This is a rush transcript from "Special Report," February 25, 2011. This copy may not be in its final form and may be updated.


MUAMMAR AL-QADDAFI, LIBYAN LEADER (via translator): Get ready to defend Libya, get ready to defend the oil, get ready to defend dignity, independence, and glory. Answer them. Let them be ashamed and degraded.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: It's clear that colonel Qaddafi has lost the confidence of his people. He is overseeing the brutal treatment of his people. The fatal violence against his own people and legitimacy has been reduced to zero in the eyes of his people.


BAIER: As Muammar Qaddafi vowed to defend his government and his control over Libya, the U.S. announced sanctions, multilateral and individual sanctions against Libya, a weapons embargo, asset freezes. At the same time Secretary of State Hillary Clinton ordered the suspension of all operations at the U.S. embassy in Tripoli. What is next here? And what about U.S. policy?

Let's bring in our panel, Fred Barnes, executive editor of The Weekly Standard, A.B. Stoddard, associate editor of The Hill, and columnist Peter Weiner. Fred, let's start with you. Thoughts?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Well, this has not been a good week for the American foreign policy and for President Obama. When U.S. civilians have to be taken out on some crummy rented ferry, and the British send in a warship to get their people, the symbolism is bad. But the symbolism is accurate.

I mean, I'm still waiting for President Obama -- I mean sanctions aren't going to get anywhere, particularly in this chaotic situation in Libya. And when you call for international -- the international community to unite, that means that you are not going to do anything because you know the international community isn't going to do anything except vote for something at the U.N.

And it's really been a pathetic policy by President Obama. And look, the best I can figure is that he was paralyzed by fear that the Americans might be taken hostage or they couldn't get out or they would be killed or something.

But, ya know, there are bigger things that if you are the American president that you have to worry about than just your American citizens there. Look, their safety is important, it's extremely important. But America is a country that has greater interest than merely those people. And Obama did not express that and he hasn't yet.


A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Well, I spoke with members this week of Congress who have traveled to the region and other regions and who have met with Qaddafi and have seen the madness up close, and they actually all had nice things to say about the way that Secretary of State Hillary Clinton and President Obama have handled this because really the priority has always been the evacuation. That the security and safety of American lives had to come first, and the time for debating sanctions or no-fly zones or anything else, was obviously taking place behind the scenes, but that was for later, and anything that would provoke Qaddafi would be a mistake.

I didn't find a lot of criticism from members of either party on that because I think that they -- people who really know the region think that there was a lot to insight and he was damned if he did and damned if he didn't, and I think that to get those people out of there was really the top priority.

BAIER: Well, they were stuck at that dock for a while.

STODDARD: I don't think the choice of exit vessels seemed be ideal.

BAIER: The catamaran did not get it done, but they're out now in Malta.


BAIER: Pete?

PETER WIENER, SYNDICATED COLUMNIST: Look Qaddafi doesn't need excuses to be provoked. The guy has blood on his hands, he has killed Americans before. You can't bow to dictators by saying we're not say anything or do anything so long as you threaten our people. That gives them a kind of veto power that is unacceptable.

I agree with Fred. The administration has been weak, they have been late, this is a habit with them on the international crisis. Particularly when it comes to regimes that are enemies of America. And we need to lead, and we need to lead morally. This is an anti-American dictator who is a jackal. And we've got to stand with the forces of liberation and emancipation.

Obama ran in 2008 on winning the heart and minds of the Arab people, but he is losing them every week as they courageously stand up against these dictators and we have nothing to say.

BAIER: Is there a sense, do you think, Pete, that this will change, now that those Americans are believed to be in safety, that perhaps we will hear of more aggressive response beyond sanctions from the president?

WIENER: Sure. Obama acts when things are inevitable. But he doesn't lead, he doesn't shape events. He's always at the end of them. He was the last major Western leader to speak out on these issues. Once it's clear that Qaddafi is going to leave, be forced to [INAUDIBLE], I think it is now, Obama will step it up. As I say, he screws up his courage when the outcome is inevitable.

BAIER: Fred, obviously the price of gas is affected and could affect the world economy, 1.8 million barrels a day come out of Libya.

BARNES: This is a huge issue for the Obama administration because of course they have done so much to suppress oil production in the United States and the Gulf of Mexico or even the -- where they are supposed to be granting permits, they aren't. A judge said just the other day -- a federal judge said, they were violating the law and not granting these permits. And of course you have Outer Continental Shell you have ANWR and all the things they could do to produce more American oil and cut down on what is coming from the Middle East, and they haven't done that, which means that they're going to be politically vulnerable if the price of gas continues to rise, which I think it is.

I want to mention one more thing. Ya know, the former justice minister, I think it was, said, Qaddafi personally ordered the bombing of the American airliner -- or the putting of a bomb in the American airliner over Lockerbie, Scotland, when so many Americans were killed.

BAIER: It was suspected but when it came out it was eye-opening.

BARNES: Yeah. And still, the White House, all they are doing is going to seek sanctions. That seems like not much to me.

BAIER: Quickly, A.B., on the gas issue, Congress is starting to speak out about opening up reserves. There are all kind of statements coming out of all kind of folks, but what is really going to happen?

STODDARD: President Obama has a green energy policy and the Republicans have an all of the above energy policy, and never the twain shall meet. I can tell you that what President Obama will do is in light of the spike in gas prices which will, ya know, affect a recovery, he will say that the budget cuts that the Republicans are offering are also going to impede -- stall a fragile recovery, particularly now that we're going to have to pay so much more for the price of gas. And that's not a debate where anyone is going to find agreement.

BAIER: Well, more on that coming up. For more on the story on Libya, go to homepage at FOXnews.com/specialreport. The Friday lightning round including the government shutdown talk is next.

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