This is a rush transcript from "Hannity," March 2, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Even as anti-government forces continue repel the violent attacks of Muammar Qaddafi's thugs, the dictator himself is managing to cling to power. Now still defiant, Qaddafi is now charging that the uprising against him is a conspiracy to get at Libyan oil reserves.

Now after vowing earlier today to fight to the last man, he warned that an American intervention in Libya would lead to a bloody civil war. But finally the U.S. is increasing the pressure on Qaddafi, our Naval and Air Forces are inching closer to Libya.

And Secretary of State Hillary Clinton revealed yesterday that there's a chance the administration will prosecute Qaddafi for the 1988 Lockerbie bombing, which killed 270 people including 190 Americans. Now many charge that Qaddafi ordered the attack personally. So we can only hope the Obama administration will get a chance to bring him to justice.

Joining me now with analysis is former Deputy Secretary of Defense Paul Wolfowitz is back with us. Paul, welcome back.


HANNITY: First of all, what do you make of the big picture. When we look at all of these countries in the Middle East, from Egypt to Tunisia, you know, to Algeria moving from the Mideast to North Africa. What do you make of why all of this is happening at this moment?

WOLFOWITZ: It's hard to say why at this particular moment, but something like this I think really was inevitable and many of us have been saying for some time seeming stability that's provided by these Arab dictators is a phony stability. It's a false stability.

And you know, President Bush said, and I think quite powerfully and correctly, he said too often in the past we've sacrificed freedom in the interest of stability and we've ended up with neither. Now we are seeing that fault stability collapse.

The good news is, it is collapsing in most places and most importantly in Tunisia and Egypt, the biggest most important Arab country, in a relatively peaceful manner with a real prospect for a positive political outcome and that is good news and we are lucky it happened --

HANNITY: Why are you so confident when 85 percent of the Egyptian people support the death penalty, Sharia law for those that are non- believers, apostates? These are significant poll numbers that show support for the radicalization of Egypt.

WOLFOWITZ: I've seen that poll and I found it disturbing. I've seen other polls that suggest different results. I'm not sure we can trust polls terribly well. I think, look, half of the population of Egypt are women. I don't think most of them want to be sent back to some 8th Century version -- to basically an Islamic dictatorship like they have in Iran.

I don't know that. I mean, the future is up for grabs, but the quality of the people demonstrating, the kinds of things they said. The constant expression for freedom I think is a better start than we might have expected.

The bad kind of start is where it happens with violent revolution organized by the most violent groups like the Muslim Brotherhood. That hasn't happened so far we are lucky.

HANNITY: Does Qaddafi survive this?

WOLFOWITZ: I don't think Qaddafi can survive. I think the question is how much damage and destruction he does before he goes. Then I think the sooner he goes, certainly the better for the Libyan people, but I think the better for the whole region.

HANNITY: What is your general take on the way the administration -- I mean, there seems to be conflict even within the administration as to, you know, how this is all going. It seems to me that, you know, you can't have the vice president, secretary of state, president of the United States, you know, even Ruth Marcus of Washington Post liberal wrote about he's too little, too late behind on almost every issue and there's not been a coherent message from the administration. I mean, how do you grade their leadership?

WOLFOWITZ: Well, I think it's certainly been terribly slow to date. But I'd like to get them to focus on what they can do now and do urgently and stop this constant hand-wringing about how difficult everything is. Let's start with humanitarian assistance. The United States is very good in a crisis at delivering medical supplies and food and other emergency needs.

HANNITY: Yes, but doesn't that free up more money for the terrorist elements, radical elements? I mean, we are freezing assets, billions of dollars from Qaddafi.

WOLFOWITZ: I'm not saying sending it to Qaddafi. I'm talking about sending it to liberated city of Benghazi.

HANNITY: But doesn't it free-up money for radicals -- if the people are getting support that they can buy weaponry?

WOLFOWITZ: Basically you have to realize that Libya is now divided between a small clique led by Qaddafi that has terrorized the city of Tripoli and has people intimidated into silence still and most of the other cities of the country including the second largest one, which is in the east, Benghazi where people have assumed control.

It seems to be orderly. It seems to be peaceful, but there's a big shortage of medical supplies and looming shortage of food. We could be helping to bring supplies in across the Egyptian border into the port of Benghazi, and I don't know why we are not doing that.

Something else that I think we should be doing is talking to these new leaders. In Benghazi, they have elected a national council, which represents each of the liberated cities of Libya. We should have somebody in there talking to them. Find out who they are. Find out what they think and find out what kind of help they need.

HANNITY: All right, Paul Wolfowitz, good to see you. Thanks for being with us.

WOLFOWITZ: Good to see you. Thank you.

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