updated 7/31/2006 12:46:08 PM ET 2006-07-31T16:46:08

Guests: Carlos Pascual, Frank Gaffney, Eugene Robinson, John Fund, Jim Gilmore, Steve McMahon

CHRIS MATTHEWS, MSNBC HOST:  Bad trend.  After the governments of Egypt, Jordan and Saudi Arabia seemed to oppose Hezbollah, the people of those countries are rooting now for the guerrilla factions battling Israel.  Can any Arab government remain on the sidelines when the Arab masses are pulling for a militant, anti-Israeli enemy?  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.

The president met with to British Prime Minister Tony Blair to talk about the crisis in the Middle East today, and announced he‘s sending Secretary of State Condoleezza Rice back to the region. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I would like to end this as quickly as possible as well.  Having said that, I want to make sure that we address the root cause of the problem. 

(END VIDEO CLIP)

MATTHEWS:  Meanwhile, the fighting in the Mideast continued with Israel warplanes attacking Hezbollah targets in Lebanon, and Hezbollah fired a few rocket which landed deeper into Israel than any of the other strikes in the 17 days of fighting. 

NBC‘s Peter Alexander is in Haifa.  Peter, thank you for this reporting.  How is that being read, that rocket attack that plunged so deeply into the state of Israel? 

PETER ALEXANDER, NBC NEWS CORRESPONDENT:  That‘s a good question, Chris.  Around this area, there are new concerns, because that rocket called the Fajr-5, can actually go further than the Fajr-3 rockets, the ones that have been used much like the Katyushas over the last 17 days that hit as far south as Haifa. 

This one went further into Israel than any previous rocket had.  It went about 30 miles deep into the town of Afula.  What it indicates is not just that this is new Iranian technology that they are using, Hezbollah is using, but also that there is a wider area that is now threatened within northern Israel. 

Not Tel Aviv—this rocket would not make it that far.  Its distance, at tops, is about 44 miles, but it does put other people throughout the northern part of this country on alert. 

In response to the firing of at least three of those Fajr-5 rockets today, we‘ll show you the newest piece of video we just got from the Israeli military.  This is their retaliation strike.  It was an airstrike targeting the launcher that they believe is responsible for those Fajr-5 launches earlier today. 

As you see from the video, they believe they have destroyed it and they hope that that, for now, will put an end to this concern, but it appears, according to most sources, that this confirms what Israel has told the United States before, that Hezbollah does have this Fajr-5 rocket in its arsenal.  It‘s believed that it‘s likely to be in the dozens that they have as opposed to the hundreds—Chris. 

MATTHEWS:  Now do more Israelis you come in contact with feel that they‘re vulnerable? 

ALEXANDER:  I think there is a sense that everybody in this area is vulnerable.  I mean, to give you a sense of our experience here over the course of today in Haifa, we heard the warning sirens blare five times today and it‘s so random where these rockets can fall. 

They are rockets, not missiles.  They are not guided.  They are very inaccurate and a little bit earlier today—it‘s dark now, you can‘t see it, but in the black distance behind me, that‘s the bay just off the coast of Haifa.  We witnessed one of those rockets land there and the boom was sufficient that wherever you looked, you saw people come to their windows to see exactly where it landed. 

There is certainly a sense in northern Israel at least, Chris, that everybody is very much vulnerable, and a lot of people are still living in fear, living underground as they have for the last 17 days. 

MATTHEWS:  You know, Peter, this may be off your beat, but it‘s my quandary here.  What good would an international force stationed on the southern part of Lebanon above Israel do to stop these rocket attacks?  If they can go all these miles, they‘ll just shoot right over the heads of the international force. 

ALEXANDER:  That‘s, obviously, part of the dispute right now, Chris. 

Israel is really not supporting this United Nations effort to put

peacekeepers there.  They believe that the United Nations has had folks

there since 1978, they were ineffective, and their ability to stop any

fighting across the border, obviously, with the kidnapping of two soldiers

when was it—just 17 days ago on July 12th

And I think the belief system here is now that, you know what?  We need to take care of this problem now in Israel, because if we don‘t, we will be stuck fighting Hezbollah again in the future, as you‘ve heard politicians in the United States say as well. 

MATTHEWS:  Thank you very much, great report.  Good weekend to you, even in the war zone, Peter Alexander in Haifa. 

Now let‘s go to NBC‘s Richard Engel in Tyre.  He‘s up in Lebanon.  I guess I have to start with the same question to you because it‘s the political question.  We saw the president, the usual East Room meeting with the prime minister of Britain and it was a nice talk, they looked nice, they were well-dressed, but the problem is all this process, where does it lead? 

RICHARD ENGEL, NBC NEWS BEIRUT BUREAU CHIEF:  Well, the people here are hoping it leads to a cease-fire.  Hezbollah certainly is not.  We were traveling further south today, right along the Israel-Lebanon border.  We actually slipped behind the Israeli frontline to go to a village that is completely cutoff, and there was clear desperation there.

We went to the village of Ehrmesh (ph).  It‘s a small Christian village that has been overrun by thousands of mostly Muslim refugees and in this village, the people are now drinking the filthy irrigation water.  They are living in a church.  Many of the people are sick.  They were desperate to get out. 

As our convoy—we went in with an aid convoy, so as this convoy of ambulances and journalists was leaving this village, people were coming up to us, begging to come with us.  So there is a sense that what needs to happen now is to open up an aid corridor.  There‘s been talk of a humanitarian corridor to bring aid to the south. 

I can tell you, Chris, after I saw today, there certainly is no safe corridor.  As we were leaving, our convoy came under attack, a mortar shell or some other kind of artillery shell landed about 200 yards from the car that they were in.  Three people were injured—Chris. 

