Rudy Giuliani was a guest on Larry King Live tonight regarding the terorrist arrests story. Transcript foll0ws…

KING: We now welcome the former mayor of New York Rudy Giuliani to LARRY KING LIVE. What’s your reaction to this story?

RUDOLPH GIULIANI, FORMER NEW YORK CITY MAYOR: Well, of course, you know, as shocked as anyone except heartened by the fact that they were able to find this.

I was in London a year ago, you know, on July 7 a half a block away from where the first bomb went off and when I look at what the U.K. intelligence has been able to do with this, you can see how they sort of factored in what they missed last time, which for, you know, U.K. citizens and people who maybe weren’t in the profile.

And they did a very, very good job here in being able to detect this but it does remind you that, you know, we’re living — this is the world we’re living in. We’re living in — and we’ve been living in this world for a long time.

This reminds me of the plot back in ‘95, I think it was ‘95 that the U.S. and Philippine intelligence was able to discover where it was a similar group of terrorists were attempting to — they were going to hijack planes and bomb planes.

So, this has been going on for a very long — we think of it as kind of starting with September 11th but this started in the 1970s, 1980s, got really heavy in the ’90s. This has been going on for a long time.

KING: How do you deal with an enemy willing to kill itself?

GIULIANI: Well, I mean this is not an enemy with as much chance to negotiate with them or to work things out. That’s why it’s so important that we use this as a reminder that we’re at war.

This is not a law enforcement activity. This isn’t — we’re at war. These people — these people want to kill us and they can maintain their desire to kill us through years and years of planning a suicidal mission.

The thing about September 11th that I still have a hard time understanding is how those people were able to carry out that plot in which their own suicide was involved over that lengthy period of time, 18 months, 20 months. So, you’ve got some very, very unfortunately dedicated people, I mean maniacal but dedicated people that want to kill us.

KING: President Bush said today the United States is safer now than it was back on 9/11, do you agree?

GIULIANI: Sure. I mean today is an example of that, right? I mean September

11 this didn’t happen. In other words, it wasn’t picked up by United States intelligence or U.K. intelligence or just like July 7 wasn’t picked up by the U.K. intelligence, even though I believe they have just about the best intelligence in the world. It does remind you that unfortunately intelligence is not going to ever be 100 percent and there are so many ways to attack us that we are very vulnerable.

KING: What concerns you the most?

GIULIANI: Well, I think what you were illustrating before, how simple this plot was and how they’re always trying to get one step ahead of us. In other words, they’re always trying to figure out where are they vulnerable? What haven’t they anticipated? What haven’t they thought of? And, it’s hard to think of everything.

I mean this — this will now result in a lot more work being done on airport security to avoid a plot like this but that’s just going to drive them to start thinking about “Well, you know, what else can we — what else can we devise?”

KING: Would you fly commercially tomorrow?

GIULIANI: Sure, absolutely. I mean right after September 11, I urged people that you should not allow these terrorists to stop us. I mean the risk for any one person, any one flight, is very, very small I mean but the risk is there.

But you know, Larry, life is full of risk anyway. I mean we’re all living with that so basically what you have to do is kind of — kind of move ahead with your life and not let them win the psychological battle.

They can attack us often. They can attack us catastrophically unfortunately as we found out and as they just foiled. But, I mean the risk in terms of, you know, rationally assessing it for any one person is not that great.

KING: Where do you think, Rudy, we are most vulnerable? What would…

GIULIANI: Do you know — do you know, Larry, here’s sort of the tragedy of it. We’re most vulnerable probably in the thing I don’t tell you meaning the things we’re concentrating on they’re going to try to look for some other way to attack us.

You know the U.K. had put a great deal of concentration in their profile on people that came from Muslim countries and people who weren’t citizens. Then on July 7, they got attacked by what turned out to be U.K. citizens. So, now they’ve expanded and gotten themselves one step ahead and they’re going to try to do that again. I mean the terrorists are going to try to do that again.

So, my hats are off to the intelligence people, the U.K. people, the people in the United States and they really have improved tremendously since September 11th but that is no guarantee of any kind.

KING: Are you surprised, and your firm and you have become kind of experts in this so maybe you’re not but I’ll ask it anyway, are you surprised at how seemingly simple it is…

GIULIANI: No.

KING: …to blow up a plane?

GIULIANI: No, no, of course not. I mean a plane is a fragile instrument when you think about it, right? It’s up there at 35,000, 40,000 feet. It’s going at a massive rate of speed so…

KING: Yes, but a bottle of Gatorade and a radio?

GIULIANI: Well it would have to work just right, meaning it would have to create an explosion. It would have to puncture maybe the wall of the plane or harm one of the engines.

I mean it might not be a absolute guarantee that it’s going to bring the plane down. But, if you’re — if you’re out over the Atlantic Ocean — I remember, gosh, I think it was about within six months or a year after September 11, I was traveling on the Concorde to London and about two hours out there was a bomb scare. Someone heard it — thought they heard a ticking on the plane.

And, you know, it turned out that it probably was some kind of an alarm clock or something else but it created a little bit of a furor on the plane. And, when you’re — when you’re hanging over the Atlantic Ocean and you got another hour to go there’s no place to easily put the plane down, so unfortunately that’s what they were counting on.

KING: And we only have about 30 seconds. You said the British are extraordinary at this, why?

GIULIANI: Well, I mean first of all the scope of their problem is smaller, right. It’s a small island compared to a large continent that we have to defend. And they’ve had more experience with terrorism than we have. Their experience goes into the ’70s and the ’80s with the IRA and all the work they’ve had to do. And I think they’re, you know, they’re very, very good.

I mean so are the Israelis and so are we but in each case you can — even the U.K. wasn’t able to stop July 7. No intelligence service, even the very best and I include our own in that can ever be 100 percent and that’s what has everybody concerned.

KING: Rudy Giuliani, the former mayor of New York.