Updated

The following is a transcript from "FOX News Sunday" on Dec. 4, 2005:

CHRIS WALLACE, HOST: The president moved aggressively this week to lay out his strategy for winning in Iraq but, no surprise, he didn't silence his critics. We're joined by the president's national security advisor, Stephen Hadley. And, Mr. Hadley, welcome back to "FOX News Sunday".

STEPHEN HADLEY, NATIONAL SECURITY ADVISER: Thanks, Chris. Nice to be here.

WALLACE: Let's start with the good news, and that is this report that a top Al Qaeda operative, Hamza Rabia, was killed, I guess, on Thursday in an explosion in Pakistan. First of all, how important is it? How important was he in Al Qaeda? How important, if he's no longer able to do his worst, and what about these reports that the U.S. killed him with a missile fired from a U.S. drone?

HADLEY: Well, Hamza Rabia is a bad guy. He's become the head of operations for Al Qaeda after the capture of Abu Faraj al-Libbi. He was involved in planning for two assassination plots against Musharraf. And we believe he was involved in planning for attacks against the United States.So if he has, indeed, been killed, that is a good thing for the War on Terror. It's part of the effort to kill or capture the major Al Qaeda leadership.

WALLACE: Now, you say if. According to reports, the information minister of Pakistan says they have made a DNA match.

HADLEY: We have seen those reports out of Pakistan. Obviously, we're looking into them. At this point, we are not in a position publicly to confirm that he is dead. But we're obviously — if he is, that's a good thing for the War on Terror.

WALLACE: And did we help take him out?

HADLEY: We've obviously been supporting Pakistan. President Musharraf has been very aggressive in dealing with the Al Qaeda and Taliban presence in Pakistan. We have helped him in terms of providing intelligence and cooperating with his forces, and obviously this is something that would be an important thing for Pakistan, important thing for the United States.

WALLACE: All right. You told me before you came on here that you don't know anything about this alleged plot to bomb Saddam Hussein's trial, so I'm not going to ask you about that.

But I do want to ask you about the president's speech this week which he labeled a strategy for victory, and I specifically want to ask you about some things that the president didn't mention this week.

First of all, let's put up the Iraqi — or, rather, the U.S. troop losses in Iraq so far this year. A hundred and seven died in January. That's when Iraq held its first elections. That went down to a low of 36 in March. Fifty-four died in July. The number was back up to 96 in October. That's when Iraqis voted to ratify the constitution. And November was another deadly month with 84 deaths. So far in December, Mr. Hadley, we have lost 14 more Americans in just the first three days of December. Is that a strategy for victory?

HADLEY: Obviously, the losses are very tough for all of us to take. They're very tough for the president to take. Every morning one of the things we start out with — he says, "how was it overnight?" It's difficult for him.

He spends a lot of time meeting with the families of those who have lost loved ones in Iraq. It's very painful for them, very painful for him. One of the reasons the president is making the series of speeches he is and putting out the report that he did is because it's very important precisely because of those losses to be clear to the American people as to what is at stake in Iraq, to make it clear that we do have a strategy to win, that we are making progress, but that there are still serious challenges ahead.

And one of the things we've been saying for several months is as we go into this election season — from the referendum on the constitution on October 15th to these elections coming up on December 15th, we said very clearly you can expect to see the attacks go up rather than down.

This is an effort by the terrorists, the Saddamists, the rejectionists to try and subvert a democratic process. They in some sense, I think, see this as sort of the big chance, because it is very clear that Iraqis support the democratic process.

Each time there have been elections, more and more Iraqis have come out and voted. The Sunni are now coming out and making clear they're going to participate in the December 15th elections. That is progress. That is the strategy for victory — that and the training of Iraqi security forces.

WALLACE: I think one of the concerns that a lot of Americans have is that this administration has talked about victory before. Last May, Vice President Cheney said the following, and let's put it up on the screen if we can, "I think the level of activity that we see today from a military standpoint, I think will clearly decline. I think they're in their last throes, if you will, of the insurgency."

Since then, 462 American troops have died. The insurgency back in May was not in its last throes, was it?

HADLEY: One of the things the president did in his speech on Wednesday was to try and be clear about who is the enemy, who we're up against, and he categorized it really in three ways.

First is the terrorists, Zarqawi being the most prominent. This is a group that sees the war in Iraq as an opportunity to get a base of operations against the neighbors of Iraq, other countries in the region, and a base of operations against us. This is a group that is not going to be reconciled by a political process. They need to be killed or captured. We also talked about — the president talked about the Saddamists, another group — probably cannot be reconciled, simply wants a return to the days of the past.

That leaves the rejectionists, many of them Sunni. And what you see in this electoral process is an effort to bring the Sunni, many of whom are on the fence, between support for the violence and support for the emerging Iraqi government, to bring them into the political process, to isolate those rejectionists and to empower Sunni security forces to deal with them.

WALLACE: But, Mr. Hadley, with respect, I don't think you answered my question. Was the vice president mistaken last May when he talked about an insurgency in its last throes, given the fact that almost 500 American troops have been killed since then?

HADLEY: The violence is continuing, as I said in my answer to the prior question. We have made clear we thought the violence was probably going to go up in this period.

But what the president is trying to make clear is we do have a strategy. We think we're making progress on that strategy, and we can see it moving forward in a progress where we will be able to turn responsibility increasingly over to Iraqis to deal with the insurgency and have eroded the underpinnings of some of that insurgency, and we think that will lead toward greater stability in Iraq.