MATTHEWS:  What will it take to end this war if Israel insists on security in the long term?  Israel doesn‘t just want a stop to the fighting for a couple of weeks or a couple of months, they want to be protected from continual assault by Hezbollah rockets and missiles from long distances.  How would a security force made up of international soldiers be able to keep peace when the military ordnance, the rocket power, the missiles are so long range? 

ENGEL:  It is a major problem.  Just having extra forces on the ground might not do it.  We saw today two Katyusha rockets launched from south Lebanon as we were driving to the border.  One of them was about a mile or two from a U.N. observation post, so the forces that have been on the ground for so long have not been very effective, they have not been able to control Hezbollah. 

That is clear, but they would be able to at least in the immediate term, try and get some of the refugees out of this area, so that a larger political solution could be worked out, something that would involve Syria, involve the Golan Heights, work out a deal with the Palestinians.  That‘s the way the Lebanese are looking at it, that this should be viewed in a larger global peace process. 

They also want to see a prisoner exchange with Israel, but that some sort of force should be if place to stop the fighting, at least for now, get the people out and then work on a Lebanon-Israel, Middle East peace process. 

MATTHEWS:  As I understand it, those are the only two countries that will accept Condi Rice on this return trip, is that right? 

ENGEL:  Condi Rice does not have very many friends here.  People were looking at her as something of a—people first thought is she going to come with a peace deal, is she going to come with a white flag, trying to bring peace? 

Then it was quickly clear that she did not have that agenda, so several Arab countries did not want to receive her, because they didn‘t think that she would deliver on what they wanted to promise to their people, that the fighting would stop. 

MATTHEWS:  Well, the problem is we‘ve got the United States‘ refusal to deal with Syria, of course, a long-term refusal to deal with the revolutionary government in Tehran in Iran and, of course, you‘ve got the inability of some of the frontline moderate states like Jordan and Egypt and the Saudis to deal now at the table. 

It seems to me it‘s a very small table we‘re talking about.  The United States, the very weak government of Lebanon, and the state of Israel, they seem to be the only people talking right now. 

ENGEL:  Well, I think there is a real opportunity right now to try and engage in a Middle East dialogue.  The situation in Iraq is tremendously volatile.  Iraq, you can say, has collapsed as a regional force.  Iran has moved in and is now the main power broker, particularly in southern Iraq, from Baghdad on south.  Jordan is very nervous about that kind of Shiite influence spilling onto its borders.  Saudi is also very nervous about that. 

So you are finding governments in the Middle East receptive to talk about solutions, but because they don‘t want this massive Shiite-Iranian influence spilling over into Iraq, pushing over into Saudi Arabia, connecting up with Hezbollah, so there is certainly an environment to discuss this. 

But right now, when you talk to Arab governments—and I talked to some fairly senior advisers in Saudi Arabia and other places—they say that they don‘t have a receptive ear in Washington when they try to really talk about the concrete issues. 

MATTHEWS:  You know, about a year-and-a-half ago, I talked with King Abdullah of Jordan and he made it clear to me his biggest concern was the development of what he called a Shia crescent, obviously, from Tehran through Baghdad to Beirut, and here we have it, don‘t we? 

ENGEL:  There is something of a Shiite crescent.  What people think is

that Iran wants to effectively control the Strait of Hormuz and make the

Persian Gulf really a Persian Gulf instead of an Arabian Gulf, you know,

try it with tensions in Bahrain and this is one of the main concerns, that

why Iraq is so volatile, one of the main concerns that Saudi Arabia has. 

It is all—it is because of this regional shift that is going on in the Middle East that this could be an opportunity to use this time to try and sit down and create a realignment in the Middle East.

Unfortunately, that hasn‘t been happening.  We‘ve just seen, instead of putting out all of the fires, the embers have just been spread out across the region.  And we have this conflict here on the border with—between Israel and Lebanon, we have the ongoing conflict in Iran—the ongoing tensions in Iran—the ongoing conflict in Iraq.  So there doesn‘t seem to be a global approach to try and come up with a solution, a political solution, that would connect all of these dots. 

MATTHEWS:  Ok, thanks.  Great report, Richard Engel over there in Lebanon. 

Coming up, more on the Middle East and the debate over how to end the fighting.  Is there a diplomatic answer out there?  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Secretary of State Condoleezza Rice returns to the Middle East tomorrow for a second round of negotiations over there, but what will it take to get Hezbollah and Israel both to end the violence, and should the Bush administration open up talks with Syria to help bring that to a close? 

Carlos Pascual served as director of the State Department‘s Office of Reconstruction and Stabilization.  He‘s now the vice-president of the Brookings Institution.  And Frank Gaffney‘s a former assistant secretary of Defense during the Reagan administration.  He‘s now the president of the Center for Security Policy. 

Let me start with you, Mr. Secretary:  simple question.  Why would we be able to stop a war when both sides want to continue it, both for their own reasons? 

CARLOS PASCUAL, FMR. STATE DEPARTMENT OFFICIAL:  Because neither side can actually win the war, and eventually we can put forth the arguments that can help both sides understand it.  Militarily, Israel can‘t achieve a victory, either through bombing or by engaging in a ground war with Hezbollah.  It‘s extraordinarily difficult to defeat an insurgency through a ground war.  We‘ve already seen that, through bombing, they‘ve wiped out most of the easily-obtainable launch targets, and still Hezbollah has continued to be able to launch. 

On the Hezbollah side, they can‘t win this either.  So eventually, I think, what‘s critical is to convince both parties and to convince the parties around them, like Syria and Iran, that the only way out of this is to in fact actually have a negotiated settlement. 

