Condoleezza Rice will be on Larry King Live in roughly 20 minutes but ICN has the transcript now (and it’s not embargoed)…

LARRY KING, CNN HOST: Madame Secretary, thanks for joining us.

We’re getting reports that the United States hopes to have a deal on a UN resolution ending the Middle East violence and that deal should come through by tomorrow. Is that true?

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: Well, I wouldn’t want to put tomorrow on the date (ph) but we’re certainly getting close. We’re working with the French very closely. We’re working with others. We wanted very much to see an end to this conflict so we need to end the hostilities in a way, though, that points forward a direction for a sustainable peace and we are working — we have worked with the parties when I was in the region to come up with those principles, with those elements. We’re now working on a Security Council resolution and hopefully we can get that passed and I think it certainly will be within days, Larry.

LARRY KING, CNN HOST: So imminent would be the word?

RICE: Well, I would just say within days.

KING: And what do you make of this? Just in this morning, the Hezbollah leader, Hassan Nasrallah, vows to strike Tel Aviv in retaliation for Israel’s bombardment of Lebanon’s capital.

RICE: Well, Hezbollah is a very dangerous organization and they do have, thanks to Iranian supply and the Syrian land bridge, they do have some very significant long range weaponry.

But that’s what we’re trying to deal with. We really have to remember how this began. This began with Hezbollah, without the knowledge of the Lebanese government, crossing into Israel, abducting soldiers, launching strikes against Israeli populations and what we’re trying to do now is to create an end to the hostilities or a situation in which you can not have a return to the status quo ante. If we simply return to status quo anti, if there are no principles going forward that would preserve a situation in which Hezbollah can not do these kinds of things and we’re going to have war again.

KING: How seriously do you take this threat?

RICE: Well, I think everyone should take it seriously and I’m quite certain that the Israelis take it seriously. It shows the kind of threat that they face but the Israelis and also have their own capabilities to deal with these threats. The international community needs to say to Hezbollah that these kinds of threats are also not helpful in a time when the international community, the Lebanese people, the Israeli people, all want an end to the hostility.

KING: Has the strength of Hezbollah and their ability in all of this surprised you?

RICE: I don’t think there’s any doubt that over the last several years since the last cease fire in this area that Hezbollah has improved its capabilities greatly. This is largely because of this relationship with Iran that has been able to finance it. That has been able to get more sophisticated technologies and were available to it before. I understand that they have a rather — gained a rather sophisticated command and control network in southern Lebanon and of course they do this mingled in with civilian populations so it’s very difficult to deal with.

But since we had the terrible and tragic and unfortunate circumstances of war over the last several weeks, it’s our obligation now to make sure that we have a process going forward that will not allow Hezbollah to re — to recoup those capabilities and to be able to threaten this kind of war again.

KING: Will the deal at the UN have a ceasefire? What — can you give us any of the particulars?

RICE: Well, I can’t really discuss the particulars at this point.

We are moving, Larry, towards being able to do this in phases that will permit first an end or a stoppage in the hostilities and based on the establishment on some very important principles for how we move forward.

It’s obviously going to take the parties some time to come to a full understanding of how they might live in peace but we want at the very beginning for there to be elements, for there to be principles so that everybody knows the basis on which the hostilities are stopping.

KING: Is that why the United States has generally opposed a ceasefire up to now?

RICE: Well, what was opposed — we’ve never opposed a ceasefire.

We wanted a ceasefire. We’ve always wanted one urgently but what we would hope is anything that is somehow unconditional, that does not make clear that there are certain circumstances that are going to have obtain (ph), some of them immediately, some of them over a longer period of time in order not to have a return to the status quo ante and just a ceasefire that like so many ceasefires in the Middle East, falls apart practically the minute that it’s in place.

I think the work that we’re doing with the French, the work that we’re doing with the parties, will ensure that there are some principles in place that make this the basis for an enduring — first of all an enduring ceasefire but more importantly an enduring peace.

KING: Frankly, could this get worse?

RICE: Well, certainly, if we don’t do our work well, it could. But everyone is working very urgently to find a way to stop the violence.

