Secretary of State Colin Powell strongly urged Palestinian leader Yasser Arafat to provide an explanation of the Karine A ship seized by the Israeli navy on January 3 with a cargo of munitions for delivery to the Palestinians.

"It's a pretty big smoking gun," said Powell, speaking January 25 on the Lehrer News Hour. "I can't put it right at [Chairman Arafat] personally, but it is clear from all of the information available to us that the Palestinian Authority was involved."

"I think he ought to acknowledge, as the first step toward moving forward, acknowledge that this has happened and they bear some responsibility for it happening, and give the international community, and especially the Israelis, some assurance that this kind of activity is going to stop. And do it in a way that will be persuasive and convincing and allow us to move forward," said Powell.

Powell mentioned the vision articulated by himself and President Bush in November 2001 of a Palestinian state coexisting peacefully with Israel and said, "[A]ll we need is people of goodwill to come together, stop the terror."

"I don't think either one will prevail over the other in a test of arms, and the sooner that this realization seeps in, then we may be on our way somewhere," said Powell.

Powell said he recognized that there are grievances on both sides, but that while this issue remains unresolved, and the Mitchell Plan is unimplemented, Palestinians and Israelis alike are dying. The Mitchell plan for peace between Israelis and Palestinians calls for a cease-fire, a cooling off period, confidence-building measures and final status negotiations.

"[Y]ou can't have a discussion, a negotiation, under these conditions of violence and these conditions of terror. Now that the world has seen terror for what terror really is and what it can do to people, people are less hesitant about speaking out about these kinds of terrorist activities. And Mr. Arafat has to realize that and act against this kind of terrorist activity, which is not just a threat to Israel, which it is; it's a threat to the Palestinian people and their vision to live in peace with Israel," said Powell.

Turning to the conflict between India and Pakistan, Powell said, "I am pleased that both sides realize the dangers of getting into a conflict, and both sides are willing to pursue a diplomatic option for as long as we can until we find a solution."

He expressed some concern with India's testing of a nuclear capable missile January 25.

"[I]t might have been better not to have such an event, but I don't think it raises it to a higher level of tension and crisis," Powell said.

Following is a transcript of Secretary Powell on The Lehrer News Hour:

(begin transcript)

U.S. DEPARTMENT OF STATE Office of the Spokesman For Immediate Release January 25, 2002

Interview of Secretary of State Colin L. Powell
by Jim Lehrer of The Lehrer News Hour
January 25, 2002 Washington, D.C.
Aired 6:08 p.m. EST

Mr. Lehrer: Now our Newsmaker interview with Secretary of State Colin Powell. I talked with him this afternoon from the State Department.

Mr. Secretary, welcome.

Secreatary Powell Hi, Jim.

Mr. Lehrer: President Bush said today he was very disappointed in Yasser Arafat. Do you share his disappointment?

Secreatary Powell Transcript: Powell Says Arafat Needs to Acknowledge Karine A Incident

Chairman Arafat gave a speech on the 16th of December saying that he would do everything to eliminate terrorism, get the violence down, so we can get this process started. And then along comes this ship, the Karine A, loaded with munitions, loaded with explosives, headed to the region, and with a clear Palestinian connection. That has to be very disappointing to all of us, all of us who want to see a cease-fire and want to see a process begin that will lead to negotiations.

And the message that I have been giving to Chairman Arafat, and the President and all of us have been giving to Chairman Arafat, is that you must crack down, you must explain the Karine A, and you must crack down on this kind of terrorist activity. Not only is it causing so many lost lives on both sides, but at the same time it is destroying Chairman Arafat's ability to lead the Palestinian people. So he must crack down, and that is the clear, consistent message that this administration has been giving to him.

Mr. Lehrer: Is there any question in your mind, Mr. Secretary, that Chairman Arafat knew all about this shipload of arms?

Secreatary Powell I can't put it right at him personally, but it is clear from all the information available to us that the Palestinian Authority was involved. And leaders in the Palestinian Authority had to know about this, and there were Palestinian Authority personnel on the ship. So it is hard to say we know nothing about it and let's form a commission to go investigate it. It's a pretty big smoking gun.

Mr. Lehrer: So what do you want him to do about it now?

