CNBC Exclusive: CNBC's Maria Bartiromo Speaks with Secretary of State Condoleezza Rice on "Closing Bell with Maria Bartiromo" (Transcript Included)

Secretary of State Condoleezza Rice.
Haraz N. Ghanbari
Secretary of State Condoleezza Rice.

When: Friday, May 23 at 4PM ET
Where: CNBC's "Closing Bell w/Maria Bartiromo"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Secretary of State Condoleezza Rice. During the interview, Rice discusses the price of oil, the U.S. approach to Iran and Iraq, among other topics.

All reference must be sourced to CNBC's "Closing Bell with Maria Bartiromo."

MARIA BARTIROMO, host: And joining us now is Secretary of State Condoleezza Rice. Secretary Rice, so nice to have you on the program. Welcome back to CNBC.

Secretary of State CONDOLEEZZA RICE: Thanks. It's great to be with you, Maria.

BARTIROMO: Thanks so much. I know you've been traveling and visiting various events with David Miliband, the UK foreign secretary. Tell me what you're trying to accomplish this week.

Sec. RICE: Well, I have a couple of goals. First of all, I love to get my foreign minister colleagues out of Washington, DC, and the New York environment to show them other parts of America. But in this case, we wanted to come here to the Silicon Valley, which is right at the center of America's capacity for innovation and new technologies, and we're concentrating quite a lot on the prospect for new clean technologies that will allow us to continue to grow the economy, diversify our energy supply and the good environmental stores. And so that's really the origin of this trip.

BARTIROMO: Let's talk a little bit about that, the issue of the day, no doubt about it, Secretary Rice, the price of oil, and we find ourselves really in a curious position here where so much money is flowing out of the United States and actually into the Middle East because obviously that is where the oil is. How did we get here?

Sec. RICE: Well, we need a comprehensive energy policy, and President Bush has been talking about a comprehensive energy policy practically since the first day that he was elected. It's very important that we diversify supply. That means that we have to find ways, energy sources that are not carbon based. That's why alternative sources of energy, new technologies will be very important. We need to increase our refining capacity. It has been a problem for us to be able to refine. And we also need to have exploration at home. We obviously need, also, to conserve, but you can't conserve your way out of the crisis. You really have to have a diversified and comprehensive policy, and that's what the president has tried to do. Unfortunately, I think we've not made the strides that we need to, for instance, in domestic exploration.

BARTIROMO: You know, it seems like many of the same senators who are wanting oil profit taxes on the--on the big oil companies are the same senators who are saying, `Look, we cannot drill here and we can't go to ANWR and this is off limits, not in my backyard.' Why is it that it has been so difficult to reach an agreement in Congress?

Sec. RICE: Well, I don't know. It is unfortunate that we continue--while we say that we want to be less addicted to foreign oil, which has been one of the president's goals, we say we want to be less addicted to foreign oil, but then we say to oil producers `you have to increase supply' rather than thinking about what we can do at home to increase supply. And, of course, the ability to use our domestic resources, our domestic sources of oil would be a very important part of that. Nuclear energy is another clean technology that we should be using and exploring. We simply have put ourselves into a situation in which it's hard to break our addiction to oil. We're not going to get out of it quickly, I'm afraid, unless--and it's high time to get started on the diversification of our energy resources.

BARTIROMO: Secretary Rice, let me switch gears, talk to you a little about our approach to the Iranian issue. This week, Senator Barack Obama out criticizing the US' approach to Iran. What do you say to that?

Sec. RICE: We have built an international coalition of states led by the United States, the UK, Germany, France, Russia and China, which is showingIran that there is a course of cooperation, and if they are not willing to cooperate and give up the technologies that can lead to a nuclear weapon, then there are consequences, and we've passed three Security Council resolutions. Iran's economy is having difficulties. They have increasingly difficult access to issues with the international financial system. People who are reputational in investment risk reasons are not investing in Iran.

And what is more, probably the most important thing that we can do in the long term concerning Iran is to be successful in Iraq. If, in fact, you have an Iraq that is democratic, that's stable, that's a friend of the United States in the center of the Middle East, that is going to make it very difficult for Iran to make trouble in that very troubled region. So we have a lot of ways to exploit Iran's vulnerability, but if we don't get it right in Iraq, if we leave Iraq prematurely, than we're going to empower Iran.

BARTIROMO: I want to ask you about Iraq, but one final question on Iran here. Is it not worth trying to open a discussion with the Iranian leader to get these thoughts on the table?

Sec. RICE: Well, we've certainly made every attempt and made it possible to open a dialogue with Iran, but we need to have them suspend their enrichment and reprocessing because what we don't need to do is to negotiate while they're perfecting the technologies that lead to a nuclear--could lead to a nuclear weapon. I've said many times, Maria, I'll meet my counterpart anytime, any place, anywhere to talk about anything if they will simply suspend. So I think the question isn't why won't we talk to Tehran. The question is why won't Tehran talk to us.