MATTHEWS:  Frank? 

FRANK GAFFNEY, FMR. ASST SECRETARY OF DEFENSE:  Richard Engel used the analogy of embers and trying to get the fires put out.  We‘re dealing with arsonists, in Hezbollah and Iran and Syria.  You‘re not going to talk them out of trying to burn down Israel.  You‘re going to have to keep them from doing it.  And that‘s what Israel is about.  I don‘t think it should be made to stop.  I don‘t even think it should be encouraged to stop. 

Can it win?  Winning is a big deal, especially when you‘re talking about parties like Iran and Syria that are outside of the immediate fight, using proxies to wage it.  I think that Israel has to be enabled to continue to try to destroy Hezbollah.  We need to try to keep Syria and Iran from building it back up.

And once you‘ve done that—as, by the way, was done with the IRA by the Brits, and the Spaniards did it to the ETA—then you can start talking about talking, once you‘ve basically put these people out of business.  But short of that, you‘re going to have more fires and they‘re going to be burning down places that we care about, like Israel.  And here, probably (ph).

MATTHEWS:  Hezbollah is shooting, what, over 10,000 rockets—they have got 13,000 ready to go; they‘ve probably shot half of them.  Why should they stop shooting rockets into Israel, if every day they do this they‘re the hero of the Islamic world? 

PASCUAL:  Because they can‘t sustain this fight and be able to win.  On the other side, the Israelis also can‘t sustain the fight and actually be able to win.  If you look at, militarily, whether either side can win, the answer, I think, is no.  If you look at, from Israel‘s perspective, what happens if they continue bombing—

MATTHEWS:  Okay, stop for a minute.  I‘m going to be really tough, here.  If I‘m Hezbollah, I‘ve got 13,000 rockets and I‘ve got some of the best last to use, the long range ones, sophisticated.  I keep shooting them in the air, hitting targets in Israel, I just keep doing it, because every day I‘m on the front page of every newspaper in the Arab world, the Islamic world, and I‘m the hero, even in the Sunni areas.  Everybody loves me.  I‘m the hot hand.  I wait till I‘ve run out of rockets, I requisition more from my friends in the area, including Iran and Syria and I get them. 

Then I‘m sitting there with a bunch of new rockets, I keep firing them.  Why would Hezbollah quit this game they‘re playing?  I don‘t get it, unless Israel knocks them out. 

GAFFNEY:  They‘re not going to quit.  They are going to have to be stopped.  And that‘s the point.

MATTHEWS:  The U.N. ain‘t going to stop them.

GAFFNEY:  The U.N. isn‘t going to stop them, NATO isn‘t going to stop them.  We‘re not going to talk them out of it.

MATTHEWS:  Some international force, standing on the border, like referees in an NBA game aren‘t going to be able to do it.

GAFFNEY:  Of course not.  Of course not.  That‘s why Israel, I think, has to continue doing its job.  Now, it‘s got to do it, I think, with ground action.  We shouldn‘t kid ourselves, and they shouldn‘t kid themselves, that you can do it by bombing.

MATTHEWS:  That means casualties.

GAFFNEY:  That does mean casualties.  But Chris, the whole point—

MATTHEWS:  Israeli casualties.

GAFFNEY:  -- the reason that they‘re—the reason they‘re fighting this now—

MATTHEWS:  I mean, if I were an Israeli political figure, like Olmert, I‘d be worried, if I send 1,000 troops and 100 won‘t be able to come back. 

GAFFNEY:  The reason they‘re fighting this war now is they will lose more casualties later.  They‘ve already wasted six years as a result of relinquishing this territory to these terrorists to build up and make it a more dangerous threat with rockets and on the ground.  They can‘t afford to wait any longer. 

PASCUAL:  To continue to fight this war is not going to actually do

any good for Hezbollah or for Israel.  Hezbollah can—Hezbollah can keep

GAFFNEY:  They don‘t see it that way.

PASCUAL:  Hezbollah can keep on firing rockets, but it‘s not going to actually achieve the elimination of Israel and it‘s actually going to bring down a great force against it. 

MATTHEWS:  That‘s not their goal.  Their goal in the next millennium is getting rid of Israel, not next month.

PASCUAL:  And in the near term, it‘s going to bring down—

MATTHEWS:  How can you say it doesn‘t reach their goal?  That‘s what I‘m curious about.  How is what I described not useful to Hezbollah?  Keep shooting rocket at Israel until you run out, then get some more from your friends and then shoot them. 

PASCUAL:  Because for that broader region of the Middle East, I think, what is in its worst interest is an absolute full conflagration, where all of the countries are starting to go to war.  Because if Hezbollah continues to escalate the situation, there‘s a potential for Syria being drawn in.  There are linkages that are going to be drawn into Iran.  You have got to stop that process. 

MATTHEWS:  Tell me he how that works.  Israel invades Syria? 

PASCUAL:  Who knows what possibilities could take place, whether Syria

Syria has already alerted its troops.  Could it in fact actually move in and engage itself in some kind of a military confrontation?  That‘s not a direct—

MATTHEWS:  Syria is going to attack Israel? 

PASCUAL:  It‘s not a direction any of us want to see it go. 

GAFFNEY:  Iran says it‘s trying to bring about an apocalyptic outcome. 

Both Iran and Syria—you keep focusing on Hezbollah; they are bit players in this.  Both of them are being enhanced.  We‘re now having people like this show talking about talking with Syria.  This is the kind of thing that rewards terror, it breeds more of it and it makes it more dangerous. 

MATTHEWS:  I‘m just wondering how a peacekeeping force can sit between Israel and the Hezbollah, and they‘re firing rockets over the heads of the peacekeeping force. 

