This is a rush transcript of "Special Report With Bret Baier" from August 31, 2009. This copy may not be in its final form and may be updated.


SHIMON PERES, ISRAELI PRESIDENT: I think we are going to make maybe by the e nd of September. President Obama will chair it. And I think at least there is a chance that we will decide to reopen the negotiations.

I'm talking very friendly and very frankly with Bibi Netanyahu. I think he is aware of the choice and you know, there is no chance, no escape, no alternative but to go ahead and make this peace.


BRET BAIER, HOST: Israel President Shimon Peres talking about a previously undisclosed meeting that is expected to happen at the U.N. General Assembly gathering in New York later on in September.

When the White House was asked about it, White House press secretary Robert Gibbs said that he would not contradict our interview with President Peres. He also said there is hope for progress as far as the settlement issue.

So what about all of this and also the developments on Iran, Israel and Iran? Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Juan Williams, news analyst for National Public Radio, syndicated columnist Charles Krauthammer.

Charles, let's start with you in the "Brady Bunch" format here. What about this development on the peace process and this meeting that we didn't know about?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It's more like "Hollywood Squares," actually.

The whole delay in the peace process is a self-inflicted wound on the Obama administration. Let's remember that for over a year, the previous prime minister of Israel, Ehud Olmert, had been negotiating with the head of the Palestinians and made an astonishingly generous offer in December of '08, which the Palestinians refused, as they always refuse.

So Obama comes in and instead of picking up and trying to get the Palestinians to moderate, what does he do? He attacks Netanyahu. He tries to make an issue of settlements, which had been in consensus. The U.S. and Israelis had agreed: No new settlements, no new expansion of territory in settlements and dismantling of existing settlements.

And the Palestinians had accepted that, had never refused negotiations for anything else. But then Obama adds a condition of no thickening of settlement, i.e., you don't construct a kindergarten if children are born, which the Israelis have rejected.

And all of a sudden the Palestinians and Arabs have said no negotiations until Israel jumps through this higher hoop.

So the Arabs and Palestinians have said we are not going to move. We're going to let Obama extract unilateral concessions out of the Israelis, and that is why the process has stopped.

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: I think that this is really great news. It was impressive that, you know, that "Special Report" is able to break this story, because I think this is really the start of a new epoch, potentially, in some sort of Middle East peace deal, and it's necessary.

To leave it as it is, the status quo, I think would have been lamentable. I think history would have judged the Obama administration as being neglectful on a key issue of our time.

And of course it extends to everything across the Middle East, because it touches on a terrorist threat. It touches on Iran. It touches on the safety of the world in terms of terrorist threat.

So let's take away this element, and I think you have an opportunity with the notion of talks opening in the fall. And I think that the Obama administration has been wise in this regard, you know, to say to the Palestinians as well — you have got to come to the table willing to make sacrifices and compromises.

The question is whether the difficulty between Hamas and Mahmoud Abbas and who is exactly in charge of the Palestinians, how will the Obama administration handle this? You can't ask Israel to negotiate with two sides of the same people, you know. Who is the legitimate government of the Palestinians?

That is the real issue for me.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, I think Juan is right that that is a major issue, and it's an issue that I think ultimately could present a serious stumbling block.

But I think the most interesting thing to come out of your interview with President Peres was this emphasis on the Sunni states.

You're reaching when you are talking about these coming negotiations, you have got a point at which there is some common ground between Israel on the one hand and various Sunni states on the other — Qatar, Dubai, United Arab Emirates, Saudi Arabia, obviously, being the biggest and most important one, on the question of Iran and what happens to Iran.

And what seems to be potentially this emerging deal is a nine-month suspension of settlements, probably with a natural growth settlement, which, as Charles points out, gets us back to essentially where we were, and then in exchange, potentially having the U.S. put more pressure on Iran, leading regional pressure on Iran and potentially at the U.N.

I think it's difficult right now for Israelis to put much faith in Barack Obama and the United States actually doing anything on Iran. We have seen what he said repeatedly on Iran, even at times when all that was required was a denunciation of what were some horrible efforts on the streets of Iran. He didn't do anything.

BAIER: Charles, quickly on Iran and Israel's positioning to really practice, prepare for the possibility that Iran becomes nuclear, did you hear anything in President Peres' response that perked your ears?

