updated 7/18/2006 1:26:19 PM ET 2006-07-18T17:26:19

Guests: Robin Wright, Tony Blankley, Gary Berntsen

CHRIS MATTHEWS, MSNBC ANCHOR:  Eye for an eye.  Israel and its sworn enemy Hezbollah trade bombs for rockets, as the Mideast conflict stays hot.  But what about us?  Thousands of Americans in war-torn Lebanon, 140,000 soldiers trying to finish the job in Iraq and oh yes, the president caught off guard being George Bush.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews tonight from San Francisco.  Welcome to HARDBALL.

The fighting between Israel and Hezbollah rages on to day six.  In the last 24 hours, Hezbollah has fired at least 100 rockets at Israel and Israel‘s warplanes have pulverized targets in Lebanon and destroyed the Palestinian foreign ministry and the Hamas headquarters in Gaza. 

What is it going to take to stop this war?  On the diplomatic front, Israeli officials say they‘ll stop fighting if the two kidnapped Israeli soldiers are returned and Hezbollah withdraws from the border, a demand Hezbollah is not expected to accept. 

But the State Department announced today that Secretary Condoleezza Rice intends to go to the Middle East to help deal with the crisis.  A very good sign, because it suggests that diplomats are moving ahead with peace efforts. 

And leaving Lebanon, 25,000 Americans are stuck in the war zone, we‘ll talk to NBC News Pentagon correspondent Jim Miklaszewski about the military‘s plans to evacuate those folks. 

Tonight, HARDBALL is live with reports from NBC News correspondents throughout the region, from Beirut to Tel Aviv, to the Gaza Strip, and chief White House correspondent David Gregory will have the latest on how the president is dealing with the crisis and being caught off guard by T.V.  cameras and sound equipment. 

We begin tonight in Beirut with NBC News Beirut bureau chief Richard Engel, who joins us by phone.  Richard, takes through the attacks today.

RICHARD ENGEL, NBC NEWS BEIRUT BUREAU CHIEF (on phone):  It began with a series of airstrikes early this morning, here in Beirut.  First targeting the main harbor, the commercial port, then a pounding, a relentless pounding on the south Beirut area, where Hezbollah is headquartered. 

Then an unusual attack, a surprise.  We were standing on our hill top, where we can have a view of the entire city and heard a very loud explosion.  It turned out to be an Israeli airstrike on a van of Hezbollah militants that were trying to fire rockets.  The force of that impact launched one of these rockets into the air, but it was out of control.  It was burning and spinning and tumbling and started coming right towards us. 

Luckily, it crashed to the ground.  Now that was lucky for us, and lucky for Israel, because according to the U.S. and Israeli intelligence, this was a Zelzal-2 rocket, an Iranian produced rocket that has a range of 60 miles and can carry a warhead about 1,200 pounds, and it would have been the first time Hezbollah ever launched these rockets.  Chris?

MATTHEWS:  Let me ask you, first of all, let‘s start with the government of Lebanon.  Lebanon is being pounded to death here.  What position are they taking?  Are they blaming it all on Israel?

ENGEL:  No, they are not blaming it all on Israel.  They are desperately trying to get out of the situation, want a cease-fire and are talking to anyone that will listen to them, to try and get some diplomatic momentum going.

Today, U.N. and E.U. delegations were in town.  The U.N. said that after discussions with the Lebanese government, they have quote, “concrete ideas that they want to take to Israel.”  The problem is the main parties involved here, in particular, Hezbollah which again just a few moments ago, said that it will not accept a cease-fire.  It said that a cease-fire and efforts to achieve a cease-fire are only ways that Israel is using to try to prolong its offensive on Lebanon.

MATTHEWS:  So it seems like the Israelis are offering to end their bombing of Lebanon.  We‘re seeing it here on television, if they get back the two soldiers that were captured by Hezbollah and if Hezbollah agrees to move back from the border.  Are those serious demands or do the Israelis think Hezbollah might accept them and end this fighting?

ENGEL:  No, they are not.  That is basically saying give us everything we want.  Give us back the soldiers and pull back from the border, which Israel has been asking for since the year 2000, since before this crisis began, and is offering to give nothing in return.

That is not a serious negotiating position, it is effectively saying, give us everything we want and the crisis will go away.  Hezbollah is also making demands and said that this crisis could be alleviated if Israel and Hezbollah has all of its demands, withdraws from the last remaining parts of Lebanon‘s area, the Shebaa Farms area, according to Lebanon, which remains occupied—the release of Lebanese prisoners. 

So they are both making their basic positions, which we‘ve heard from Hezbollah and we‘ve heard from Israel for years, so these are not positions that have achieved any kind of diplomatic solution in recent years.

MATTHEWS:  We‘re looking at these terrible fires in Lebanon.  You‘re there, Richard.  Here‘s the problem.  From this perspective here in Washington and the United States, is this a perfect storm we‘re looking at here where the Israelis want to destroy Hezbollah and this is their chance, the two soldiers being captured, being a good reason to start this fighting?

