>> rose: welcome to the program. tonight, from the state department in washington, d.c., conversations on diplomacy, with secretary of state hillary clinton, and former secretary of state james baker.

>> tonight special edition of charlie rose. >> rose: tonight a special edition of charlie rose from the

state department in washington, d.c. we bring you conversations on diplomacy. this series offers an opportunity to hear previous secretaries of state and the current secretary of state, hillary clinton. they reflect on the challenges of the office and address the most pressing issues of u.s. forepolicy. this evening we bring you our second installment of this see, featuring secretary of state clinton. there are seven living secretaries of state, henry kiss, joornlg schultz, madeleine albright, colin powell. and hillary clinton. the state department has announced a u.s. initiative. secretary clinton has spent nearly four decades in public service as an attorney. the first lady of the united states, a senator from new york, and a candidate for the 2008 democratic presidential

nomination. he was appointed by president obama in 2008 and has announced she will retire at the end of the presidential term in 2013. secretary baker served under three u.s. presidents. he has held some of the highest offices in government. in addition to serving as secretary of state under george h.w. bush he was ronald reagan's secretary of the treasury and white house chief of staff. i want to begin with this notion. you both came to this building, to state department from politics. is that a good background? >> well, i certainly think so. that may not be surprising for jim to hear, but it might be to some. there are lots of different routes to this job. we can look back at our predecessors, the 66 that came before me, and see some accomplished men, and finally women.

but i think bringing a political experience to the job, particularly in recent times, has been very beneficial because everybody has politics. even authoritarian regimes have their own brand of politics. and understanding what motivates people, what moves them, how to create coalitions, especially in the time that i f serving, has been extremely helpful. >> rose: secretary baker, as i said, you were chief of staff. you ran political campaigns. but also served in a number of positions, including secretary of treasury. you know politics. is that beneficial? >> politics, you say? it is very beneficial. i agree wholeheartedly with what the secretary said. in fact i entitled my memoir "the politics of diplomacy." i said my experience, both as a lawyer, yes, but then politicked i found grounded me very well

for this job because the job of secretary of state is quite political. it's very substantive, and i don't mean to suggest that there's a difference there, but it's international pol dicks. it's politics but it's international politics. >> rose: you both, it also should be said, you had a very close relationship with president bush. you have been his campaign manager, you have been his friend from texas, you couldn't be closer than the two of you. your relationship with president obama was different. they usedded the term "team of rivals" to describe it. talk about the notion of the relationship between the secretary of state and the president. >> well, jim, has eloquently written about this. you have to have the president's confidence. you have to have a sense of shared mission, an understanding of what's important to the president, and the principles and values that he-- or some day she-- is fighting9

reading about secretary suard, and, you know, there was a meeting of the minds, and a melding of purpose and vision that i feel very comfortable in representing this president, and his foreign policy agenda. >> i agree with all of that. to succeed, i think, as

secretary of state, you need a president that will support you and protect you and defend you. even when you're wrong. and i-- ( laughter ) and i had such a president. and it's very-- very important because everybody in washington wants a little piece of the foreign policy turf, everybody. and you need a president when the stories come out in the "washington post" that the n.s.c. is running foreign policy, who will pick up the phone and phone you and say, "hey, bake, i want you and susan to come up to camp david tonight, and we're going to spend the weekend up there." that ends all of that kind of stuff. >> rose: you're smiling like-- >> that's exactly right. >> that relationship is critical, in my view, to the success of a secretary of state. >> you know, in listening to jim talk, i mean, the more things change, the more they remain the same. there are story themes. there is an appetite for

conflict. henry kissinger, as he and i discussed when you interviewed us, said he couldn't get over the fact that, you know, i wasn't fighting with, you know, the national security adviser or the secretary of defense or, you know, you name it. so you do have to not only work hard to make sure that the relationship with the president is positive and strong and perceived as such, but also to make sure that the whole team functions because you don't want a lot of wasted time and energy. i mean, the world is moving too fast. there's so much going on, and you have to be given the level of trust and confidence that enable you to go out there and make these decisions. un, we were talkin talk before e campaign out about what i had to do in china a month ago with negotiating once, negotiating twice on the blind lawyer disdepartment, and you have to

