HIGHLIGHT: Edward Said is Professor of English and Comparative Literature at Columbia University. He also happens to be the author of 17 books, and he recently won a Lannan Literary Award for lifetime achievement.

PAULA ZAHN, CNN ANCHOR: And we focus on what is going on in the Mideast right now. Our next guest is an author and Palestinian scholar. Edward Said is Professor of English and Comparative Literature at Columbia University. He also happens to be the author of 17 books, and he recently won a Lannan Literary Award for lifetime achievement. Congratulations on that. Welcome sir. First of all, your reaction to the overnight developments. You had two young Israelis killed, presumably, at least at one -- killed by an Islamic Jihad activist.

EDWARD SAID, AUTHOR: Right. Yes.

ZAHN: Do you denounce that this morning? SAID: Yes, yes, of course. I mean I have always been against terror of this sort but I think one also has to understand the context, which is a very long military occupation. Almost 35 years now that Israel has occupied the West Bank and Gaza. And there's a tremendous amount of desperation in the lives of people who are, you know, terribly poor, have no place to go, are, you know, their houses are destroyed, their land is taken, the settlements increase, and I think that cauldron of frustration and anger, at Israeli occupation, is what causes this sort of thing.

ZAHN: So you're saying it's easy to understand the anger, but you don't in any way support that kind of terror on either side.

SAID: No, no, absolutely not, no. And, of course, the terror that has been visited on Palestinians with huge tanks, I mean, last week 10 tanks go into small town of about 200 people and destroy houses, and just aim the tanks at them -- aim the guns at undefended people. And kill 10 people in an overnight raid. I mean that's terror too.

ZAHN: But the prime minister of Israel says that is exactly what the Palestinians are doing to the Israeli people. His latest quote is, "we don't have any intention to stay in the Palestinian controlled areas, but the timing depends on the situation," -- quote -- "we are facing terrible terror. We've had a number of casualties. 200 dead. Thousands wounded.

SAID: That is simply not true -- Palestinians don't have an army. They don't have an air force. They don't have a state. They don't have any air defenses. They don't have any heavy weapons. They don't have a leadership. They're not allowed to move from one place to the other. Their condition is desperate. And they are -- they have been ground down to a degree by Sharon, and previous governments, to the extent that I think it amounts to a set of war crimes. There is an attempt to destroy Palestinian life, and just let me just finish this one point, the amount of violence visited on Palestinians is hugely disproportionate to the violence visited on Israelis by Palestinians, which is -- which is a pinprick.

ZAHN: Of course, you know what Ariel Sharon has had to say about that over the years. He says that's patently absurd, that Israelis are living with terror. But let's move on to this question --

SAID: No, that's simply not true.

ZAHN: Well, let's move on to --

SAID: He is responsible for the massacres of Sabra and Shatila, and during the summer of '82, my entire family lived in Lebanon when the Israelis invaded and killed 20,000 people. I mean -- this is complete madness.

ZAHN: Well, we obviously don't have time to go back and revisit every single terrorist issue, but do you believe that Yasser Arafat can control his people right now? You hear the Islamic Jihad people come out --

SAID: Yassar Arafat --

ZAHN: -- and say we are not going to listen to him.

SAID: Yasser Arafat is unable to move from one part of the West Bank to the other. From Gaza to the West Bank. He is unable to use the air -- this little airport strip in Gaza without Israeli permission. Yasser Arafat is a paralyzed leader. That's number one. Number two, his people are scattered over a much larger area than he controls, and, if anything, he can do is minor compared to the damage visited on him by the Israelis.

ZAHN: Well, let me ask you this --

SAID: But he has made an attempt, he has made an attempt.

ZAHN: Given how entrenched feelings are, among the Palestinians, as the talks move forward, do you believe --

SAID: Well, they haven't for a while.

ZAHN: Well, they've hinted at it, I mean, there have been meetings over the last two weeks that would suggest that people are trying to move things forward. Do you think that the average Palestinian will actually accept Israel? As a state?

SAID: Not in the present situation. I mean, Palestinians need a state. And I think one of the significant aspects is --

ZAHN: But come back to my question.

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SAID: No, no, I'll tell you -- I'll tell you --

ZAHN: You're saying if you create a Palestinian state --

SAID: Then they will, of course, of course, of course.

ZAHN: -- then they fundamentally accept Israel.

SAID: Then there will be two people in one land, which is a problem. Except that now one people has all the rights, has -- controls everything, with an enormous power subsidized by the United States. Don't forget that we've given Israel 92 billion dollars over the last 20, 30 years. Palestinians are in a state of poverty and desperation, and what they need as Bush, President Bush, noted at the beginning of the crisis that we now are living through, is that we need to attend to the Palestinian issue which is one -- which is, I think, the major issue in the current situation.

ZAHN: All right. So just give us your assessment, then, on what happens next. The Israelis have made it clear, if you can protect the borders of Israel and its right to exist, then perhaps motions will be made to create a Palestinian state. Are you -- are you pessimistic --

SAID: Yes, and I -- yes, because, I mean, it isn't -- it isn't Palestinians who are going to protect Israel. It's Palestinians need protection from Israel, and I think that what we need is a pullout. We need the end of the military occupation, so long as you have foreign troops in your towns and villages, you are not going to have peace.

ZAHN: But there was an assassination in the middle of all of that, the Minister of Tourism --

SAID: There's been 60 assassinations of Palestinians. There's been 60 assassinations of Palestinians, you know, openly declared by the Israelis, in last few months There have been hundreds of Palestinians killed and 20,000 wounded. I mean there is no comparison.

ZAHN: You sound completely pessimistic.

SAID: I'm pessimistic --

ZAHN: -- that these talks are ever going to go anywhere.

SAID: No, I think now that there's a climate of understanding, beginning to understand, that in our relations as Americans with the Muslim world that central to the whole -- a Muslim and Arab world, central to whole thing is the resolution of the problem of Palestine. And the only way it can be resolved is with U.S. and the European allies to bring about what in effect is a pullback. That the forces -- not the forces -- the Israeli army should withdraw and the Palestinians can try to establish a normal life within declared boundaries.

ZAHN: Professor Said, we have to leave there. Thank you very much for dropping by. Appreciate it.