Let's go back to 9/11. President Bush says, "You're either with us or against us." Secretary [of State Colin] Powell calls President [Pervez] Musharraf and gives him a list of demands. What was Pakistan's reaction to those demands at the time?

I wouldn't term them as demands. I think what the U.S. has decided after 9/11, obviously, [was] that they had to go after Osama [bin Laden] and therefore the Taliban. This was a clear decision. We understood it. And it was inevitable. Therefore we decided, in our own strategic interest, that we would cooperate with the strategy that the U.S. had outlined. Our response was, therefore, it was an important decision, a strategic decision that was taken by President Musharraf, but in hindsight, the correct one.

But this was a tough decision, because you were tight with the Taliban. You had advisers in the ministries across the border in Afghanistan. You were friends with the Taliban.

Well, we were one of the few governments which recognized the Taliban. One has to understand the strategic context in which we did so. Post the departure of the Soviets, there was chaos in Afghanistan -- warlords, internecine fighting -- which affected us. Therefore the Taliban, when they emerged, were able to impose order on most of Afghanistan. For us, any government which was there in Kabul which had control of the territory was the criteria. And that is the political and legal criteria in most cases for recognition of a government. So we did recognize them.

They had links with the tribals on our side. They were friendly. Therefore, we had relations with the Taliban. And of course we tried to help Afghanistan, as we're doing now. ...

But they had a difficult ideology. We didn't agree with the ideology, but we were not in a position to judge that ideology. It was a decision taken on cold-blooded national interests for Pakistan.

Well, you're asked to switch your position 180 degrees from being an ally of the Taliban to being an enemy of the Taliban.

I don't think it's that cut-and-dried. We were engaged, even previously, in efforts with the Taliban to have them give up Osama bin Laden. We made tremendous efforts. We sent our intelligence chief. We cooperated with the Saudis to try and persuade the Taliban to give up Osama bin Laden, and they did not respond. We told them that this was not in the interest of their government and not in the interest of Afghanistan, but they refused to give up Osama bin Laden.

When 9/11 happened, it was inevitable that the U.S. would then use force to get these objectives. It was clear to us that they would do so, and we told the Taliban. Even then, at the last moment, we said, "Cooperate; respond to the demands to give up Osama." They still refused. And therefore the intervention became inevitable. ...

The chief of the ISI [Inter-Services Intelligence] at the time, Gen. Mahmood [Ahmed], was fired from his job. Why?

... He, I believe, had a different position, different views, which is quite natural in circumstances like that. Once the policy was decided by the president, obviously everybody, including the intelligence chief, had to be in line with that policy, and therefore the changes that were necessary were made.

You say he had different views. What do you mean?

... His position was actually more supportive of the Taliban in the previous period. Therefore, I think the president felt, rightly, that he needed somebody who was fully in sync with the policy he had. So I would not exaggerate the change of personnel. That happens all the time. ...

The criticism has been made that Musharraf, the president, didn't go far enough in cleaning up the ISI.

I think that is incorrect. I know personally the ISI personnel change on a regular basis in any case. It's part of the operational structure. But in this case, there was a thorough change in personnel, new people who came with the new setup. I think that's not true that there was not a thorough change. There was full change.

How many people were let go?

I can't give you exact figures. I don't obviously have exact figures, nor would our people share the exact figures.

But are we talking one or two, or are we talking scores?

No, no. There were hundreds of people.

Hundreds of people were let go from the ISI after 9/11?

Ah, yes, I imagine. It's a large organization. There were big changes.

Well, let me give you one example that we've witnessed, we photographed after 9/11, was volunteers streaming out of the tribal agencies and into Afghanistan to fight. It was one of the demands that was made specifically by Secretary Powell to Pakistan, to prevent Pakistani volunteers from going across the border to fight Americans. But yet there was nothing done to stop them. We have photographs, video of hundreds of them, thousands really, streaming across the border.

Yeah. Do you know that 30,000 people cross the border between Afghanistan and Pakistan, at one point, every day, legally?

