Opening comments from Bush at start of interview:

"Just a couple of comments. First of all, I was pleased with the fact that Israel and Palestine have agreed to negotiate a vision for what a Palestinian state will be. And I applaud Prime Minister Olmert and President Abbas for taking a courageous step. And I am pleased that the international community was there to support the efforts by Israel and Palestine. ....

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"It is important that people understand that we're dealing not only with a lot of history, but we're dealing with terror and extremists and radicals who murder — you've heard me say this a lot — who murder the innocent to achieve political objectives. And therefore, the first step in getting to the process we ended up on today is to — for me to have recognized that the problem is terror, and states cannot accept terror on their border, particularly democracies, nor can a state be formed because of terror.

And so I spoke clearly about terror and said that the United States would only deal with leaders who made it clear that their objective was to live at peace with their neighbors and fight terror. So if you listened to my remarks today, which I know you did, that — thank you for nodding — is that I welcomed the leadership of President Abbas and Prime Minister Fayyad as leaders who were willing to have a state that exists with Israel and leaders who reject terror.

So step one in getting to the process today was recognition of the significant problem that terror poses for the creation of a state. Step two was recognizing that a democracy was — on Israel's border was necessary for Israel's security. And I think if you'll look at the history of this issue you will find that the Israeli leadership took a significant shift when they recognized — they, themselves, recognized that a democracy was necessary for Israel's survival — democracy on her border — that recognized Israel's right to exist and was at peace.

So the two-state solution — I'm the first President to have proposed it, if I'm not mistaken, at least that's what the writers say — but it was accepted by Israel — to the point where Prime Minister Sharon, at one time during my presidency, withdrew from Gaza, unilaterally withdrew. And so Prime Minister Olmert campaigned on the platform, I'm for a Palestinian state; vote for me and I'll work to get a Palestinian state.

I also insisted that a Palestinian state — as you noticed today in my speech, I said, the boundaries matter — and they will discuss the boundaries — but the nature of the state is vital. And so the nature of the state has to be one in which the institutions are such that their neighbors can — will recognize that they're peaceful.

And thirdly, I have been working hard, as has Condi, to convince the international community to participate in the process."

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Question: Back to 2000, you went to the Middle East and you said that your role was going to be to keep the process moving, and you promised to ride herd on what happened. How much of yourself and your presidency are you willing to risk on the peace process now?

Answer: I don't think it's a risk to try for peace; I think that's an obligation. And I am pleased with the progress that was made today. And I understand that it took some — that things had to be aligned properly, in order to get to this moment. And I applaud the courage of Prime Minister Olmert and President Abbas. I'm looking forward to staying engaged with them — and I will. I've worked the phones with them quite a bit.

Question: Are you going to be Bill Clinton?

Answer: Pardon me?

Question: Bill Clinton? Are you going to be Bill Clinton? Are you going to be that engaged?

Answer: I've been very engaged up to this moment. A moment like today just doesn't happen. In other words, it requires work to set — to lay the groundwork for what was a successful conference. And now the hard work between Israel and the Palestinians begin. And it's very important for the American people, at least, to understand that America cannot impose the solution. We can help facilitate, and we can push and listen and work with the parties, but a lasting solution will only occur if Israel and Palestine agree on what the parameters of a state will look like.

And the strategy is to develop a vision, with specificity, so that the people of the Palestinian Territories realize there's hope on the horizon. The implementation of the state will occur based upon — or subject to the road map. So the vision is the beginning — today was the beginning of the outline of a vision, so that people have something to be for. And it's an important step. Today was an important step, and it's going to be hard work to be done. Both leaders said they'd like to try to get it done over the next year, and we will help facilitate that.

Question: But your role — again, back to you — what do you do?

Answer: I work the phones, I listen, I encourage, I have meetings. I do a lot of things.

Question: Would you go to Israel and the Palestinian territories?

Answer: Will I?

Question: Yes.

Answer: We'll see. You don't have to be in a particular country to have influence on whether or not the process moves forward. But I'd like to go to Israel, I'd like to go to Saudi Arabia. But if that ever gets planned and agreed upon, I'll let you know.

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Question: With Abbas and Olmert both having internal problems at home that weaken their standing, how do they move forward and progress with that kind of shaky foundation?

Answer: Generally, if a leader is able to promote peace, genuine peace, it will help their standing with the people. I'm not a great analysis of polls, but I do believe that leadership is rewarded, and particularly leadership that leads to the prospect for peace.

