The following is an excerpt from FOX News Sunday, March 14, 2004.

CHRIS WALLACE, HOST, FOX NEWS SUNDAY: As investigators in Spain examine evidence from Thursday's deadly terror attack, a videotape claiming to be from Al Qaida was found early today. On the tape a man says the group carried out the bombings because Spain supported the U.S. invasion of Iraq.

And late Saturday five suspects were arrested. All this, as Spanish voters hold a national election today.

It's also Election Day in Russia. President Vladimir Putin is expected to easily win another term, but critics say the government has prevented opponents from competing in a fair and democratic contest.

And officials in Iran say it's unclear when U.N. inspectors will be allowed back into that country. Those comments came hours after an international agency voted to deplore Iran's failure not to be more open about its nuclear activities.

As we've seen, the global war on terror tops the news this week. And next Friday marks the first anniversary of the start of the U.S. war in Iraq. Here to discuss all of this is Secretary of State Colin Powell.

And, Mr. Secretary, welcome. Good to talk with you again.

COLIN POWELL, SECRETARY OF STATE: Thank you, Chris. Good to be here.

WALLACE: Let's begin with those terrible bombings in Spain. Five men arrested, this videotape that claims that Al Qaida was responsible. What do we know?

POWELL: Essentially what the Spanish know, and that is that they can't yet place responsibility. ETA is still a candidate for responsibility, but now with these new developments of the arrests of the Moroccans and the Indians and the tape, I know that the Spanish authorities have to consider that it might have been another group, perhaps Al Qaida. But we really don't know yet.

WALLACE: So just because you've got these arrests, including Moroccans, and you've got this tape claiming Al Qaida, you don't believe it necessarily?

POWELL: Well, it's not matter of believing anything; it's just premature to make a judgment. I don't think we know enough, and the Spanish are very good at these kinds of investigations. And I'm sure they'll get to the bottom of it.

WALLACE: As we said, all of this is going on while Spanish voters go to the polls today. Supporters of the Socialist Party blame the government, they say, for backing the U.S. war in Iraq.

Are you concerned that this attack could serve to further weaken support in Europe for the war on terror?

POWELL: No, I think what this illustrates is that there is a war on terror that must be fought. Nobody's immune. Saudi Arabia's not immune. Turkey's not immune. Indonesia's not immune. Spain is not immune, Germany, France.

And so rather than finding fault with what Spain has done by being aggressive in the war on terror, this should redouble everyone's efforts to go after terrorist organizations of any kind, whether it's ETA, whether it is Al Qaida or any other terrorist organization. Terror has to be brought to an end.

And that's the commitment that President Bush has made, and it was the strong position of President Aznar as well, the prime minister of Spain. And he did not step back or shrink from these responsibilities, and I hope other leaders will not shrink from our responsibility, collective responsibility, to go after terrorists wherever they surface.

WALLACE: But let's talk about other leaders. The Socialist leaders say that if they win the election today, that they will pull U.S. troops out of Iraq by the summer unless there is a clear U.N. mandate.

POWELL: Well, we think there is an opportunity to get a clear U.N. mandate. Look at how much we've accomplished. We now have an administrative law that has been passed by the Iraqi Governing Council which gives the Iraqi people for the first time a bill of rights. It puts in place an independent judiciary.

We're moving forward. And we hope that there will be a transition to a sovereign government on the 1st of July. That's our goal. That's what we're working toward.

And there may well be another U.N. resolution by that time, which should provide any nation contributing troops, more than an adequate mandate. We believe there's an adequate mandate now, with the U.N. resolutions that have already been passed.

WALLACE: Obviously I misspoke. They were going to pull Spanish troops, not U.S. troops, but...

POWELL: I got that.


WALLACE: Let's turn, if we can, to Iraq. The White House sent an official to Baghdad this weekend to try to break the logjam with various forces, various factions among the Iraqis.

Are you worried that with three and a half months left to go before the U.S. hands over power, there is still no government in place on the Iraqi side?

POWELL: Well, right now we have a governing council. I mean, they are serving as the government. The question before us over the next three months is: What should we do to broaden the representation of that group, so that it is really representative of all Iraqis, before it becomes the interim government?

So we're looking at different models. Should it be expanded? Should there be another arrangement put in place? And Ambassador Bremer is hard at work on this with the Iraqis themselves. And we always have people going back and forth to Baghdad to consult on these matters.