But these were armed, in vehicles, being cheered by the side of the road.

Yeah, I understand. You have to see these are the same tribes across the border. There are traditional crossings across the border. It's very difficult. Every Afghan or Pashtun in these tribes usually carries a rifle or a gun with him, so it's difficult to distinguish between those who are going to fight with the Taliban [and] those who are not going to fight with the Taliban. And it's, I think, perhaps an exaggeration to say that we allowed them to go. I think there are so many border crossings, so many points at which people cross over every day legally, for family reasons, for commerce and trade and employment, that it's very difficult to say that this was a sort of wave of people just flowing across. ...

Certainly there were sympathizers who may have gone across and fought with them. They were not encouraged. ...

American military officers feel that you could have moved your troops more quickly, that you didn't move until the battle of Tora Bora, and you were under significant American pressure by that time to do so.

Well, you have to see that at that time, we had a confrontation with India on the other side of the border. All our troops were aligned there. The Indians had moved up their troops. They were threatening us. We have to look at our national security first and foremost. So we could [not] have moved more [at that time].

We did move later, once we had normalization, or a greater normalization, with India, when they pulled back their troops. We did move troops. We've got 80,000 troops on the border now, much more than the combined forces inside Afghanistan. We just moved 10,000 troops on the border in Baluchistan. So we are doing what we can and when we can. ...

What do you think the effect of that nuclear showdown had on the chances of arresting Al Qaeda, especially bin Laden, who was coming across the border at that time?

I can't say. But obviously if there had been more troops on the ground, perhaps our chances would have been better. But at that time there wasn't long-range thinking. The bombing was taking place. American commanders reportedly were confident that they'd get Osama in Tora Bora at that time, but it didn't happen.

So we all have to see what the lessons [were] that we learned from that and to try and improve our operations. I think the operations have improved. Of course there is room for improvement, but on our side, as I said, we've deployed 80,000 troops. We've gone into the tribal areas, which was not done even by the British. We have had casualties in the fighting with some of the tribes.

I think Pakistan has done much more than anybody else in the world as far as fighting Al Qaeda and the Taliban is concerned. We've taken a lot of sacrifices; we've paid a huge price. We are paying a huge price, both in terms of casualties and in terms of the political fallout in those regions. The opinion of the Pashtuns -- we have 20 million Pashtuns; Afghanistan has 8 or 9 million -- and we have to be careful about public opinion inside Pakistan, especially the views of the Pashtun tribes.

The Americans have at various times threatened you and said, "Look, if you can't clean up these tribal areas, we're going to come in ourselves."

Well, I think first, the problem is within Afghanistan, basically. It's not in Pakistan. The problems of Afghanistan are warlords, local chieftains, drug lords, criminals and religious extremists that they are fighting. Fighting is taking place all over Afghanistan. ...

Therefore, I think first and foremost, the U.S. military should concentrate on cleaning up in Afghanistan first before they threaten to come into Pakistan. We will not allow it. It is our territory. We are responsible. We are doing, we think, a fine job. We're doing the best job we can.

Maybe with some addition to our capabilities which we requested, some greater sharing or real-time intelligence, which doesn't always happen, we could do better. But I think that the presumption that the U.S. can do what our military can't do is somewhat far-fetched. ... We know how to deal with them, these tribes. We've been doing it for a long time. There we have a strategy. Our strategy is a strategy which combines military aspects, political aspects and economic aspects.

This is the kind of comprehensive strategy that is required also in Afghanistan, and you will not succeed in stabilizing Afghanistan unless there is such a comprehensive strategy which seeks to have a security presence; which seeks political accommodations with all the influential settlements within each region; and which brings economic development and reconstruction to each region. ...

Well, let me play devil's advocate with you a little bit here. I've listened to some of these criticisms. They raise some interesting points. One is that in the beginning, Pakistan tried to go after some of the Taliban who were first showing up in South Waziristan back in 2003, 2004. You ran into some rather stiffer resistance than you expected, and after trying to defeat them militarily, you began negotiations with them that really raised questions about just whose side you were on.

