'Proxy war' in Yemen - and the US is in the middle

'Proxy war' on Yemen - and the US is in the middle

Saudi Arabia and allies launching strikes against Shiite rebels, who are allied with Iran - while the US tries to play both sides of the fence

This is a rush transcript from "On the Record," March 26, 2015. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Yemen is disintegrating. Iran is there and now so is Saudi Arabia. The Saudi Arabia is launching air strikes. The strikes targeting the Shiites rebels in Yemen allied with Iran. Lt. Colonel Oliver north joins us. That is incredible.

LT. COL. OLIVER NORTH, U.S. MARINE CORPS (RETIRED)/HOST OF 'WAR STORIES': It's not just Saudi Arabia. It is eight nations, all lined up doing this and this is -- we are looking at another civil war in Yemen. I mean, 1963 to 1967 while we were engaged in Afghanistan, there was a very bloody civil war. The Egyptians sent troops, lost a lot of troops. You now have Egyptian military personnel getting ready to go in. Air strikes being ran literally without us being even consulted.

(CROSSTALK)

NORTH: The amazing this about it, Greta, is our hands off policy out here, our leadership deficit disorder that we have got has created a situation were this country is going to disintegrate into civil war, and we are at the edge of a Sunni-Shiite civil war.

(CROSSTALK)

VAN SUSTEREN: You know, I have to back it up. Because two things have really disturbed me. One is President Obama touting sort of success in our counter-terrorism battle last September or October. That's really bad. But, you know, for me, the other thing that really distresses me is that we had to run from Yemen. That our -- we closed down our embassy. Everybody fled and even our special forces were there. They had to flee because this place is so awful. And meanwhile, Iran is there, and you got Saudi Arabia fighting them and now, we are helping Iran and Iraq.

NORTH: Get this, OK . So he we are backing the Shiite regime in Baghdad, which has Iranians fighting for them, and in Yemen.

(CROSSTALK)

VAN SUSTEREN: With air power now.

NORTH: Oh, yeah.

VAN SUSTEREN: With air strikes.

NORTH: In Tikrit. And in Yemen, we are backing the Sunnis against the Shiites that are being supported by Iran.

(CROSSTALK)

VAN SUSTEREN: Meanwhile, we are having talks with Iran on nuclear weapons and our good friend the Israelis' Prime Minister Netanyahu is not happy.

NORTH: So here is the frightening part of it. The Saudis clearly feel threatened by what's happening in Iran. In fact, the big losers with Yemen going upside down in the hands of Iran is all the shipments that go through the Suez canal go right through the Coast of Aden, right? And so, you can't have that area if you are Saudi or an Emirate or an Egyptian. You cannot have that controlled by Iran.

What we are looking at is the likelihood I think it's very strong -- excuse me, Senator Graham on just a little while ago, I think you are looking at the very strong likelihood of a Saudi first strike at Tehran. I'm saying that because the meeting that took place 10, 12 days ago now in Riyadh. King Salmod calls a (inaudible) out of Egypt, (inaudible) out of Turkey. He invites Abdullah, but he has got his hands full in Jordan. He couldn't make it. The two guys run the emirates, UAE, and Sharif of Pakistan. Now, why would they do that? Because they are getting ready to go to war against the Shiites, and what we are looking at is having absolutely zero influence on it.

The frightening prospect is if you think the market went back in 2008, as soon as anyone cracks off a nuke, the market is going to drop like a stone and it's going to take us a decade to recover from it. And all because this administration cannot figure out what they want to do. This talk -- what they really are trying to receive is Kissingerial Nixon (inaudible) like they did in China. The difference is China wanted to survive the experience. These people in Tehran don't care about that.

VAN SUSTEREN: Colonel North, nice to see you.