This is a partial transcript of "Special Report with Brit Hume", May 3, 2004 that has been edited for clarity.

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BRIT HUME, HOST: So what happens now to Ariel Sharon's (search) plans to pull out of Gaza and parts of the West Bank, and to build a fence or wall, to separate Israel from the disputed parts of the West Bank? For answers we turn to Fox News foreign affairs analyst Dennis Ross, who served the last two presidents as a key adviser and envoy in the Middle East.

All right, Dennis, to review the bidding here. Sharon had this plan, two parts to it. One, withdraw the settlements from Gaza, which is already encircled by a fence...


HUME: ... and from which little terrorism has emanated because of the fence. And also, complete the fence or wall across the West Bank with hopes for the same result, and to eliminate some of the settlements on the other side of that wall once it's finished.

ROSS: Correct.

HUME: His own party has now rebuffed that idea. What happens to the idea?

ROSS: You know what's interesting is they're rebuffing the idea of evacuating settlements. They're not rebuffing the idea of completing the wall -- not really the wall, the fence, the barrier. The question is, though, what does Sharon do at this point?

Seventy percent of the Israel public supported his initiative. And 40 percent of the Likud Party is all that turned out to vote; so 50,000 Israelis are the ones who voted decisively against him within his own party. Now, if he gives into that, then I think he has a problem because I don't know how he can carry out what it is he was talking about. And he did gain assurances from President Bush that were based upon a set of assumptions about what it is he would do. So I'm not sure that...

HUME: So if he doesn't do it then the Bush -- presumably, whatever Bush's -- the Bush promises are off, right?

ROSS: I would say that the administration would say, look, we made promises based upon what was an assurance from you of what it is you would do. And you've scaled it back...

HUME: The Likud referendum, that's not binding; it's an expression of opinion by the members of his party, correct?

ROSS: Exactly. Exactly.

HUME: Now, if this no confidence vote had gone through, that would be the end of his...

ROSS: That's right.

HUME: He would have been out, right?

ROSS: That's right.

HUME: So he is still in. So, he can go, what? Make peace with the political opposition that might support this, what?

ROSS: I think he has basically the following options. Option 1 is to work out with those who voted against it, within Likud, a scaled back version of his approach -- of his plan. Now, the problem there is, I think, he loses most of the Israeli public and he probably loses the administration. At least he can't get from the administration what he was going before.

HUME: By the way, roughly what was that stuff?

ROSS: The essence of it was statements of fact about what eventual outcomes will look like. Meaning, you're not going to have borders that were June 4th, 1967. Meaning, Palestinian refugees go to their state and not to Israel.

HUME: Big deal to the Israelis. Obviously something -- that's a deal breaker, right? The Israelis have to have that or they'll never make peace.

ROSS: Right. Absolutely.


ROSS: But one of the things I'd like to note is, it's interesting a lot of the criticism about this is that this is somehow prejudging outcomes. But when the Bush administration adopted a new policy on Palestinian statehood, and we had never had that.

In the Clinton administration, we proposed ideas that would have provided for a state, but we withdrew them. Now, when the Bush administration -- when President Bush articulated a position in favor of an independent Palestinian state that was prejudging an outcome, but nobody complained about it. We have to keep this in perspective.

HUME: It's not prejudging to the Palestinians unless it's prejudging in a way they don't want.

ROSS: I think that's correct.

HUME: All right. Now what are the other two options?

ROSS: So the other options are he goes to elections and he basically says I need a mandate to be able to govern. I said I'm not here just to warm the seat for four years; I'm going to the Israeli people and we're going to have new elections.

And on that basis, he builds a mandate. The other one is he does a national referendum. Which is not an election but a referendum on this idea. And he says this was not a partisan decision. This is a national decision. So I'm turning it over to the Israeli public.

HUME: All right. Now, let me see if I understand why this idea has interested you. The building of the wall, if it's as effective as it was around Gaza, would greatly diminish the threat of terror.

ROSS: Yes.

HUME: It would also establish, for the time being, borders between what is now Israel and what is now the territories. And those borders would then subject to adjustments because walls can be torn down or fences can be moved, but we would certainly have a very different situation for the purpose of negotiations.

ROSS: Absolutely. I think what you have to produce right now is what I call a "way station." We are locked in a situation where there's a dialogue only of violence between the two sides. We have got to create a different reality, a reality that is designed to promote freedom for the Israelis from terror and freedom for the Palestinians from Israeli control. Now, if you go ahead and you complete the fence, which will be in 12 percent of the territories...

HUME: Right, and the Israelis' presence in the West Bank would then be withdrawn, to a great extent presumably. Palestinians will have freedom of movement within there that they don't have now...

ROSS: That's correct.

HUME: ... and Israel would have some security from terrorism.

ROSS: You have a more optimum position for the Israeli military. You have the Palestinians in a position where they're not controlled on a daily basis by all the Israeli checkpoints. Greater security for the Israelis, greater freedom for the Palestinians, that can create a...

HUME: But they'd take a loss of momentum -- I mean a loss of leverage, right?

ROSS: Yasser Arafat...

HUME: Quickly.

ROSS: ... is against it because basically he still wants one state.

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