PASCUAL:  Because the critical first step is to actually achieve a cease-fire and get everybody to agree to a cease-fire.

MATTHEWS:  Oh, a cease-fire.  We‘ll see if we get that one in six months.

PASCUAL:  If you do then get a cease-fire, then you have a possibility of in fact having a force that maintains some stability. 

GAFFNEY:  That protects Hezbollah.  That‘s the problem.  That‘s what it winds up doing.

MATTHEWS:  Okay, Carlos, thank you.  Thank you, Mr. Secretary.  Thank you, Frank, as always.  Thank you both for joining us.

Up next, Condoleezza Rice is planning to head back to the Middle East.  The president said so today.  Can she help end the violence this second time around?  I guess we doubt it.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Thank you both for joining us.  Up next, Condoleezza Rice is planning to head back to the Middle East.  The president said so today.  Can she help end the violence this second time around?  I guess we doubt it.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:     It should be a moment of clarity for people to see the stakes in the 21st century.  I mean, there‘s an unprovoked attack on a democracy.  Why?  I happen to believe because progress is being made toward democracy. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  Back to the Middle East for Secretary of State Condoleezza Rice.  President Bush sends her back to the region to try to work out a solution to the violence.  Today Eugene Robinson‘s column in the “Washington Post” criticized the secretary and her diplomatic efforts and called the Lebanon conflict Condi‘s war.  John Fund writes for the “Wall Street Journal‘s” OpinionJournal.com.  Eugene, sir, what did Condi do wrong? 

EUGENE ROBINSON, WASHINGTON POST COLUMNIST:  Well, it does seem that on the whole, she would rather be in Malaysia playing the piano rather than running around.  She did an interesting thing.  First of all, she doesn‘t want a quick cease-fire, which is something that at least a lot of the parties want here, and second, she keeps talking about a new Middle East, and you know, sure, everybody would like to see a new Middle East, but first we‘ve got to deal with the Middle East we have, and that sort of talk I think sounds almost millennial and almost apocalyptic.  It frightens a lot of people.

MATTHEWS:  John, did you see the president today in his press conference with the prime minister of the United Kingdom? 

JOHN FUND, THE WALL STREET JOURNAL:  Sure, they were very subdued and I think very realistic. 

MATTHEWS:  Do you think the president was clear about where he wanted to go right now? 

FUND:  Yes, that if you paper over the existing problems, which are that Hezbollah has not been disarmed, as the United Nations dictated six years ago, if you paper that over, you make it very difficult for countries like France or others to come in and form an international peacekeeping effort.  Because remember, all of those countries remember, that in 1983 the United States lost 283 marines because terrorists blew up a barracks there.  They don‘t want to repeat that.  Therefore a lot countries are telling us privately, behind the scenes, we would like some resolution of Hezbollah and all of the terrorist weaponry there before we come in with an international peacekeeping force. 

MATTHEWS:  Let‘s talk about this Alfonse and Gaston routine here, to use and old Vaudeville term.  What comes first, they stop shooting or you put some sort of international brigade between them? 

FUND:  Well, the international brigade is a little reluctant to go in at this point.  We‘ve had six years of U.N. resolutions being ignored and I have to tell you, Chris, if U.N. resolutions continue to be ignored, we shouldn‘t be surprised if a country like Israel, which was just attacked, lost several people, and had several kidnapped, if it doesn‘t finally decide six years is enough, we‘re going to move in and Iran is going to be unhappy, but they‘ll deal with it. 

MATTHEWS:  I don‘t see this Eugene, I mean we‘re talking here in circles.  I mean the United States is watching, but we‘re basically almost shadow dancing with Israel, backing them up 100 percent.  Israel says we want the two soldiers back, we want some sort of cordon of safety between us and Hezbollah, reasonable proposals and then we don‘t seem to add to that, we just say OK you have to meet those standards and then we sort of try to broker it from the Israeli side.  We‘re not getting anywhere with this. 

ROBINSON:  And I don‘t think we will get anywhere if we‘re seen as from the Israeli side entirely.  I mean, there are a couple of things.  First of the U.S. has to have some credibility as an honest broker in the region in order to get anything done, and I think we do not now.  I think, because it‘s been Bush administration policy to be, you know, in every way identified with the Israeli side and in terms of coming to an ultimate solution, that‘s problematic. 

Second, somebody has to talk to Syria.  Somebody has to talk to Iran, eventually.  I mean, you talk about disarming Hezbollah or neutralizing Hezbollah, well, where are they getting the weapons and how are they coming in and who‘s giving them money and everything else and it just seems to me absurd this kind of Bush doctrine that, you know, there are good people and bad people, good and, you know, we talk to good people and Syria, Syria bad people, we don‘t talk to them.  Well, I think if we don‘t engage with them, in some way, and face-to-face, I think we get nowhere. 

FUND:  But Chris—

MATTHEWS:  I don‘t see John.  John, we just had Frank Gaffney on who‘s very, he‘s a neo-conservative, he‘s a conservative on this war, he believes in the cause, but it doesn‘t seem to matter ideologically, right now, what side you‘re on.  It seems to me the people doing the fighting, Hezbollah and Israel, both believe it‘s in their interest to keep up the fight.  Is that right?   

FUND:  Well, who started this? 

MATTHEWS:  No, just, both believe in keeping up the fight now. 

FUND:  Hezbollah was founded 25 years ago by Iran, four presidents have tried to tackle them.  They are still terrorists.  They remain terrorists.  Remember Chris, there‘s a larger problem here.  Iran was about to be put into a box by Europe finally on its nuclear program.  The Palestinians, under Abbas, were finally going to have a vote scheduled to see whether the Palestinian people were willing to recognize Israel as a legitimate entity. 

