TONY SNOW, FOX NEWS: Israeli officials have threatened to arrest or deport Palestinian leader Yasser Arafat unless he stops undermining Palestinian Prime Minister Mahmoud Abbas.

Israel´s prime minister, Ariel Sharon, discussed Arafat, Iran and much more in an exclusive interview Friday with Fox News correspondent Jennifer Griffin. She joins us now from Jerusalem.

Jennifer?

JENNIFER GRIFFIN, FOX NEWS CORRESPONDENT: Tony, it was Ariel Sharon´s first interview with an American television network since he was re- elected as prime minister in January, and since he and the Palestinians started to implement the road map after meeting with President Bush in Jordan.

We spent the morning with him at his farm, a 1,500-acre working farm in the northern Negev desert. This is where this former army general is most at home. He breeds cattle, sheep and grows citrus fruits there. This is where he retreats from the pressures of the peace process. Clearly, he is most at ease overseeing his livestock.

In fact, he chose to speak to us literally in the sheep pen, and sometimes the sound of the sheep actually drowns out what the prime minister has to say.

That´s where we talked to him about the road map and his relationship to the Palestinian prime minister, Mahmoud Abbas, who he refers to as Abu Mazen in our interview.

My first question to him was about the power struggle between Abbas and Yasser Arafat that led Abbas to threaten to resign this week. I asked him, would this be the end of the road map?
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SHARON: First, I believe that he will not resign. But I think that it´s very, very important to understand that Yasser Arafat is making every effort to undermine him.

It´s very, very important that Abu Mazen will be able to continue his work. He understands that Israel, the Jews cannot be defeated by terror. And he understands also that the suffering of the Palestinians are the result of Yasser Arafat strategy, strategy of terror.

Knowing him, I believe that he will not resign, but that will happen, will that be the end of our effort? I don´t think so.

GRIFFIN: You´ve said before that back in 1982 in Lebanon, that you actually had a chance to kill Yasser Arafat. You had him in your sights. Do you regret not having done that?

SHARON: First, I don´t regret because of one thing. When you agree about something, you have to stick. But if you ask me if he would not have been part of our society, would things have been different, yes, it could have been different. Maybe we could have had peace years earlier.

GRIFFIN: What makes you trust Mahmoud Abbas? After all, he wrote in his PhD thesis, he basically denied the Holocaust. What makes you personally trust him?

SHARON: Well, I think Abu Mazen is a courageous man. He never hesitated to express his views in the past.

Look, we have to remember, Abu Mazen is a Palestinian. He´s not a member of the Zionist movement. But he understands that one can reach an agreement only as a result of negotiations, without using any terror.

GRIFFIN: But his red lines really are no different than Yasser Arafat´s red lines. What makes you think that Mahmoud Abbas is going to be able to deliver an agreement to you that will hold?

SHARON: I believe that the current leadership, Abu Mazen´s leadership, will take, let´s say, negotiations more seriously, and will understand what Israel can do and what Israel cannot do.

GRIFFIN: But who is the real Palestinian leader, Yasser Arafat or Mahmoud Abbas?

SHARON: Yasser Arafat, who conducted a strategy of terror now almost over the last 40 years, he is no doubt a Palestinian leader, but a leader that has not brought anything, no peace, a lot of suffering to the Palestinians.

Arafat should be removed from any position of influence. The problem now that Arafat still controls most of those armed Palestinian forces, and the security organization or one can say security/terrorist organizations. And the Palestinians themselves must understand that they have to act and struggle against the terrorist organizations. Their weapons should be taken from them and given to a third party. That, I believe, only the Americans can do that.

GRIFFIN: Would you accept that the Americans would actually keep the peace between you and the Palestinians? In fact, Senator Richard Lugar, on Fox News Sunday, the head of the Foreign Relations Committee, suggested as much.

SHARON: No, I don´t think that the American forces should be involved here. I would say, enough burden on American forces. I believe that the peace process should take place between the sides, Israel and the Palestinians.

GRIFFIN: The U.S. is talking for the first time about giving direct aid to the Palestinians. They are talking about giving $20 million to the Palestinians. This is the first aid since it was cut off during the intifada.

Do you think the time is right for that? And are there any guarantees that that money won´t be used to attack Israel again?

SHARON: I hope that the arrangement that will be done will prevent that possibility that that will be used for terror. As a matter of fact, in the past, and still I think, money is provided not by the United States, of course, but I think money is coming from Arab countries, no doubt from Iran, and I think also maybe still from European countries, directly to Arafat.

GRIFFIN: Are you saying that Iran is supporting Yasser Arafat right now and actually helping to derail the road map? Do you have evidence to that effect?

SHARON: Yes, first, we have evidence. I will say that Iran is, I would say, maybe the greatest danger to Israel at the present time. They managed to build ballistic missiles that covers a major part of the Middle East and that covers Israel. And they are making a major effort to possess nuclear weapons. Their leaders speak about the elimination of the state of the Israeli and Jewish people.

GRIFFIN: Mr. Prime Minister, you have said that you´re willing to make painful concessions to get peace with the Palestinians. But some say, many say, that you are talking about a Palestinian state on 42 percent of the West Bank and Gaza.

What makes you think that the Palestinians, or any Palestinian leader, could agree to less than what Ehud Barak offered them three years ago?

SHARON: What I say that exactly what I mean. But I think it going to be a major mistake to say now what are those concessions and what are those compromises. Because once I will say that, that will become immediately the start line of the negotiation.

And that´s about what Prime Minister Barak (inaudible). Nobody ever offered that before him, and I´m afraid that no one will ever offer that after him.

GRIFFIN: Now, when National Security Adviser Condoleezza Rice was here recently, a major policy difference emerged between you and the Bush administration over the security fence that you are building between the West Bank and Israel. She said that that security fence looked like a political border. She also said that it was taking Palestinian land and incorporating it into this side.

Are you willing to change the route of that fence?

SHARON: I made it very clear that we don´t speak about political borders, we don´t speak even about security borders. We speak about another mean, to stop terror or to make it harder for terrorists to penetrate from Palestinian cities into the heart of Israel.

GRIFFIN: But why does it have to dip into parts of the West Bank and take certain Palestinian lands?

SHARON: The Jews also has the right for self-defense. That´s what we are doing, and we have to continue to do that.

GRIFFIN: Recently it was proposed to you that it might be a good idea to actually bring Yasser Arafat back into the picture, to use his weakened state and his desire to be legitimized, re-legitimized, to actually help bring a deal between you and the Palestinians.

Is this something you would consider?

SHARON: We will never agree to that. The problem that we have is with some of the European countries that still support and back him. And by that, they are postponing the possibility to reach peace here that all the parts would like to reach.
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GRIFFIN: Tony, Prime Minister Sharon left for Europe today, where he will make the point that ongoing European support for Arafat is simply undermining the peace process and Abu Mazen.

Later this month, he will meet — or he is scheduled to meet with President Bush in Washington, where they will discuss how to strengthen Abu Mazen.

Tony, back to you.
SNOW: Jennifer Griffin, thank you very much. (Copyright 2003 FOX News Network, LLC. 07/13/03)