This is a partial transcript from The O'Reilly Factor, January 12, 2004.

Watch The O'Reilly Factor weeknights at 8 p.m. and 11 p.m. ET and listen to the Radio Factor!

BILL O'REILLY, HOST:  In the "Personal Story" segment tonight, if you look beyond the political rhetoric, the basic problem is that the Country of Mexico cannot support its population.

Here are some facts.  According to the "CIA World Fact Book," 40 percent of the Mexican population lives below the poverty line.  Per capita income in Mexico is $4,700.  Per capita income here in the USA is $28,000.  This, despite the fact that Mexico is rich in oil and other fossil fuels and has two beautiful coastlines.

So why is there so much poverty south of the border?

Now we were supposed to have the -- our next guest on the satellite.  The satellite crashed just moments before this segment, and that happens.  Outer space is beyond our control.

But joining us now from Mexico City on the phone is Ambassador Andres Rozenthal, the president of the Mexican Council on Foreign Relations (search).

You know, Mr. Ambassador, President Fox (search) today saying he wants open borders with the USA is a joke.  I mean that's never going to happen.  Americans would never support that because, you know, the narcotics problem alone would make that impossible.  When we hear that kind of stuff here in the USA, we all shake our heads.  How do you react to it?

AMB. ANDRES ROZENTHAL, MEXICAN COUNCIL ON FOREIGN RELATIONS:  Well, I think that it's really not so much a question of open borders as it is of dealing with an issue that is a reality between our two countries.

And that is that there are up to about four-million to four-and-a-half-million Mexicans who live in the United States, work in the United States, and who don't have proper papers, as well as a continuing flow of people who go to take jobs which are offered by American employers.

You have to remember that there would be no Mexicans working in the United States if there wasn't somebody giving them a job.

O'REILLY:  Well, look, I don't know about that, you know, and I'll tell you why.  We don't have a flood of Canadians coming down here.  You know, we have a few but not many.  And Canada seems to be able to support its population of 30 million.

You have a hundred million people, 40 percent, as we said, living below the poverty line.  Your country cannot support your population, sir, and it's just astounding to some of us who love Mexico.

I think it's a great country, I really admire the culture, but you simply cannot support your people with tremendous resources.

So what is the essential problem?

ROZENTHAL:  Well, the essential problem is exactly what you say it is, that the country cannot give employment opportunities to enough Mexicans after...


ROZENTHAL:  Well, there are lots of reasons.

The first reason is that we had many, many years of an old demographic policy, which was that the more Mexicans, the better.  So the country grew hugely.  And it was only in the last 10 to 15 years that there was a population policy that understood that you have to control population and have family planning and other things.

But, more importantly, I think what you have is a developing country, poor in many ways, resource rich, as you said, but poor in many other ways, that has not been able to satisfy the demands inside the country for all the people who join the job market every year, and...

O'REILLY:  Yes, but it's got to be the government's fault.  I mean it has to be.  When you have an oil industry the way that you have it and the natural resources as far as tourism is concerned, the service industries, and you -- and your population remains uneducated, you have no social services for them, it has to...

Look, here's my question.  Let's get right down to the no-spin zone.  Is it the folks' fault, or is it the government's fault?

ROZENTHAL:  No, there's no question it is the government's fault.

O'REILLY:  All right.  Good.  Thank you...

ROZENTHAL:  I agree with you a hundred percent.

O'REILLY:  ... very much.

Now why should Americans pay the price of the government of Mexico's fault in the sense that you now are asking us here in America...

And, believe me, we want a guest worker program.  We do.  We need it, all right.  We want to put as many people to work as we can without hurting Americans.  But we also want it to be regulated.  We don't want this continuing wave coming across the border.  And President Fox does not seem to agree with that.  He doesn't want this...

Look, you guys seal the border at Guatemala, you're not letting those people in, yet you won't do anything to help us on the border "el Norte."

