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U.S.-Pakistan Relations: An Update [Rush Transcript; Federal News Service]

Speaker: Riaz Mohammad Khan, Foreign Secretary, Islamic Republic Of Pakistan
Presider: Daniel Poneman, Principal, the Scowcroft Group
October 3, 2007
Council on Foreign Relations Washington Club
Washington, DC

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DANIEL B. PONEMAN:  Good evening, everyone.  It's my great pleasure on behalf of the Council on Foreign Relations to welcome Foreign Secretary Riaz Mohammad Khan back to the United States.  He is no stranger to the United States.  I just learned a few moments ago he actually spent some time at Georgetown, which I'm sure is a place that many of you have spent time writing, and he was actually writing and finishing writing a book which many have started, not all have completed. 

I had an opportunity to meet him in his current incarnation just a year ago in Islamabad.  He has been working very hard on issues that are of great interest to many people in this audience, on all of the borders of Pakistan, Afghanistan, the Kashmir issue.  Just made an important address to the U.N. General Assembly a couple of days ago -- met with U.N. Secretary-General Ban Ki-moon, a good friend of many people at the council as well, and we are delighted that he is here to speak to the council. 

Now, I am admonished by the council to say certain things, and one of the most interesting things is this is not under typical Council on Foreign Relations rules.  The foreign secretary has graciously agreed to speak on the record and he'll speak for about 10 minutes or so and then he'd be happy to take questions for the rest of the time.  We will adjourn promptly at 7:30.  The other thing I'm admonished to remind you is to kindly turn off your cell phones, Blackberries, and other wireless devices.  Anyone who's had their kid put on a ring tone that goes off in the middle of a meeting knows how embarrassing that could be.  And as I said the foreign secretary -- there we go -- has graciously agreed to speak on the record and we are very happy to welcome you on behalf of the Council on Foreign Relations, Mr. Foreign Secretary.  Thank you.  (Applause.)

SECRETARY RIAZ MOHAMMAD KHAN:  Thank you very much, Mr. Daniel Poneman, for introducing me.  Ladies and gentleman, it really is a great privilege that I'm here before you, and as Mr. Poneman has mentioned I've been asked to speak for about 10 minutes or so on Pakistan-U.S. relationship as they stand today, and then perhaps I'll be basically guided by your questions and would respond to as best as I can. 

Pakistan-U.S.  relationship -- a long history but let me first say that Pakistan is a pivotal country in the region.  Stability of Pakistan is important for the region and whatever happens there certainly would have an impact all around.  This has been proven by also the history of the past.  Secondly, the U.S.-Pakistan relationship -- it has undergone over these 60 years ups and downs but let me say one thing.  When the relationship has been strong it has been helpful -- helpful to our interests and also helpful to your interests.  And when it has gone through phases of weakness then it has been hurtful to us and also to the United States.  If you look at the period covering from 1950s, the alliance period, and then later on there was down side.  Then we he had the Afghanistan situation cooperation.  Later on there was a down side again -- the -- area suffered neglect, and then we had the consequences -- the world woke up to the shock and horror of 9/11. 

But now we have, again, a stronger relationship but, again, by virtue of the same let me say that today there is a realization, certainly in Pakistan and I also find it here, that -- especially in the administration -- that there ought to be a strong, sustained long-term relationship between -- and both sides should work towards that and between the two countries which is important for you, important for us.  We call it quote, unquote, "a strategic relationship."  Pakistan will also term as important, major non-NATO ally.  The description applies to what is the current engagement -- the war against terrorism.  That's a complex thing and in terms of war against terrorism that we first say that the history of terrorism goes back to about 30 years in that part of the world. 

This fight, first and foremost, we are fighting in our own interest -- for our own development -- for our own progress.  But surely this also helps the world, and in that sense there is a convergence and cooperation between us and the United States, other countries to counter this phenomenon which is dangerous.  It is a phenomenon that destabilizes societies, especially modern societies.  It is anti-progress.  This is important for us and in that sense we are making a contribution to a worldwide effort. 

So in this context there has been after President Bush's visit a structured effort as well for building this strategic relationship and particularly in four areas which have been identified -- education, science technology, energy and economy.  There is a dialogue in these areas which is ongoing.  This also is suggestive of the fact that both sides they want that, the relationship should be beyond one-point agenda of just to fight against terrorism or fight against extremism, which in any case we are doing. 

In this there have been ups and downs.  Pakistan is one of those countries which, as people say, suffers from an image problem.  Regardless of thematics, there is -- there are issues which rankle with you but there are also issues that rankle with us.  For example, when there is all the time a kind of finger pointing that the problems arise from there, they radiate from there, et cetera.  We feel that it somehow misses on the realization of the enormity of the challenge that we face over there -- this challenge which has developed over a period of 30 years or so because if you look at the genesis of these forces -- terrorism and extremism -- goes back to the 80s when there was this struggle against the Soviet Union.  And the world, in a way, benefited from that situation. 