And is it also the case that Hezbollah would love to shoot every one of its 13,000 rockets at Israel and become the real leader of the Arab fight against Israel?  Does either side have a real reason to stop fighting?

ENGEL:  No.  Unfortunately, they don‘t.  Israel has long wanted to get rid of Hezbollah and to take this kind of action for several reasons.  By destroying Hezbollah‘s stockpile, Israel also feels much more secure because in any kind of confrontation with Iran, Israel has long been concerned that if the tensions in Iran flare up, if there are sanctions put on Iran or pressure to put on Iran, or even a military engagement between the U.S. and Iran, that Hezbollah would immediately begin launching all of these missiles into Israel. 

So Israel has for that reason, has long wanted to get rid of the Hezbollah arsenal along the border.  Then came this trigger, a trip wire.  They took these soldiers and Israel said this is it, we‘re going to implement the security plan that we‘ve been working on for - since the 2000 withdrawal, if not before. 

Hezbollah is under tremendous domestic pressure in this country to disarm, to try and enter into the political fold.  But it has thousands of rockets, perhaps 12,000 Katyusha rockets, maybe 30 or 40 of these long-range Zelzal-2 rockets, which—there was an attempt at firing today, and the logic is, if we‘ve got them, we may as well use them if we‘re going to change the rule of the game.

MATTHEWS:  OK, thank you very much, Richard Engel in Lebanon.  We go to CNBC‘s Carl Quintanilla, who‘s in Tel Aviv, who joins us also by phone.  Carl, what is it like right now in those big cities of Israel?  Are they afraid of this continuing bombing attack, this rocket attack from Lebanon?

CARL QUINTANILLA, NBC NEWS:  Yes, definitely, Chris.  There‘s an increased sense of worry as Richard was just saying, not only about the fact that Lebanon is in the words of some officials, knee deep in these rockets, but also that unknown factor, how many of them are medium range, how many of them have the capability to reach beyond those million people in northern Israel and into Tel Aviv, which as you know, is the New York City of the country, the financial capital of Israel, a city that has had its share of violence, but certainly has not traditionally been the target of long-range rocket attacks. 

People in this city tonight, although they are out at bars, at restaurants, feel like this is different.  That they are for the first time in a very long time, in the crosshairs and that when the government tells them to be alert, and to be listening for these sirens, that is not—that is not business as usual.

MATTHEWS:  Carl, are they willing to support Olmert in his efforts to try to destroy Hezbollah or would they like to see a cease-fire?

QUINTANILLA:  I think hat this point, they are willing to give Olmert

the benefit of the doubt.  The biggest complaint that we‘ve heard today

here in Tel Aviv was that they feel they‘re losing the P.R. war.  They said

we don‘t understand.  We had two of our soldiers taken and around the world, why is it we end up looking like the bad guys, like the aggressors?

So I think there‘s a sense that they want Olmert to use what is being called the window of opportunity here before worldwide political pressure really starts to lean on Israel, and just like—imagine yourself in a bar fight.  You know, you may not swing at the other guy, but you want to give them a good strong push on the shoulder, and say step off.  I think that‘s what they think Olmert is trying to do here.

MATTHEWS:  What‘s it like there?  I‘m going to ask you an unusual journalistic question.  What‘s it like, in a sense of, I‘ve been to Tel Aviv fairly recently, a few months ago, and it‘s just like to me, so much like northern California.  It‘s nice, it‘s very modern, it‘s very debonair in a way, despite the fact of world geopolitics.  It seems like a very nice place to live, and it‘s also the vacation season over there.  How are people mixing their vacation plans, and this is obvious, with their war situation?

QUINTANILLA:  Well, it won‘t surprise you to know, Chris, that the cancellations at hotels, at travel agencies are through the roof.  Even businesses here who do international business are having to schedule their business meetings in other countries, because no foreign companies want to hold meetings here. 

Outside the Hilton, where I am right now, I mean, you‘re right, it is very much like San Diego on the Mediterranean.  There are people at cafes, there are people at dinner.  The fear here is not that there‘s anything imminent in terms of a rocket attack.   I think that‘s more of a long-term worry. There is a sense that this was, as you say, the high season for tourism.  Two weeks ago at some of these restaurants, the managers will say, you couldn‘t get a seat at this place.  You‘d be waiting an hour for a reservation and today, tonight, the restaurants are half full, so there is concern about tourism, but again, this is an economy that has weathered worse situations than this in the past, and yet the economy grew five percent last year, so they‘re worried, but they are also are aware that this is a country that is remarkably resilient. 

MATTHEWS:  Is it a war zone like in Iraq? 

QUINTANILLA:  No.  Given my limited experience in Iraq I would say absolutely not.  Obviously Richard Engel is in a very different situation up north, but it‘s extremely disconcerting, Chris, to sort of square off the pictures that you see in the states from Haifa, from Beirut, and as you put it, the almost charming sense of calm here as people go about their business, walk their dogs, go for jogs, go to the beach, to the pool, an we say to them, this violence is 45 minutes away.  And I guess it just takes a very special person, an Israeli to look back and say yes, I understand that and I‘m going to continue to go on with my affairs. 