WALLACE: But isn't there a basic problem here that hasn't been solved, and that is that the Shiite majority wants to be able to run things, and the other factions — the Kurds, the Sunni Muslims — want to be able to find some way to stop them from being able to run things?

POWELL: Well, let's face the reality that the Shiites are 60 percent of the population. And in a democratic system, 60 percent of the population will have the ability to accede to power, and power in a way they've never had before.

But what the Iraqis are doing now that is so exciting is they're finding ways to consider the views and bring into the governing system the views of the Kurds and the Sunnis and others. So, rather than having one group oppress the others, as was the case during the days of Saddam Hussein, where the Sunnis literally oppressed the Kurds and the Shias to keep them down, we're creating a federated system where all parties will have a voice in the government, even though Shias are 60 percent of the population, and they will have a strong voice, but not the only voice.

And that's what this administrative law has done, and that's what the constitution will do. It's not unusual for there to be a majority of a people in any one country that is a diverse country. And this is a way in which we will bring those diverse voices together to serve the people of Iraq, and not just one section of the population.

WALLACE: All right. Next week, as we mentioned, marks the first anniversary of the U.S. invasion of Iraq. Obviously, you got rid of Saddam Hussein, which is no small thing. But in a larger sense, what do you feel has been accomplished in this last year? Has it changed the region? Has it helped in the war on terror?

POWELL: Well, it is no small feat that Saddam Hussein is gone, and I think the major achievement is that this dictator and his awful regime are gone. No more mass graves are being filled. We don't have to debate about weapons of mass destruction any longer, because we know there will be none in the future. And we have taken this country that has been so brutally oppressed by a dictatorial leader and put it on a path to democracy. Schools are being built, hospitals are being built, the economy is being started up again.

There's a long way to go, but we are on our way to a better future for the Iraqi people, and that's a major accomplishment.

And I believe the possibility of a terrorist nexus between Saddam Hussein and the weapons that he had the capability of producing or might have had and terrorist organizations that might have gotten access to those weapons, that's been broken up.

And so I think, if we just stay the course, if we show determination, if we help the Iraqi people, we'll put in place a stable democracy in Iraq, a democratic nation in Iraq, and that will be an example to the rest of the region, an example to the world.

WALLACE: But let's talk about the rest of the region, because President Bush, as you well know, talks about bringing democracy to the Arab world. Beyond Iraq, has there been progress in the region over the last year?

POWELL: Yes, over the last several years, really, if you look at what a number of the Arab nations have been doing, look at the changes that are taking place in Tunisia, in Morocco, where the king of Morocco has put forward a very exciting proposal to his legislature to expand the rights of family members, rights of women, new family law; see some of the changes that are taking place in the UAE, in Bahrain. Even in Saudi Arabia, they're starting to make changes.

The president is not putting forward a strategy for peace or democracy, as we call it, merely to impose something on someone. We can't impose it on anyone.

POWELL: What we're saying to the leaders in the region, this is time for them to look at reform, to see what they need to do to reform their societies to make their societies better able to cope with the challenges and demands of the 21st century.

And the United States and our other friends in the industrialized world stand ready to help. And so I think it is more a partnership than the United States imposing anything on anyone.

WALLACE: Mr. Secretary, it's impossible to talk about Iraq in the last year without talking about weapons of mass destruction. Last year, before the war, February 2003, you laid out the U.S. case to the U.N. Security Council and to the world, and you were very definitive. Let's listen.


POWELL: These are not assertions. What we're giving you are facts and conclusions based on solid intelligence.


WALLACE: Mr. Secretary, I know that you were reporting the best intelligence that you had from not only the U.S. intelligence community, but the whole world. But when David Kay came back that month or so ago and reported that they had found no stockpiles at all, on a personal level, how did you feel?

POWELL: Well, I was surprised, because we thought there would be stockpiles. David Kay thought that there would be stockpiles when he went in to look for them.

And the body of intelligence, the body of evidence that we had and accumulated over a period of years, not just the United States, the United Kingdom and other countries around the world, the previous administration, the U.N. over a period of 12 years had established that Iraq had not accounted for stockpiles we knew it had, and we simply believed, and had every reason to believe, that the stockpiles were there.

But what there is no question about is that Saddam Hussein never lost the intention to have weapons, weapons of the kind that he'd used previously against his own people and against his neighbors. And he had the capability, he had the infrastructure, he had the dual-use capability within his industrial base to produce such weapons.

We thought, and had every reason to believe, that those weapons were there, just as President Clinton did back in 1998, when for four days he bombed these facilities.