have people back in washington who when the inevitable second-guessing and all the rest of it goes on can say, look, you know, we're going to see this through and it's going to be okay. we're just going to make sure we're on the same path together. and that happens in every administration, and the quality of that relationship is determined whether you stay focused and effective or not. >> and the president can stop all that sniping and second-guessing, and that's, of course, what you want. i'm reminded of the fact that in the first few months of our administration, way back in 1989, we had a chinese dissident who came to the u.s. embassy and sought refuge and asylum, and we had to deal with a guy named fong de leur, and it was almost the same kind of experience secretary clinton had. >> and every president says, "oh, i don't need this." ( laughter ). >> that's right. >> and, you know, you just have to navigate through it and make it turn out okay.

>> that's right. >> rose: how was it that it turned out okay? >> on that particular case. well, i think in the case of chen cheng, it was in part wd the right thing. it always helps if you believe you're doing the right thing. we did the right thing by giving refuge and medical care to this man who had escaped from a brutal house arrest after an unjust imprisonment. it was something that was in accordance with our values, even though we knew it was going to be a difficult diplomatic follow-through with the chinese. the fact that we had this strategic and economic dialogue that had become very important to both-- both united states and china-- that i was on my way there for our fourth meeting, had everybody invested in trying

to work through whatever the difficulties were. and i had also worked very well and on a lot of challenging issues, not all of which we agreed on, with my counter-parts in the chinese government, most particularly the state counselor. we were very frank. they didn't like it that this man ended up in our embassy. we stood our ground groundand said, look, this is who we are as americans. we have a chance to make this better than it would be otherwise and let's work together-- which we had to do not once but twice. but in the end, i think it showed a level of confidence and even trust in the good faith of each side that enabled us to work it through. >> rose: what ought to be our policy towards china today? >> i think the policy that we should be pursuing is pretty much the policy we are pursuing.

i come, of course -- i came over here with a treasury hat on. i had been secretary of the treasury for four years, interrupted by a political conservatism. but onpolitical campaign. but one of our big gripes with china is they manipulate their. and they do. strong diulose amy is my view of the way we ought to be approaching that. but with respect to china generally, charlie, we have a big interest in having the best possible relationship we can have with china and they have a big interest in having the best possible relationship they can with us. there are many areas of common interest-- trade, regional security, energy, you name it.

a lot of areas where our-- where our interests converge, and we should seek to magnify those and emphasize those. but we have various deferences, too. we have tibet. we have taiwan, we have the currency problem, we have some-- we've got the iranian-- iranian nuclear issue. so where we differ, we have to manage those differences. but continue to work with them. that's what diplomacy is all about, frankly. i mean, you-- you don't-- you have to-- you have to find a way to manage the differences and magnify the common areas of agreement. >> rose: are you hopeful that you'll be able to get them on board with respect to iran and with respect to syria? >> well, with respect to iran they are on board. you know, one of the real successes of our diplomatic

strategy toward iran, which was to be willing to engage with them but to keep a very clear pressure track going is that the chinese and the russians are part of a unified negotiating stance that we have presented to the iranians, most recently in moscow. i think the iranian have been surprised. they have expended a certain amount of effort to try to break apart this so-called p5 plus 1. and they haven't been successful. the russians and the chinese have been absolutely clear they don't want to see iran with a nuclear weapon. they have to see concrete steps taken by iran that are in line with iran's international obligations, and we have said we'll do action for action, but we have to see some willingness on the part of the iranians to abt first. so i think it took three-plus years because one of the efforts

that we've been engaged in is to make the case that as difficult as it is to put these sanctions on iran and particularly to ask countries like china to decrease their crudeile purchase crude om iran, the alternatives are much worse. and we've seen china slowly but surely take actions, along with some other countries for whom it was quite difficult-- japan, south korea, india, et cetera. so on iran, they are very much with us in the international arena. >> rose: would they support an oil embargo? >> well, absent some action by iran between now and july 1, the oil embargo is going into effect, and that's been very clear from the beginning, that we were on this track. i have to certify under american laws whether or not countries are reducing their purchases of crude oil from iran.

