Jerusalem -- Secretary of State Madeleine Albright said here September 12 that dealing with the issue of terrorism is absolutely essential to getting the peace process back on track.

In an interview with CBS TV, the Secretary said the crisis of confidence requires a "time-out" on certain acts that both the Israelis and Palestinians see as provocative "so that a climate of confidence could be rebuilt, and so that they could stop seeing each act as a zero-sum game."

Albright said in response to a question about the U.S. role in the process that "the tough decisions here have to be made by the leaders themselves. The United States, as powerful as we are, cannot take the tough decisions. We are prepared to help where we can, and frankly, I am prepared to come back here when the big decisions are made, and I can make a difference. I am not coming back here in order to tread water."

Following is the transcript of the interview:

(Begin transcript)

QUESTION: Madame Secretary, you asked for a "time-out" yesterday, referring specifically to what you called the provocative expansion of settlements. What does the "time-out" mean? When does it start?

SECRETARY ALBRIGHT: Well, let me say that I think it's important to understand what we were able to accomplish here, and then I can talk a little bit more about the "time-out." I have been very concerned about the crisis of confidence that we have seen in this whole peace process, and I had hoped that when I came here that we could take some steps, some important steps, to put the process back on track. We have managed to take some small steps. Big steps were needed, but there are some small steps and so Prime Minister Netanyahu and Chairman Arafat have agreed to send some senior negotiators to Washington at the beginning of the week-after-next to talk about the peace process, and then I will host Foreign Minister Levy and Palestinian deputy Abu Mazen in New York the week after that to see if we can move the peace process forward. Those are small steps. I wish they were larger.

As far as the "time-out" is concerned, we do think that the issue of terrorism here is the underlying theme and problem, and as we've said, dealing with it is the sine qua non of getting the peace process back on track. But at the same time, I think that the crisis of confidence requires that certain acts -- and if I might correct this -- that are viewed as provocative by each side -- not that I am calling provocative, but that they see as provocative -- that there be a "time-out" on some of those, so that a climate of confidence could be rebuilt, and so that they could stop seeing each act as a zero-sum game. We have to get away from that.

QUESTION: "Time-out" starting when?

SECRETARY ALBRIGHT: Well, as soon as possible, obviously. I think that if it's a matter of having each side stop seeing this as zero sum.

QUESTION: You asked Netanyahu to do several things which he would not ordinarily be inclined to do. Had you shown Netanyahu the speech before you delivered it?

SECRETARY ALBRIGHT: No, I think that it's important; I had something that I had to say, and I wanted him to hear -- actually, I gave the speech to some students and public and I have, as a matter of course, whether I travel in the United States or abroad --I enjoy going out and giving speeches to the public.

QUESTION: Have you previewed it with any members of Congress?

SECRETARY ALBRIGHT: Certain parts, I think -- but anyway, I'm not going to go into the making of it.

QUESTION: But did you get any reaction from the Hill last night?

SECRETARY ALBRIGHT: Not that I know of, yet. But let me say that I am -- what I wanted to do was to elaborate a bit on a speech that I gave in Washington in August, which, by the way, I did get excellent reaction from members of Congress, and a lot of other people, and I wanted to elaborate on it here, because I think it's fair to state one's views clearly in the place.

QUESTION: Everyone in the peace camp here, Israeli and Palestinian, tell me that for anything to get done, the Americans have to be very deeply involved -- what President Weizman allegedly referred to as "knocking heads together" a couple of days ago, if it comes to that. Asking Arafat to do things he doesn't want to do, well, Arafat doesn't have much of a constituency in Washington. Netanyahu is a very powerful man in Washington. Is the Administration prepared to go down the road on this, which will involve taking Netanyahu on?

SECRETARY ALBRIGHT: Well, let me say that I have said that the tough decisions here have to be made by the leaders themselves. The United States, as powerful as we are, cannot take the tough decisions. We are prepared to help where we can, and frankly, I am prepared to come back here when the big decisions are made, and I can make a difference. I am not coming back here in order to tread water.

QUESTION: Thank you.