Now we have not found those stockpiles, and we have to look at how we accumulated the intelligence over the past five or 10 years to see whether or not we were totally wrong, or whether something may yet turn up, or whether the stockpiles were destroyed.

But I don't think this takes away from the merit of the case. I don't think this takes away from the rightness of this, to remove this dictator, make sure that there would be no weapons of mass destruction in the future.

But the information that I represented on the 5th of February reflected not some political spin. It reflected the best judgment of the intelligence community, and judgment that had been consistent over many years, the same information that in a National Intelligence Estimate the intelligence community had presented to the Congress.

And the information I presented, the information that went to the president, was the best we had. And we did not spin it or in any way try to give it a political — more than a political context that was inadequate to the base for that context, i.e. the intelligence estimate.

WALLACE: I know how zealously you protect and regard your reputation for honor and integrity, which you have built up over a long and distinguished career. Even though it was done in good faith, did you feel some responsibility for giving the world bad information?

POWELL: I don't know that I — I wasn't giving the world bad information. I was giving the world the information that we had at the time we had it.

Now, intelligence is constantly trying to penetrate below levels of secrecy and deception, and Saddam Hussein had practiced that for many, many years.

So the information that we put forward last year was the best information we had. The suggestion in your question is that somehow I knew that the information was wrong that we were presenting, or that the president knew it was wrong.

WALLACE: No, no, I'm not suggesting that at all.

POWELL: Then my reputation is not at risk, because I put forward the best information we had. And I was the one to do it, as the secretary of state, before the United Nations. And the CIA stood behind that presentation, every word of it; the intelligence community stood behind it.

There are always differences within the community, and we argued about the differences in different parts of my presentation. But the director of central intelligence, sitting right behind me that day, George Tenet, stood behind every word in that presentation.

WALLACE: Hans Blix, the former head of U.N. weapons inspectors, has just written a new book, and I want to show you what he has to say about your presentation to the Security Council that day in February of 2003.

"Much of the material in Powell's presentation had been made available to us by the U.S. and other countries. We had inspected most of the sites he described and taken samples from them for analysis that could detect traces of chemicals or biological agents if there were any. We had examined records and interviewed people at these sites. In no case had we found convincing evidence of any prohibited activity."

And then Blix concluded with this: "It is hard to avoid the reflection that Colin Powell had been charged with the thankless task of hauling out the smoking guns that, in January, were said to be irrelevant and that, after March, turned out to be nonexistent."

Mr. Secretary, Blix says that the White House was using your credibility to build its case.

POWELL: Well, I disagree with Dr. Blix. And you can look at Dr. Blix's reports to the United Nations during this period — very extensive reporting. And you will see that he lists many, many unanswered questions that he couldn't answer with respect to what Saddam Hussein was doing.

He found the declaration that Saddam Hussein presented 30 days after the U.N. Resolution 1441 was passed that was so inadequate, there were questions that were unanswered. And so, Dr. Blix's own presentation to the U.N. left many, many unanswered questions. And so, I don't think...

WALLACE: Well, what about this argument that somehow the White House was using your credibility, your standing in the international community?

POWELL: Well, it's what you keep saying, Chris, because it's, you know, it's the story you want to keep putting out there and Dr. Blix wants to put out there.

WALLACE: I'm not trying to — I'm just asking about...

POWELL: What I said several times is that I presented the case that the intelligence community had presented to the Congress, that was consistent with what the intelligence community had been saying for years, the case that the intelligence community used in the previous administration with President Clinton, the accumulated information that had been acquired by the United Nations inspectors over those years.

A lot of the questions that I had in — rhetorical questions I put in my presentation said, what happened to the stocks that we knew exist, that the U.N. said exist, what happened to them? Why won't the Iraqis account for these stocks?

And the fact of the matter is that we spent a great deal of time going over that presentation to make sure that it reflected the best judgment of the intelligence community. And that's what I did. And it wasn't a matter of worrying about my reputation or putting my reputation at risk or credibility at risk. I presented, as I am obliged to present, the best case that our intelligence community could come up with.

Now, if there were flaws in that case, then let's find out where there were flaws and correct anything that needs to be corrected. But at the time, it was the best information available, and the president relied on it, I relied on it, Congress relied on it.

WALLACE: All right, we have to take a break here, but when we return I want to ask you about Russia, Iran and what Senator Kerry has been saying about foreign policy.

Much more with the secretary of state, in a moment.


WALLACE: And we're back now with Secretary of State Colin Powell.