and i was able to certify that india was, japan was, south korea was, and we think, based on the least data, that china is also moving in that direction. and thankfully, there's been enough supply in the market that countries have been able to change suppliers. on syria, you know, so far they've taken russia's lead on syria. but we're working on that every single day as well. >> rose: why do they do that? why do they take russia's lead? >> well, i think both russia and china have a very strong aversion to interference in internal affairs. >> rose: sovereignty issues. >> yes. >> for the russians -- i was with president obama in mexico two days ago. we had a two-hour meeting with president putin. you know, they don't want anything to do with it. they find it quite threatening, and basically, they reject it out of hand.

so anything that smacks of interference for the russians and for the chinese, they presume against. there are other reasons, but, you know, that's the principal objection that they make. >> rose: would coming different countries and different points but somehow come together on these,syria, with respect to russia and the role they are playing. >> yeah, yeah. >> rose: and the role the united states is playing and the role that the region can play. what should we be doing and what is the risk of not doing? >> well, i'll answer that in just a minute, but first let me say, if we're goin we're going e differences with russia-- and we do have differences with russia-- it seems to me the most important difference we might have is with respect to iran and we don't have that now and that's really important. and i don't think we ought to create a problem with russia-- vis-a-vis what we want to do in iran about their nuclear ambitions-- as a result of

something we might do in syria. i just think the iranian issue there is far more important, really, than how we resolve the syrian issue. how should we resolve the syrian issue? i think we should continue to support a political transition in the government in syria. but i don't-- but i think we ought to support it diplomatically, politically, and economically, in every way that we can, but we should be very leery, extremely leery, about being drawn into any kind of a military confrontation or exercise. >> rose: does that include supplying them with arms? >> well, that's a slippery slope. the fact of the matter is, a lot of our allies are already supplying them with arms, okay. it's not something -- >> rose: and our friends in the region. >> i say our allies in the region, yeah. they're doing it. and it's not something we have to do. you know, i look at syria, and i

think why-- why are we not calling for something that we-- it may not be the right comparison, but in 1989, when we came into office, the wars in central america were the holy grail of the left, political left in this country, and the holy grail of the political right in this country. we'd if we can take these wars out of domestic politics we can cure the foreign policy problem and we did. how did we do it? we put it to both partyes, daniel ortailing athe hard-line, authoritarian dictator, if you will, in nicaragua, and the opposition candidate, we said if you'll hold an election and both agree to abide by the results, that's the way we'll get out of this conundrum. that's what happened and both of them did agree finally to abide

by the results. ortailing lost. president carter was very instrumental in getting him to leave office. why don't we try something like that in syria and say, look, political transitions, what we're looking for, everybody-- even the russians, i think, would have difficult saying no, we're not going to go for an election, particularly if you let bashar run. let him run. make sure you have a lot of observers in there. make sure they can't fix the election. why not try that? >> rose: why not try that? >> well, actually, that is the path we are-- we are trying, and i spoke with kofi annan again today. he is working on a political transition road map. we are somewhat disadvantaged by the fact that i think assad still believes he can crush what he considers to be an illegitimate rebellion against his authority, and characterizes everyone who opposes him as a terrorist who is supported by

foreign interests. he's not yet toe point where he understands his legitimacy is gone, and he is on a downward slope. the other problem we will have is that the opposition has not yet congealed around a figure or even a group that can command the respect and attention internationally within syria, as well as internationally. so what we're doing is, number one, putting more economic pressure because that is important. and the sachgzs and-- sanctions, and trying to cut off the syrian regime, and send a message to the syrian business class, which so far has stuck with assad. we're also working very hard to try to prop up and better organize the opposition. we've spent a lot of time on that. it still is a work in progress.

we are also pushing hardo having kofi annan lay down a political transition road map. and then get a group of nations that would include russia, in a working group, to try to sell that to both the assad regime and to the opposition. so, i mean, the path forward is exactly as jim has described it-- getting the people and the interests on that path has been what we've been working on now for several months. >> rose: is there a role for iran? >> at this point it would be very difficult for iran to be initially involved. i mean, i'm a big believer in talking to people when you can and trying to solve problems when you can. but right now, we're focused on dealing with iran and the nuclear portfolio. that has to be our focus.