Both of those things are off the table because Hezbollah and Iran decided to blow up the process, get the two issues off the front pages and distract all of us.  They have succeed.  We‘re talking about them.  We‘re not talking about Iran.  We‘re not talking about the Palestinian vote.  The only way to solve this problem and move forward is to disarm Hezbollah as the U.N. said we should do six long years ago. 

MATTHEWS:  Who will do that? 

FUND:  Well, in the absence of the U.N., which will act, which apparently it won‘t, in the absence of NATO acting, unless the Israelis are going to do it, by proxy. 

MATTHEWS:  What‘s that mean?  I don‘t know what you mean? 

FUND:  They‘re disarming Hezbollah right now by blowing up their munitions storage and taking them out.  

MATTHEWS:  OK, so you support Israel‘s continued assault on Hezbollah, to continue. 

FUND:  If Hezbollah were to stop the fighting, which they started, then there could be a discussion, but there seems to be no indication on Hezbollah‘s part that they don‘t want this fighting to continue. 

MATTHEWS:  That makes my point, both sides want to fight. 

ROBINSON:  And the problem it seems to me, is sure, Israel is damaging Hezbollah, but it‘s not going to wipe out Hezbollah with this action, you know, by bombing, trying to bomb it, or even with ground actions. 

MATTHEWS:  Going back to your point, has Condi Rice got anything to do over there?  First of all, I think you‘re made the point.  I think, John, you made the point, there‘s certain countries in that region, our administration, the Bush administration, does not choose to talk to, Syria and Iran, don‘t reward them for this support of terrorism by talking to them at the table as equals.  You‘ve got other countries in the Arab world that don‘t want to be involved in this.  Condi is over there talking to two people, the Lebanese government, which is a weakling, and the Israeli government which has a mission here to wipe out Hezbollah.  What‘s the conversation about?  I don‘t think she can get anything done either.

ROBINSON:  I don‘t think she can get anything done that way.  Now, I think if she really wants to get something done, she needs to influence this policy and, you know, I think a secretary of state would try to convince the president that it has to be a wider dialogue and that she‘s got to have someone else to talk to.

MATTHEWS:  Does she that kind of freedom, John, to change administration doctrine? 

FUND:  Well, the Iranians have shown no indication, whether it‘s on nuclear weapons or Hezbollah, that they‘re willing to bargain in good faith.  We have back channels through our European allies to the Iranians and to Syria.  They have tried to set up some kind of a discussion whereby can‘t you lean on Hezbollah to have a cease-fire, so we can at least have a breathing space of a few days? 

That hasn‘t gotten anywhere, Chris.  The obstacle is, terrorists will act like terrorists.  That‘s the problem.  You can‘t deal with them as you can a normal country or a normal group of political players. 

MATTHEWS:  Let‘s come back and talk about the politics of this again, with Eugene Robinson of the “Washington Post” and John Fund of the OpinionJournal.com. 

And Monday, HARDBALL will be live from Rockefeller Plaza in New York City on the set of the “Today Show” to celebrate the 10th anniversary of this network, MSNBC and also MSNBC.com.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back.  We‘re back with Eugene Robinson of the “Washington Post,” and John fund who writes for the “Wall Street Journal‘s” OpinionJournal.com.  Senator Chuck Hagel today speaking.  Let‘s take a look at what he had to say about the administration.  He spoke at the Brookings Institution. 

(BEGIN VIDEO CLIP)

SEN. CHUCK HAGEL ®, NEBRASKA:  I don‘t blame the United States totally for this.  There‘s enough blame to go around.  There‘s enough blame to go around.  But the United States has not been engaged, and we are the only nation in the world that can lead this. 

(END VIDEO CLIP)

MATTHEWS:  You know, that‘s the shot from the moderate Republican, Chuck Hagel from Nebraska on this, that the administration, since taking office, their attitude was almost benign neglect in the Middle East. 

ROBINSON:  Yes, and you know, at first, I mean, I confess, I was kind of sympathetic to the idea that, you know, if they don‘t want to make peace, why should we, you know, be there trying to get them together?  Let‘s see what they can do on their own.  And that was kind of the Bush administration policy in the beginning. 

But it‘s been clear for sometime that that‘s actually a really bad idea and that, in fact, you know, the tedious incremental process of shuttling and confidence building measures and, you know, kind of inching forward, it‘s unsatisfactory. 

But it‘s the best of a bunch of really bad alternatives for dealing with the situation, and at least it keeps the rock from rolling all the way back down the hill as it has now, because just kind letting them have at, I think is not a promising way to proceed. 

MATTHEWS:  Hey, John, you know, former President Bill Clinton said something along those lines earlier it week—I think it was last week, actually.  He said that every time you allow the two sides to get apart and start fighting, more people are killed, more anger is built up, it‘s harder to bring them together.  So he argues you‘re always better trying to bring the two sides together than stopping the shooting.  Do you disagree? 

FUND:  No one tried harder in diplomacy in the Middle East than Bill Clinton.  He got the Israelis to agree to withdraw from 95 percent of the Palestinian territories, to withdraw from Gaza.  He had a deal on a silver platter and Yasser Arafat turned him down, and that was a tragedy. 

So we have to remember, Chris, the governments in the Middle East are increasingly realistic.  We have Egypt and Saudi Arabia directly attacking Hezbollah for starting this.  You have Jordan, I think, increasingly moderate. 

Increasing Syria and Iran are isolated.  Because they are isolated, they are lashing out to preserve their geopolitical position.  Of course, the Middle East is a mess, but Syria and Iran are acting out of weakness in this, because they are increasingly isolated by other moderate Arab countries in the region. 