BARTIROMO: Let me ask you about Iraq, Secretary Rice. What is the status of the progress there in Iraq? I was surprised to see recently that Iraq announces that it wants to buy airplanes because it eventually wants to look for leisure travel to Iraq. What a fascinating story that is. Where are we in Iraq today? Barack Obama, Hillary Clinton want the troops home immediately. Senator McCain, obviously, on the other side of that. How long will it take before troops can start coming home?

Sec. RICE: Well, troops are already coming home from the levels that we needed to surge into Iraq to help to deal with the very precarious security situation there, a situation that is much improved, though still fragile. We are training the Iraqi security forces to be able to take control of their own provinces and to be able to carry out their own security tasks. We're seeing the benefit of that now as they have the lead in securing Sadr City, as they took the lead in securing Basra in the south. The Iraqi government is now fighting those militias that everybody knew it was important for them to establish state power and state control throughout Iraq.

And what is more, the Iraqis have passed the National Reconciliation Language and Amnesty Law, a law on de-Baathification, a law on provincial powers. They've passed two budgets. And, by the way, the budget of Iraq this year is significant. It's $49 billion, and we have told them, and they are doing it, that they need to take more responsibility for their own reconstruction, for their own security costs, and they're doing exactly that.

So we're getting exactly what we had hoped: the emergence of a functioning government in Iraq that is making strides towards democracy and reconciliation, that is providing better security for its people, that is beginning to be integrated again into the region and getting better relations with its neighbors. We're getting what we'd have hoped for. It's not a job that is yet finished, but it is a job that is well under way.

BARTIROMO: Miss Secretary, so often the issue of America's competitiveness comes up again and again as we've watched this economy grow just about 1 percent and China grow 12 percent and India grow 10 percent. The idea or the suggestion that America is less competitive or worse, less important on the global world stage keeps coming up. Has America lost its edge vs. competitors around the world?

Sec. RICE: Oh, I can count many, many times that people have said that America had lost its competitive edge. You remember, Maria, we had lost our competitive edge vis-a-vis Japan. We were a power that was overstretched in the '80s. We were going to converge with the Soviet Union, by the way, in the 1970s. So there have been many premature sentences for America losing its competitive edge. We're going through a difficult time in the economy. Adjustments to a number of circumstances, including in the housing markets and in the financial markets, that my colleague Hank Paulson and others who have stewardship of this will tell you will work their way out. It's hard, and it's hard on Americans, and no one can say or should say that it is not. But America has rebounded before, and we rebound because we are people with a spirit of innovation and creativity.

You see it right here in the Silicon Valley where today we visited Google, a company that only went public in 2004, and look where it is now. Where we visited a start-up called Bloom Energy that has radical new ideas about how to improve energy efficiency. It's that creative spirit. And you know, Maria, at every one of those stops, you saw the face of the world. You saw people from every corner of the earth who've come to America because this is the place that you can innovate and be creative and succeed. That's why this country is always going to be on the leading edge. It's not to say we don't have our economic difficulties right now, but the--America will rebound because our fundamentals are very strong.

BARTIROMO: Yes, but the issue of immigration keeps coming up, Miss Secretary. The point is that we used to have an open-armed policy where we would let in the best and the brightest people in the world to work in these companies and continue to make this country more competitive. There's an immigration policy. People with PhDs, smart people from international economies, can't get visas. What are the answers?

Sec. RICE: Well, we need a comprehensive immigration reform. We need to make certain that we are able to secure our borders. State Department plays the role in that in working with our neighbors and also working with the states. Everybody knows that we need people to respect our laws, and that needs to be said first. But it is also the case that we are a country of immigrants. We are a country that has been tremendously benefited by bringing the people to the United States who want to work hard, people to the United States who believe in the kind of free environment that we have here. They built this country and they will continue to build this country if we can remain open. And so the president has long been an advocate of comprehensive immigration reform. Unfortunately, we couldn't get it done in the last session, but I believe that this country is going to have to have enlightened immigration policies if we're going to stay this strong, competitive, open magnet for the best and brightest around the world that we've been.

BARTIROMO: Which candidate right now has the best policies on immigration, in your view?

Sec. RICE: Oh, Maria, I'm not going to get into the political fray. It's my job right now to go out and represent this great country as its chief diplomat. It's something I love doing because I love America. I believe in America. I think it's the greatest political and social and economic, I think you'd almost say experiment ever in human history. And that's what I'm doing. I'm trying to help resolved a few problems along the way, because America's always stood for power and principle together. It's always stood for interests and values together. And it's a great country to represent in the world because essentially it is the engine of optimism and change for the entire world.

BARTIROMO: Has John McCain approached you to be his running mate?

Sec. RICE: Maria, I've said many times that I don't need another job in government. It's time for me to move on. I'm here in the Silicon Valley, it's where, in many ways, I grew up as a professional. I came here as a 25-year-old first. And I have hard work to do between now and the end of the administration, but I will have--I will have served eight years. I will have served in consequential time, I will have done what I can and it'll be time to give the keys to somebody else.

BARTIROMO: Secretary Rice, it's always a pleasure to talk with you and a privilege. We so appreciate it. Thank you.

Sec. RICE: Thank you. Great to be with you.

BARTIROMO: And you. Thank you so much. Secretary of State Condoleezza Rice.

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