I remember in the 80s -- you mentioned about the time I had spent in 1989 in Georgetown to write a book on basically the diplomatic process of Afghanistan, the Geneva negotiations.  All the scholars of Sovietology and Eastern Europe used to say that there is a contribution of Afghanistan to the consolidation of freedom movements in Eastern Europe, and it accelerated the process of unraveling of the Soviet Union because this was the issue which first was questioned by the public in the Soviet Union.  The big lie was exposed. 

But when the Soviets left, everybody left, and I have my personal experience about that.  We were at that time trying so serious that there ought to be package of $3 billion to $4 billion to help the situation in Afghanistan settle down.  But at that time everybody was preoccupied with what had happened in Eastern Europe and also the unraveled Soviet Union.  Afghanistan -- there was scant international attention to that.  The result was that things went from bad to worse, and you had this -- this was the period Taliban came, others come.  This was the period when al Qaeda coalesced in Afghanistan.  These were the 20(,000) to 30,000 youth who were also brought, thrown into the fray.  They were radicalized.  They could not go back to their own countries.  They developed their own agenda.  It was Palestine-related.  It was related to the first Gulf war, when the American troops were in Saudi Arabia.  If you look at their statements, you would realize.

And then they were the ones who started controlling the Taliban also, and that is the reason why the Bamyan Buddhas were not destroyed when the Taliban came in 1995.  They were destroyed in 2001.  They became the financiers of the Taliban.  And, in fact, the hardline Taliban based in Kandahar not those in Kabul.  There were factions within the Taliban.

Anyway, for Taliban, nobody helped.  Nobody wanted to touch them with a barge pole.  The world woke up to the horrors of 9/11, and from then onwards there is one lesson which everybody seems to draw, that you simply cannot ignore and be indifferent to such situations in the world.  You have to engage.  And today we are engaging.

Again, this engagement is very complex.  There is no simple linear solution to this that you just send military and everything will be all right.  It has to be a broad, comprehensive, which is economic, socioeconomic development.  It means political measures, administrative measures, et cetera.

In Afghanistan, people say that much of the problems of Afghanistan are because of Pakistan.  Far from it.  In fact, many of the problems of Pakistan are because of what had happened over these 30-odd years.  Why the problems in Pakistan?  These areas, you hear now a lot about tribal regions.  The tribal regions were the staging ground for the jihad in Afghanistan.  For 10 long years they served that purpose.

The result:  The administrative structures, the traditional structures of authority, they all fell apart.  They were supplanted by a new order, which was basically these jihadis.  The madrassas also mushroomed in these areas.  Why?  Because nobody was caring for the education of these children, refugee children, et cetera.  Basically the money came from elsewhere, and then a particular creed got encouraged, got promoted in the process.

So I just wanted to flag, to sort of underscore the complexity of the issue.  And why I'm doing this is because people are impatient with us.  They want quick solutions.  Nothing can be done overnight.  People will have to be understanding and patient with us.

We are making this effort, first and foremost, as I said, in our own interest.  But the world has an interest in the success of our effort, and therefore we also have certain expectations from the world, particularly from the United States, with whom now we have a stronger relationship.  This is in a variety of areas.

Some of the things which are being done -- I'll give you just one example -- the so-called ROZs -- reconstruction opportunity zones -- for example.  What it means is basically -- and let me also say that this problem has been compounded by many other factors -- warlordism, drugs.  Drugs is a very major problem.  Who is now financing all this?  Who wants to keep the situation in a state of turmoil?  I think one of the stakeholders in turmoil are drug barons, people who are drug traffickers.

Apart from that, let me also mention one other thing.  What is the problem in Afghanistan?  As I said, some people say that it is a problem which is from Pakistan into Afghanistan.  No, the basic problem, in my view, in Afghanistan has been -- this is my personal view, but I think there is something to it, as validated by decisions of the joint Jirga very recently -- that a national consensus, which tenuously had existed for a very long under the monarchy, for almost 150 years, that broke down in 1978-79, that has not been rebuilt; under Babrak Karmal, under Najibullah, under the mujaheddin leadership, under the Taliban.

Now there is an effort, the Bonn process.  And we have -- all of us have a stake in the success of the Bonn process.  And what is Bonn process?  What is the objective?  Reconstruction, reconciliation -- these are the two things.  Reconciliation among whom?  Reconciliation among the Afghans.  That is, again, rebuilding that national consensus which had existed and which has not been rebuilt.  So that is the heart of the problem.  So it has many, many aspects.