The Lebanese people have suffered, the Israeli people have suffered, everybody wants to stop the violence. This time we just want to stop the violence based on principles that will helps us not return to the violence some time in the, I can almost guarantee in the fairly near future.

KING: Is it true that the president has not spoken to Prime Minister Olmert?

RICE: Well, we’ve had many, many conversations with the Israelis and the president has stood ready to talk with whomever he needs to at whatever time he needs to.

I, of course, have been to Israel and I met with Prime Minister Olmert twice during that period of time so there isn’t any absence of contact there and I’m quite certain that the Israelis have every access to us that they need.

KING: Is there a reason why President Bush, though, hasn’t spoken to him?

RICE: The president has spoken to leaders when it’s been necessary to do it. It isn’t necessary for him to call to let the Israeli people or the Israeli prime minister know that we consider Israel an ally and a friend. It isn’t necessary to state what he’s been stating, that they have a right to defend themselves.

It’s also absolutely clear, I think, to everyone that it’s time for an end to the violence and so we’re communicating those messages directly and in other ways. I think that when the president needs to speak to people, he speaks to them.

KING: Is the United States in an unusual position here? You are friends of Lebanon, right?

RICE: We are indeed. Friends of the Lebanese people.

KING: And you are friends of Israel?

RICE: Yes.

KING: And Lebanon is critical of Israel. Do you have to walk a line?

RICE: Well, clearly our friends here unfortunately are in a conflict. But let’s remember, it wasn’t Lebanon, it wasn’t the government of Lebanon that launched this attack against Israel. It was a state within a state, so to speak. It was Hezbollah that without the knowledge of the government of Lebanon launched this attack and so we really believe that there is a lot in common here to provide for a peaceful and democratic future for the people of Lebanon. The United States was, of course, one of the principal movers in getting Syrian forces out of Lebanon so that Lebanon could have complete control of its sovereignty.

And now the answer to how Lebanon remains sovereign, how we don’t have incidents like we’ve just had that plunged the area into war, is that we have to extend the sovereignty, extend the authority of the Lebanese government throughout the country, get Lebanese armed forces into the south where they belong and to make sure that these armed groups are not operating outside of the authority of the Lebanese government.

And there will be ultimately — a part of that will have to be an international force that will help the Lebanese do that.

KING: Does the United States want Hezbollah destroyed?

RICE: The United States wants terrorism to stop and Hezbollah is a terrorist organization. Hezbollah has a political wing. One of the unfortunate circumstances is that political wing, which is a part of the Lebanese government, didn’t somehow prevent this military or militant wing of Hezbollah from launching attacks even though Hezbollah sits as a part of the Lebanese government.

So this just shows the problem when you have one foot in politics and one foot in terror. Eventually Hezbollah has got to reconcile this but what we want is we want terrorism to stop and we want the Lebanese government to have full authority over the territory of Lebanon.

KING: Which would mean — does it mean the end of Hezbollah to you or not?

RICE: This will be a decision for the Lebanese to make but the Lebanese to have obligations under the Taif Accord, which they signed in 1989, it’s an intra-Lebanese agreement signed in 1989 in Saudi Arabia.

There are, through Resolution 1559, Lebanon has an obligation to disarm militias and to make sure that all arms are in the hands of the Lebanese government and the Lebanese security forces and when that is done it will be a matter of anyone who is a part of the Lebanese government will be in politics and that will be just fine.

KING: We’ll be right back with more of Condoleezza Rice, the United States secretary of state. She’s at the State Department. Don’t go away.

(COMMERCIAL BREAK)

KING: We’re back with Condoleezza Rice, the United States secretary of state on this edition of LARRY KING LIVE.

How do you — with all that’s going on, how do you bounce all the balls?

RICE: Well, you do have to be a bit of a juggler because there is an awful lot going on in the world but I really think we have a very strong focus on a set of principles that’s guiding our policy. We know that we believe that the importance of democratic institutions and the growth of democracy, for instance, in the Middle East, is going to be a part of getting to a more peaceful and democratic Middle East and so we spend a good deal of time on those issues.