iran's always trying to get us to talk about anything else except their nuclear program. and we also have the added problem that iran is not just supporting assad. they are helping him to devise and execute the very plans that he is following to suppress, oppress the opposition. >> with respect to iran, i agree with the secretary. this is not the place to involve them. however, i would think there might be a place for them in a-- in a-- in a group with respect to afghanistan. they helped us when we first within in there. we talked to them. they were helpful. i've never understood, myself, why we are pulling-- we're doing all the laboring, pulling all the-- doing all the laboring in iran. >> rose: in afghanistan. >> i'm sorry, in afghanistan.

treasure, blood-- and yet every country surrounding afghanistan has a huge interest in a stable afghanistan. why don't we see if we can't-- everybody is-- we're leaving now. we've said that and i agree with that. why don't we say look here. you all want a stable afghanistan? come on in here and help us, everybody contribute. in that instancing i think we ought to have iran at the table. >> and we agree with that. we are part of a-- a large group of nations as well as a smaller seg am of that. just last week, my deputy, bill burns, was in kabul. iran was there. other countries in the region. and further afield were there. jim is absolutely right. i mean, part of what the problem as we look forward in central and south asia is that, you know, once again, afghanistan is so strategically located and in the neighborhood in which it finds itself tthere's a lot of

interest at work that has to be in some way brought to the table in order to try to have as much stability going forward. and iran is at the table. now iran oftentimes is not a constructive player but we're going to keep them at the table and try to do what we can on behalf of afghanistan for them to be more positive force. >> rose: this question about iran, my understanding of the administration's position on containment is that, that dog will not hunt? right. >> yes. >> rose: do you agree with that? >> i agree with that. >> rose: containment will not work. >> my personal position on that is this-- we ought to try every possible avenue we can to see if we can get them to correct their desire and goal of acquiring a nuclear weapon, but we cannot let them acquire that weapon. we are the only country in the world that can stop that. the israelis, in my opinion, do

not have the capability of stopping it. they can delay it. there will also be membership, many side effects, all of them adverse, from an israeli strike. butt end of the day, if we don't get it done the way the administration is working on it now-- which i totally agree with-- then we ought to take them out. >> rose: secretary clinton? ( laughter ) >> well, we're-- we're working hard. >> i said at the end of the day. the end of the day may be next year. ( laughter ) it will be next year. >> rose: i'm waiting. >> look, look, i think, i think the president has been very, very clear on this. he has always said all options are on the table, and he means it -- >> rose: but as you know the question is not whether they will have a nuclear weapon but whether they will have the capacity to quickly have a nuclear weapon. >> well that is, obviously, the question, and that is why jim

said, you know, kno at the end f the day may be a year. these kind of calculation are-- >> it may be more than that. >> it may be more than that. they are difficult to make. a lot of countries around the world have the-- what's called break-out capacity. they have stopped short of it. they have not pursued it. they have found it not to be in their interest or in the interests of -- >> rose: but do you think that's what they mean and that's what they intend? >> well, that's what we're testing. that's what every meeting with them is about to try to really probe and see what kinds of comimentz we can get out of them. now at this point we don't have them, so i can't speak to what they might be if they are each to be presented. but that's why we have to, you know, take this meeting by meeting and pursue it as hard as we can. >> the problem is not the threat they would represent to us or

israel otheir allies somewhere in the region. it's the proliferation problem. it would really then be out of control. and that's the real thing you have to guard. and that's why i would say at the end of the you just cannot let them have the weapon. is that break-out time or is that after they make one, after they make three or four or after the delivery vehicles? that's all for the military to decide. but at some point, you have to say that's simply not going to happen. >> rose: i think i heard that loud and clear. but you also suggested that the united states should do it rather than israel. >> absolutely. and the reason i say that is if you look at what martin dempsey said not long ago. he said if israel -- >> rose: chairman of the joint chiefs. >> chairman of the joint chief of staffs. if they hit nuclear facility we're going to lose a lot of american lives in the region. many people in the israeli