ROZENTHAL:  Well, first of all, the Guatemalans are getting in and in very large numbers.

O'REILLY:  You've got your troops down there, Mr. Ambassador.

ROZENTHAL:  But that's not -- troops have never worked, Bill.  Troops are not the answer.  You can't live in a world in which you close yourself off with military personnel and decide that that's going to be the way.  I mean the United States has for years spent billions of dollars trying to close the border with Mexico.

O'REILLY:  And they could do it in a heartbeat if they put the military to back up the Border Patrol.  It works in Korea.  It works in Bosnia.  It worked in East Germany.  You can seal borders.



O'REILLY:  ... the solution, Mr. Ambassador -- we cannot absorb -- we've got 10 million now -- illegals here now, all right?  Eighty percent of those are Mexican.

If President Bush's proposal goes into effect -- and I think it will pass -- you're looking at 20-million new Americans here in the next 10 years, and a lot of those people are going to fail and cause problems.

We can't absorb it, Mr. Ambassador.  We just absolutely cannot.

ROZENTHAL:  Bill, with all due respect, the numbers you're mentioning are a little bit high.  I mean we're talking -- by all agreement between the two countries, the number of people who live in the United States without papers are about eight million of which about half are Mexicans.  So we're talking about a universe of four-million people, first of all.

O'REILLY:  Well, you -- I think you've got that in California alone.

ROZENTHAL:  No.  No, no.

O'REILLY:  And then if you're allowed...

ROZENTHAL:  These are figures that the U.S. agrees with and that...

O'REILLY:  Well, you're not going to...

ROZENTHAL:  ... in terms of census...

O'REILLY:  The U.S. government is not going to tell us the truth because it's an embarrassment to them that they have so many illegal aliens in here in the war on terror.  I mean it's a tremendous embarrassment.

ROZENTHAL:  That's exactly right.

O'REILLY:  It is.

ROZENTHAL:  That's exactly right, and that's why...

O'REILLY:  It is not the illegals' fault either.  If I were down there, I'd do the same thing.

ROZENTHAL:  But that's why exactly it was -- it was said from the very beginning -- on the 12th of September of 2001, the Mexican government said to the Bush administration there is an even more imperative reason now to look at who is in the United States.  How can you have a secure homeland if you don't know who's in the home?

O'REILLY:  Well, how can you have a secure homeland if you want an open border?


O'REILLY:  It's insane.  You can't.

ROZENTHAL:  But President Bush hasn't proposed an open border.

O'REILLY:  No, Fox has!

ROZENTHAL:  He proposed...

O'REILLY:  Fox said it today!

ROZENTHAL:  Well -- well, but let's talk about the Bush proposal.

O'REILLY:  Why not -- wait a minute.  Fox is your guy.  He's pushing this down our throats.  Why do you want to -- why do you want to get away from him?

The Bush proposal is 50 percent good but can't work with no strengthening of the border because it -- the Reagan amnesty led to this situation.  The Bush amnesty will lead to a worse situation.  But your guy wants a completely open border.

I'm going to give you the last word, Mr. Ambassador.

ROZENTHAL:  No, I just want to tell you that I think that President Fox -- I don't speak on his behalf, so -- he can speak on his own, but I think that basically what he is looking at is that when the time comes that Mexico is able to have the equivalent per capita incomes and economic development and so on that Canada and the U.S. have, he would be looking towards a North American community where people could, just like they do in Europe, freely cross across the borders.

Now you had...

O'REILLY:  All right.  Well, you're going to have to stop the narcotics traffic and everything else because this is...

ROZENTHAL:  But -- no, but you -- you have exactly the same situation in Europe.  There are countries like Greece and Italy where they had crime problems and others.

O'REILLY:  Mr. Ambassador, we appreciate your candor.  Thanks very much for appearing this evening.

Copy: Content and Programming Copyright 2004 Fox News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2004 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, Inc.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.