MATTHEWS:  Well Carl, that will probably be the Israeli character which will keep that country around for a long time to come.  Thank you very much.  Coming up, President Bush is back, more live reports from the region.  The president is back home.  What‘s he got to say about the G-8 meeting and is he really going to get Condoleezza out front in finding a solution to the Middle East fighting?  Can she broker a peace deal?  What more can the president himself do?  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  As fighting continues in the Mideast, American helicopters and ships are ferrying American citizens out of Lebanon.  Military officials say they‘re planning on evacuating thousands of Americans as the fighting in the Middle East rages on.  We‘ll get an update on the evacuations from the Pentagon later this hour.  President Bush returned to the White House himself today from his meeting with other world leaders at the G-8 in Russia.  Here‘s the president and Tony Blair at the G-8 when they didn‘t know anyone could hear them. 

(BEGIN VIDEO CLIP)

TONY BLAIR, PRIME MINISTER OF GREAT BRITAIN:  I think the that is really difficult is you can‘t stop this unless you get this international presence agreed.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  She‘s going.  I think Condi‘s going to go pretty soon.

BLAIR:  Well that‘s diplomatic.  Well that‘s all that matters.  If you see, it will take some time to get out of there.  But at least it gives people...

BUSH:  It‘s a process I agree.  I told her your offer too. 

BLAIR:  Well it‘s only, or she‘s going or if she needs the ground prepare as it were.  See if she goes out she‘s got to succeed as it were, where as I can go out and talk.

BUSH:  See the irony is that what they need to do is get Syria, get Hezbollah to stop doing this (EXPLETIVE DELETED) and it‘s over. 

(END VIDEO CLIP)

MATTHEWS:  David Gregory is NBC‘s chief White House correspondent. 

David, we were all taught by our mothers never to talk while we‘re eating.  We‘re also told by our colleagues don‘t talk when the line is hot or did the president make both mistakes today? 

DAVID GREGORY, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT:  Well, it appears he did.  Nobody from the White House is backing away from this, aboard Air Force one coming home, Tony Snow, the press secretary, told the pool reporters that the president read a transcript of what was actually heard around the world and seen and he kind of rolled his eyes, according to Snow and laughed it off.  It‘s certainly nothing different than what the president has been saying. 

It was certainly blunter language that you saw him using with Tony Blair, but what was interesting about all of that is that all of the issues of the day were encapsulated in that one conversation there at lunch, at this G-8 conference.  The president‘s frustration with the United Nations and Kofi Annan, who has talked about the need for a cease-fire and where the president is much closer to Israel, saying no, there‘s got to be these conditions that are met before there can be any cease-fire. 

Tony Blair talking about the idea of an international peacekeeping force, but even Blair says there‘s got to be a process, in other words the U.S. wants to see conditions met, return the hostages, stop shelling Israel and then we can talk, so that‘s what came out of all that. 

MATTHEWS:  Well, to use a yiddishism, I guess he was saying for Hezbollah to stop all its kaka, but the fact of the matter is that‘s not exactly the Israeli position.  Isn‘t the Israeli position, give us back our two soldiers, move back your line so it‘s a safer distance from Israel and maybe more where the president says just stop rocket attacks basically. 

GREGORY:  Right.  I think that is the position.  I think those are essentially the conditions.  It gets a little more detailed in the sense that what Israel wants, what the U.S. wants, indeed, what the international community wants is for Hezbollah to be cleaned out of that area, to be eliminated frankly, but certainly to be cleaned out of that area of southern Lebanon.  So the issue is who is going to do that.  Apparently Lebanon isn‘t strong enough to do it or else its forces could go in there and clean Hezbollah out. 

And what the president was alluding to there is that the international community needs to pressure Syria to crack down on them and Iran, as the president said today, to stop backing them.  So that‘s the kind of wider reverberations of this fight, but right now the idea of sending in a peacekeeping force is all about helping the Lebanese army really patrol that area and make it safer for Israel, so that rocket attacks cannot be launched from Lebanese soil, which has been the case for some time, where Hezbollah is operating there at will. 

MATTHEWS:  On the other front, you‘re used to the president‘s sort of frat boy behavior, by calling people by their last name or nick names, like I guess Stretch is your name.  Does that, and you‘ve covered diplomatic areas, does this offend the Brits and other Europeans, is this too much the cowboy for them or don‘t they care? 

GREGORY:  You know, I think certainly in the general public it may reinforce stereotypes about Bush being a cowboy or being a frat boy or being indelicate or undiplomatic.  Certainly there‘s not a lot in the popular media about Tony Blair having any of these moments, but first of all, I don‘t think any of the foreign leaders are surprised by this.  This is what they hear all the time.  One of the other things that the president said to Vladimir Putin was we have to keep this thing going, people are talking too long and I need to get out of here so that your security forces can be freed up. 