I think that's a completely incorrect assessment of the situation. Yes, we went into the tribal areas in 2000, before 9/11, because we decided to integrate the tribal areas into the federal structure and to bring administrative and economic development to the region. We went in there with the agreement of the tribes, of the tribal chieftains.

After 9/11, when the flow of the Al Qaeda and Taliban came from the other side, of course the dynamics changed, and we had to go after those militants that found refuge in some parts of these regions. Most of the tribal leaders cooperated.

But many of those tribal leaders that cooperated with you were subsequently assassinated. You found that the real power in those areas was the Taliban.

No. Actually there are only three subregions where the problems occurred. The rest is still OK.

But we're talking South Waziristan. That was a big problem for you.

But you have to see how large the area is. With what dimensions of the problem we had, we solved most of the problem. We faced difficulties in parts of Waziristan, South Waziristan, yes, and then we had to take a combination of military and political action. But the military action that was taken never excluded the political action. This is the way we have dealt with the tribes for decades. This is the way the British dealt with the tribes.

So to say that we went [with] military operations and then we negotiated, no. There was always two channels: military action, political contacts. There is no indirect or direct contacts, so the strategy has to follow both tracks.

Do you really believe you could negotiate with the Taliban, who were harboring Al Qaeda successfully?

We were not negotiating with the Taliban. ... No, we were negotiating with the tribal leaders. To see whether there's a way to get an objective through political means is a smart thing to do.

Do you think it was smart to negotiate with [Pakistani tribal leader] Nek Mohammed?

Maybe it was; maybe it was not.

He's a Taliban leader.

Well, if he was a Taliban leader, fine.

He'd run an Al Qaeda camp.

OK. Suppose we were able to get him to surrender the Al Qaeda militants; it would have been good. So we had to follow both tracks, and we are, even now, we feel that we have to have a strategy which combines military action, political accommodations and economic development.

But if I can just go back to that big jirga [council]. [Lt. Gen.] Safdar Hussein goes into Shikai Valley, and he makes a speech. In his speech -- it's on video -- he ridicules the United States in front of the tribesmen. He ridicules the United States for having suspicions about the tribal areas. He clearly does not seem like he's in there negotiating on behalf of Pakistan as a loyal ally to the United States. He seems as if he's encouraging the tribesmen with anti-American views.

Uh-huh. I can't comment on the views of one particular general. He's not there --

A very powerful general.

Certainly.

In charge of negotiations.

Certainly. But he's not there anymore, so --

Is that why?

I don't know. But negotiations have different dynamics, different techniques. I mean, if we could also carp on the number of times that American generals have criticized us.

But Gen. Safdar Hussein told two journalists in Peshawar that he had actually made a deal to offer money to the Taliban to pay their debts to Al Qaeda. It was reported in the press.

Uh-huh. I don't know the details of that discussion.

Would that shock you?

No. You know that [Afghan President Hamid] Karzai's strategy at a certain time was also to try and win over the Taliban, and there are some Taliban who are in the Afghan parliament, who are in the Afghan government.

But paying money to Al Qaeda seems a bridge too far.

No. It's a judgmental issue, and I'm not passing judgment on negotiating techniques or negotiating objectives. Neither am I here to say that this is a position of the government of Pakistan, which I have to defend. This is the position of one general who was negotiating. It may be so; it may be right, may be wrong, may be wrong negotiating techniques and whatnot. But this does reflect Pakistani policy. It is negotiations. Everybody there was trying to see how to reduce the violence. One way was military; another way was try and win them over the traditional Afghan way, which is to pay money.

But paying money to Al Qaeda, would you agree that that's a little bit --

We're not paying money to Al Qaeda.

That's what Hussein said he was doing.

Well, maybe he was wrong, and I'm willing to admit that he was wrong. It's not government policy, in any case.

It's hard for me to believe that he would be out there freelancing on his own without the approval of President Musharraf.

Well, I think this does not reflect Pakistan government policy or the president's policy. When a commander is out in the field, sometimes they feel the need to have flexible strategies. He's no longer there, in any case.

