Transcript: Stephen Hadley on 'FOX News Sunday'

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: This week the Olympic torch continued its international tour, but instead of being a symbol of the world coming together, it was a flashpoint for critics of Chinese human rights.

We'll discuss what the U.S. role should be with an Olympic gold medal winner in a moment. But first, we turn to the president's national security adviser, Stephen Hadley.

And welcome back, sir.


WALLACE: We invited you here to talk about China, but first let's deal with some other troubled spots right off the top.

There are reports the White House now views Iran, not Al Qaida, as the central threat in Iraq. First of all, is that true? And what is Iran doing differently to merit that growing concern?

HADLEY: We've really had three challenges in Iraq. First was sectarian violence. The surge has brought that down. Al Qaeda. They're on the defensive. A third one was the activities of illegal militias, particularly in the southern part of the country. We've known that's been a problem for a while.

What's different now is that Prime Minister Maliki decided it was time to take control of the situation down there. He moved forces down. He's had some success. He's taken control of the port. But there's more work to do.

WALLACE: But what is Iran doing differently that we're hearing all this talk from General Petraeus and other top administration officials that Iran is now the central threat?

HADLEY: I think what Prime Minister Maliki learned and the Iraqis learned was what we've known for some time, that Iran is very active in the southern part of Iraq.

They are training Iraqis in Iran who come into Iraq and attack our forces, Iraqi forces, Iraqi civilians. There are movements of equipment. There's movements of funds.

So we have illegal militia in the southern part of the country that really are acting as criminal elements that are pressing the people down there and, in good measure, as we've seen, alienating the Iraqis from Iran.

WALLACE: This week President Bush put the regime in Tehran on notice. Let's watch.


PRESIDENT GEORGE W. BUSH: ... Iran makes the wrong choice, America will act to protect our interests, and our troops and our Iraqi partners.


WALLACE: Mr. Hadley, we've imposed economic sanctions. We've attacked their supply lines in Iraq. And the Iranians have only become more aggressive.

So when the president talks about protecting our interests, what more is he prepared to do?

HADLEY: Well, as the president said, Iran really has a choice. Do they want to have good relations with Iraq, or are they going to continue a pattern of activity that's destabilizing the situation?

One of the good things is that we believe the Iraqi government now understands more clearly what they are doing. They will put diplomatic pressure to bear on Iran. That's a good thing.

In addition, we will continue to do with Iraqi security forces what we've been doing for some time. We will go after their surrogate operations in Iraq that are killing our forces, killing Iraqi forces.

We will disrupt their networks by which they move fighters, weapons and funds in and around Iraq. And we will cut off as best we can the flow of fighters, weapons and arms into Iraq.

WALLACE: There were some mixed signals from the administration this week about further troop withdrawals after the five surge combat brigades come out in July, so here's your chance now to try to clear that up.

Will the president consider pulling out more troops after this period of assessment during the summer, and what does he need to see first?

HADLEY: Here's what he's decided. We will continue the withdrawal of combat brigades going from 20 to 15 by July. That's the first decision.

Second, General Petraeus asked for a period of time to consolidate his forces and assess the security situation. The president said he will have the time he needs. General Petraeus says he needs 45 days.

At the end of that — after the completion of withdrawals in July. At the end of that 45 days, he will be in a position to make further recommendations.

What we hope is that conditions on the ground will permit continuation of what we call return on success, and more U.S. forces will come out. That's the recommendations we hope he will be able to make based on the conditions on the ground after he completes this period of consolidation and assessment.

WALLACE: Well, you know, some Democrats are already saying, "Sure, what's going to happen is around Labor Day, September, the president's going to announce more troop withdrawals to try to help John McCain."

HADLEY: He is going to make a decision based on the recommendations of his field commanders.

He has told them very clearly their only consideration is what they need to do to succeed in Iraq, and his objective is to leave Iraq in a situation at the end of his term where we have a strategy that is succeeding, that the American people can see progress, and to hand it over to the next administration, whether Republican or Democrat, so that they will inherit a strategy of working — that is working and don't have to confront a crisis on Iraq policy in the first months of a new administration.

WALLACE: Let me turn to one other trouble spot. The U.S. House voted this week to change the rules and to delay consideration of the Colombia free trade deal, in all likelihood until after the election.

Is the president prepared to deal with House Democrats to try to resolve this, or are we basically in a standoff?