MATTHEWS:  Do you really believe that Iran is less powerful than it was, say, five years ago? 

FUND:  Well, first of all, Iran is developing a nuclear weapon.  That‘s why it wants to be the big kid on the block.  In terms of its Iran‘s economy, in terms of its geopolitical position, it‘s weaker.  The only thing that‘s propping it up is the rising price of oil and that is giving them flush cash to buy nuclear material around the world with. 

MATTHEWS:  Well, how do you explain—let me go to Eugene on this.  You know, it looks to me, if you look at the map, you see what King Abdullah predicted to me a year-and-a-half ago, which is if there‘s an election post-Saddam in Iraq, the winner will be a Shia, probably a pro-Iranian Shia.  His cabinet will have people in it who are pro-Iranian. 

You then look at the map and it goes—you know, it goes right across the border from Iraq to Lebanon, and you see that crescent, and it‘s already there. 

ROBINSON:  I would argue that Iran is much more powerful now than it was five years ago, because Saddam Hussein is gone, and Iraq, which was this kind of big, you know, Sunni-led bulwark that kind of kept Iran over to the side, is now a mess.  If there were an election, it would be led by a Shiite, if this were a new election now. 

And well, gee, there is a government now, an elected government in Iraq now, actually, and it is led by a Shiite, who will not condemn Hezbollah so, you know, I think Iran is doing pretty well. 

MATTHEWS:  John, let me ask you about—and let‘s just end this for the weekend for most people who are going to wait for the Sunday shows to know what‘s going on now, but let me ask you, John, give me what you think is an ideal scenario in this very difficult mess. 

We‘re still fighting hard in Iraq, we‘re taking—more casualties are going on over there with all the people counted getting killed on all sides than we‘re seeing in the Middle East, but the Middle East is the hot situation now.  Where do you think we could get in the next month that we‘re not now? 

FUND:  Chris, there is no ideal situation.  We are losing hundreds of people killed, that is a human tragedy.  I think because we‘ve had six years now of diplomacy, Hezbollah is still a terrorist operation that dominates the weak government of Lebanon, in some respects, I think we have to destroy their war-making capability. 

Then we can step back.  Then we can have an international peacekeeping force move in, and then Syria and Iran, having seen their creature Hezbollah weakened are going to have to reevaluate, because that dog won‘t hunt anymore? 

MATTHEWS:  John, I mean Eugene.

ROBINSON:  I don‘t think you can destroy their war-making capability. 

FUND:  You can weaken them substantially and we already have. 

ROBINSON:  Yes, they have been weakened substantially, they‘ve retreated.  They‘ll be back.  They‘ll be back as son of Hezbollah, but they‘ll be back. 

FUND:  If there‘s an international peacekeeping group, that can position itself between Lebanon and Israel, Hezbollah will have trouble coming back, if that peacekeeping group has the authority to defend itself, and to police the area. 

MATTHEWS:  Let me ask you both a question which bothers me sometimes.  Israel has been around since 1948, reestablished from the old days, 48 years from now, are we going to be having this conversation? 

ROBINSON:  I sure hope not.  I hope not.  You know, I don‘t know.  I

mean, I think this is a generational issue, and I think when we can see the

day when to kids, it‘s not a big deal, then I‘ll be confident that in 48

years we won‘t be having this conversation

MATTHEWS:  John, same question, 58 years from now, will we be having a fight on the Israeli frontier with some Arab group, the latest hot hand?  John, you have a thought here? 

FUND:  The key is the economy.  One of the things I will fault Israel on is it has consistently prevented Palestinians from developing an economic infrastructure, developing new leadership in the economy, which would have given people, at least, the rising middle class, which perhaps would distract them from having perhaps political vendettas, going back for two or three generations.  I think there has to be ultimately other Middle Eastern countries, including Arab countries, have to come in and have to recognize the Palestinians can‘t stew in their political juices.  They have to have an economic future and frankly most Palestinians, at least the polls I‘ve looked at are interested in that at least as much.

MATTHEWS:  I agree.  You know what I‘m skeptical about is the greater Arab nation caring about that goal, because there‘s no evidence that it does.  The Israelis aren‘t pushing economic development in the West Bank and neither are the Arabs.

FUND:  And that‘s the major reason why the Palestinians are still in trouble.  They‘ve been abandoned by the Arabs. 

MATTHEWS:  Invite them back to invest, invite them back to start a business, because everybody who comes here, especially the Palestinians, do better here than there.  Let them take their money back and develop that part of the world. 

FUND:  And we need an honest Palestinian government, because all they‘ve had is corruption, which has completely prevented their development. 

MATTHEWS:  Would you pay taxes to Yasser Arafat?  Thank you very much Eugene Robinson.  Thank you John Fun.  Up next, the HARDBALLers will be here to debate what‘s going on with decision 2006.  That‘s coming up three months from now.  Congress is going to be bracing for a tsunami.  Will election day be eviction day for a lot of Republicans and some Democrats?  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  As congress gears up to hit the campaign trail during their August recess, the polls don‘t look promising for the president‘s party.  Can Republicans hold on to power despite an unpopular war, an unpopular president and overwhelming pessimism about the country‘s future.  Tonight‘s HARDBALLers are Democratic strategist Steve McMahon and Jim Gilmore, the former governor of Virginia and former chairman of the Republican party.  Let‘s take a look at this poll.  Nearly half the country now wants somebody else to be their representative in congress.  They want a new person there.  Look at this, 38 percent say keep the guy they got, or the woman they got.  Governor, you were saying you‘ve never numbers that bad before. 