One of the problems you faced was that many of the people in the army have cousins or brothers even who are actually inside the Taliban, that there's a close relationship from Pashtun to Pashtun. For instance, the fellow, Abdullah Mehsud, who was released from Guantanamo and went back and became a Taliban leader, has a brother who's a major in the army. It's a challenge, is it not, to get an army to fight their own relations?

I think that you will not find one instance where our army has refused orders to fight, and the fact that they may or may not have relatives is not relevant to our army. It's a disciplined army with fighting orders. They follow the chain of command. ...

So the idea that there are officers within the ISI or within the military of Pakistan who have divided loyalties, you reject that out of hand.

Yeah.

But this is a very common thing. Former ambassadors to the region have told me that we are having trouble because the ISI still has a hand in with the Taliban.

I think that is a subjective and incorrect assessment on the part of some of our ambassadors. And there are many reasons for that. I think some of our friends want to be able to explain why they have not succeeded in Afghanistan, why the war on terror has not been able to capture Osama bin Laden. It's very easy to find scapegoats for that purpose. But you have to see the challenges which Pakistan faces, the enormity of the task that we are confronted with.

We have a 20-year history of the blowback from Afghanistan. The whole bunch of 40,000 extremists who were brought there, who operated freely in Afghanistan, some of them crossed over into Pakistan; many are still in Afghanistan. We have to be able to deal with this issue in a comprehensive way, in a way that will not affect our own national structures, our unity and stability. We're trying to do that as best as we can. ...

We have to address also the long-term issues of how are we going to end this. To end it we have to address the whole issue of extremism: Stop the hate propaganda; stop the extremist organizations; address the education problem; address the employment problem; address the whole issue of state structures and so forth.

At the same time, what is it that is feeding the anger and the frustration which leads to young boys becoming recruits to terrorism? That anger is the humiliation that is faced by the Muslim world, by the Palestinians every day, by the Kashmiris every day, the Chechens. Then, on top of that, we have Iraq, which has become a magnet for terrorism. We have then this conflict between Israel and Lebanon which has strengthened the extremist organizations. All of these are adding on to the anger and frustration on the Muslim street and makes it very, very difficult for governments to be able to deal with this problem at home.

But you have to see how Pakistan is one country which is not afraid of taking on the terrorists. We are cooperating on a daily basis with the United States, the United Kingdom, all our friends. ... And we are taking them on in the mountains; we are doing it in the cities.

I think that instead of the appreciation and gratitude which we would expect from our friends, what we often hear is the carping and the criticism of Pakistan is not doing enough or should do more. Yes, we should do more, could do more, but everybody should do more. We have 80,000 troops on our side of the border. On the other side there are 20,000, 25,000. It's a two-way street.

Let me just raise a few things they say you can do. Haqqani, Jalaluddin Haqqani -- why don't you arrest him?

Well, I think Jalaluddin Haqqani, if he's found, I'm sure he'll be arrested.

But the ISI certainly is a very capable organization with longstanding ties to Haqqani. Even post-9/11, you were talking to him. Why not arrest him?

Well, that's a question which we will have to see. Arresting him might be something that we will have to do. But I'm not sure whether we know where he is or whether we are capable at this time of getting him.

American officials tell me that it is not believable that the ISI couldn't arrest Haqqani, and by doing so could get a lot closer to bin Laden.

I'm not sure the assessment of American officers is necessarily a correct one. I think the situation on the ground could be much more complex.

But he was an ISI asset for many years.

But that doesn't mean that we know where he is.

Gulbuddin Hekmatyar, another example, was working for the ISI.

… I think this is a ridiculous argument to say that because he was being paid by the ISI, so were so many other guerrilla leaders.

You can't arrest Hekmatyar?

Perhaps we don't know where he is. I mean, it's a big place. We have not been able to find -- well, we meaning the U.S.-Pakistan -- have not been able to find Osama. We've not been able to find Mullah Omar. He could be in Afghanistan, could be in the border regions of Pakistan. What makes the American officials sure that Haqqani is on our side and not on the other side? If they know, why don't they tell us? Pinpoint exactly where he is, and then we'll arrest him. They don't know.