So I don‘t think anybody‘s surprised.  It may reinforce some images about Bush around the world that he doesn‘t seem too concerned about in the first place, but again White House officials are saying look, this is how the president sees this.  They were trying to tamp down any difficulty between the president and Kofi Annan, saying that this is the same views that he has expressed publicly. 

MATTHEWS:  I can‘t wait to hear what you have to say off-camera David, about this.  Thank you very much David Gregory with the president.  Up next, can diplomacy end the fighting?  Does the U.S. want Israel to wipe out Hezbollah? Log on to HARDBALL.MSNBC.com for our special blog on this ongoing crisis.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  It‘s after midnight in the Middle East right now and air raid sirens have again been heard in Israel as Hezbollah rockets are hitting northern cities, including Haifa.  Israeli officials say 24 Israelis have been killed in the fighting so far, including 12 civilians hit by rockets.  Hassan Nasrallah, leader of Hezbollah, is at the center of this crisis in the Middle East.  He‘s been described as a man of god, gun and government.  The question is how do you get him to stop.  Robin Wright is with the “Washington Post.”  She met with the leader recently and is here to share some of her insights about the man and his cause.  Good evening Robin, tell us about Nasrallah, the leader of this fight. 

ROBIN WRIGHT, “WASHINGTON POST” DIPLOMATIC CORRESPONDENT:  Nasrallah is a man who is kind of a cross between Iranian revolutionary leader Ayatollah Khomeini and Che Guevara, the Latin American revolutionary.  He sees himself as far more than just a Lebanese warlord.  He thinks he‘s above the system.  He thinks he is a regional player and he thinks that he is not only standing against Israel, on behalf of the Palestinians, but providing an alternative vision for the broader Middle East. 

MATTHEWS:  What would take it to get him to stop his attacks on Israel? 

WRIGHT:  It‘s a good question.  I think he miscalculated, I think he engaged in this prisoner seizure in part because he thought this would add pressure to Israel and he could engage in another swap, as he did in the year 2004, when he managed by returning the remains of three Israeli soldiers and one Israeli businessman, he won the release of 430 Arabs, 400 Palestinians and 30 other Arabs and I think that‘s what he thought and he didn‘t anticipate that Israel would respond with such massive force, and you know, I don‘t think that he is likely to give in any time soon.  He admitted last year, he has more than 12,000 missiles or rockets and even if the Israelis have destroyed some or even most of them, he is likely to have many hidden in the caves and probably some civilian targets, some civilian facilities as well in southern Lebanon. 

MATTHEWS:  Where‘s he vulnerable? 

WRIGHT:  He‘s vulnerable in the fact that he represents the largest single faction of Lebanese, the Shiite community, but he doesn‘t remember all or the majority of the Lebanese and the more the destruction, the greater pressure or resentment he‘s likely to experience within Lebanon itself. 

MATTHEWS:  Is he the boss or the tool of Iran? 

WRIGHT:  Well you know, a little bit of both.  He was one of the first military leaders who joined Hezbollah in 1982, and you know, has been beholden to them for the missiles he is firing at Israel today.  He gets an estimated $100 million a year in arms, goods and cash from the Iranians, although he also has his own sources of income from Lebanese expatriates and other sources, some of them not legal, but he does have very much a wide base of support and, I think, makes many of his own decisions.  The Iranian revolutionary guards who moved to Lebanon in 1982 to form Hezbollah, train it and arm it, have largely left.  They left a few years ago, and they‘re only around somewhere between a dozen and 50 left in Lebanon. 

MATTHEWS:  OK.  Thank you very much, Robin Wright.  Up next, we‘ll have the latest on the Pentagon‘s plans to evacuate thousands of Americans from Lebanon.  Plus, MSNBC‘s Patrick Buchanan and Tony Blankly of the “Washington Times” will talk about what President Bush can do, what he wants to do, to end the violence.  By the way, stay with us for another live HARDBALL tonight at 7:00 p.m. Eastern.  We‘re going to have a whole new show tonight.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.  As the fighting rages on between Israel and Hezbollah, 25,000 Americans remain in Lebanon.  Tonight, plans are underway to evacuate Americans who want to get out.  NBC‘s Pentagon correspondent Jim Miklaszewski joins us now with the latest.  Mik, can we get our people out?

JIM MIKLASZEWSKI, NBC NEWS PENTAGON CORRESPONDENT:  Well, Chris, the State Department, U.S. military and Pentagon have plans to begin a massive evacuation of Americans from Lebanon, beginning as early as tomorrow. 

Now of that 25,000 figure, 24,000 of those have dual citizenship, Lebanese-U.S. citizenship and the State Department is estimating that actually only about 5,000 American citizens may want to evacuate Lebanon. 

Now, so far, U.S. military helicopters have airlifted only 63 Americans from Lebanon to Cyprus and at that rate, it would take forever.  So the State Department and Pentagon have charted a Greek cruise ship, the Orient Queen, to begin ferrying passengers 750 at a time for that five-hour sail from Lebanon to Cyprus. 