national security establishment have come out publicly now, you know, and questioned their leadership's view that maybe israel ought to do it. and they say, no, israel shouldn't do it. there are a lot of unanticipated consequences that can follow from that, not least of which is strengthening the hand of the hard liners in iran. i mean, you don't want to do that. they're having troubles now. sanctions are not complete yet. we want to squeeze them down more. but they're having an effect. and the governmentee having some problems. and you don't want to lose all that. >> inability, i mean, what jim is saying is a really important point because we know that there is a vigorous debate going on within the leadership's decision-making group in iran. there are those who say, look, you know, theses singleses are really biting. we're not making the kind of

economic progress we should be making. we don't give up that much by saying we're not going to do a nuclear weapon and having a verifiable regime to demonstrate that. and then, frankly, there are those who are saying the best thing that could happen to us is be attacked by somebody. just bring it on because that would unify us. it would legitimize the regime. you know, you feel sometimes when you hear analysts and knowledgeable people talking about iran that they fear so much about the survival of the regime because, you know, deep down it's not a regime. it doesn't represent the will of the people. it's kind of morphed into kind of a military theocracy. and, therefore, an argument is made constantly on the hard-line side of the iranian government that, you know, we're not going to give anything up. and in fact we're going to provoke an attack because then

we will be in power for as long as anyone can imagine. >> and, charlie, let me just explain why i said i don't think the rels can do it but we. reason i say that is the israeli government came to the prior administration, the bush 43 administration, and they asked for over-fly rights, they asked for bunker busting bombs, they asked for in-flight refueling capabilitys. and the administration said no, that's not in the national interest of the united states today for you to strike iran's nuclear facility. my understanding is they made the same request of this administration. i don't know the answer to that for sure. the secretary would. whether they did or not, that's the reason i say if anybody's going to do it, we ought to do it because we have the capability of doing it. >> and hopefully we won't get to that. ( laughter ) that-- that-- that would be i think -- >> rose: because you believe there will be a change of behavior or a change of regime? >> no, there's-- i'm not going to talk about a change of

regime. i see no evidence of that. i think the iranian people deserve better. but, you know, that's-- that's for them to try to determine. >> rose: but there is this question, too, about iran-- i want to move to some other issues-- looking back at the time of the protest over the election, do you wish you had done more? do you wish you had member public, more supportive? >> well, look, at the time there was a very strong consistent message coming from within iran that anything we said would undermine the legitimacy of their opposition. >> rose: this is from the opposition. >> this is from the opposition coming out to us. one can argue were they right? were they not right. at the time it seemed they had some momentum. they did not want to look like

they are acting on behalf of the united states or anybody else. this was indigenous to iran and to iran-- iraniansacy discontents and that made a lot of sense at the time. the last thing they wanted was to give the regime the excuse that they didn't have to respond to the legitimate concerns arising out of that election. what we did do, which i think was very value added was to work overtime to keep lunlz of communication open. we found out social media tools, one in particular, was going to shut down for a long-scheduled rebooting of some sort, and we intervened and said, no, because the opposition uses you to communicate to say where they're going to have demonstrations to warn people. so we were deeply involved in a lot of package messaging that we thought did not cross the line

that the opposition didn't want us to cross. that was our assessment. >> rose: let me move to egypt? what's the risk for the united states and what's the risk for the middle east in terms of where the army is, where the people who created the arab spring is, and where the muslim brotherhood is? >> well, i think the risks are quite large because for some time, we've been looking at egypt as perhaps a textbook success case of how -- >> rose: of the arab spring. >> of the arab spring. now people say it's not an arab spring at all it's an arab winter because of what's happening. and there's some, in my view, potential for that-- for that to happen. it is not, as we sit here today, not an unahighwaye unalloyed su. the military has come in, they've taken power back, and it

looks like they're going to keep it. and then we have a question of whether the results of the election are going to be confirmed or observed. there are all these questions coming forward. within the last, frankly, last week, week or 10 days, so it's a real problem. because if egypt goes the wrong way, if we lose the arab-- if we lose the egyptian-israeli peace treaty, and that's possible if the more radical elements in egypt end up on top after all that's happening now, that-- that would be a very destruct and i have destabilizing event. >> jim is right. we are concerned, and we have expressed those concerns. we think that it is imperative that the military fulfill its promise to the egyptian people to turn power over to the