HADLEY: We have been trying for the last 16 months. People forget, this agreement was signed 16 months ago. And for 16 months we have been trying to work with the leadership in the Congress for a bipartisan way forward to get a vote on that agreement.

The decisions that were made by the leadership are disappointing. We will continue to work with the Congress, but the point is this is a good agreement. It helps American farmers, workers and businesses. It stands by Colombia.

We have no better friend than Colombia in this hemisphere. And the president believes very strongly that Congress owes the American people a vote on this agreement this year.

WALLACE: Let's get to China. No sitting president has ever visited any foreign Olympics, so why is President Bush even going to Beijing?

HADLEY: The president's going to show support for the U.S. Olympic team and to show support for our men and women who are going to participate in these Olympics. He said that very clearly.

He's also said — and what he has done through his own personal diplomacy is to contact the Chinese authorities. He talked with President Hu just two weeks ago. He raised the issue of human rights. He raised the issue of what's going on in Tibet.

And he sent a very clear message that he believes it's in the interest of Chinese authorities for them to meet with representatives of the Dalai Lama.

WALLACE: But the president says he doesn't view the Olympics as a political event. He views it as a sporting event. Clearly, the Chinese see it differently. They see it as a statement that they have arrived as a great power.

Whether the president feels this way or not, can you understand where the world may see the president's coming to the opening ceremonies as a statement that he, in effect, is lending his prestige, or at least that he's not so upset that he would boycott the Olympics?

HADLEY: You know, I think this issue is in some sense a bit of a red herring. I think, unfortunately, a lot of countries say, "Well, if we say that we are not going to the opening ceremonies, we've checked the box on Tibet." That's a cop-out.

If other countries concerned about Tibet, they ought to do what we are doing, through quiet diplomacy, send the message clearly to the Chinese that this is an opportunity, with the whole world watching, to show that they take into account and are determined to treat their citizens with dignity and respect.

They would put pressure on the Chinese authorities quietly to meet with representatives of the Dalai Lama and use this as an opportunity to help resolve that situation.

If people are concerned about Tibet, that's what they ought to be doing rather than making these sort of symbolic gestures about whether you go to the opening ceremonies.

WALLACE: But no consideration — you do have leverage at this point. Obviously, these Olympics are terribly important to the Chinese — no consideration of even raising with the Chinese the issue in private and saying, "If you don't change your actions towards Tibet or Darfur, the president reserves the right to change his mind about going to the Olympics?"

HADLEY: We have a lot of leverage on China. We are using it in a constructive, diplomatic way, and it is a lot greater leverage than just the issue of whether he goes to an opening ceremony or not.

I think the whole international community has leverage. They ought to be using it now, not letting themselves off the hook by simply saying, "Well, we won't go to the opening ceremonies of the Olympics."

WALLACE: Is there also a tactical decision here that confronting the Chinese in public is counterproductive?

HADLEY: Well, it's an issue of the Chinese government. It's also an issue of the Chinese people, who are very invested in the Olympics, who see it as a coming of age for China, and so it's a balancing here.

We think that it is very important to deal with the Tibet issue, but we think the best way to do that is through the kind of diplomacy we have been undertaking, not by the kind of frontal confrontation that is being suggested by some.

WALLACE: Presidential national security adviser, Stephen Hadley, thanks so much for talking with us.

HADLEY: Thanks very much.

WALLACE: Joining us now is Olympic athlete Joey Cheek, who won a gold medal in speed skating two years ago. He's a founder of Team Darfur, a coalition of athletes raising awareness about the crisis in Sudan, and he comes to us from Princeton, New Jersey.

Joey, what do you think of President Bush's decision to go to the opening ceremonies? And what do you make of Mr. Hadley's comment that it's a cop-out for other countries to boycott the event and think that that accomplishes anything?

CHEEK: Well, as far as President Bush and his decision on whether or not to go to the opening ceremonies, I think that's — that is not exactly for me to say.

From the beginning, obviously, I'm very strongly against any sort of athlete boycott, because most of these athletes have spent their lives preparing for this, and I, of course, couldn't ask another athlete to do something I wouldn't do.

That being said, you know, one of the things on Darfur and the issue with Darfur, over and over again, China, who has more leverage than any other country in the world on Sudan and Darfur, has said that they were using quiet diplomacy.