Senator Kerry has been offering his views of Bush foreign policy, and I'd like to ask you about some of his comments.

Kerry says that the president has gone about defending America's security in the wrong way. Here's what he had to say during a debate. Let's listen.


U.S. SENATOR JOHN KERRY (D-MA): This war on terror is far less of a military operation and far more of an intelligence-gathering, law-enforcement operation.


WALLACE: Why isn't intelligence gathering and law enforcement the right way to fight the war on terror?

POWELL: There are many ways to fight the war on terror. And intelligence gathering certainly is a major feature of our effort. I mean, we've spent a lot of time on intelligence gathering.

Law-enforcement activity, working with our friends and partners around the world, going after the financial infrastructure of terrorist organizations, we haven't neglected any of that.

And we have seen success over time in starting to roll up these networks. We have captured a number of members of Al Qaida without going to war. But taking direct military action sometimes is necessary and appropriate.

WALLACE: Senator Kerry has also suggested that the Bush administration held up the agreement with Libya for it to give up its nuclear weapons program to help in the president's reelection.

This is what Senator Kerry had to say, and you can see it on the screen: "Gadhafi's been trying to get back into the mainstream for several years now. There's evidence that we could've had that deal some time ago."

POWELL: It's absurd. I don't know what Senator Kerry's talking about. It's just absurd. That took time to bring that deal together. And I've been following it very, very closely for a number of months. And when finally the United States and the United Kingdom negotiators got a deal with Libya, we acted on that deal and we announced that deal. It was not held up for any campaign or political purpose.

WALLACE: You seem offended by it.

POWELL: Well, it is offensive because it's a political charge in a political year. And I expect that we will be hearing and seeing many more charges and many more such video clips. But I don't know what basis Senator Kerry is using to make such a statement. I mean, what is his evidence for this, other than an assertion on his part? It's not accurate.

WALLACE: All right. I'm not sure you can answer this one, but I would like to get your comment on it, if I could.

Senator Kerry says that foreign leaders — you look like you know this — want him to beat the president. And here's what he's had to say: "I've met with foreign leaders who can't go out and say this publicly, but boy, they look at you and say, 'You've got to win this. You've got to beat this guy. We need a new policy."'

POWELL: I can't even talk to that, Chris. I don't know what foreign leaders Senator Kerry is talking about. It's an easy charge, an easy assertion to make. But if he feels it is that important an assertion to make, he ought to list some names. If he can't list names, then perhaps he should find something else to talk about.

WALLACE: Senator Kerry also has had something to say about you. He says that you've been undercut on a regular basis by the more hawkish members of the Bush administration. Here's what he said: "I think, simply, Powell, who I know, like and admire, has never been permitted to be fully secretary of state in a way that I envision the secretary of state."

Does he have that right?

POWELL: No, I don't think he has that right. The president has me right now on the lead on so many issues, whether it has to do with our relations with China, what we're doing with the new Republic of Georgia, whether it has to do with Haiti, whether it has to do with Iraq, whether it has to do with negotiations with our European friends and the IAEA on Iran, whether it has to do with Russia, where I was last month. I'm on my way to the subcontinent now.

Name a specific issue where it looks like I have been marginalized. I was part of the team that took this case to the United Nations for Iraq. I am working on the North Korean issue. And so this is also an easy charge.

Are there differences of view within an administration? Sure. And we resolve those differences of view. But I know what the president wants, I know what his agenda is, and he knows that I am working his agenda. So these sorts of charges are always interesting to read and fun to gossip about, but don't have any standing in reality.

WALLACE: What do you think of John Kerry?

POWELL: I have known Senator Kerry for many, many years, and we did some work together on Capitol Hill. And I have regard for him, but it's now a political campaign between he and President Bush.

WALLACE: OK. Russia is holding its election today, and there's no doubt about the outcome, as we said. Obviously, Vladimir Putin is going to win big.

How concerned are you about the way this campaign has been conducted, with the government running all of the major television, with all the candidates either jailed or undercut? Is real democracy in trouble in Russia?

POWELL: I have some concerns, but I don't think democracy is in trouble in Russia. But Russians have to understand that to have full democracy of the kind that the international community will recognize, you've got to let candidates have all access to the media that the president has.

POWELL: You've got to make sure people are not in any way kept from participating in the open, full democratic process.

And we are concerned about the way this election is being held, and the way the election for the Duma, their parliament, was held not too long ago. And we have expressed directly to President Putin — I have, as the president's chief diplomat, to President Putin, and to other leaders in Russia, that these are areas that they have to work on.