It will have to make several trips obviously to come up with about 5,000.  In the meantime, the USS Gonzalez, a navy warship, a destroyer, will be in the area to provide escort and any force protection.  And later this week, some 2,200 marines and an amphibious task force, including the helicopter carrier Iwo Jima are expected to arrive in the area as well.

But I can tell you that U.S. military and Pentagon officials are saying that those warships intend to maintain a discreet distance from the shoreline of Lebanon, so as not to be provocative or to become a target.  After all, you know, the Americans were attacked en masse with deadly consequences twice in the early ‘80s when Hezbollah carried out bombings against the U.S. embassy and against the marine barracks at the Beirut airport, killing 241 marines back in 1983.

MATTHEWS:  Thank you, Jim Miklaszewski.  Let‘s bring in now MSNBC political analyst Pat Buchanan and Tony Blankley, editorial page editor of the “Washington Times.”  Pat, let‘s just start with your take on this and then to Tony‘s.  Your basic take on what‘s going on over there and what we should be doing?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, my basic take, Chris, is I think it is tamped down a bit and the markets show that.  I think the Israelis realize that really the all-out assault they made on Lebanon itself was an act of collective punishment, I think which has damaged them badly. 

They were attacking people basically and destroying infrastructure of people who were not responsible and who could do nothing.  I do think this is continue because Hezbollah still appears to have fight in them and I don‘t think the Israelis can stop these missile strikes unless frankly they move in troops and clean out some of these places, and I don‘t think they‘re going to want to do that. 

The president has got a problem because I don‘t think he‘s got any leverage with Iran.  He doesn‘t talk to them, he doesn‘t talk to Syria, he doesn‘t talk to Hamas.  He doesn‘t talk to Hezbollah.  So we‘re going to have to get some interlocutors to go in and talk to these people for us.

MATTHEWS:  Tony, your take?  What should we be doing?

TONY BLANKLEY, EDITORIAL PAGE EDITOR, WASHINGTON TIMES:  I think—my angle would be that there‘s a danger that Hezbollah will not be dismantled by Israel.  If they fail to dismantle Hezbollah, then I think Hezbollah is in a very good position not only to continue its terrorists attacks against Israel, but to come to dominate Lebanese government itself.

So we‘re in a situation where, and I think they are going to need substantial armored ground troops and I don‘t know how far they have to go, because it‘s not a question of establishing a few mile cordon.  With the current missiles, it can go 50, 70, 80 miles.  They have to really break down Hezbollah sufficiently that the Lebanese government along with other international assistance can finally enforce the U.N. resolution that requires the Hezbollah militia to be out of Lebanon.

So there‘s a real danger of not getting enough done, and I agree with Pat though, that some of the bombing in Beirut probably wasn‘t in retrospect as necessary as the Israelis think it was, because in fact, even bringing material down from Lebanon there, could be blocked outside of—outside of Beirut rather.  So there‘s certainly a bad press.  That‘s the least of it.  And the question is, will Israel get the job done?

MATTHEWS:  Do you think it‘s an American interest for Israel to invade Lebanon on the ground?

BUCHANAN:  Do I?  Look Israel was...

MATTHEWS:  ... That‘s what Tony is saying they ought to do.  I‘m just saying, do you agree with that?

BUCHANAN:  I would say—look at it from Israel‘s standpoint.  I would say they may have to, but Chris, they were in there 18 years, they couldn‘t disarm them.  They‘re better armed now.  You send Israeli ground troops in there, they could go all the way to Beirut in a short matter of time, but then the killing and the casualties would really start up.  It would be far worse than before, when they lost more than 800 people.  So they‘ve got to be thinking long and hard. 

But Tony is right.  They are the only power in that neighborhood that can do it, but it‘s going to be a bloody mess if they have to do it.

MATTHEWS:  Tony, if it is a bloody mess and Israel goes ahead and advances on the ground into Lebanon, to get a hold of those 13,000 rockets and I guess that is something that they ultimately would like to do, what does that do in terms of consequence in terms of the Iraqi front?  We‘re dealing with the Shia in the Iraqi front.  We‘re putting a government together for them.  Are they going to still do business with a country so closely identified with a very aggressive Israel?

BLANKLEY:  Yes, it‘s an interesting question.  Of course the Sunnis in the Middle East, including Saudi Arabia, have as you know, strikingly come out against Hezbollah.  So we‘ve seen this division between Sunni Middle East and elements of Shia Middle East on this.

So that‘s going to be a unique institution.  The interesting thing is, Iran has clearly pushed the button to start this.  We have to understand that Iran can hurt us in Iraq, they can hurt Israel and throw Israel off through Lebanon, and we now are having Israel doing some of our dirty work to give them a very bloody nose and more than that. 

But I agree with you, there‘s no neat answer to this.  If—I don‘t know how this undercuts our relations with the Shia majority in Iraq.  We have pretty good working relations with them as I understand them.  My guess is that most of the Iraqis—the Shia Iraqis are interested in standing up a government they can dominate and will not let this sideshow from their point of view affect them.

