This is a rush transcript from "Special Report," April 12, 2011. This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: Before the break we asked you to give NATO a grade for its work in Libya. There you see it, 56 percent of you gave the alliance a failing grade of "F," 29 percent said "D," and I guess these are NATO officials, 0.6 percent gave NATO an "A" in Libya.

It has been a back-and-forth, and the administration weighing in on what is next on the ground.


HILLARY CLINTON, U.S. SECRETARY OF STATE: We want to see a cease-fire. We want to see the Libyan regime forces pull back from the areas that they have forcibly entered. We want to see a resumption of water, electricity and other services to cities that have been brutalized by the Qaddafi forces. We want to see humanitarian assistance reach the people of Libya.

These terms are non-negotiable. We believe, too, that there needs to be a transition that reflects the will of the Libyan people and the departure of Qaddafi from power and from Libya.


BAIER: Secretary of State Clinton this week, listing the terms that are non-negotiable, but Qaddafi leaving didn't sound like it was one of those terms. We're back with the panel. Charles, you heard from Prince Idris, member of the royal family exiled, his family since 1969 when Qaddafi took over, asking for help tonight. It seemed like he was cut and dry.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: He was. As was the British foreign secretary who said the fellow NATO members who have been sitting on the sideline except for the French, where are you guys? How come it's only us and the French? Ya know, Clinton says even in these restricted terms leaving out the exit of Qaddafi, says we want to see X, we want to see Y, we want to see the withdrawal from the cities as Obama himself said in a televised address a month ago, non-negotiable, the leaving of Misrata alone.

Today, Misrata is getting shelled mercilessly. And this is non- negotiable. The United States want to see, if you are the world's leading power and if you want to will the ends, you have to will the means. Otherwise you are Liechtenstein. It also wants to see the world live in peace and harmony, but nobody expects it to do anything.

Either you get in a war seriously or you don't. Secretary Gates had advocated against it, it' a perfectly reasonable position. But if you're in and you give it over to NATO, what the British and the French are saying is that it's a farce. The Germans and the Turks are against the operation. All the others are standing on the sidelines and doing nothing, and the British and the French are trying some of the ground attacks. It's the ground attacks that are the issue. That is why the rebels have been thrown back, and that's why Misrata is on the brink of collapsing. It seems to me that NATO operation is stalled and the Dutch commander says cheerily he's pleased with how things are going. If you are in Misrata I think you would have another view.

BAIER: Juan, is the administration -- well, first of all the news coverage seems to have diminished over a number of days. The administration is asked about it everyday, but it doesn't often make front page news. What about the stance of where we are and what NATO is doing now?

WILLIAMS: Well, sort of despite the marshal music coming from Mr. Krauthammer, I don't think most Americans want to see American forces on the ground.

KRAUTHAMMER: I was against the operation.

JUAN WILLIAMS, SENIOR EDITOR, THE HILL: OK, well, now, at this moment, when you talk about that, but I must say that conversation is starting and you are starting to hear it now from people like the British and the French because everybody is frustrated with what is described as a stalemate militarily on the ground. So the question is, ya know, exactly how do you accomplish regime change? Because that remains the U.S. goal, that remains what you've just heard from Secretary Clinton, it is what the Europeans want --

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Although, that's not non-negotiable. I mean it seemed like it was outside the list of non-negotiables.

WILLIAMS: I think it's non-negotiable at this point. But I also think it's shored up by what you heard earlier from your guest and from the rebels. They don't want to agree to any deal that doesn't include Qaddafi being ousted. That is their bottom line. So the fact that that conversation is starting and that American troops will definitely not be involved is very curious to me because I can't imagine that the Europeans would do it. But that seems to be the talk.

BAIER: So how you get from point A to point B, is kinda the question here.

HAYES: Yeah, I mean look, there's one way to end this and it's for Qaddafi to either be killed or to go, by his own regime, by people surrounding him or by the United States and NATO taking him out.

The fact of the matter is, there's been all this talk in Washington over the past week of a stalemate, it's not a stalemate, we're not winning. I mean, clearly the rebels are losing. The Qaddafi forces are advancing, they're continuing to shell. The rebels are increasingly disorganized. There is no sense at all that it's a stalemate. The only kind of a stalemate is the kind people want to talk about in Washington when they don't know how else to describe it and they don't want to say that we're losing.

This is what happens when the United States doesn't show leadership, when it wait too long to get involved and when it does get involved it gets involved in a sort of hands-off sort of way and passes it on to NATO.

BAIER: All right, 15 seconds. What happens?

KRAUTHAMMER: If it's a half-hearted operation you have only the British and the French I think you get continuation of what's happening. The rebels get pounded, they just are kept alive. Misrata will fall and I think we're going to have to live with an ongoing civil war that's gonna be a catastrophe.

BAIER: OK, that's it for the panel, but stay tuned for one show's winners and losers in the Friday night budget battle.

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