Following is the transcript of Powell's interview with CNN:

U.S. DEPARTMENT OF STATE Office of the Spokesman

June 25, 2002

INTERVIEW

Secretary Of State Colin L. Powell On CNN's Connie Chung Tonight

June 25, 2002

(8:03 p.m. EDT)

MS. CHUNG: Secretary Powell, the President has called for a change in the Palestinian leadership, but have the Palestinians privately agreed to some sort of structure; for instance, putting Arafat in a symbolic presidency?

SECRETARY POWELL: No, I haven't had that communicated to me yet from any Palestinian leaders, but I sense that there is debate within the Palestinian movement now as to the nature of the leadership they've been receiving, and whether or not they need a different form of leadership where more people hold power, as opposed to just one individual with a few close associates.

And so I think there is movement in the Palestinian community. I have been quite impressed by some of the steps that have been taken with respect to reform -- the writing of a constitution, new ministers that are coming in that show some promise. And so I think there is enough churning going on within the movement that people will be anxious to move forward, and perhaps will have an opportunity to have a more broadly based government for the Palestinian people that will bring a stronger commitment to democracy and a stronger commitment to fighting terrorism and moving forward.

MS. CHUNG: You reportedly talked to Arafat and told him that his days were numbered, but just today a reporter asked Mr. Arafat if he could react to President Bush's speech, and Arafat said he didn't think that the President was referring to him. Does Arafat not understand what is occurring now?

SECRETARY POWELL: Well, you'll have to ask him that more directly, I think. But it was some ten weeks that I spoke to him, and I made it clear to him that the direction he was taking is leading nowhere and that he had to make a fundamental strategic choice as to whether he was going to continue to tacitly and actively support the Intifada, with the --

MS. CHUNG: Well, then doesn't what he has said --

SECRETARY POWELL: -- with the terrorist acts that it spurned, or whether he would make a strategic choice to move in a new direction. So far, we have not seen him make that strategic choice.

The President never mentioned Yasser Arafat's name in his speech yesterday, but I think the implication is clear --

MS. CHUNG: Why not?

SECRETARY POWELL: Because he didn't want to personalize it. He wanted to talk to the Palestinian people, and he wanted to talk to all Palestinian leaders and say to them that the direction in which you are going now with the leadership that you now have and the leadership organization and government that you now have is not moving you in the right direction; and you need to bring up new leaders and put in place new ways of doing business that will bring terrorism to an end, bring the Intifada to an end, realize that the whole international community is standing by waiting to help you achieve this vision of a Palestinian state.

And then the President laid out that vision and put a timeline on it that we are anxious to move down and get this state in a rather short period of time, and the President put his full weight and authority behind that goal. But now we need responsible leadership coming out of the Palestinian community that we can work with.

MS. CHUNG: Isn't it obvious, though, that the President was referring to Arafat? You said he didn't want to personalize it, but in fact hasn't it become rather personal? President Bush would not meet with Arafat. And doesn't that make your job all the more difficult?

SECRETARY POWELL: My job is difficult under any circumstances, and it was difficult before the speech and it will be difficult afterwards. This is one of the most challenging foreign policy issues before us. And we have been in touch with Chairman Arafat. I have spoken to him regularly. My people are in touch with his people now. And he knows -- MS. CHUNG: And is it your feeling that he understands what is occurring?

SECRETARY POWELL: There is no way for him to misunderstand the message that the President gave yesterday and the message that I delivered some ten weeks earlier, which said to him you must make this kind of a choice. He has not made that kind of a choice.

And so the President, I think correctly, speaking not against the Palestinian people but for the Palestinian people, to encourage them to use the electoral process to bring in other leaders, responsible leaders, diffuse power, make it more democratic, go after terrorists, end this violence which is doing nothing but denying your dream for a Palestinian state.

We will see in the days and weeks ahead whether the Palestinian people respond to this message and provide that kind of government. If that kind of government is provided democratically through the elections, then they will find the United States and the international community willing to work with them to help them achieve that vision of a Palestinian state and work with the Israelis to open up the closures that currently exist, to end the occupation, to end settlement activity, to return their revenues -- all the things that the President spoke about yesterday -- as we move toward a Palestinian state, with perhaps a way station of a state that has provisional boundaries and other provisional aspects, but ultimately on the way to a final settlement.

MS. CHUNG: When will the United States make more demands of Israel; for instance, dismantling the settlements rather than just freezing?

SECRETARY POWELL: We think all of that has to be a part of a settlement. And as we move down this road, we have, as you know, always been calling for the freezing of the settlement activity. But it has continued. And that will be an issue that will come on the table rather quickly, just as it was going to come up on the table rather quickly if we had been able to get into the Mitchell Report process of last year. Settlements were going to be an early issue to be dealt with and to be discussed. And it will be one of the toughest issues.

MS. CHUNG: All right. Finally, when will you be going to the Middle East? Next week? Next month?

SECRETARY POWELL: When it's appropriate to go. Everybody is very interested in my travel plans. I've spent a lot of time in the last few days working with the leaders in the region, talking with leaders, getting their reaction to the President's speech. And so I need a little bit of time to get these reactions in, to analyze them, determine what the next steps are, what the appropriate next steps are, in order to make sure that when I do go, it will be a trip that will have purpose and we'll be able to accomplish something on that trip. Whether it's in the next several days or in the next couple of weeks remains to be determined, but it won't be in the too distant future.

MS. CHUNG: All right. Thank you so much, Secretary Powell.

SECRETARY POWELL: Thank you, Connie.