This is a rush transcript from "The O'Reilly Factor," January 2, 2008. This copy may not be in its final form and may be updated.
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BILL O'REILLY, HOST: "Unresolved problem" segment tonight, by all accounts, the security situation in Iraq has improved drastically in just a few months. The surge by American troops has worked.
There's another aspect to the surge campaign that some believe is the most important story of last year, 2007. That situation is not being reported very much.
Joining us from Washington, Lieutenant Colonel Ralph Peters, author of the book "Wars of Blood and Faith." And you wrote about this today in The New York Post. People want check that out, they should go to The New York Post Web site.
But first, I want to give you a chance to - it's interesting because Ron Paul, a Republican congressman, and John Edwards, a Democrat, both saying basically the same thing, get the hell out of the Gulf. And Paul doesn't want any intrusion in Pakistan at all. And I'm sitting here going, am I crazy? Or would this heighten the danger for Americans like by a 1,000 percent? What say you?
LT. COL. RALPH PETERS, U.S. ARMY (RET.): Well, what strikes me is we're seeing ghosts from the American past. We can just write get rid of Edwards right away. It's Huey Long with a Madison Avenue makeover.
But Ron Paul's more interesting. He comes from a very sincere, well meaning, absolutely screwy tradition. William Jennings Bryan, fighting Bob LaFollette, the America firsters back in the 1930's, who really imagine that we can withdraw from the world and everything will be just fine.
But as we saw yet again on 9/11, the world comes to us. And finally, I think these people have a valid role. They raise important issues. The problem is they have no realistic solutions. So Bill, I...
O'REILLY: You know, I told Mr. Gillespie that I would feel personally in danger if we allowed Iran to dominate the Gulf, which they would do if we pulled out of there.
O'REILLY: And if we allowed the jihadists to take over Pakistan, which they would do without us propping up Musharraf. I mean, in both cases, we're stand between the Huns and the Huns coming at us. And so anyway, look, now you say in your column today in The New York Post that the most underreported story of the year is the most important story of the year. And that is?
PETERS: Well, that is the fact that Al Qaeda suffered an incredible strategic defeat, not only on the battlefield where they lost hundreds and hundreds of operatives in Iraq and elsewhere, but most importantly, they lost their base of support.
And this was huge. Al Qaeda really got where it was last year by trading on romanticism, a romantic streak in the Arab personality, the Middle East, the idea that we're David fighting Goliath. We're standing up for Sunni Islam against the great Satan America.
Well, millions of Sunni Arabs in Iraq tried Al Qaeda's version and found it was kidnappings, torture, mass murder, rape, and a lot of corruption. And what we saw last year was millions of Sunni Muslims deciding that the great Satan America was a much better deal than Al Qaeda.
And it's not just reverberating in Iraq, where we see Al Qaeda on the defensive, as Usama bin Laden admitted in his Christmas message. It's reverberating throughout the Middle East and beyond. The mystique of Al Qaeda is dying. And Bill, although we're going to see terrorist acts throughout our lifetime, sad to say, Al Qaeda's now on the defensive. And unless we are very clumsy and very foolish, we should be able to keep them on the strategic defensive.
O'REILLY: OK. Now you know that the American media per se, The New York Times, The Washington Post, the network news, CNN does not believe what you just said. Their point of view is, we illegally invaded Iraq. The Al Qaeda came there. They never were there, OK? And we really haven't defeated them. That's the other side. OK? They don't see it the way you see it. Can you possibly convince these people?
PETERS: No, I don't think so. But I'm not saying Al Qaeda suffered a permanent defeat and they're going to go away. They've suffered a strategic defeat, an important one, but these defeats aren't permanent. There will be terrorists with us for a long time.
O'REILLY: OK, but wasn't worth it — the key question is was it worth American blood and treasure. You go to Iraq to suffer — for the years that we've suffered in — and then at the end, be able to say we hurt Al Qaeda there as you are saying. Is that worth it?
PETERS: Well, you know, a year ago, I was really starting to doubt it. But history's not linear. And what we saw were this tremendous strategic reverse. With Muslims by the millions rejecting Al Qaeda, may have a long-term payoff that indeed makes it all worth it.
Now Bill, what troubles me is the way Iraq has just disappeared from the headlines. In the Democratic debates.
O'REILLY: Yes, but you know why.
PETERS: If Democratic contenders are never pushed about their comments that Iraq was inevitably lost, blah, blah, blah. And yes, we both know why.
Nonetheless, I just wish we could get past this ridiculous partisanship, and recognize...
O'REILLY: Not going to happen.
PETERS: ...that Al Qaeda's our enemy — civilization's enemy.
O'REILLY: It won't happen until the presidential vote. Now I think if Hillary Clinton is elected president, that she'll be much more conservative in these areas than many people think.
As you said, John Edwards is a loon. I think he'll be out soon.
But I think the next president of the United States will understand the danger. They'd have to. It's presented to them by our intelligence agencies as, look, here they are. How many videotapes of beheadings do you need?
O'REILLY: But I agree with you, Colonel. The most important story last year was the surge. We picked Petraeus as a man of the year. Al Qaeda's taken a beating, you ain't going to read it on the front page of The New York Times, colonel.
PETERS: Hey, Bill? President McCain is going take care of it.
O'REILLY: All right. Colonel, happy new year to you.
PETERS: Happy new year.
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