BUCHANAN:  Chris, let me dissent.  I‘m not sure, I don‘t believe really that Syria is behind us.  I wish the president would show us some proof.  Secondly, Iran has been taken pains to say, look, we didn‘t send that unguided robot that killed that ship.  We didn‘t send this and that.  They sound like they don‘t want to be involved because they know they would be hammered. 

I am not sure that they are behind this.  What looks like to me is that Hezbollah moved not in synchronization, but in solidarity with Hamas, very much on their own.  The Lebanese are outraged, the Syrians look to me like they don‘t want to fight.  I don‘t know that the Iranians want to fight right now.  I think that may be why they suddenly came to the table on the nuclear deal.  So the president really ought to lay some cards on the table before we start down the road and get ourselves into a third war there.

MATTHEWS:  OK.  We‘ll be right back with Tony Blankley and Pat Buchanan.  They‘re staying with us.  Up next, we‘ll have a live report from on the ground in Gaza.  Plus, how Arab countries are responding to Hezbollah‘s attack on Israel.  Kind of interesting, kind of mixed.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Let‘s go now live to NBC News Fred Francis is reporting on the conflict tonight from Gaza.  Fred, that front, is that still alive over there, or is it taking second fiddle to the Hezbollah attacks? 

FRED FRANCIS, NBC NEWS, GAZA CITY:   Well, it‘s really taking second fiddle.  What the Israelis are doing, Chris, is just playing with the Hamas government.  They‘ve sealed it up tight, example, two days ago they moved 10 tanks into an area in northern Gaza, they had a little skirmish.  Tonight they pulled those 10 tanks out.  Another example, Chris, last night, about this time, they dropped a 500-pound bomb on the foreign ministry, an empty building, the second time they had hit it.  Just a reminder to the Hamas government that they‘re not too distracted with what‘s going on up north, Chris. 

MATTHEWS:  Do you sense, report there, that there is any kind of coordination between Hamas and Hezbollah? 

FRANCIS:  Well, I heard what Pat Buchanan said.  There‘s absolutely no evidence of it.  In fact, let me just tell you that the prime minister here, the Hamas prime minister, Ismail Haniya, showed up today, first time we‘ve seen him in days, and expressed his solidarity with the Lebanese people.  He did not say one word about Hezbollah.  In fact, there‘s been no, aside from some flag waving, there‘s been no political, diplomatic, or military support for what‘s going on between Hezbollah and the Israelis. 

And Chris, think of this.  It‘s Hamas, the Hamas leadership, the military wing, that was behind all the suicide bombings of so long ago, for 18 months they had not done that.  If they wanted to harass and terrorize the Israelis, while they‘re so busy on the northern front, they could unleash those suicide bombers.  They have not done that in six days.  They‘ve been very quiet for six days, they‘re waiting for the struggle up north to end, the fighting up north to end, so they can get back to their business. 

Remember, for five months, the Palestinian people down here have been under the Israeli gun, there‘s been no pay, no money coming in, no jobs going out, so people down here are suffering, and they were very close, prior to Hezbollah crossing the border, very close to a deal getting that Israeli soldier back.  I‘m not sure what the deal was going to be, but several sides, the Egyptians, the Israeli sources, Palestinian sources said they were talking.  So there was the chance of a deal.  Well, that deal is off until something happens up north. 

MATTHEWS:  Thank you, Fred Francis.  Fine report from Gaza.  We‘re back with MSNBC political analyst Pat Buchanan and Tony Blankley of the “Washington Times.”  Gentlemen, what is our greatest threat in the world, Hezbollah or al Qaeda?  Pat, you first. 

BUCHANAN:  Well, al Qaeda is interested in attacking the United States of America.  It‘s killed Americans, 3,000 of them, Hezbollah has not attacked the United States since 1983 with the marine barracks and the blowing up of the Beirut embassy and that was in concert with the militia, so Hezbollah THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT/BE IN ITS FINAL FORM AND MAY BE UPDATED. Israel, it does not threaten the United States.  Al Qaeda is after us.

MATTHEWS:  Why is Tony saying that Israel is doing our dirty work for us by attacking Hezbollah? 

BUCHANAN:  I don‘t believe the war between Hezbollah and Israel involves the United States at all. 

MATTHEWS:  Tony does.  Tony, get in here.  Why do you say we‘re doing the dirty work, that Israel is doing the dirty work for us in attacking Hezbollah? 

BLANKLEY:  And for themselves.  This is a question almost of theology on the part of all of us here, whether you think that there is a worldwide radical Islamist threat, that while not necessarily coordinated all the time, nonetheless it is each in their own ways attacking the west or whether you seem them all as separate enemies. 

MATTHEWS:  I‘m asking you the question, do you believe that every enemy of Israel is the enemy of the United States? 