Your president was handed a list of where people were, and he complained that it was worthless.

It was worthless. It was a list that was six months old, handed over at a summit meeting, of addresses that were not there anymore, telephone numbers which were false, names which were incorrect. It was a completely false list that was given. ...

The Americans say to me they give you actionable intelligence, and it takes you days in order to act on it when you should be acting in hours. They complain about this.

Well, at least we act. Some other friends will not act. But we act. I think we act in a timely way. It may be sometimes we don't have the capacity for quick action. Maybe we are not as advanced as the U.S. in this capacity to act, but we do act when we are given information.

I think that to say that we don't act quick enough, perhaps you should help us to get the capability to act quickly. Give us the electronic capabilities; give us the helicopter capabilities; give us the quick rapid-reaction capabilities that we require and which we requested from the United States. ...

Here we are, five years since 9/11, and over just the last three years, there have been six different plots -- some successful, some foiled -- all of which have ties back to Pakistan. What does it tell us about the progress that Pakistan is or is not making in the war?

Well, I think that you have to see it in perspective. Firstly, I have mentioned the 40,000 militants that were brought to Pakistan to be funneled into Afghanistan for the war against the Soviets. Those militants, their ideology, their ethos has survived in parts of Afghanistan, in the frontier parts of Pakistan. So that's one aspect of it.

The second is the aspect of anger ... throughout the Muslim world. That anger is due to the sense of humiliation that Muslims all over the world feel, and this anger is now manifested in Europe, in other parts globally as such. So that is the explanation.

Pakistan, after all, is a country of 160 million people. It's as many people as almost the whole Arab world. It's a big place; it's a difficult terrain. ...

It's most regrettable that some of our friends, especially in the media, try to focus on what is wrong rather than what has gone right. The fact that we've foiled 20 plots, the fact that we've arrested 600 Al Qaeda operatives, the fact that we've contained the Taliban -- these are positive facts. Are we going to look at the glass half full or half empty? You can look at it either way. ...

There's a debate about being tougher on Pakistan. There's a debate: Should we be tougher on Pakistan and risk destabilizing Musharraf, or are we being too soft on him?

Well, I think it is a futile debate. You be tougher on Pakistan to get what?

To get action against Taliban sanctuaries and Al Qaeda sanctuaries.

We are going to act in our own national interest. We do not respond to pressure. We are going to do exactly what is in our national interest. The U.S. national interest and our national interest, at this time, is convergent.

I asked Musharraf the question, what was in it for him? He lost 600, 700 men in tribal areas. What was in it? He didn't say that we shared common interests. What he said was that he received money from the U.S. He was getting F-16s; that it helped the economy. He put it in terms of money.

Well, on the contrary. Of course there is the aspect of U.S. assistance to Pakistan. That's in the national interest, right? It's in the national interest to be supported by the U.S.

Well, then it's in your national interest, by extension, to keep the pot on the boil, as they say, to keep the war on terror going, because once it's over with, you don't get any more money.

No. We risk destabilizing our own country. Do you think that we are so stupid that we will not act to suppress extremism and terrorism which affects the stability of our country to get a few million dollars?

I don't know.

No.

It depends on how strong Musharraf is. I asked Steve Coll the question as to whether Musharraf was a false ally and he says no, he's not a false ally. He's a weak ally.

I think he's a strong ally. And he's a good ally. And he's the only ally you have in that region who is capable of delivering on his promises. You have no other ally in that region.

And the promise is what?

The promise is a long-term campaign against terrorism and extremism. We will win it. It requires patience. It requires sacrifice on all sides. It requires cooperation. It requires no shifting of the blame from where it should fall. We are doing the best we can. It's got to be seen in a long-term perspective. It's in the interest of the U.S. to have moderation in Pakistan and in Afghanistan and in the whole region.