legitimate winner upon we don't know yet who is going to be named the winner of the election, but we think that the military has to proceed with its commitments to do so. and so the actions that they've taken in the last week are clearly troubling. and it's been a fast-moving situation because we've had mubarak's serious illness intervene. we don't yet have vote totals coming out. we don't yet know what the military really has meant by these statements and decrees. they've said one set of things publicly. then they've been backtracking to a certain extent. but our message has been very consistent that, look, we think, number one, they have to follow through on the deem process. democratic process. and by that we mean, yes, elections that are free and fair and legitimate; whose winner

gets to assume the position of authority in the country; but who recognize recognizes that ds not about one election, one time, and we have very clear expectations about what we are looking to see from whoever is declared the winner that it has to be an inclusive, democratic process. the rights of all egyptians, women and men, muslim and christian, everyone has to be respected. they have to have a stake in the future of the democratic experiment in egypt. the military has to assume appropriate role, which is not to try to interfere with, dominate, or subvert the constitutional authority. they have to get a constitution written. there's a lot of work ahead of them. we also believe it is very much in egypt's interest, while they're facing political turmoil and economic difficulties, to honor the peace treat weisrael.

the last thick of thing they need is to make a decision that would undermine their stability, and furthermore, we think it's are important that they reassert law and order over the sinai, which is becoming a large, lawless area; and that they take seriously the internal threats from extremists and terrorists. so they have a lot ahead of them. >> plus the dissolution of the parliament. they've just come in and dissolved the elective parliament. how do you put that humpty dumpty back together? ( laughter ) >> rose: hard. the impression is during the time of the revolution that was takes place, that the leaps between the americans and the military was very good and very strong. >> uh-huh. >> rose: does that still exist? >> well, there certainly is a continuing effort to reach out. and in fact i know there are

ongoing conversations between our military leaders and their counter-parts in egypt. but the message is the one i just said. you know, we expect you to support the democratic transition to recede by turning over authority. and we are watching this unfold, but with some really clear red lines about what we think should occur, based on what the people of egypt thought they were getting. you know, within of the, you know, stories that will emerge even more in the months ahead is that the people who startedly the revolutio ref revolution thr square decide they wouldn't really get involved in pol tibs. and i remember being there -- and this kind of goes back to your very first question, going to dirow shortly after the success of the revolution, meeting with a large group of these mostly young people. and when i said, so are you going to form a political party?

are you going to be working on behalf of political change?" they said, oh, no. we're revolutionaries, we don't do politics." i sat there and i thought, that's how revolutions get totally derailed, taken over, undermind, and they now are expressing all kinds of disappointdisappointments at ths they had and the results. the energy that went into creating this participatory revolution, giving people a sense of being citizens in a hernandez egypt, has to be rekendled because as hard as this has been, this is just the beginning. they are facing so many problems that, you know, we could list for an hour that they're going to have to deal with, and they have tol somehow paint a picturt what it's going to take to get the results of this hard-fought change. this is a generational project. and, you know, preparing these

young foreign service officers for the aftermath of these revolutions, how we manage it, how we try to exercise influence as hard as it is, because we have to be so sensitive billion it. that really is what diplomacy is about and we will be doing that for a long time. >> rose: the late holbrook was worried about that, that the world was shifting, particularly afghanistan and the exclusion of diplomacy. do you have some concerns about that? >> i wouldn't say to the exclusion, but certainly -- >> rose: imbalance, perhaps. >> well, i think by most definitions, the power, the presence, the resources of the military are quite disproportionate to what, you know, we can field through the state department and u.s.a.i.d. but what has happened in the last tech decade in iraq and in afghanistan has been, you know,

quite important. the growing appreciation and cooperation between our military, our comes-- diplomat and development experts -- call it the three d.s of forepolicy-- and both bob gates and leon panetta were real champions of this because they recognized if we weren't working as an american team, we were going to get out of balance pup know, it's not been an easy relationship because there are different culturees, different expectations about what we're work for, what kind of result we're seeking. but with we've learned to not just coist but cooperate in the field, on the ground. you know, i give out heroism awards. i've given out about 30 of them the last three and a half years. they've gone to difficults who have saved victims lives and p.r.t.s in iraq.

