHARLES LANE, WASHINGTON POST: Well, I think, if I remember correctly, these are alleged violations of U.N. Security Council resolutions as opposed to the agreement with the United States. But be that as it may, it's clearly some kind of provocation or test or attempt by Iran to see what Donald Trump is really made of.

And so of course he's going to make the kind of response he did. I mean, to say nothing is off the table including military, I think that is standard. Any president would answer the question that way. So I don't think that's such a big deal in the scheme of things. The sanctions are interesting. But let's remember these are going to be unilateral sanctions. This is just things the United States is doing. And of course they are only going to be really effective if he can somehow gather some more international group of countries to apply broader pressure on Iran.

And that's in a way why some of these phone calls and so forth have been so damaging, because they highlight the fact that this "America first" president has often sounded like "America only." And there is a lot of reluctance in Europe and other places to work with him even on things, and we'll find out, that may be in their -- usually in the common interest, like Iran.

BAIER: One of the closest allies, Australia, we talked about it earlier with this call between the Australian prime minister and President Trump dealing with the deal that was made under the Obama administration with the Australians on refugees. Take a listen.

(BEGIN VIDEO CLIPS)

TRUMP: When you hear about the tough phone calls I'm having, don't worry about it. Just don't worry about it. They are tough. We have to be tough.

The previous administration does something, you have to respect that, but you can also say, why are we doing this?

SPICER: He has tremendous respect for the prime minister and for the Australian people, and has agreed to we need to review the deal.

SEN. JOHN MCCAIN, R-ARIZ.: They fought alongside us in wars, including losing over 500 brave Australians in the Vietnam War which some of us remember.

(END VIDEO CLIPS)

BAIER: And tweeting a little bit further, the president saying "Do you believe it? The Obama administration agreed to take thousands of illegal immigrants from Australia. Why? I will study this dumb deal." Chris, first of all, how does this call, the readout we hear about of this blunt, frank, however you want to call it between President Trump and prime minister of Australia, how does this get out there? The White House says it wasn't them.

STIREWALT: I'm sure it wasn't either. I'm sure that -- logic tells me it was the Aussies who let that go because obviously this is quite a departure because this is one of those relationships, much like even stronger than Britain, but much like Britain, much like Canada, the Anglo-sphere on which the United States can depend in the most difficult times.

When the world was against us going into Iraq, the dire straits of our foreign policy, these are the countries that we stand with and stand with us. So the question for us now is you've got Iran. You've got Russia. You've got some instability in the U.S. relationship with western Europe conceivably. Can we get the band back together on important issues like Iran? Or if Russia's aggression intensifies, what are we going to do?

BAIER: The Aussies say it wasn't them either. Mollie, what about this, and is this what President Trump promised on campaign trail, even with allies, the closest of them?

HEMINGWAY: It's entirely possible that this is a bootable offense against the Australians, but I have a hard time with this story for two reasons. One, it's based on a lot of anonymous sources and I think the media has had a lot of trouble accurately reporting what's going on or understanding the proper framing of stories. We find out later what we are told is not true.

The second issue is this deal makes no sense and the case has never been made to the American people of why we would be taking refugees from Australia. It's not like these are refugees who are on a sinking ship that need immediate recovery. They have already made it to a free country with plenty of land, plenty of resources, plenty of money. And we are expected to take these people.

I think that most American people would hear the president saying that deal that the lame-duck president put us into with no apparent result and return wasn't such a good one. They want to hear a precedent questioning the deals and saying please don't do, you know, they are dealing with the new administration.

BAIER: Yes. Quickly, Chuck. These refugees, it's roughly 1,200 of them from various countries in the Middle East that Australia said if you paid your way to try to get to Australia we were going to keep you off on these islands. And they provided them food and shelter. However, they didn't make it to the mainland of Australia, and this was a deal that the U.S. was going to take this in exchange for the things that Australia does that we don't fully know across the board with the military and intelligence. That's where we are.

LANE: Yes. I mean, it's a little bit of a misnomer to call them illegal immigrants, as the president did. They may have been illegal immigrants of some kind with respect to Australia, but obviously if they are vetted as they are going to be as refugees, they would not be illegal immigrants into the United States. So it's kind of inflammatory for the president to put it that way.

Look, this is one where he had a choice. He could have -- he's going to get to the same place either way. He's going to bring these people in, or some of them. He said that himself. So the question was, do I do it without creating a diplomatic flap with Australia, or I do while creating a diplomatic flap with Australia? And for some reason he has chosen the latter, and I think the reason has to be some kind of domestic political reason that it he was going to take some people in that Obama has effectively forced him to, he is going to have to at least signal to his base that he's not doing it anything but reluctantly.

BAIER: We will see how this plays out down under.

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