This is a rush transcript from "Special Report," February 10, 2011. This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: Just a few hours ago, the Egyptian president said this in a statewide address:


HOSNI MUBARAK, PRESIDENT OF EGYPT: I am aware of the danger of this intersection and I am convinced that Egypt is going through a very crucial moment of history. It is necessary to put the country first, to put Egypt first beyond and above any other consideration. So I gave the powers, the presidential powers to the vice president. I know, and I'm sure that Egypt will go through this crisis.


BAIER: Interpreting all of that has been a challenge over the past few hours. Let's bring in our special panel tonight, Elliott Abrams of the Council on Foreign Relations, he's a former deputy national security advisor, Aaron Miller of the Woodrow Wilson International Center for Scholars. He's a former State Department advisor to six secretaries of state, and former deputy defense secretary Paul Wolfowitz, now with the American Enterprise Institute. Thank you, gentlemen, for being here.

First, let's talk about an overview of what you thought of the day and what it means big picture.

PAUL WOLFOWITZ, AMERICAN ENTERPRISE INSTITUTE: Well, I think, once again, Mubarak is two days behind what he needs to do. He finally expressed condolences for the people who have been killed. Maybe if he'd said in the first speech he would have a little more credibility right now.

And he reminds me, ya know, Anwar Ibrahim, who is a very courageous Muslim Democrat, who's had enourmous difficulty in Malaysia who was imprisoned on trumped up charges ten years ago. He got a letter from Vaclav Havel, who said the people who are really in prison are the people who put you there. They are sheltered, they don't know about reality they don't know what's going on. You have the feeling that Mubarak doesn't really know what's going on.

AARON MILLER, WOODROW WILSON INTERNATIONAL CENTER: Paul's rightly focused on what we would like to see happen but I think that the basis of this is what is actually happening right now. And I think what began as a very hopeful day has now morphed in a situation, in which we're looking over into the abis. You've got two imovable and implacable forces right now. The president of Egypt who believes he is Egypt and his presence is vital to avoid the danger of instability and foreign intervention on one hand and an inchoate not very well organized but very determined and courageous opposition movement who is convinced it needs and will transform the Egyptian system. And these two sets of forces are now in danger of a serious confrontation.

BAIER: And we're just hours away from Friday prayers, Elliott?

ELLIOTT ABRAMS, COUNCIL ON FOREIGN RELATIONS: We are. I think Charles was right, earlier on -- Charles Krauthammer. There could be violence tomorrow. The army has been desperately to avoid making the choice to throw Mubarak out or to fire on the demonstrators, to use violence to end this and send people home.

And as this drags on I think their efforts to avoid making that choice become harder and harder and harder. And I think sooner or later they're going to have to make it, and sooner may be the next couple of days.

BAIER: Is there a sense that actually the power has transferred to Omar Suleiman, the vice president? I mean, the answer was buried in the speech by Mubarak. I don't think many of the protestors knew what it meant. Since then, the ambassador to the U.S, the Egyptian ambassador, has said that Suleiman is the de facto president. What does that mean?

ABRAMS: But it's Mubarak who went on TV first and in that speech he must have said the word "I," 50 or hundred times. And he said things about, "I will do this, I will guarantee that. I will not permit the other thing," that suggest that he is not going anywhere. He still views himself as the central figure.

WOLFOWITZ: But there really is a third force, and it's been mentioned, and that's the military. And I could be wrong in this, but I think everything the military has done up until now, says they're not going to go down with Mubarak. They're not going to do a Tiananmen and start slaughtering Egyptians. So it seems to me he's finished. It may not happen right away but my sense is the military has cast its vote pretty decisively.

MILLER: This is a critical point it seems to me. I mean, and we can't forget, Egypt was a praetorian state, it is now and it's likely to remain a polity where the military has tremendous influence, not just in national security politics but in politics and also in the economy. And the military will be the last to act. They are clearly positioning themselves between Mubarak on one hand and the opposition on the other. And when they're tested in the streets, if it comes to that, that will be the question -- will they use live fire on their own and vice versa? That is the core question.

BAIER: Much more with special expert panel on fast moving developments in Egypt and the Middle East. We'll take a look at the region and the administration's response after the break.

Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.