difficult and development experts who literally have been on the front leans in afghanistan. so we're shaping an expeditionary diplomacy for the 21st century that has to work hand in in hand with the military. >> your foreign policy has got to be supported strongly by the military but it has got to have a disappointive component. i always said diplomacy is best practiced with a male fist. that's where the military comes in. the last 10 year we fought two, very long, and expensive wars. so it's natural, i think, that the military side of the equation would be emphasized. i happen to believe-- maybe i'm wearing my treasury hat now-- i happen to believe the american people are tired of wars. i know one thing-- we're broke. we can't afford them anymore. we can't afford a lot of things, and the biggest threat facing this country today is not some

threat from outside. it's not iran. it's not nuclear weapons or anything else. it's our economic -- >> rose: we have to get our economic house in order. >> we better damn well get our economic house in order because the strength of our nation has always depended on our economy. you can't be strong politically, militarily, or diplomatically if you're not strong economically. >> well, amen to na. ( laughter ) because i've had to go around the world the last three and a half years, reassuring many leaders, both in the governments and business sectors of a lot of countries, that the united states was, you know, moving forward economically, that, you know, we were not ceding our leadership position. we were as present and as powerful as ever. but we recognized that we had to put our economic house in order. i was in hong kong during the

debt ceiling debate, and all of these, you know, billionaire moguls were at this event, lining up and with real anxiety on their faces asking me whether the united states of america was going to default on its debt. and i said, "oh, no!" ( laughter ) i had to hope that people were listening. so, yes, i mean, if we don't get our economic house in order, and, obviously, there are, you know, perhaps some differences about how to do it, but when-- you know, when secretary baker was secretary of the treasury, when president bush 41 were in office, when my husband was in office, we actually compromised. you know, i know that some believe that a word that has been banished from the washington vocabulary. but i'm also responding a lot of time explaining to people in new democracies that democracy is about compromise by definition you don't think you have all the

truth all the time. and people of good faith of different perspectives or different parties have to come together and hammer out these compromises. and so of course we've got to get back into the political work of rolling our sleeves up and solving these problems. >> rose: she's singing your hym. >> i don't disagree with that at all. you know that, so theiry. ono siree.based on my politicale and public service experience it ain't going to happen until after november. ( laughter ) why don't you ask us about pakistan. >> rose: i'm coming to pakistan. >> ask her that. ( laughter ) >> rose: all right. all right. so, how do you assess what the state of our relationship with pakistan before i come back to the the secretary? >> i think it's terrible. and i think it's really sad because, you know, for the duration of the cold war, they

were our ally, and india was the ally of the soviet union, and now all of that has changed. but the relationship is very problematic in my view. it's a tough job. i'm glad i'm not sitting there trying to deal with the pakistani relationship. and i think we need to maintain a relationship with them. a lot of people are saying cut off all their aid. fire them and so forth. i think we need to maintain a relationship with them for bawz they're a nuclear power and because it's really important that we not see nuclear conflagration in the subcontinent, and we don't want to see any more proliferation than we've seen from pakistan. but guess what? they've been a very problematic ally, they really have. and we need to -- >> rose: you mean by things like isi, and their activities? >> yeah, and the proliferation that took place under kahn, and the fact that obama-- osama was living there in abbottabad all

that time-- and don't tell me they didn't know that. and the fact they've thrown this doctor in jail for 33 years who helped us find him. all of these-- and they want to charge us $5,000 per truck. i mean, come on. >> rose: i'll make this easy for you. what would a president jim baker do? >> i think i might do what i did when i was secretary of state sitting in this office one floor down. first month i was here, one of the-- one of the assertant secretaries came in and said, "mr. secretary, you need to sign this." i said, "what is it?" he said, "it's the certification that pakistan is not developing a nuclear weapon." i said, "well, they are, aren't they?" and they said, "yes." ( laughter ) and-- and like the greenhorn i was, i signed it. ( laughter ) and the next year the same week, same guy came in, "mr. secretary, you need to sign this."

