This is a rush transcript from "Special Report," March 13, 2012. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: At this stage, it is my belief that we have a win dow of opportunity where this can still be resolved diplomatically. That is not just my view. That is the view of our top intelligence officials. It's the view of top Israeli intelligence officials.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: None of us can afford to wait much longer.


NETANYAHU: As prime minister of Israel, I will never let my people live in the shadow of annihilation.


BRET BAIER, ANCHOR: Well, the back and forth, Israel and Iran. Will Israel act and attack Iran's nuclear program? When the chairman of the joints chief of staff conducted an interview in which he said this, quote, "We are of the opinion that the Iranian regime is a rational actor. And it's for that reason, I think, we think the current path we're on is the most prudent path at this point." it did raise some eyebrows. Over the weekend the former chief of Mossad for Israel, the intelligence unit in Israel, talked to "60 Minutes" and said this.


MEIR DAGAN, FORMER MOSSAD CHIEF: The regime in Iran is a very rational regime.

HOST: Do you think Ahmadinejad is rational?

DAGAN: The answer is yes. Not exactly our rational, but I think that he is rational.


BAIER: What about this? We're back with the panel. Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, Iran is rational in the sense that it has this idea, a correct one, that if it aquires nuclear weapons it becomes the dominant hegemon in the region, dominant over all the Arabs, which has been a Persian dream for thousands of years, dominant over the region, dominant over oil, and in a position to annihilate Israel if and when it wants. So that is rational.

The problem is what have we done? When the president speaks about a diplomatic resolution, there is not a shred of evidence that is in the cards. In fact, acting as if it is going to happen, I think, is irrational. His own director of national intelligence said to the Congress that economic sanctions have had economic effects on Iran, but over all these years they have had zero effect on the progress of the nuclear program.

So what evidence is there that's going to have an effect in the future? It's a hope, but it is hardly anything that you would risk the lives of 8 million people in Israel and of the existence of a Jewish state.

BAIER: Now, just to ask you about this Iron Dome, the antimissile defense umbrella -- a lot of success in the past weekend.

KRAUTHAMMER: I have been reading today there has been a high success rate. This is something that the Israelis had developed that shoots in -- shoots down incoming missiles. It was used in the fighting that we've had over the last week from Gaza. And apparently the success rate was extremely high, about 80 to 90 percent, which changes the strategic equation, because if it weren't in place there would have been high casualties on the Israeli side and there would likely have been a huge escalation. As a result of that it makes the kind of missile attack that the Gazans have much less of a threat. And it creates situations in which escalation is less likely, which I think is good all around.

BAIER: A.B., Doug McKelway has the first of a series of reports on Israel and Iran this week. The administration is trying to create some breathing room. Are they having success?

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Not only do the two countries disagree on timing, but the administration still believes that given enough time the sanctions are so crippling that they will convince these rational actors in the regime to actually give up their quest for nuclear weapons permanently. They think just attacking them buys you only a year and a half. But they want to so squeeze around with these sanctions, that they will literally give up their quest for weapons. The Israelis don't believe that the regime has any of this intention at all. And they believe the longer time is given for sanctions the more time they have to build an impenetrable bunker. So they disagree on timing. The only way that this works is if these reports are true, that they've made an exchange for more powerful superior weaponry and time. The Israelis get weapons and Obama gets the time.

BAIER: Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I thought the most interesting thing that came out of press conference was the clip that you just played at the beginning where President Obama says this is the view -- the view that we have of this window is my view, it's the view of U.S. intelligence and it's the view of Israeli intelligence, something that was underscored by the appearance of Meir Dagan on "60 Minutes" yesterday, or at least in theory was.

But the effect of that comment is that it really isolates Benjamin Netanyahu. It suggests that he is out there on his own as somebody who thinks there may not, in fact, be this window. I think that is very unhelpful in terms of the diplomacy that we are seeing take place right now, presumably, behind the scenes. We're not seeing much of it out in the open.

The second point is, this is an administration that came to office saying that they were the ones to conduct smart diplomacy, that they were the ones who knew how by virtue of their vast experience in such matters, to avoid war by doing the things that you would need to do diplomatically to avoid that outcome. They haven't shown much evidence of that right now. And in fact, if I were the administration right now, I would be putting up pressure on precisely the people that Charles talked about, the Arabs in the region, our allies in the Gulf states, to say -- to talk about how unacceptable an Iranian nuke would be, and to do that now before it's too late.

BAIER: And that is one of the pieces in this series about the Arab states and what they think about this situation. Down the row, do we still -- what is the going bet? Israel attacks before the election? Yes or no?


STODDARD: I think it's moved past the spring but before the election.

KRAUTHAMMER: I think our own secretary of defense has said it. There is a very strong chance that it's going to happen. I think it's higher now than ever.

BAIER: That is it for the panel. But stay tuned to see unexpected highlight from one of the world's largest competitions of a certain sort. You'll want to stick around.

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