This partial transcript of Special Report with Brit Hume, December 5, 2001 was provided by the Federal Document Clearing House. Click here to order the complete transcript.

BRIT HUME, HOST: In the Middle East, it is being described as a moment of truth for Yasser Arafat. It is not the first time he has been said to face such a moment, nor the first time his predicament seemed so precarious that his continuation in power seemed in doubt. But he has proved a nimble and enduring figure, and no one knows that better than Dennis Ross, the man who handled the Middle East process for two presidents: Bush the first, and then Clinton.

He is now a foreign affairs adviser and analyst for Fox News. Welcome, Dennis, nice to see you.


HUME: Talk to me about the Yasser Arafat's options now. And, in particular, he's being asked to crack down. And you hear it wondered aloud whether he is capable of doing that. I assume that means whether he has the forces at his dispose who he could physically do it. Does he?

ROSS: He does have the forces at his disposal. The hesitancy he has always had is the hesitancy of someone who's always reluctant to make a choice. One thing about Yasser Arafat — he abhors choice. He always sees any decision as exposing him.

He understands if he cracks down there's going to be opposition, so he tries to have it both ways. He tries to see if he can do a little bit, but not everything. When I hear him say I'm doing all I can, I know right away that he's not yet doing all he can.

HUME: So far what you've seen, has he done anything much yet? Or not...

ROSS: Not serious yet. He's made some arrests. And some of the arrests are of people who matter. But of the 130 or so they've arrested, I would say it's a small percentage of those who are actually serious.

HUME: Now, he was said to have already started releasing some of those he arrested over the weekend. Is that typical?

ROSS: Absolutely. But again, the idea that you sweeps, it's legitimate to have sweeps, and you don't hold everybody. The critical thing is, he knows who are the people he has to arrest. We know it, he knows it, the Israelis know it. And until he begins to really arrest them, you cannot say that he's really doing what he has to do.

In 1996, he did. In 1996, he arrested all the leaders of Hamas and Islamic jihad. He went into the mosques. He replaced the imams. In 1996, he saw the four bombs in nine days as being a threat to him, and he acted, as a result. He has to do the same thing again, and now.

HUME: Now, presumably the reason he's hesitant is he would get opposition, as you've pointed out. How precarious, within the Palestinian community, is he, politically? Is it possible that if he moved ahead at this time, that it would be the end of him politically? Or is the public support there for him?

ROSS: Let's put the public support in perspective, because I'm not sure that people really understand it. One thing the Palestinians have become very good at is polling. And in the polling, he one thing that has changed is Arafat's popularity, which has gone down. What has not changed is the popularity of Hamas and Islamic jihad. They have not dramatically gone up.

HUME: What is it, about?

ROSS: They are about 25 percent. So, think about it. In a period when the Palestinians are paying a price — the public is paying a prices. The Israelis do have them under siege. The Israeli response to terror in Israel is to put the Palestinians under siege. At a time when they are experiencing, I would say, real pain...

HUME: From Israel.

ROSS: From Israel, you still don't see their popularity go above, about 25 percent. What has changed is that Arafat's popularity is down to about 25 percent. Think about what that means.

In the last year, the Intifada has been there. They have paid a price. A year ago, they were very close to achieving their aspirations, from an historic standpoint. Today they're very far away. Their economy is in shambles. Nobody has come to rescue them. And Arafat offers no pathway for improvement. That's the reason that his popularity has dropped.

Were he to be decisive now, explain to them what he's doing, why he's doing it, how this will serve the Palestinian cause, I believe you would see his popularity go up, not down.

HUME: Now, a number of analysts have said that Arafat needs to be told by the United States it's this or else, buddy, if you don't come through this time, our support for you and our dealing with you and treating you as a relative leader will be gone.

First of all, is he likely to respond to that? And second, what incentives or disincentives do we have to offer? Is there aid of a consequence that would hurt him? Is he rich because of American money? What about that?

ROSS: We don't have leverage through money, because we're not providing any money to him.

HUME: Not any?

ROSS: No, not to the Palestinian Authority. The only money we were providing was to particular projects, not managed by the Palestinian Authority, but by nongovernmental organizations. The leverage comes from something that's a little bit more abstract, intangible.

For Arafat, the cause of Palestine is everything. He has embodied it. He will do everything he can to promote that cause. Now, the key for him is to be sure that that doesn't become discredited. If we made it very clear that we were going to suspend relations with him, unless he finally made the decision, once and for all, no safe haven.

What we've seen for the last 15 months in the Palestinian Authority is that Hamas and Islamic jihad have been allowed to fabricate their bombs, recruit the bombers, build their organization, develop an infrastructure, with no pressure from the Palestinian Authority. At different periods he put pressure on them, but he never completely cracked down.

What has to happen now, once and for all, is to say this is it. And the way he can do it is to make it clear they are destroying the Palestinian cause. And our leverage with him is to make it clear, we will work with the international community to have everybody suspend relations with him. If that happens, then it looks like his cause is being discredited.

HUME: Now, presumably, one of the things he's banking on is the idea that if he goes, that both the Israelis, Americans, other interested western countries, very much fear that whoever comes after, or whatever comes after will be worse. Is that necessarily so?

ROSS: What is certainly the case is he has always tried to use his image of weakness as a strength. And that, "there is no alternative to me, therefore as I jump out the window, please save me." Now, there is a reality. There is no other address without him. That's true. Right now we don have another address. And it is true, you would have a period of utter chaos without him.

And even for the Israelis, they wouldn't have anybody to hold responsible. Right now you have him to hold responsible. But if you're going to say now or never, you have to be prepared to live with the consequences of never.

HUME: Right. And in your view, are the Israelis? Or are they just taking this right up to the edge?

ROSS: I think with this government now, I think they hit the wall. I really think they hit the wall. I think when you saw the attacks yesterday, they were sending a signal to Arafat that said, "we mean it. And we're prepared to live without you. We're not targeting you, but when we hit a building that's right next to where you're staying and we know where you are, we're doing it as a warning." And I think it was for real.

They're not going to want to do this. The Israeli military has told the prime minister that there will be chaos without him. But the fact is, a lot of Israelis are saying we have chaos with him.

HUME: Dennis Ross, great to have you. Thanks very much.

ROSS: Thank you.

Click here to order the complete transcript.

Copy: Content and Programming Copyright 2001 Fox News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2001 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, Inc.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.