Secreatary Powell I think he ought to acknowledge, as the first step toward moving forward, acknowledge that this has happened and they bear some responsibility for it happening, and give the international community, and especially the Israelis, some assurance that this kind of activity is going to stop. And do it in a way that will be persuasive and convincing and allow us to move forward.

We all want to see a ceasefire. We all want to see peace. All sides -- the Palestinian side, the Israeli side, the American side, the international community -- want to see a Palestinian state side by side, living in peace with its Israeli neighbors, a Jewish state in Israel. And all we need is people of goodwill to come together, stop the terror. And if you are going to be part of this new world, you've got to crack down on the kind of terrorist activity that takes innocent lives.

We recognize that there are grievances on both sides, but the terrible thing about this is every day this remains unresolved, people are dying on both sides, and it is time to bring an end to this.

Mr. Lehrer: Now, have you said what you've just said to Chairman Arafat?

Secreatary Powell Yes.

Mr. Lehrer: You talked to him on Wednesday, right?

Secreatary Powell I talked to him on Wednesday at some considerable length. I talk to him very often, very regularly, and I have delivered this message rather directly and rather forcefully, as recently as last Wednesday.

Mr. Lehrer: Now, what does he say when you say you must acknowledge this, and just exactly what you said?

Secreatary Powell We got into a conversation where he says that we ought to form a commission and go look at it, and he does not acknowledge the responsibility.

Mr. Lehrer: He still doesn't acknowledge responsibility?

Secreatary Powell Not as of Wednesday afternoon.

Mr. Lehrer: Now, there was a meeting of the National Security Council today, and the word going in was that you all were going to consider with the President the possibility of severing ties with Chairman Arafat. What is the conclusion?

Secreatary Powell We are forever reviewing our policies with respect to the region and with respect to the Palestinian Authority and Chairman Arafat, and those options will continue to be under review. But you have now heard today from the President and from me and from other administration officials, so you can see what the message is -- a clear, stern message to Mr. Arafat that this must stop -- and a willingness on our part to move forward with the process if it does stop.

But if it doesn't stop, it gets very, very difficult to move forward. What new steps can we put on the table and think it would be a positive step, something that others would respond to, if this kind of activity is constantly undercutting our efforts? So this is, in some ways, a moment of truth for Chairman Arafat.

Mr. Lehrer: Can you move on without Arafat?

Secreatary Powell Well, you know, he is the leader of the Palestinian Authority and the recognized leader of the Palestinian people. There will come a time, as there comes in the time of every man and woman, when you move on and others come along, and we don't know when that will be or under what circumstances. We will continue to work for peace.

Mr. Lehrer: Have you expressed the possibility to Chairman Arafat that, hey, look, if you can't make this work, we'll find some other Palestinians to make it work?

Secreatary Powell I talk about a lot of things with Mr. Arafat, but I don't think it's appropriate to go into any greater detail in our conversations.

Mr. Lehrer: But you called it a moment of truth. Does he understand, at least from your perspective, that this is a moment of truth for the United States?

Secreatary Powell Well, I can't say what he understands. He should have no misunderstanding about it because I think the President has spoken clearly, I've spoken clearly, and we've spoken to the Arab leaders in the region to make sure this message gets communicated as clearly as possible.

Mr. Lehrer: The Israeli novelist, Amos Oz, was on this program the other night, and he said that, from his perspective on the ground there, that the people of Israel and the Palestinian people have both moved beyond their leaders, that both Sharon and Arafat are locked up in old grievances and processes of the past, and it's time for both of them -- well, he didn't say to step aside, but that it's going to be difficult as long as these two men are in charge.

Do you see it that way?

Secreatary Powell Well, I don't think I would quite put it that way. Ariel Sharon is the elected leader of Israel, a democratic nation that elected him freely, and he will put his leadership to the test when the next election is held. And Chairman Arafat is the recognized leader of his people.

And however much others might wish one or the other to go into retirement or to leave the scene, we have to deal with the leaders who are there, and they are the ones who are there. And we have dealt with other leaders in the past and there will be other leaders coming along in the future. But I don't have the luxury of thinking about who might be there five years from now; we have to deal with the leaders who are there now.

Mr. Lehrer: Oz also said that those who think that someday there is going to be one side going to say, okay, we won, and the other is going to say, yes, you won, and they will embrace and move on, it's not going to happen; that it's only going to be kind of a -- he called it a clinched teeth compromise, called as you said side-by-side states and one day both people are just going to say, "No more killing, no more of this," and that's what is going to happen.