I also of course have extraordinarily good people who handle a lot of the issues but I would have to say, Larry, it’s a time when the international system is changing, changing very rapidly and I rather like the challenge of the changes that are going on in international politics right now. If you’re going to do this job it’s great to be doing it at this time of consequence.

KING: How do you handle the critics? Senator Biden yesterday described the administration’s Middle East policy as a failure.

RICE: Well, I don’t — obviously Senator Biden is a very fine voice in international politics. I talk to him all the time and there are going to be times when people disagree but I have to say that what has been a failure in Middle East policy is the last 60 years, in which we decided that we would try and trade democracy for stability and we got neither.

And that policy produced the circumstances in which Al Qaeda came into being. Not just threatening our interests but literally threatening the homeland and so now we are on a difference course in the Middle East and it is a course that because it is different, because it insists on major change in the Middle East, it is going to produce some turbulence. That’s the nature of large-scale change.

But I would have to say that this is a better Middle East in which you have Syrian forces out of Lebanon. We have to remember that Lebanon, unfortunately, had violence 10 years ago of this kind. We’re trying this time to make sure that that can’t be repeated. It’s a better Middle East in which Saddam Hussein is not still repressing his people though obviously the Iraqi people have a difficult transition to peace and democracy and it’s certainly a better Middle East where the rights of women and the rights of people to express themselves are being upheld.

We forget that in a place like Kuwait, women have the right to vote now.

So I will stack up this policy in the Middle East against any. I think that we have made more progress under this president toward a Middle East that will be different and better than at any other time in recent memory.

KING: Madame Secretary, when people are in conflict, generally we think that if you’re having a disagreement with someone on a small scale or a large scale, you talk to them. Because by non-talking you don’t know what they’re thinking.

Why don’t we talk to Syria?

RICE: Well, Larry, there’s this misconception somehow that we’ve not talked to Syria. Secretary Powell talked to Syria a couple of times. Bill Burns, the then assistance secretary for Near Eastern affairs went to Syria several times. Just before the president’s second inaugural, Rich Armitage, the then deputy secretary of state, went to Syria.

The problem isn’t that people haven’t talked to Syria, the problem is Syria hasn’t been responsive. Syria hasn’t acted in a responsible way and so we have no problems to talk to people but when you talk you’d like to get a response.

KING: Would you talk to them — would you go and talk to Assad?

RICE: Well, I think the time is for Syria to act and there is widespread concern and widespread agreement that Syria has not acted in a responsible way. We have, by the way, a charge-d’affairs in Syria.

We have an open embassy in Syria.

So I want to correct the misconception that somehow we don’t have a relationship — relations with Syria. The problem is that Syria has not responded to numerous entreaties not to send the United States, to change its behavior, to not support terrorist organizations that sit on Syrian territory and cause problems for the Palestinians or cause problems for the Lebanese, that’s really the issue with Syria. That behavior could stop any time.

KING: Do we also talk to Iran?

RICE: Well, Iran we have a long history with, of course, going back to the really brutal treatment of our diplomats in the taking of hostages. It is also an Iran, of course, that has supported terrorism around the world, including the support of Hezbollah that has caused this latest problem.

It is an Iran that has been active in trying to get a nuclear weapon under cover of civil nuclear power. We made an offer to Iran that if it is prepared to live up to the obligations that it undertook several years ago, a couple of years ago, to the European Union to suspend its uranium enrichment activities. We’re ready to show up at the table and talk because if Iran is serious about finding a civil nuclear program that would not allow them to develop a nuclear weapon, we are more than happy to participate in that process.

And so the offer is there but Iran, of course, has not responded positively and a couple of days ago, as a result, the UN Security Council voted to make that suspension of uranium enrichment activities mandatory. The diplomatic track is still open to the Iranians should they choose to take it.

KING: You talked to former secretary of states when in conflict (ph). You talked to Powell or Baker or Albright?