i said, "what is it?" "it's the certification required under the pressler amendment that pakistan is not developing a nuclear weapon." i said, "well, they are, aren't they?" and he said, "yes, they are." and i said why do i have to sign it?" he said, "because the white house wants it." i said, you take it over to the white house and have them sign it." and i didn't sign it and guess what. we cut off their aid. i think at some point we need to seriously do that. >> rose: i thought you just said not to cut off their aid. >> i said we need to maintain a relationship with them but we need to get their attention. we shouldn't break the relationship right now, sever the relationship totally but we need to get their attention. and i am sympathetic to people on the hill saying we're broke, we're giving taxpayer money to this country, which is not treating us right. >> rose: so there. >> we are living with a country that has a lot of difficult dift

issues both for themselveses and then for us and others. but here's-- here's what i would say. first of all, i completely agree. it is not in our interest to cut off our relationship. it is in our interest to try to better direct and imagin messent relationship, and there are several things we're asking the pack takens to do more of and better. number one, they've got to do more about the safe havens inside their own country. i mean, everybody knows that the taliban's momentum has been reversed. territory has been taken back. the afghan security forces are performing much better. but the extremists have an ace in the hole. they just cross the border. they get, you know, direction and funding and fighters and they go back across the border. and what we've said to the pack

takenthepakistanis is, look, ife were ever an argument in the past of your policy hedging against afghanistan by supporting the hakani network, or the afghan taliban, those days are over because that's like the guy who keeps poisonous snakes in his back-yard line convinced they'll only attack his neighbors. that is not what is happening inside pakistan. they are losing sovereignty. they have large area areas thate ungoverned. they've had a rash of you know terrible attacks, more than 30,000 pakistanis have been killed in the last decade. they talk a lot about sovereignty. well, the first job of any sovereign nation is to protect your own people and secure your own borders. and, therefore, that's what they should be doing. and by doing so, they would help themselves, first and foremost, help the afghans, help us and others.

secondly, they have to be willing to recognize that as we withdrew from afghanistan, it is in their interest to have a strong, stable afghan government that only can come from being part of the solution, being at that table-- as we were discussing earlier-- to try to help with afghanistan's economic and political and security development, rather than doing everything possible to try to undermine it. so these are big issues that they have to come to grips with, and that's not even mentioning the need to prevent nuclear proliferation or a nuclear incident that could occur because of the problems within their own system. >> rose: for the historical record, you believe they knew that osama bin laden was there? >> we have never been able to

prove that anyone at the upper levels knew that. i said when i first went to pakistan as secretary in 2009 that i found it impossible to believe that somebody in their government didn't know where he was. i still believe that. and that he took up residence and built this huge compound in a military garrison town. but we-- to be fair-- we have no evidence that anybody at the upper levels-- and certainly, if you talk about the civilian government-- because the other goal that we have to try to strengthen democracy and a civilian government inside pakistan. and i have no reason to believe that the civilian government knew anything. who was in what level of responsibility in the military or the i.s.i., whether they were active or retired-- because we do know that there are links to retired members-- we've never been able to-- >> at the very least, they ought

to stop double dealing us. >> yes, at the very least. >> rose: threaten them with removing aid in order to use that leverage to get them to stop? >> well, i'm not sure we give them enough that that's going to make them stop, but they need to know that we-- that we're upset about this. they better-- thigh ought to stop double dealing. >> rose: and they should release dr. afare, idy. >> absolutely. >> it is something so unnecessary and gratuitous on their part. this man was an international terrift. the pakistanis claimed he was their enemy as well as ours. this man contributed to ending the al qaeda leadership that was in their country. and they shouldn't treat him like a criminal. >> rose: i want to thank secretary baker for coming up from texas and sharing your ideas and opinion with us. >> thank you. >> rose:es and's woo have done today. we hope other secretaries will be here, and to hear people at

the top of american government who had important roles and to take advantage of their own experience, their history, and to funnel that through a consideration of the challenge that faces secretary clinton every day. so i thank both of you. thank you, charlie ( applause ) >> yes, thank you.