JIM GILMORE, FORMER RNC CHAIRMAN:  I‘m surprised, because usually people are prepared to stay with their own representative.  They think everybody ought to change their other representatives someplace, so that‘s pretty strong, but it remains to be seen.  I will say this Chris.  I would agree that what we‘re really seeing here is a discontent among the American people.  I think that we‘ve really got to focus our attention on what we can do to make it better for the middle class, for people who are working out there every day, and until we do that, we‘re going to continue to see poll numbers like that. 

MATTHEWS:  What‘s bugging the middle class? 

GILMORE:  I think high taxes are bugging the middle class.  I think they‘re paying about 40 percent or more, maybe even half of their income.  They‘re looking at higher tuitions, gas prices through the roof.  I think these are serious issues and I think frankly it‘s going to spill over on to both the Republicans and Democrats and I think that‘s what‘s going on. 

MATTHEWS:  Steve, you know, one of the things in this new NBC poll that I found interesting, probably disheartening to you, although people don‘t like the president, they don‘t like the war, they don‘t like the direction the country is in, they have no favorable feelings toward the Democrats.  It‘s stunning, they don‘t see them as the positive alternative to this president and his party. 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  Well, the Republicans in congress have ruined it for everybody, Chris.  I mean basically what you‘re seeing is that congress has gotten nothing done.  The governor just articulated many of the issues that the middle class is concerned about and they look at Congress and they see nothing happen.  Now the fact is what Democrats need to do is connect the dots.  Republicans have controlled Congress since 1994, both houses they‘ve had and they‘ve got the presidency, so it‘s up to the Republicans to do something, and if they don‘t, if the American people want change, if they want some action on some of the things the governor just mentioned, they need Democrats, because the Republicans aren‘t going to do it. 

MATTHEWS:  Can your party win by simply saying in the old days, 1946, with the Republicans after world war II and the New Deal, simply said, had enough?  Those kind of lines, do they work still today? 

MCMAHON:  Yes, they do work, because people have had enough, and what you‘re seeing in these poll numbers is, in spite of their fondness for their elected representative, and there is fondness for their elected representatives, people want a change in direction, and they believe, for whatever reason, probably because they‘ve seen it repeatedly, that the Republicans in Congress aren‘t going to stand up to the president, aren‘t going to hold the president accountable, aren‘t going to change direction in the country and aren‘t going to change direction in the Middle East or in Iraq. 

MATTHEWS:  So you believe the Democrats will get the House this time? 

MCMAHON:  I think right now, if the election were held today, they would definitely get the House and they would get it by a pretty good margin. 

MATTHEWS:  Governor, you see those same numbers? 

GILMORE:  No, I think that the mistake Steve is making is some assumption that somehow the overall problem is just a Republican problem.  You see the Democrats, the big advantage the Republicans have, Democrats aren‘t offering any new ideas at all and I can tell you, if you look at the Democrat Leadership Conference, that Hillary Clinton was leading the other day, all they‘re going to end up talking about is increased taxation and new programs.  It‘s the same thing the Democrats have been doing for years.  If they do have a moment in time where they could gather control, this is it, but they‘re not going to be able to take advantage of it, because they don‘t have any new ideas.  The American people know that. 

MATTHEWS:  You heard Michael Steele, the Republican candidate for senator from Maryland, you‘re neighboring state, the state I live in, said that being a Republican this campaign, in this campaign, is like wearing a scarlet R on you and then it turned out that in a private meeting with reporters ...

MATTHEWS:  ... candidate for senator from Maryland, your neighboring state, the state I live, said that being a Republican in this campaign, in this campaign is like wearing a scarlet R on you and then it turned out that in a private meeting with report there‘s ceased to be private, he was very tough about the president.  Is that just because he‘s in a Democratic state or are a lot of Republicans scared of the president‘s shadow right now? 

GILMORE:  Well, it probably is because he‘s in a Democratic state, but Michael Steele can win this race.  He‘s a solid, articulate ...

MATTHEWS:  Why is he saying being a Republican is like wearing a scarlet R? 

GILMORE:  Again, the Democrats out-register the Republicans in the state of Maryland, but they‘re prepared to elect Republicans, look at governor Ehrlich, for example.  The key here is offering good ideas.  Look, Chris, talk about all these R‘s and D‘s you want to, at the end of the day, the candidate has to stand on his own feet and offer solid solutions to the people of Maryland or to the people of the United States.  

MATTHEWS:  Steve, are you running against the president? 

MCMAHON:  Absolutely.  I‘m not running for anything, I‘m just sitting here talking to you Chris, but as I look around the country and you look at what Democratic candidates, who are doing well, are doing, that‘s what they‘re doing, they‘re running against the president.  They‘re saying we need to change direction in this country.  We need energy independence so we can bring down the price of oil.  Health Care ...

MATTHEWS:  Did you watch the press conference today? 

MCMAHON:  I watched a little bit of it.  

MATTHEWS:  The president looked like this was getting tough on him.  I was thinking of all the problems I‘ve got in my little world, this guy is worrying about the fact that the whole strategy over there was to end the Middle East instability, by going into Iraq, remove this thorn in the side of Israel, this threat.  Turns out they have a bigger thorn coming at them in Israel now and our soldiers are over there fighting to hold the line in Iraq. 

MCMAHON:  They‘re trying to hold the line in Iraq and the president is out there trying to take on the entire world.  I mean look, the president is basically reaping what he sowed.  He ignored the Middle East for his entire administration.  He didn‘t engage, as other presidents have, as Bill Clinton did, and now he is now paying the price for it and it‘s a tragic situation over there and it‘s one that frankly, if we had a few more friends, we might be able to get in there and be a little bit more aggressive and get it resolved, but the world is not exactly running into the United States‘ arms when we say let‘s go in there and work together. 