Pakistan is the key to success in that strategy. You press us more, you pressurize Pakistan, you destabilize Pakistan, it's going to be the most counterproductive thing that would happen. And perhaps that is the aim of some people. And some people who may be fielding policy. But this is certainly would be most counterproductive and silly thing to do, is to press Pakistan more. To the point where either the cooperation breaks or you destabilize Pakistan.

What happens if United States pressure destabilizes Pakistan?

I think you know the scenarios and those scenarios have been sketched out very well.

Religious parties taking control of a nuclear state.

Whatever. You know there are so many scenarios. …

… It's five years since 9/11 and we haven't really made good progress against Al Qaeda. We haven't been able to dismantle it. You mentioned that you've captured or killed 600 Al Qaeda operatives. But the top guys continue to operate. They have their own TV studio somewhere between Waziristan and Bajaur. They operate freely.

Well, how freely one doesn't know. Having a TV studio is different from having a command-and-control structure and a whole hierarchy and the ability to move around at will. We think that we have destroyed the command and control structure. But Al Qaeda now is more of a kind of an ideology or a state of mind with splinter groups operating on their own. …

But we think that our actions have considerably and significantly degraded Al Qaeda, the original organization. But the ideology we need to deal with, as I said, in a more comprehensive strategy. We have to win the hearts and minds of people. And I think there we have not done as good a job as we could have.

[What is the strategy in the tribal areas?]

… Well, basically what we have is a military strategy in the sense of security presence, which is credible, which can respond, punish bad behavior. Secondly, a political strategy which would accommodate those who wish to cooperate and use them as a basis to win the support of the people of the region. And thirdly an economic strategy which would try and provide infrastructure development, employment, social services, to these parts.

In South and North Waziristan there's very little economic development.

Yes. Naturally, of course we have to have a certain success at the security and political level before the economic development.

But it's five years and no progress on security.

There has been construction of roads. There have been schools which have been made. So there has been some progress. But, yes, I agree, that in parts of Waziristan … there is still a lot of work to be done. And that's where the focus is.

[Why do you think you'll be successful in bringing stability?]

This is our country. … This is our people. … In the final analysis, we will have to find the political accommodations in order to have them in the mainstream of Pakistan. And that's the major objective, is to bring them, integrate them into the political and economic life of the country.

They are fervently anti-American. They are fervently against Karzai. How do you bring them into the mainstream?

Well, I mean, there are people who are fervently anti-American and anti-Karzai, who are part of the … government.

Well, that's what America sees as the problem. You're not with us.

America cannot expect just to be loved by everybody. And love is not necessary for cooperation in the success of mutual objectives. There is a sufficient number of people who understand that it is in our interest to cooperate with the U.S. And we are doing so.

Why? Why is it in your interest? What are you getting out of this besides money?

We are getting security. And it's not in our interest to have an unstable Afghanistan. It's not in our interest to have extremists run around and terrorists in our presence.

Well, as long as they don't attack you.

No. It's certainly in our interest to eliminate it, because we are trying to create a modern, democratic state, industrial country, and these people are standing in the way of that. It's they [who] are in the wrong direction.

We are going in the direction of integration with the world. The rest of our country is being integrated very well into the world economy. We are trading; we are investing; we are producing. Our GDP has doubled in the last six years. Our per capita income has doubled in the last six years. We are on the threshold of becoming a middle-income country. The profit rates for foreign investment in Pakistan are 40 to 50 percent higher than in India by more than two times. So it is an attractive country for the world. We're being held back by these extremists and terrorists, and therefore we have to eliminate them. ...

But if you see extremism as a force that holds you back, why then did you back an extremist force in the Taliban?

You know that the policy on the Taliban evolved before President Musharraf took over. It was not a policy of President Musharraf. And when there is a policy of that nature, it takes time to change it. It was a strategic policy --

So it was a mistake, is what you're saying, to back the Taliban?

If I was honest, I would say yes. ... But, you know, countries live with mistakes, and they have to deal with them. Was it a mistake for the U.S. to back the extremists in the Afghan war against the Soviets? Perhaps yes. ...