BLANKLEY:  No, I didn‘t say that.  Hezbollah, I think Iran is our enemy right now.  I think Hezbollah, unlike al Qaeda, is more hierarchical organization that is more controlled by Iran.  Al Qaeda, which of course is the primary aggressor against us currently, is a more lateral organization, more inspirational organization and a funding organization, so there are different kinds of mechanisms, but let me make a more general point, because we‘re all guessing, and that‘s all it ever is, what the intent of the various belligerents are, and as Pat knows, because Pat and I were talking a couple of months ago, it‘s only in the last couple of years we found out what the real intent of the German general staff was before World War I, so we‘re forced to make conjectures based on our best judgment about what intents are, but we don‘t know, and maybe the greatest danger is everybody is guessing what everybody else is trying to do. 

MATTHEWS:  Let me ask you about the consequences.  I‘ll keep this as an interrogative, although I have theories here.  If we allow this war to stay hot, Pat, on the northern front of Israel and this goes on for weeks or months, that‘s against American interests, isn‘t it?  Because it heats up the Shia front, it makes it more difficult for the Shias to deal with us in Iraq, it makes the Sunnis in Iraq, who have to give in to a superior power politically, much less willing to do that.  Doesn‘t this all hurt us, this war? 

BUCHANAN:  You make a very good point.  I think, and you made it earlier, the Sunni-Shia differences in the Arab world over what Hezbollah has done are interesting and it‘s sort of the mirror image of the Sunni-Shia conflict going on in Iraq.  You‘re right Chris, the main thing is, the United States is behind this Lebanese government, which is being hammered and smashed and accused of crimes by Olmert, it itself did not commit.  That would really hurt us.  But I‘ll tell you this.  You don‘t resolve this, I don‘t think in American way in any way by military force, putting our troops in there. 

I do agree with all out diplomacy and one problem is the president has out-sourced his Middle East policy if too many cases to Israel and we got no communication, no contact with Hamas, Hezbollah, Syria, Iran.  I don‘t care how bad they are.  In the Cold War days, in the other days, George Bush‘s father made an ally out of Syria in the Gulf War by bribing him. 

MATTHEWS:  Let me ask you Tony about the possibility that‘s been raised by Dianne Feinstein, a senator, who most people agree is a grownup politically, not some flake.  She‘s a serious grownup politically and says the time has come for a bipartisan approach to that region, put in Bill Clinton as a special envoy.  What do you make of that? 

BLANKLEY:  Yes, she‘s a serious person.  I think one president at a time is enough.  I don‘t think the problem is a lack of an envoy.  I think the problem is, I don‘t know what the strategic vision of how you solve the problem of radical Islam in the Middle East and its assault on the west, and unless you have a philosophy and a strategy, simply sending somewhat out to talk, we can talk, we talk through the Egyptians, we talk through the Saudis, we talk through the Jordanians.  There‘s no problem communicating information from us to every player.  The question is what is being communicated. 

MATTHEWS:  Well, I guess I‘m asking whether this president can wear the traditional two hats of American presidents since 1948.  Friend of Israel and power broker in the region.  It seems like our president today doesn‘t have that second role in mind.  That‘s why I‘m suggesting a bipartisan approach. 

BUCHANAN:  He‘s given it up, Chris.  He has, the president of the United States has deliberately in effect told Ariel Sharon, we will follow your lead.  Olmert says, don‘t even talk to Hamas even though they‘re elected in your elections, cut off their money and we do it.

BLANKLEY:  Wait a second, President Bush engineered the road map which was an effort that was endorsed by all sides, including the Europeans and was unfortunately it failed, as all the peace efforts have failed, as Clintons peace effort failed in the 1990s. So, I mean, nobody has succeeded.  It‘s not like Clinton or the Democrats or anybody else has figured out how to get peace in the Middle East.  Everybody has failed. 

BUCHANAN:  But when has President Bush ever used his leverage with regard to the Israelis to get them to stop building settlements, stop building these outposts.  Pull them back. 

BLANKLEY:  The whole point is the only leverage we have traditionally there is against Israel, to lean on them to pull back, while on the other hand, all the other forces in the world, including the U.N., that‘s been present in Lebanon since what, 1993, with their force, and have completely failed to protect Israel from Hezbollah, which is one of their functions. 

MATTHEWS:  Tony and Pat thank you very much because you‘ve replicated the worldwide debate at this moment.  Coming up we‘ll have the latest on the conflict from Jerusalem and talk about how Hezbollah and Hamas operate with a former CIA officer who ran the agency‘s Hezbollah desk.  Let‘s get the insight from this fella.  You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Israel‘s prime minister said today that the objective of the campaign in Lebanon is to distance Hezbollah so that it will not pose a threat to Israel.  Kevin Peraino is the bureau chief of “Newsweek” in Jerusalem.  He joins us now by phone.  Kevin, is the goal narrow, simply to get the troops back, the two soldiers back that were captured by Hezbollah and to push back Hezbollah or is it to destroy the terrorists group? 