Most people in Israel long for peace. They long for a life that is not threatened by rockets and suicide bombers. And the Palestinians have had a — have lived — had to live a miserable life. And the danger is, for the Palestinians, that unless there's a vision described that people can aspire to and hope for, it is conceivable that we could lose an entire generation, or a lot of the generation, to the radicals and extremists. In other words, there has to be something more positive than that which is being — that which is on the horizon today.

Secondly, leaders will be rewarded if the result of their labor is constructive. And the result of this labor will be constructive, if the two leaders are able to deal with some difficult issues. Our job is to help them deal with them.

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Question: You talked about the consequences of failure at Camp David. And I'm wondering what the consequences would be, in your view, this time, if this agreement of today, this conference doesn't yield progress.

Answer: Well, it's going to take a while for any agreement to be reached, and so I think that there is a — in other words, it's going to take — it's going — the negotiations between Israel and Palestine aren't going to occur in one week. And so there's a — there's going to be an opportunity for expectations to be set right over time, if — for success and/or for failure.

Secondly, obviously I am concerned about the consequences of a failed conference — or a failed process, in this case. It's not just a conference; it's a failed process. On the other hand, it is worth it to try, because the Middle East needs to have the liberty agenda prevail in order for long-term stability and peace for the world.

And this agenda is not just in the Palestinian territories. It is also — for example, if you look at Lebanon — I put Lebanon in my speech today for a reason. But Lebanon is under threat. You know, where you find democracies, you find people trying to undermine them, in many cases: Iraq. You would think that people would say, what a great opportunity, let's all go promote a free society in Iraq. And yet there are radicals and people still trying to blow up the opportunity for a free society to exist, although they're becoming less successful, over time.

And so my view is, is that when the conditions are right, like they are in this case, in the Palestinian and Israeli issue, it's worth it to go for peace.

Question: How about one last one? Can there be a Mideast peace as long as Hamas controls Gaza and the Palestinians are divided?

Answer: There can be a vision for what a Palestinian state would look like. It is going to be very difficult for that Palestinian state to come into being, so long as there are terrorists who are able to exploit the — a weak government and launch attacks against their neighbors. And that's exactly what the road map says must not happen. In other words, the implementation of the vision is subject to the road map.

One of the powers of having a state defined is that it will serve as a catalyst to marginalize extremists who have no vision — at least they don't have a positive vision. And so it's — what you're watching is the development of a state which will become something that people like Abbas and reasonable, moderate people can say, support us and this is what you'll end up having; support the other bunch and you'll have war and violence.

Question: Is that how you get Hamas out of the picture?

Answer: Excuse me?

Question: Is that how you get Hamas out of the picture?

Answer: Well, I think, first of all — it's how you marginalize some of the leadership in Hamas. Now, I think if you analyze the election on Hamas, the election was not an election about war; the election was an election on corruption, health, education. That's why I was strongly supporting the elections. Elections are moments of clarity. Elections allow people to see the truth. Elections give you an opportunity to hear from the people themselves, not from pundits or self-anointed leaders. Elections, in this case, sent a message to the world that there's a group of Palestinians who are sick and tired of not having government responsive to their needs.

Now, one of the needs for the Palestinians is to have a state — a contiguous state, a state they can call their own. Obviously there needs to be work to help that state develop the institutions, but at some point in time, when the state emerges — the vision of the state emerges, rational leaders will have the opportunity to say, you got a choice: Is it extremism and terror, or is it peace as a result of the state? And that's why the kickoff today is so important to eventual peace.

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Question: On Pakistan. The return of the former Prime Minister, Nawaf Sharif — how much of a problem do you think that is for the U.S., with some of his leanings, his history, the way he's talking about those people in Pakistan who are not so comfortable with Musharraf's alliance with the U.S. — what kind of problem does he pose?

Answer: Well, first of all, I'm hopeful that President Musharraf will honor his commitment to take off his uniform. Secondly, we still believe that it is in Pakistan's interest that President Musharraf get the country back on the road to democracy — he put the country on the road to democracy, and to get them back on the road to democracy, he ought to lift the emergency law.

Question: Before the election?

Answer: Yes, right, exactly. It's hard for me to envision a free and fair election under emergency law. One of the things that President Musharraf has — what he did that impressed me was he clearly understands the nature of the radical threat, and has worked hard to make sure his country doesn't become a haven for radicals.

Now, there are some there, no question about it. We've had a good record of working with the Musharraf government in routing out al-Qaida and capturing or killing al-Qaida. And I would be concerned about any leader who didn't understand the urgency of dealing with radicals and extremists who want to attack the United States and/or any other nation.

Question: Is Sharif in that category?

