The following is a transcribed excerpt from 'FOX News Sunday,' February 27, 2005.
CHRIS WALLACE, FOX NEWS: Russia signed a deal with Iran today to supply that nation with nuclear fuel for its first reactor. U.S. officials suspect Iran wants the fuel to build a nuclear weapon. But under the agreement, Iran is to return spent fuel, which could be used to make plutonium, back to Russia.
In Iraq, Sabawi Ibrahim al-Hasan, half-brother to Saddam Hussein, has been captured. Hasan, one of the 12 most wanted still at large, was suspected of helping to finance the insurgency.
And in Rome, Pope John Paul II made a surprised appearance at his hospital window during the Sunday blessing. Vatican officials had said he would miss the Sunday prayer for the first time in his papacy because of surgery that he had Thursday to relieve breathing problems. We'll have more on the pope in the next segment.
President Bush spent the week in Europe dealing with the full range of his foreign policy agenda, from relations with the allies, to where Russia is headed, to new worries about Iran.
For more on all this, we turn now to Senator John McCain, who's just back from his own trip to Europe and Iraq. And he joins us today from Arizona.
Senator, welcome. Always good to have you with us.
U.S. SENATOR JOHN MCCAIN, R-AZ: Thanks, Chris.
WALLACE: Let's start with that agreement today for Russia to send nuclear fuel to Iran. What does that tell you about Iran's intentions and also about how seriously President Putin took his meeting earlier this week with President Bush?
MCCAIN: Well, first of all, I think we have to remember that Iran is not a nation that's in need of energy resources. They're sitting on a sea of oil, as we know. So that alone makes one suspect that they want to have nuclear capabilities for other reasons.
Second of all, they have been at least in technical violation of the Non-Proliferation Treaty.
And third of all, there is no point to all this, because it is ratcheting up tensions throughout the Middle East and in our — as well as the United States' relations with both Russia and Iran.
Vladimir Putin seems to me to be acting somewhat like a spoiled child. He tried to interfere in the elections in Ukraine, much — in a very embarrassing fashion. He throws people in jail. He now is repressing the press. He is now appointing governors of all the provinces in Russia. Every step he takes seems to be headed toward a restoration of the old Russian empire. And this is not good.
The United States and our European allies I think should start out by saying, "Vladimir, you're not welcome at the next G-8 conference," at least to start with. That has some symbology associated about it.
Back to the Iranian situation, it's serious. It argues that the United States and our European friends come to agreement on a common approach. And that common approach is perhaps agreeing with the European approach that we have to give them a lot of carrots. But the Europeans have to agree with us that if those carrots don't work, we go to the United Nations for sanctions against Iran.
I gave you a very long answer, but it's very comprehensive.
I'm very worried about the Russian behavior. And we should be worried about this latest deal between Russia and Iran, because Iran does not need nuclear power, and obviously this is a regime which became much more oppressive and repressive over the last couple of years.
WALLACE: I want to pick up in a couple of minutes about Russia, because you said some fascinating things there, but let me just complete our discussion of Iran.
Realistically, at this point, do you think that the U.S. can stop Iran if it's determined to develop a nuclear weapons program?
MCCAIN: I hope we can. And obviously we'd send much more powerful messages if we agreed with our European allies.
We've got a fault line between ourselves and our European allies. They don't have a strong military so they want to act in diplomatic fashion. We're the opposite. But in this area, we certainly should have common cause. And unless we act in a united fashion, our chances are lessened.
But at the end of the day, if you have a nuclear-armed Iran, it is tremendously destabilizing in the region, not to mention the status of Israel, the country that Iran has stated they are dedicated to the extinction of.
So this could create a very volatile situation in a region that, frankly, has shown a lot of progress in a lot of other areas, and it's very unfortunate.
WALLACE: Do you think that the U.S. should enter into the negotiations, join with the Europeans and engage directly with the Iranians, not take this back-seat approach that they are at this point?
MCCAIN: I do. But the Europeans, on the other hand, have to agree that if the carrots don't work — which, by the way, I would imagine, given past Iranian behavior, it's going to be difficult for them to work — that their commitment to us is that they go to the United Nations, we seek economic and other sanctions against Iran, because that's a logical next step. So far, our European friends have not agreed to do that.
WALLACE: Let's go back to relations with Russia, which I can tell you're pretty wound up about today.
Mr. Bush said early on in his trip that the U.S. and Europe must place democratic reform at the heart of their dialogue with Russia. But after their meeting in their joint news conference when Putin made some fairly vague statements about democracy, President Bush seemed to endorse them. Let's take a look.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He declared his absolute support for democracy in Russia. And they're not turning back. When he tells you something, he means it.
(END VIDEO CLIP)
WALLACE: Question: Did President Bush go too easy on Vladimir Putin?
MCCAIN: It's hard for me to second-guess the president. I know that they had private conversations, that the president was pretty straightforward with Putin.
There's obviously many areas of mutual concern: the nuclear stockpile that remains in Russia, which we have to dispose of. There's a number of areas that are of the highest importance that we have to work together on.
But rather than me second-guess the president, I think this latest step of the Russians vis-a-vis the agreement with the Iranians calls for sterner measures to be taken between ourselves and Russia. It has got to, at some point, begin to harm our relations, because we can't stand by and allow Russia to continue to behave — it's almost aberrational.