KEVIN PERAINO, “NEWSWEEK”:  That‘s the big question.  There has been a lot of speculation over the last couple days.  When this whole thing started, Israel said the goal was to get this soldier out, and then as the bombing campaign continued, we got the sense that it was to pressure the Lebanese government to get the soldier back.  But now, as the campaign has gone on, we are hearing more and more that the goal is to take out Hezbollah, as much of this infrastructure as possible.  I talked to a former Mossad guy this afternoon who put it in terms of investment and return.  He said we dropped so many bombs at this point, we‘ve taken so many casualties here, something like 24 I think, that we wanted to get a return here.  It‘s the crippling of Hamas, and he said this is something that will take probably weeks and not days. 

MATTHEWS:  So the point of diminishing returns is way off? 

PERAINO:  Yes, I mean yes, they feel like there is a lot more to do.  They feel like they are not getting any kind of significant pressure, at this point, from the U.S., and that it will take some more time, and they want to take that time. 

MATTHEWS:  Can you get a sense of the Israel public opinion on this point of how long to extend of the fighting, how broad a goal to set? 

PERAINO:  Well people have largely rallied around Olmert so far, to this point.  There was a little bit of speculation this morning about whether a ground invasion was imminent.  That is something that could change public opinion, because the shadow of Israel‘s past Lebanon involvement weighs so heavily here, casts such a long shadow.  People remember the guerrilla attacks of 1990s, the roadside bombs, and so when we talked to officials here, they say we wanted to limit this right now to an air campaign and do as much as we can from the air, and that‘s something that is designed partly to try and keep, you know, try to keep the public behind Olmert in the campaign. 

MATTHEWS:  Great report.  Thank you Kevin Peraino in Jerusalem for “Newsweek.”  Joining me now is former CIA officer Gary Berntsen, also the author of the book called “Jawbreaker, the Attack on Bin Laden and Al Qaeda.”  A personal account by the CIA‘s key field commander.  First question, what is the bigger danger to our country, America, Hezbollah or al Qaeda? 

GARY BERNTSEN, FORMER CIA OFFICER:  Iran.  Iran. 

MATTHEWS:  Therefore Hezbollah? 

BERNTSEN:  Yes, Hezbollah is really in many ways the first team.  They have better technology, larger infrastructure around the world, they have not been attacking us recently but they have been around a long time, and are sort of latched to the Iranian intelligent services.  They are a significant problem, and the Israelis, of course, are trying to do whatever they can to brush them back from the border.  There are too many of them, they came up with too many missiles, 13,000 missiles is quite a bit to have pointed at you.

MATTHEWS:  Are they anti-American or simply virulently anti-Israeli? 

BERNTSEN:  I think they are anti-Israeli, but they are very hostile to the U.S., because they recognize the support the United States has given to Israel over the years. 

MATTHEWS:  And that explains the blowing up of our marine barracks back in 1983.  We were in there helping, I thought we were at the time, sort of playing a backup to Begin‘s government at that point as they cleared out of Lebanon, we were sort of their rear guard.  At that point they hated us most and killed us.  Why haven‘t they tried to kill Americans since 1983? 

BERNTSEN:  Well, I would like to say that, you know, you had Cobra terrorists, which the Iranians ...

MATTHEWS:  That‘s theirs, that was an Hezbollah attack, right?

BERNTSEN:  The Iranians participated in that with Hezbollah of the Hijaz in Saudi Arabia, but Lebanese Hezbollah provided some support to that as well.  They‘ve been helping the Iranians against us, and the Iranians have done many attacks against us for the last 30 years. 

MATTHEWS:  Do you believe Iran is behind, do you believe Ahmadinejad has given the OK to this assault on Israel, the grabbing of the soldiers, the rocket attacks that continue as we speak? 

BERNTSEN:  You have to recognize that Iran, the Iranian president has leverage to control the intelligence service.  The IRGC is controlled by the Ali Khomeini, the ruler, the supreme ruler.  So it could be one or the other. 

MATTHEWS:  Because the question arises, as it did way back in the Korean war, when we fought North Korea and then the Chinese came in, who gave the OK to the North Koreans to attack the south?  It seems like a lot of tonight‘s program, of HARDBALL has been to try to figure out who gave the OK, who gave the green light for Hezbollah to attack so broadly?  Who do you believe did that? 

BERNTSEN:  Well, We will probably not know for a long time, but the Iranians provide them weapons, training, money, encouragement, the whole thing, they‘re on the ground with them.  So the Iranians are not stupid, the Iranians know there is pressure on them.  This is a very convenient thing for them.  They probably over played their hand again.  You can count on the Iranians to mis-play it, and as far as the nuclear issue goes with us, they will mis-play that as well. 

MATTHEWS:  Gary stay with us, we‘ll need you on this story as we continue.  Thank you, great reporting, great analysis.  His book is called, your book is “Jawbreaker.”  Stay with us on MSNBC for another live addition of HARDBALL tonight, one hour from now, at 7:00 PM Eastern for the latest on the fighting in the Middle East.  Right now it is time for “TUCKER.”

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END   

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