KRAUTHAMMER: Well, he is very much of a moderate, but even he reflects even the moderates and the left of Israel. And understand that Israel will not accept a nuclear Iran and they will attack. That is absolutely unmistakable, unless the world stops them. It is only a question of when.

And the only question is how long will they give the United States to actually help the program before Israel acts?

BAIER: All right, former vice president's criticism of the Obama administration is making big news. We'll talk about that with the panel. We'll dissect it, next.



FORMER VICE PRESIDENT DICK CHENEY: I think it is an outrageous political act that will do great damage long-term to our capacity to be able to have people take on difficult jobs, make difficult decisions without having to worry about what the next administration is going to say.

WHITE HOUSE PRESS SECRETARY ROBERT GIBBS: This is the same song and dance we've heard since literally the first day of our administration. So I don't have a lot to say.


BAIER: Well, the "FOX News Sunday" interview with former Vice President Cheney made a lot of news, but was not too well received at the White House.

We're back with the panel for a little bit of reaction for this interview and the White House response.

Let's start with Steve.

HAYES: Well, I thought what you just saw was Dick Cheney very, very animated for Dick Cheney. He clearly is fired up about this issue.

I think one of the things that was most interesting that he talked about yesterday was the effectiveness of the techniques. And we have seen, I think, a shift in public opinion, certainly a leap in public opinion, about whether these techniques were effective, because of the inspector general's report, which I think is fascinating.

You have got a report that the left wing held up to be this devastating critique of these techniques, and in fact, we learned, I think inescapably have to conclude that the techniques were effective.

There was an interesting story the night before the Cheney interview in The Washington Post about just how effective these techniques were. So I thought he made that case again on Sunday morning and made some news doing so.

WILLIAMS: Well, I don't know about the effectiveness, because in the same Washington Post story, Khalid Sheik Mohammed says to the Red Cross that he lied to the people who were torturing him just to get them to stop torturing him. And that's what we know from that kind of technique.

But without a doubt, after he was subjected to this treatment, the repeated waterboardings, he started to sing more so than he had ever done before.

I don't think there is any question that this is about politics. I think Vice President Cheney is right there when he says, look, Justice Department officials looked into this previously and decided not to prosecute.

The difficulty is at the moment he you have got congressional committees now launching their own investigation, and I think that puts added pressure onto Obama administration.

KRAUTHAMMER: I think there really has been a shift in public opinion, and I think the I.G. report has reflected that quite strongly.

Look, the liberal position was inherently implausible. The position was enhanced interrogation — torture, if you like — doesn't work. Intuitively everybody knows that everybody has a breaking point.

Then you get I.G. report, which tells you in black and white that Khalid Sheik Mohammed said nothing of interest or importance until he was subjected to the simulated drowning and the sleep deprivation. And then he became a professor on Al Qaeda with a chalkboard. And that happened to several others.

And then people have to say, liberals have to say it's a coincidence that he didn't say anything before and spoke after. It's coincidence that there were no attacks in eight years. Cheney is winning on this because it is intuitively and empirically obvious that these techniques have worked and saved many American lives.

BAIER: Well, Steve, what about the Vice President Cheney factor? We saw of course those dueling speeches on that day a few months ago. Is Vice President Cheney now becoming the most effective critic of president Obama?

HAYES: Well, I certainly think he is. I mean, you see how people respond and react, and particularly he drives the left wing in this country nuts.

But look, it helps to have the facts on your side. And on this issue, I think the facts are actually fairly clear: This works. It has worked before, and we have now seen evidence in the inspector general report of just how effective the techniques were.

KRAUTHAMMER: Remember when we had the dueling speeches?

BAIER: Juan, any final words?

WILLIAMS: Well, I think that you have a situation here where Vice President Cheney's legacy is a man who says he protected America over that eight-year period. And he feels President Obama is undermining that legacy by saying that he can do it without breaking the law, without torturing people.

That would put the vice president's legacy in some question, and I think Vice President Cheney is trying to protect that political legacy against President Obama.

So I see this as highly political. I don't think there is any question about that, if that's his point.

BAIER: All right, Charles, ten seconds.

KRAUTHAMMER: That's because the Bush-Cheney administration dispersed and dismantled and weakened Al Qaeda to a point we might be able to afford the soft treatment of the Obama administration and get away with it.

BAIER: I think that was nine, nicely done.

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