This is a partial transcript of "The Big Story With John Gibson," July 19, 2004, that has been edited for clarity.

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JOHN GIBSON, HOST: The new information about Al Qaeda (search) and Iran calls into question whether they are helping or hurting in this war on terror. Michael Ledeen is a national security expert at the American Enterprise Institute (search). Mr. Ledeen, today's big question: Is Iran an even bigger terror threat than Iraq?

MICHAEL LEDEEN, NATIONAL SECURITY EXPERT, AMERICAN ENTERPRISE INSTITUTE: Yes, and it always has been. That's been obvious forever. All have you to do is look at the annual State Department report on state sponsors of terrorism: Iran has always been number one. They've never lost; they're unbeaten.

GIBSON: Well, what does it mean to you to hear the Director of Central Intelligence (search) telling us that eight of the 9/11 hijackers sort of, got free passage through Iran?

LEDEEN: Well, you know, the Italians have a great expression for that. It's called the "discovery of the elephant," which is something we knew all along. We've known all along that Iran was at the center of a lot of this activity, after all, where did the Al Qaeda leaders go after Afghanistan? They went to Iran. And they keep on surfacing over and over again.

The Bin Laden sons — Zawahiri, Zarqawi — all keep on showing up in Iran. The latest stories are that there's nearly 300 top Al Qaeda people living in sumptuous villas on the Caspian Sea protected by the Iranians. And every time we catch them, the Iranians say, "Oh, you know, they're under arrest. We're going to turn them over to you and so on." They've never turned over anyone.

GIBSON: But does it make you feel that there is reason to believe that the Iranians knew what these eight 9/11 hijackers were up to, were giving them free passage so that an Iranian stamp didn't turn up on their passport when they crossed the border elsewhere?

LEDEEN: I don't know the answer to that question. I doubt anybody in this country has the answer to that. What I am quite confident about, and what I've been saying for three years, is that Iran is a long- standing sponsor of Bin Laden and of Al Qaeda, as of Hezbollah, Hamas, Islamic Jihad and so forth. That Iran is the heart of the terror movement, that Iran is the biggest of the terrorist sponsors, and of the people that I've called the terror masters, Iran is by far the most dangerous.

GIBSON: All right. Explain one thing, because I think a lot of Americans get mixed up on this point, I know I do. I'm constantly having some expert tell me, "Well, there couldn't have been cooperation between Iraq and Al Qaeda because Al Qaeda hated Iraq." Al Qaeda hated a secular, Baathist regime under Saddam Hussein. Al Qaeda, Sunni, Wahabi fundamentalists: why would they cooperate with Shi'a, religiously speaking, their sworn enemy, in Iran?

LEDEEN: It's like "The Godfather," under normal circumstances the various mafia families compete against one another, fight one another, and even kill one another, but when the feds come after them, they sit down around the table and make a war plan and that's what has happened now. We have come after them. All these various countries and movements and different religious groups are working together hand in hand and they've been doing it for a long time.

People who tell you that Sunnis and Shiites don't work together — just look at the origin of the Iranian Revolutionary Guards. They were originally trained in the early 1970s in the Becca Valley in Lebanon by Yasser Arafat's Fatah. There is nothing more Sunni than Fatah and there is nothing more Shiite than the Iranian Revolutionary Guard. So that when the CIA came out in whatever it was, 2002, and said, "Oh, something new is going on, Sunnis and Shiites are working together," they were only 30 years late.

GIBSON: Mr. Ledeen, what are we supposed to do about this now? Just sort of, call Iran on it and say, "What are you doing?" or since we're in the neighborhood, do something a little more aggressive?

LEDEEN: What we should do is what we should have been doing all along, which is support the desire for democratic revolution by the overwhelming majority of the people of Iran. They want to be free. These are pro-Western, pro-American people. Remember, John that the night of 9/11 the Iranian people poured into the streets of their cities carrying lighted candles mourning the death of Americans in New York and Washington. They desperately want to be free.

Our failure to support this freedom movement in Iran is one of the greatest failures of American foreign policy for a great many years, and it's very discouraging that we're not doing it. And it's very discouraging to see all these self-proclaimed experts on the Middle East coming out saying we have to make some kind of accommodation with Iran.

GIBSON: All right. Michael Ledeen, national security expert at the American Enterprise Institute — been telling this story for three years. Mr. Ledeen, it's good to hear it one more time. Thank you for coming on.

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