This is a partial transcript of "Special Report With Brit Hume" from Jan. 26, 2006, that has been edited for clarity.

BRIT HUME, CO-HOST: So what does it mean for the Mideast, for Israel, for Hamas, the United States, that Hamas will take power in the Palestinian territories. Well who better to assess that than Ambassador Dennis Ross, who was point man on the Mideast for both the Bush I and the Clinton administrations.

Dennis, this looks to me, to my untutored eyes, like a regular mess. Is it?

DENNIS ROSS, FORMER MID EAST ENVOY: I think it’s a disaster. It is. Think about this. Hamas basically has turned the clock back almost 20 years. Before 1988, the position of the Palestinian leaders was a one- state solution.

HUME: That means goodbye Israel.

ROSS: That’s right. In 1988, they came out with a deceleration and said, a two-state solution. And also then later was a two-state solution. We now have a Hamas party that is going to dominate the government that rejects a two-state solution.

HUME: Well, is there any reason to believe that Hamas might find it necessary to moderate that stand or could it politically do that?

ROSS: Could it politically? Yes. Will it do it becomes a fundamental question. And here I think there has to be a very clear set of conditions created by the international community in a united front to make it clear to the Palestinians: We will not deal with a government that is one that doesn’t believe in co- existence, doesn’t believe in a two-state solution, promotes violence, promotes terrorism. If that’s the case, no relationship, no economic support.

HUME: Now, to what extent is the economy and the governance in those Palestinian territories dependent upon outside aid from such places as the United States, which has shipped billions in there, and Europe as well?

ROSS: One billion a year has been going to the Palestinian Authority at a time where, because of the intifada over the last several years, their economy was almost halved. So the $1 billion has been critical. Hamas cannot come in and, as its first act as being a government, be the responsible party for losing all that outside assistance. Here’s where they have some choices to make.

HUME: How much is coming from Europe? Similar amounts?

ROSS: No, it’s -- $1 billion is overall.

HUME: Overall. All right.

ROSS: The Europeans are actually the biggest single provider of assistance.

HUME: Right.

ROSS: Actually, the Arab world provides a very small amount of the assistance.

HUME: That’s typical.

So how much leverage? Real leverage? Can they -- are they going to have to moderate?

ROSS: I think they’re going to have to make some choices. Look, they didn’t expect to win.

HUME: Really?

ROSS: They thought they were going to come in -- they thought over time they could dominate and take over the Palestinian authority. Right now they expected they would be in opposition and they would tie the hands of the leadership. They didn’t know suddenly they are going to be the government. As a result of that, I expect them perhaps to want to support maybe a technician to be the front person, to hide behind that and sort of say, look, we just want to deal with the social/economic issues. You had Jennifer Griffin interviewing Mahmoud Zahar.

HUME: Right.

ROSS: Who’s the Hamas leader in Gaza, effectively addressing those questions… And then also saying, well there is no peace process. Well the fact is, with them, they say, we don’t want to deal with Israel period. They’re going to have to back off of that or they’re going to lose a lot, assuming we lead the way.

HUME: Right.

ROSS: Very clearly.

HUME: So you don’t think the U.S. should moderate its position at all?

ROSS: No. In fact, I think our roll right now is to come up with very clear solutions about, accept a two-state solution, give up violence or you get cut off and we have to lead others to make the same positions very clear. Then Hamas has to make a choice. If it’s not clear from the outside, they won’t make a choice on the inside.

HUME: Dennis, thank you. Glad to have you here.

Watch "Special Report With Brit Hume" weeknights at 6 p.m. EST.

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