This partial transcript of Special Report with Brit Hume, December 3, 2001 was provided by the Federal Document Clearing House. Click here to order the complete transcript.

BRIT HUME. HOST: Once again, in the aftermath of a weekend of terrorist atrocities in Israel, the U.S. faces a familiar, if now more urgent, dilemma: If peace cannot be made with Yasser Arafat, then why continue to deal with him? But if he goes, what comes next? And what should he be called upon to do now to qualify as a relevant leader, still a relevant leader, in the region?

For perspective on those questions, we turn to Robert Satloff, executive director of the Washington Institute for Near East Policy. Welcome to you, sir.


HUME: Do we know anything now that we didn't know, about Yasser Arafat and the state of his situation over there, since the weekend?

SATLOFF: Well, I think we know that he still has yet to begin to fulfill his responsibilities to fight terror with the full force of his authority. Now, I don't think we know much more about him today than we've known for many years, which is he often makes very important public statements, and he does some of what he's asked to do. But it is never lasting and it is rarely, if ever, enough to make a lasting impression.

HUME: Now, the Israelis have carried out this policy of attacking, and indeed, trying to kill, terrorist leaders. They have done that, noting, they say, that Yasser Arafat should have rounded up these people and locked them up, which he has periodically done in the past, only to release them later.

Is it fair to suggest that if he had done that, rounded these people up that, presumably he's rounding up now, and locked them up, that perhaps this round of attacks might not have occurred?

SATLOFF: I think it's fair to say that even with 100 percent effort, there is still likely to be some violence between some Israelis and some Palestinians. But the world would be very different than it has been. There would be a clear authority that is exerting its control. Any bomb maker, any terrorist, would be hounded by the Palestinian police, and would be hiding from them more than from Israel.

Much of what has happened would not have occurred if, indeed, the PLO was fighting with the full force of its security apparatus against the terrorists in its midst.

HUME: Now, the reason Arafat does not like to engage the full force of his security apparatus is presumably the internal politics of the West Bank. What can you tell us about those — how severe they are, how much doing something, as fully as he has been called upon to do it, would threaten him politically?

SATLOFF: First, the big picture is that for his entire public career, which is now over 40 years, Arafat has always chosen national unity over progress. When a fork came in the road, whether he should break with a more radical group, or make achievements for the Palestinian cause, he's chosen not to break with the group, and to keep the whole Palestinian people together, rather than make progress.

Now, in the last intifada...

HUME: That is the year-long violence...

SATLOFF: The year-long violence since shortly after the breakdown of the Camp David peace talks last summer. Now, Arafat may have been, at the beginning of this, at one point, and may have given support to some organizations. But over the last several months, many organizations have been operating Hamas, Palestinian Islamic jihad, radical groups, doing terrorism.

Now, Arafat has made no achievements for his people over the last year, through politics.

HUME: And no attempt to stop those groups?

SATLOFF: Very few attempts to stop the groups. So now they see him as an increasingly irrelevant figure, because he's making no political gains, that the people who are fighting the Israelis are his opponents, not him. So if we're not going to make political gains, we might as well fight the opponents. And Arafat has let them do it.

Arafat can make political gains if he would reign in the terrorists and do what he has promised to do. But instead, he is growing increasingly irrelevant. This is despite the fact that he has the power under his disposal.

HUME: Does he have enough, really?

SATLOFF: The reality is that there are 35- to 40,000 members of the Palestinian security forces.

HUME: All loyal to him.

SATLOFF: The vast majority, loyal to him. And by all professional estimates, there are no more than 1,000 or 2,000 members, armed, of the radical Islamic organizations opposed to him. They may have some popular support. But among the people he needs to shut down, 1,000 or 2,000. It wouldn't even be a big fight. He needs to make the choice. It's not about ability. It's about will.

HUME: Let's assume, just for the sake of discussion, he doesn't make that choice, he doesn't make that move, he doesn't advance on these people. And Israel continues to aggressively respond, continues to kill such leaders as it can find and kill, continues to retaliate as it has now. What is the likely outcome of that?

SATLOFF: Well, if Arafat is unable or unwilling, really, to do what he needs to do, he will grow increasingly irrelevant. And the world will view him as irrelevant and the Palestinian people will view him as irrelevant. And we're more likely to have Hamas emerge as a dominant political force.

Arafat thinks he can ride any tiger, though. There is a uniform belief among his lieutenants that he's on the wrong path. But since he knows that Sharon will not kill him, since he knows that the understanding between the Israelis and the United States is: do what you need to do about the radical groups, impose a price on Arafat, but don't destroy Arafat himself, he believes he has an insurance policy. And he believes that, like a phoenix, he will rise.

HUME: What should the U.S. do about that?

SATLOFF: My belief is the U.S. should start to impose consequences on Arafat for his failure to fight terrorism. And here is what I mean. Ten years ago, George Bush's father was faced with exactly the same circumstance, the PLO unwilling to fight terror. His decision was to suspend U.S. relationship with the PLO

HUME: This...

SATLOFF: Arafat mattered — this matters to Arafat. We need to impose that sort of cost on him.

HUME: So, we cut him off.

SATLOFF: We cut him off politically, so that the Israelis don't have to cut him off militarily.

HUME: Robert Satloff, interesting insights, sir. Thank you for coming. Good to have you.

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