Putin, in some ways, is acting counter to his own self-interest. This is the thing that's hard for me to understand exactly why he's doing it. He's obviously very angry about what happened in the Ukraine, because he felt that was — Ukraine was really part of the Russian empire.
But I think that the president was probably pretty stern with him privately. Publicly, he's encouraging him. And then now we're going to have to figure out what the next step is.
WALLACE: Well, let's talk about a couple of next steps specifically. I gather that you would, if you had the power, you would disinvite Putin from the G-8 summit that's going to be held in Scotland this summer, correct?
MCCAIN: Absolutely. I thought we should do that before this Iranian agreement was made.
WALLACE: Mr. Bush has already said that he's going to go to Moscow for the 60th anniversary of Russia's victory over the Nazis in May. Should he cancel that trip?
MCCAIN: I don't know. I think that he should, first of all, try to examine exactly what went on with this latest action with Iran and then take decisions accordingly. But I also think that the president will severely criticize this latest agreement with Iran.
Look, a nuclear-armed Iran in the Middle East is a very destabilizing turn of events and could ratchet up the possibility of conflict in that region.
MCCAIN: This is a very serious step, because most experts believe that Iran is about to, or is on the road to, acquisition of weapons of mass destruction. And they have means to deliver them as well.
WALLACE: Senator McCain, let's talk about one development that I gather you're happy about, and that is what's going on in Egypt, with the possibility of democratic reform there. Your reaction?
MCCAIN: Well, you know, I really was proud of Condi Rice when she canceled a trip to Egypt because of the jailing of a leading opposition figure in Egypt. And I'm glad that the Egyptians are agreeing to multiparty elections for the first time in I don't know how many years.
This also, I think, is directly attributable to the successful elections in Iraq, to the movement toward democracy in other parts of the Middle East, progress in the Palestinian-Israeli situation.
We could be — look, I'm an eternal optimist, Chris, but we could be on the verge of seeing a fundamental sea change in the Middle East toward freedom and democracy. And, among other things, that puts the lie to the attitude or belief on the part of some that some people of certain cultures don't want to govern themselves and don't want the basic freedoms that we believe are guaranteed to all people.
And so, I'm encouraged by it. I hope that Mubarak will follow through with it. And I really believe that our success in Iraq and Afghanistan has had an impact on the politics of the Middle East, and a very beneficial one, and including, by the way, Lebanon.
WALLACE: Senator McCain, I don't want to finish without doing a quick lightning round on domestic issues — quick questions, quick answers.
MCCAIN: Yes, sure.
WALLACE: What are you hearing from your constituents about Social Security reform? Has the president made his case for personal accounts, both the cost and the risk?
MCCAIN: I think he's made the case. I think my constituents want us to sit down together and stop demagoguing the issue. I think that the Democrats owe it to us to stop demagoguing and sit down and seriously negotiate.
There's not going to be the same benefits 30 years from now or 20 years from now for working Americans, and we better sit down and work together and come to an agreement.
WALLACE: Now, there are some reports today that congressional Republicans who were home for the recess now, having heard from their constituents, feel that the president may have to scale back on his Social Security reforms. Are we at that point?
MCCAIN: Well, I hope not. I think the president has indicated that he would be flexible. But the fundamental issue of personal savings account — look, that renowned conservative country Sweden has a personal savings account. So does Chile.
Look, this is a way — this is what our grandfathers would have advised us to do, try to take some of our money and invest it ourselves, not in something like Enron but in, like we do with federal employees and members of Congress, in one of five different groups.
It's a good thing to do. Interest compounds. And I think it's an important thing that we should continue to support.
WALLACE: Senator, another issue, the Senate is about to reconsider one of the president's judicial nominees.
If it comes to a vote on the so-called nuclear option, the idea that you would change the rules and require only 51 votes to end the filibuster, if it comes to that, how will you vote?
MCCAIN: I'm very concerned about the nuclear option, because I'm afraid it's going to shut down the United States Senate, and we have a lot of things to do. I'm still hoping that we could sit down between Harry Reid and Bill Frist and work out some kind of agreement.
Really, Republicans did hold up some Democrat nominees. They held them up in committee.
But this is one that's going to be a very close call for me.
WALLACE: So you're not prepared to say at this point that you would vote "no" on the nuclear option?
MCCAIN: I'm leaning against "no," but if the leaders of my party and the president want to talk to me about it, I will certainly listen carefully, because I do believe that elections have consequences and presidents should be able to appoint their nominees and carry them with a majority vote. But I'm worried about the consequences of it.
WALLACE: And finally, we have less than a minute left. Because we're disturbed people, you and I, Senator, let's talk a little bit about the 2008 campaign.
Republicans tend to be an orderly sort who always choose the next one up, whether it was Bob Dole in 1996 or George W. Bush in 2000. Who's the next one up in 2008?
MCCAIN: Jeb Bush.
If you're looking at dynasties — and by the way, I'm a great admirer of Governor Bush. He's done a great job in Florida.
I don't know. I think this might be a wide-open situation. And I think that it's going to be directly related to our success or failure in places like Iraq and how the economy is doing.
It's hard for me to know. I think it's probably wide open. We have already indications a lot of very highly qualified people will be running. I think Republican voters will have a great luxury, because they'll have a lot to choose from.
WALLACE: Senator McCain, you always surprise but you never disappoint. Thank you. Always a pleasure.
WALLACE: Come on back.
MCCAIN: Thank you, Chris.