Do you see that coming?

Secreatary Powell I think that is the more likely outcome. I don't think either one will prevail over the other in a test of arms, and the sooner that this realization seeps in, then we may be on our way somewhere. And I think it has to seep in on the Palestinian side as soon as possible, and that is the message we are giving to Chairman Arafat. The Mitchell Plan gives us a way forward, with a ceasefire, with confidence-building measures, and then with the beginning of those negotiations under UN Resolutions 242 and 338 which can lead to a settlement of this dispute.

But you can't have a discussion, a negotiation, under these conditions of violence and these conditions of terror. Now that the world has seen terror for what terror really is and what it can do to people, people are less hesitant about speaking out about these kinds of terrorist activities. And Mr. Arafat has to realize that and act against this kind of terrorist activity, which is not just a threat to Israel, which it is; it's a threat to the Palestinian people and their vision to live in peace with Israel.

Mr. Lehrer: Another crisis situation, India-Pakistan. India fired a nuclear ms today as part of a celebration, a nuclear-capable missile, I should say, as part of a celebration. Was that the right thing to do in this current environment?

Secreatary Powell That is a very important distinction. It was just a missile and it was a test that had been scheduled for some time. We would have preferred that they had not fired it during this time of tension, but I don't think it escalates things that much more. Their day of celebration is coming up tomorrow, Republic Day, and it might have also been linked to that.

Both sides have indicated that they are willing to work for a diplomatic solution to this crisis, and we are actively involved with both sides to find the elements of that solution. Nevertheless, it is a tense, dangerous situation with two armies in close proximity to one another, and a spark could set something off. Both of these nations are well armed and nuclear armed, and so we are doing everything we can diplomatically to keep tensions from rising any higher, which is why we would just as soon had not seen a missile test earlier today.

Mr. Lehrer: You have been very much involved personally in this, have you not? How did that come about? Why?

Secreatary Powell Well, right after the events of the 11th of September, I began a series of conversations with President Musharraf of Pakistan, and he and I got in the habit of talking with each other rather frequently as we went through the post-September 11th crisis period.

And then I had gotten to know Foreign Minister Jaswant Singh of India, and so when the 13th of December came along and we had that attack, that terror attack against the Indian parliament, and things escalated rather quickly, I used those contacts that I had made, and the friendships frankly that I had developed with President Musharraf and his foreign minister, Foreign Minister Sattar, and with Foreign Minister Singh on the Indian side, and just kept in regular touch with them.

And then I visited the region recently, as you know, to see if the United States could play a helpful role in keeping things under control until we can start to de-escalate again. And I think that is where we are now, looking for a diplomatic solution so we can start to de-escalate and remove the tension from this situation.

President Musharraf made an important and bold speech not too long ago, weekend before last. He is acting on that speech by arresting extremists, by shutting down their offices. He has taken some actions to reduce tensions along the line of control. The Indians are waiting and seeing if this action is permanent and irreversible. And I am pleased that both sides realize the dangers of getting into a conflict, and both sides are willing to pursue a diplomatic option for as long as we can until we find a solution.

Mr. Lehrer: Did you talk to either or both sides today after the missile was fired?

Secreatary Powell No, I haven't had a chance to. I'm not sure I will. It's really late in the region. As you know, I had the Foreign Minister of the new Interim Authority of Afghanistan here and a number of other things that kept me from making those phone calls.

Mr. Lehrer: So you don't see this as a big deal, this firing of this missile today?

Secreatary Powell Well, it is a big deal in the sense that with this level of tension it might have been better not to have such an event, but I don't think it raises it to a higher level of tension and crisis.

Mr. Lehrer: In general, is the crisis continuing to boil, or do you believe it is going down the other side now? Are you over the worst, in fact?

Secreatary Powell It is continuing to bubble, if not quite boil at the moment, but I will not be comfortable until we have found a solution and we can start going down the escalation ladder, rather than just staying where we are on the escalation ladder. And I certainly don't want to see us go up any higher on that ladder.

Mr. Lehrer: Well, Mr. Secretary, thank you very much.

Secreatary Powell Thank you very much, Jim.

(end transcript)

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