WALLACE: But doesn't that undercut the credibility of the administration, first of all, when the vice president talks about last throes, last May, and clearly it turns out it was wrong?

And, with respect, there's an unwillingness for you to admit it was a mistake then. A lot of people say that this administration, even when it's clearly mistaken, is never willing to say it was wrong.

HADLEY: Well, one of the things that's interesting...

WALLACE: Was he wrong when he said that?

HADLEY: Well, look. What I think we can say is that there were indications that we are making progress against the insurgency. And if you look at, for example, Al Qaeda, we started this story with the killing of Hamza Rabia, the number three operational chief in Al Qaeda. If you look at what has been able to be done up, for example, in the Mosul area about routing out the local Al Qaeda operatives, we are making some progress. We are taking away the leadership of Al Qaeda.

But clearly, there's a lot more work to do. And one of the things the president tried to make clear in his speech on Wednesday is it is a challenge, and we have learned as we've gone. Our approach to training the police is now different than it started out. The role of the Iraqi army is now different than when it started out. This has been a tough challenge, and one of the things the president wanted to make clear is we've learned as we've gone. We've gotten better at what we're doing. We think we're at a point where we have a strategy that will work and is working over time.

But look, let's be candid. There are challenges ahead. This is a difficult thing that is being done. But it is a strategy or a plan for victory. And, remember, the subtitle of that plan for victory is helping the Iraqis defeat the terrorists and establish an inclusive democratic state.

HADLEY: That is what they need to do.

WALLACE: May I pick up on that, sir? Excuse me. The president, as you say, talks about building democratic institutions. Does he view the U.S. military paying to plant stories in Iraqi newspapers as undermining a free and independent press?

HADLEY: The president was very disturbed about those reports. One of the reasons we are in Iraq is to help the Iraqis establish the institutions of democracy and freedom, and one of those, of course, is a free press and a free media. And so those reports are very troubling.

The Pentagon is looking into them. To the extent that kind of behavior is inconsistent with our policy, it will be stopped. Our policy is support a free media and get out truth, truth to Iraqis, truth to the American people about what is going on in Iraq.

WALLACE: So you're saying that there is going to be no more paying to plant stories in the Iraqi media.

HADLEY: They're investigating it. We need to know the facts. I've talked to Secretary Rumsfeld. He needs to know the facts. We don't at this point, but I think the policy of where we want to go — the support for a free media, for truth about what's going on in Iraq — that is the policy.

WALLACE: And does the president view these reports as inconsistent with that policy?

HADLEY: Yes. It's very troubling. And if it turns out to be true, I think you'll find that activity stopped.

WALLACE: Now, some military officers in Iraq say look, there's a lot of disinformation coming from the bad guys. They're not really apologizing. They're saying this is what we need to do to get our message out.

HADLEY: We need to get our message out, but the message we get out has to be truth and facts. Truth is our great strength here in the United States.

WALLACE: Well, nobody's saying the stories were untrue.

HADLEY: That's a very important point, but, obviously, it's got to be done in a way that reinforces a free media, not undermines it.

WALLACE: OK. I want to do a lightning round with you, if I can. I'm going to ask you a series of brief questions. I'd like brief answers. You met with Senator John McCain this week. Do you have a deal with Senator McCain for the White House to drop its objections to his amendment about banning the use of torture or abuse of U.S. prisoners?

HADLEY: We are working hard in good faith on both sides to come up with an approach that can be supported by the president and the Congress to both find a way to be aggressive in the War on Terror and still comply with U.S. law. We're working it. We're not there yet.

WALLACE: Now, what specifically Senator McCain wants to do is ban cruel, inhuman and degrading treatment both by the Pentagon and the CIA. Are you willing — I understand there could be definitional issues there, but in theory, are you willing to agree that neither the CIA nor the Pentagon should be involved in that kind of treatment of prisoners?

HADLEY: What the president has said is that we do not torture, and he has said that while we need to be aggressive in the war against terror, we also have to do it in a way that complies with U.S. law, with U.S. treaty obligations and with the constitution. That's our policy.

And to the extent there are provisions in the convention against torture dealing with those things, it's the president's view we need to comply with whatever the U.S. obligations are under those kinds of conventions.

WALLACE: All right. It's a lightning round, so I'll try to keep my questions shorter, and I'll ask you to do the same.

Our European allies are demanding answers to these reports — and we had another one in our headlines today — that the U.S. is transporting terror prisoners through Europe and, in fact, even to secret CIA prisons in Europe. What are we going to tell the European allies?

HADLEY: Secretary of State Rice is going to Europe this week. She leaves tomorrow. She is going to be addressing these issues in a comprehensive way. One of the things she will be saying is look, we are all threatened by terror. We need to cooperate in its solution.

As part of that cooperation for our part, we comply with U.S. law. We respect the sovereignty of the countries with which we deal. And we do not move people around the world so that they can be tortured.

WALLACE: Finally, the 9/11 Commission is issuing another report in which they say that the government is not doing enough to protect all of us from another terror attack. Your response.

HADLEY: The 9/11 Commission made a number of recommendations, I think roughly 74 recommendations. The president reviewed them. We accepted 70 of them in whole or in large measure, and that is being implemented now. Obviously, as we've said all along, we are safer, but not yet safe. There is more to do.

WALLACE: Mr. Hadley, thank you. Thanks for coming in. We covered a lot of ground.

HADLEY: Nice to be here. Thanks a lot.