RICE: It’s funny you should mention. I saw — I’ve seen them both very recently, two that you mentioned, Secretary Baker and Secretary Powell. Madeleine and I have talked, not during this recent crisis but I do, of course, talk to former secretaries of state. They are always wise and good people to talk to, not just in times of crisis but in general.

KING: You just saw Secretary Powell?

RICE: Yeah, I just did. We try to get together every once in a while.

KING: What does he say about this?

RICE: Well, I don’t think he would want me to divulge his advice to me through a television program but we’re good friends. We’ve been good friends for a long time. We were before we started in this administration and we remain and he is somebody whose advice I value and value greatly.

KING: Is this a United States war? What’s the United States’ role in all of this? Is it the peacemaker, is it on the side of one of the parties? What is it?

RICE: Our role is clearly to be on the side of peace and to be on the side of the development of a more stable and democratic Middle East. And that means that we, in this particular conflict, are very much focused on the future of a Lebanon that can be indeed sovereign, that doesn’t have foreign forces controlling its territory, that doesn’t have a state-within-a-state that causes wars that then devastate both the territory of Lebanon and the Lebanese people.

And it means, too, recognizing that we have a relationship and a friendship with Israel, and we want Israel and Lebanon to be able to live in peace. And so it’s not as if we’re on one side or the other, here. We’re on the side of certain principles, certain kinds of behavior that we really believe will lead to a peace for both the Lebanese people and for the Israeli people.

KING: Couple of other things: Secretary Rumsfeld on the Hill today, explaining what’s going on in Iraq. At the same time a Gallup poll comes out today — 55 percent now back the United States pullout from Iraq within a year, 54 percent say the whole thing was a mistake.

Is that going to be a civil war? What’s happening?

RICE: Well, it’s a tough situation in Iraq, of course. They’re going through a really major transition. These are people who — for whom democratic institutions are new, these are people for whom the way of doing things for so many years was to solve their differences either by violence or more likely by repression. And now they’re trying to learn to solve those differences within and to promote interests within democratic institutions. And it’s difficult, because there are determined enemies that don’t want to see a democratic Iraq emerge because a democratic Iraq is going to change the Middle East.

But they will succeed, Larry, and what they deserve from us is that the United States is prepared to support them and to finish the job.

KING: Are you surprised that there has been as much of them as there are, that there’s been as much of a hostility on the minority side?

RICE: I think the hostility is coming from a few people who want to stop progress. Either they see no future in a democratic Iraq or they are people who see everything in zero-sum terms, or they are terrorists

— still quite a few foreign terrorists in Iraq.

But this is a system that’s also made tremendous progress over time. This is a country that has had free elections and has a freely-elected prime minister, a freely-elected parliament. This is the most legitimate government in that sense, in terms of elections, in the whole region. And so we have to remember that our security is inextricably — American security is inextricably linked to a different kind of Middle East that cannot produce the kinds of — the ideology of hatred and people who will act on that hatred, of the kind that costs us

— caused September 11th.

And so this is — the security of Iraq and the security of the United States are inextricably linked.

KING: And finally, what happens, Madame Secretary, if Castro dies?

RICE: Well, we’re watching very carefully, that situation, and of course a transition is one way or another appears to be underway there.

And transition will have to come. What we want for the people of Cuba is what every person in the world deserves, and that’s to be free, to be able to live in a land in which you can educate your children, boys and girls, and say what you think and worship as you please, and have just the human dignity that comes with controlling your own future and being able to chose those who are going to govern you. That’s what we want for the people of Cuba.

The time will come when there is going to be a free Cuba. The time will come when we are no longer talking about the only state in the entire Western Hemisphere which you don’t have an elected leader. That time will come, and the United States will be there to support the aspirations of the Cuban people.

KING: So the United States might be involved in a transition.

RICE: Well, the United States will certainly support a transition, because, as we’re doing around the world, people deserve to be free.

And perhaps the people of Cuba, because they live in a hemisphere that is essentially free, feel that lack of freedom more than most.

KING: Thank you very much, Madame Secretary.

RICE: Thank you.

KING: Always good talking to you.

RICE: Good to be with you.