Answer: Well, I don't know him well enough. I would be very concerned if there was any leader in Pakistan that didn't understand the nature of the world in which we live today.

Question: Let me switch to another Pakistan question. Can you envision a scenario where the international community or the U.S. might go in — feel the need to go in to secure nuclear weapons or technologies?

Answer: We feel comfortable that the Musharraf government has taken the necessary steps to secure their nuclear stockpile.

Question: Why do you feel comfortable?

Answer: Well, because we're aware of the actions he's taken, and we appreciate the safeguards that are there.

Question: Okay, so, on Iran. It seems like every time you say you're trying to tamp down this march to war with Iran, then there seems to be another opening, and then you go back into being really hard on Iran again. The rhetoric kind of tends to go up and down a little bit. When you do that, the Americans are really afraid of war, and we're trying to figure out why you're doing that.

Answer: Doing what now?

Question: Why you are stoking the rhetoric ...

Answer: You mean the one time I — one time I recently said, if you want to avoid World War III — that time?

Question: Well, okay, that's a good example. I think there have been others, but maybe that's the most recent big example.

Answer: I have consistently ...

Question: — just the stoking of the rhetoric, I think — we're wondering about what's behind that.

Answer: Well, my concern that if they end up with a nuclear weapon, a generation is going to pay a terrible price. And the reason I've said that is because their own president has said that, "we want to wipe out Israel," for example. So when somebody says that, my judgment is, we ought to take them seriously.

Question: So you're not concerned that it worries Americans thinking we're going into another war?

Answer: I have also said, if not once, a hundred times, that we want to try to solve this issue diplomatically.

Question: Are you speaking to ...

Answer: And I think we can solve it diplomatically. And that's what we're trying to do, and have got a pretty good coalition put together of countries that are concerned about Iran — if Iran ends up with a nuclear weapon. Matter of fact, it's been a diplomatic success of this administration to get two U.N. Security Council resolutions through, which means, obviously, that Russia and China didn't stop them. We have recently made a — I also was the person that joined with Russia, that said to Iran, okay, you say you have a sovereign right to have nuclear power, fine, you can have it; but because you didn't tell the truth to international organizations, and because people are suspicious of your intentions, therefore, our view is, is that you ought to have a plant but you ought to welcome enriched uranium from Russia and have your spent fuel collected by Russia.

Question: Is there a new approach, new tact to get China in line? Is there a new argument that you can make to them?

Answer: Other than they would be a major threat to peace? I think that's pretty significant. That's a pretty significant argument. And that's the argument I've been making. In all due respect, I think this "march to war" claim is pretty well created by punditry. I'm not suggesting you, although your language kind of made me believe that maybe you are part of trying to create this march to war.

My language has been consistent, and very clear, and hopeful that we can solve the issue diplomatically. And I believe we can.

Question: Before the end of your term do you think you'll be able to resolve ...

Answer: Well, part of solving the issue is to put together a firm coalition of like-minded countries who are willing to act in concert to send a clear message to Iran through isolation and other economic measures. If you also notice that in my speeches, and in my answers to your questions, on camera in particular, I've been addressed — talking to the Iranian people — almost every answer. Last time I did so I think was either with the German chancellor or the French president — all aiming to send a message to the Iranian people saying, we have — our issue is not with you; our issue is with a government that has announced its intentions to be violent and has really defied the world in terms of learning how to enrich uranium, which then could be converted into a bomb.

Question: How likely is it that you can resolve this before you leave?

Answer: Well, part of the resolution is to put a framework in place that will effectively be able to deal with Iran diplomatically. And that's what we spend a lot of time doing. Thus far we've been successful. One of the issues we face is the issue of people's concerns about market share — if my company pulls out, somebody other's (sic) company will move in. And so there's several levels on which isolation occurs. One is, obviously, diplomatically through the United Nations, and then it's the implementation of different measures that we work to make sure they're consistently applied, so that one doesn't gain advantage over another and, in turn, miss an opportunity to keep the pressure on the Iranians.

The Iranians have a clear choice — they've got a different choice to make. And we've made it clear. Will we talk to them? You bet. I've said — I think for maybe three years I've said absolutely, if they suspend their enrichment program. And then we will sit down through the P-5 process or the P-3-plus-one process and have a dialogue.

Question: Let me ask you about Vice President Cheney, more problems with his health.

Answer: No, he's in good shape.

Question: Pardon?

Answer: Good shape.

Question: You're not worried about his health?

Answer: No, not at all.

Question: You don't think that's ...

Answer: No, my dad had the same issue with his heart, and jumped out of an airplane at age 83.