And they've been using quiet diplomacy for the last two years, as tens of thousands of more people have been killed and another few hundred thousand in just the last few weeks have been displaced from their homes.

So what I notice is that often times — I'm sure that quiet diplomacy is necessary, but often times quiet diplomacy takes place while people are being slaughtered.

WALLACE: So when President Bush talks about this reasoning that, you know, he can, has and will talk to Chinese leaders in private, you're not persuaded?

CHEEK: Well, you know, I certainly — I have no idea what President Bush does in private with Chinese leaders.

But what I do think is that, you know, when we speak about the Olympics and the opportunities that Olympians have, by hosting an Olympics, any nation that hosts an Olympics — I think you're accepting a higher moral standard.

The Olympic games was founded not just to be a simple sporting event. It wasn't founded just because people wanted to get together and have fun and play some games.

It was created so that we could promote the values of peace and human rights and justice. And when a nation accepts that obligation, as China or any nation that hosts it, they accept this higher standard.

So I don't think it is just another sporting event.

WALLACE: Joey, as we said, you are one of the co-founders of Team Darfur. What is it that you want Olympic athletes to do in Beijing to express opposition to Chinese support for the government, the regime, in Sudan?

CHEEK: Well, what people may not realize is that the IOC places very strong restrictions on athletes at the Olympics. You're not allowed to make any sort of political statement, wear any sort of political propaganda, as they put it.

What I think, though, athletes can do, and what I think our best bet is, for us to use our voice, for us to use our chance in the media, and not just U.S. athletes. Team Darfur is made up of athletes from over 51 countries who can raise awareness about what's still happening in Darfur, for example, and really point out the connection between governments and especially China and the leverage they have over Sudan.

WALLACE: So when would they express those views? I mean, for instance, obviously, I'm sure you're talking with other members of your team about the kinds of statements they might make or the demonstrations they might make.

Could we expect flags to be carried during victory laps, or demonstrations on the awards podium or at news conferences? Give us a sense specifically of where you want to get your message across at Beijing.

CHEEK: Sure. Specifically, I think our best bet and, really, our only, in an Olympics sense, legal bet is to use our press conferences and our media.

If an athlete were to raise a flag or to even wear one of our Team Darfur wrist bands in an Olympic venue, the IOC has said that athlete would be sent home.

It's funny that the IOC and some of the nations in the west — in particular, Great Britain, New Zealand, Belgium — have all tried to pass what equates to gag orders on their athletes.

And you're not allowed to say anything bad about China, about the Olympics, about anything, even if there is a real legitimate program, because it seems that everyone is just cowering and doesn't want to, you know, offend Beijing.

The problem is when we talk about a coming of age, when a nation has a coming of age, you have to start acting like an adult.

WALLACE: Obviously, you know, you're going to — it's going to be up to the individual athlete, but would you like to see — would you anticipate that some of these athletes may defy the Olympic rules and, in fact, make these kinds of public statements or public demonstrations at the Olympics?

CHEEK: Yes, well, myself and as now — you know, I'm a retired athlete, but as myself, being a leader of this organization, Team Darfur, and really trying to bring people in, I can't endorse or recommend anyone doing anything that would jeopardize their Olympic career.

If I saw an athlete do something like that and they were penalized for it, I can't say it would blow me away. I wouldn't be stunned. But I would certainly be moved by the gesture.

And if they came under pressure or fire, which they certainly would from the Olympic Committee, I, for one, would be more than happy to stand up and scream from the high hills what a noble gesture it was.

WALLACE: And finally, given the ability and the willingness of the Chinese regime to do what it wants despite all kinds of pressure, what do you actually think a few athletes speaking out, or carrying a flag or doing something like that at the Olympics — what do you think that can really accomplish?

CHEEK: Well, the thing is, I'm not sure that the original premise is correct. I'm not sure that China doesn't respond to this. A year and a half ago when you brought up the issue of Darfur and China, they said, "Hey, this is an African internal issue. We have nothing to do with it."

And because of the work of other activists — and athletes have said that they'll be competing at the games and say that this is wrong. Slowly, the rhetoric began to change, and we think some of the actions have changed.

So what I've seen from personal experience of the last two years of working on this issue is that it's not a zero-sum-progress game. There is some movement. However, it's just painfully slow.

WALLACE: Joey Cheek, we want to thank you so much for talking with us. And I expect we'll be in touch between now and August in Beijing.

CHEEK: Thank you for having me.