MATTHEWS:  Also in a political sense, I think he thought that he was

making a case to American voters who care about Israel, which is a lot of

people, that what did he over there in Iraq would help Israel and it turns

out that it‘s unleashed a lot of trouble over there.  We‘ll be right back

to argue that one with former Governor Jim Gilmore and Steve McMahon to

talk about election 2006.  And be sure to tune in on Monday when this show

HARDBALL will be live from New York‘s Rockefeller Plaza.  NBC‘s Brian

Williams will join us on the set of “THE TODAY SHOW” to celebrate

MSNBC.com‘s 10th anniversary.  And tune in this Sunday to “MEET THE PRESS”

with Tom Friedman of The “New York Times.”  You‘re watching HARDBALL, only

on MSNBC

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with our HARDBALLers, former Virginia governor and Republican party chairman, former chairman I should say, Jim Gilmore, and Democratic current strategist Steve McMahon.  Let‘s take a look at these numbers.  I love these numbers because I just wonder whether people really think this clearly when they are asked this question.  Here‘s the one, will your vote for Congress this November be a vote to send a signal of support, opposition or not a signal either way about President Bush?  Well, one in five people say there vote is to stick with Mr. president, stay the course, 38 percent, almost twice as many, say it‘s a vote against you Mr. president, I don‘t like you Mr. President and 40 percent say it doesn‘t mean nothing about the president.  What do you think governor.

GILMORE:  I don‘t think those numbers are particularly bad at all.  It means 60 percent are saying that it‘s either no signal at all or a signal of support, 38 percent are voting against.  I don‘t think that matters much in the way of a poll.

MATTHEWS:  You don‘t think it‘s dangerous that 2-1, that people do have a tune about the president are voting against him?   

GILMORE:  I don‘t think that‘s a poll that I would be concerned.  I am concerned about these issues in the Middle East though, and I am concerned about homeland issues.  I‘m very concerned. 

MATTHEWS:  Because some people might just vote against all that‘s going on right now.

GILMORE:  Well, I think that there is a real danger, but there is time for either party to come forward with a really constructive program for the people of this country, but it still has to be done. 

MCMAHON:  And you know, the president has been president for how long?  And the governor is sitting hear saying there is still time for somebody to come forward with a plan for the country.  For 10 or 12 years the Republicans controlled both houses of Congress, and the governor is sitting here saying there is still time to bring forward a positive plan for the country. 

GILMORE:  Time‘s change Steven and there is still time for the Democrats to do something, too but they‘ve been around 12 years and haven‘t done anything either. 

MCMAHON:  But, the Democrats can‘t get a vote on any kind of issues.  The Democrats have brought all kinds of bills to the floor, to control gas prices, they can‘t get a vote, to do ethics reform, they can‘t get a vote, to make health care more affordable and provide health insurance for every working American, they can‘t get a vote.  And if people care about these issues and if they want to change directions in the country, they need to vote for Democrats.

MATTHEWS:  Why can‘t they narrow it down to two or three issues? 

MCMAHON:  I just did. 

MATTHEWS:  No, no, two or three.  If they really have a reason to get elected, it‘s usually like Ronald Reagan, get the economy moving again, Bill Clinton was the same.  You usually have a pretty good, or Eisenhower, I would got to Korea.  It‘s usually pretty clear, it‘s usually three items.  Why do Democrats have these laundry lists that you cannot get through the list before you vote.  You know why, because they have meetings and meetings, and everybody wants to put in theirs on the list, and that‘s why the party has a very hard time saying what it stands for.  Give me three things the Democrats should win this election on.

MCMAHON:  Affordable health care, energy independence and decent wages and pension protection for working Americans. 

MATTHEWS:  You skipped Iraq? 

MCMAHON: Well, you know, we need to change direction in Iraq.  We need to hold the president accountable.  It‘s not up to the Democrats to make policy in Iraq.  The president is commander in chief. 

MATTHEWS:  The number one issue on ever poll we take here is Iraq, and you don‘t think the Democrats should have an opinion on that? 

MCMAHON:  The Democrat‘s position is we need to hold people accountable.  We need to have an exit strategy and we need to start moving our troops out of harm‘s way and bringing our troops home.  They are locked in a civil war right now, and the president has no strategy for keeping the peace or bringing them home.  Democrats think it‘s time to hold him accountable. 

MATTHEWS:  Bring the troops home, the Democrats say it‘s time to bring the troops home. 

MCMAHON:  Democrats think there is the year of the transition, I know you‘ve heard that before. 

MATTHEWS:  Why can‘t you guys take a position, bring the troops in six months home, bring them home in a year? 

MCMAHON:  Chris, there are many Democrats, as you know, including Senator Kerry, who have taken a position, and they have taken a position just like that.  Jack Murtha is another one, but our party is a big tent and there are some people who don‘t want to set a deadline, but everybody wants to hold the president accountable. 

MATTHEWS:  Why can‘t you elect some leaders and let them decide?

MCMAHON:  We have leaders.

MATTHEWS:  They don‘t decide these things, that‘s why you can‘t say it.

GILMORE:  I‘ll agree with that..

MATTHEWS:  Of course you will.

GILMORE:  You are seeing here the problem here with the Democrats have got, they can‘t lead. 

MATTHEWS:  OK, Jim thank you.  Governor thank you.  Steve, thank you very much for being with us.  Steve McMahon, Governor Gilmore.  Play HARDBALL with us again Monday in New York City.  We‘ll be celebrating the tenth anniversary of MSNBC.com live form Rockefeller Center in New York.  Right now it‘s 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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