We have OSCE, Office of Security and Cooperation in Europe, monitors in Russia who are watching this election procedure, and we will get independent assessments about this election.

And since President Putin has had such an overwhelming edge in this election, and, frankly, is liked by the Russian people, and the Russian people will return him to office easily, then it's not entirely clear to me why they go out of their way to keep opposition candidates from fully participating in the electoral process.

It's not good, but I don't think it signals the total demise of democracy in Russia. They've just got to do a better job of it.

WALLACE: Iran. Iran has canceled further inspections of its nuclear sites. They say they're going to resume enriching uranium. I know that you have been pushing the international community to get tough with Iran. But aren't we seeing the same cheat-and-retreat tactics in Iran that we saw for years in Iraq?

POWELL: We're worried about Iran, and we have brought a great deal of international pressure to bear: the International Atomic Energy Agency, working with our European Union colleagues and working with the Russians.

Iran tried to deny they had any such programs. They were cheating on their obligations to the international community. And they have now been pinned. They have been exposed to the full light of daylight.

And so they're now responding to the strong statement, strong resolution passed by the IAEA the other day, and we'll see where this goes.

But if they continue in this manner, to deny and to put out the kind of statements as they did, they'll find that the international community will be prepared to take action when next the IAEA meets in June.

WALLACE: Now, when you say "take action," are you talking about a return to sanctions? Is that satisfactory?

POWELL: We're talking about the IAEA reviewing where we are in June, once again, not where we are in March, notwithstanding all the statements that have been by the Iranians, and if the IAEA finds their actions unsatisfactory, it has the option of referring it to the Security Council for action.

I won't prejudge now what those actions might be, but the Iranians need to understand that the international community is not going to just sit by idly while they continue to move in the direction of a nuclear weapon.

WALLACE: Middle East, briefly. There's going to be the first meeting this week between Israeli Prime Minister Sharon and Palestinian Prime Minister Qureia. The Bush road map has been on the shelf for months now, and Sharon is talking about taking unilateral steps.

Do you see those as a move toward peace, or toward killing the negotiations?

POWELL: No. The road map, as Prime Minister Sharon has said, the road map remains the one document that everybody has agreed to, and it is there, waiting to be used.

What we need is serious action on the part of the Palestinians to bring terror under control and to stop these attacks against Israelis. And Prime Minister Sharon doesn't believe he has a partner for peace until the Palestinians do that.

However, he has decided to take action and remove the settlements from Gaza, if that's ultimately what he decides to do, but he's put forward this proposal. And it's an interesting proposal. And depending what he also is planning to do with settlement activities in the West Bank, there may be something here that we can work with and get this process started again.

But any process like this will not get very far unless the Palestinians take necessary action to end terrorism on the part of these Palestinian organizations, and that's what we keep pressing them on.

WALLACE: We talked about this earlier, and I just want to finish with this, if I might. You know, there is a conventional wisdom in this town, which we talked about, that you've been somehow beaten, or outflanked, by the hawks, that you're frustrated, that you're marginalized.

Here's your opportunity. Set the record straight. What's the state of Colin Powell?

POWELL: Colin Powell is just fine. And I read these stories, and they are interesting, sometimes they're annoying, sometimes they're very amusing. I've been reading them for the last three years. Everybody's been waiting for me to get frustrated and do something, and leave perhaps.

But let me tell you what. I'm very proud to be working for this president. I'm very proud to be serving my country again. I'm very proud to be a part of this administration and work with my colleagues within the administration.

There are occasionally different points of view in the administration, but guess what? That's why we have a strong president who tells us what he wants to do, as opposed to what any one of us want to do.

POWELL: And so, we're hard at work on an agenda that includes helping the people of Africa and our own hemisphere on HIV-AIDS, the Millennium Challenge Account, the biggest increase in development assistance since the Marshall Plan in the late '40s.

We have dealt with Saddam Hussein. This regime is not coming back. No more mass graves, no more dictatorial actions, no more suppression of people. Building a democracy.

Libya's getting rid of its nuclear weapons and other weapons of mass destruction. We have gotten all of our friends in the Pacific to press the North Koreans.

We're doing a lot. It's a positive agenda, and I'm pleased to be part of that agenda. I'm pleased to be part of this leadership.

WALLACE: Well, I think that's a good place to leave this. And, Mr. Secretary, thank you so much for giving us a kind of tour of the international horizon. I know that you're off later today to South Asia. Safe travels.

POWELL: Thank you very much, Chris.