Reconstruction -- there is the role of the international community.  And we always say -- President Musharraf has said so many times that Afghanistan needs a Marshall Plan-like program, a program which also suits the ground realities, generates employment, generates economic activity, counters this proclivity towards drug production, et cetera, through programs.  So there's a whole sort of range of things which are required in that area.

Coming back to Pakistan again, here as I said that we seek understanding.  The ROZs I was mentioning.  The concept of ROZs, or reconstruction opportunity zones, is that there should be designated areas in Pakistan, including tribal areas, some parts of Baluchistan and Afghanistan.  The product from this area should have duty-free access to the United States.

Now there have been a lot of arguments, to and fro and all that.  One of the arguments has been that nothing of the textiles should be part of this.  Anyway, one can understand the sensitivities of textile lobbies, but we believe that even if this program succeeds, in two to three years' time you would not be able to generate more than $400 million, $500 million worth, or at most $1 billion worth of trade from there.

Now, that trade is not going to disrupt the economy of the United States, but that would make a critical and most vital difference to these areas.  And the socioeconomic development, that is -- and many people will agree with that -- is key to success in this so-called war against terrorism.  It is key to success in countering extremism, which is another facet of this phenomenon, that phenomenon, which we have to counter.

So here we do seek understanding and help from United States.  And we are also approaching Europe to do something for Afghanistan.  Afghanistan will be covered by this, ought to be covered by this, and certain parts of Pakistan which are affected, because why the struggle in the tribal areas?  I have already explained that they were the staging ground for the jihad for such a long time.  Therefore, now we have to change.  And these are some of the measures.  Apart from this we are raising the FC (Frontier Corps); these are the traditional institutions.

We are also introducing administrative measures to resurrect the institution of the maliks and the elders, which had been sort of disrupted by the developments of the last 30 years.  We are also having socioeconomic programs of our own.  So this program of ROZs is important.  We have also requested that United States should help us with socioeconomic development of these areas.  We have requested about $150 million a year program for this.

Then we want to expand the Frontier Corps, which again is a traditional institution that generates employment, takes people, youth, from the local areas into the Frontier Corps, helps settle down things.

Now there is one question, and then I'll finish.  That is, look, there is this problem.  So how can all these programs work in the tribal areas?  Yes, there is problem, mainly in North and South Waziristan.  These are two of the seven tribal agencies.  So there are five other tribal agencies.  We do not want that this contagion should travel to those agencies.  And one way to stop that is that these programs, which ought to be also for those agencies, they should be put into place, they should be implemented as soon as possible -- we are trying to do on our own, and we also look up to help from our friends.
 
 Generally this is in terms of some of the preliminary remarks which I wanted to make, but Pakistan I think is a subject where you must be having a whole range of questions.  (Laughs.)  So as I mentioned earlier on that I'll depend on that and I'll try to respond as intelligently as possible.  (Laughs.)
 
 PONEMAN:  Thank you.  Thank you.  And now I think if you'll join us here --
 
 KHAN:  Should I sit --
 
 PONEMAN:  -- this is the David Frost format, I guess.  You're a history maker so you get this.
 
 One thing that I think many of us were intrigued by, Mr. Secretary, is we know that you have been on point for the government of Pakistan in the Kashmir dialogue with India and meetings you have had with your counterpart, and that you had a tantalizing statement in New York about the issue being ripe for further movement.  And I wonder if you could describe to us how you would define -- it's a two-part question -- how you would define the end state; what does the solution look like?  And then obviously, no less tricky -- probably much trickier -- how do you get there from where the parties are today?
 
 KHAN:  Well, surely we are engaged I can say in the process which was never as serious as today and never did we have between the two countries as intense a phase of negotiations as we have been having in the last, I should say about two-and-a-half, three years. 
 
 What has been -- what has made it possible -- that's a very different issue -- two countries, deterrents, all that -- the experience of 2003, when there was 1 million troops eyeball to eyeball situation.  And good sense prevailed, and then we have moved into this peace process.
 
 Now, there are two aspects to it, or you can say, as the Indians would like to say, that this is part of the one -- part of one process.  We distinguish between what we say as CBMs -- confidence building measures -- and what is addressing those issues which had been at the heart of conflict, tension between the two countries -- resolving issues. 
 
 Now, there have been CBMs.  There have been, for example, travel exchanges, et cetera, that have been continuing.  I think we have traveled a fair distance in that regard.  Trade also has improved, although there are still many areas where we need to engage, and it gets linked with other issues.
 
 But we feel that now it is important that the two sides show the ability to resolve issues.  The major issue is Kashmir.  And as I said, that there has been a lot of intensive negotiations both on substance and also on the various political aspects which are related to it.
 
 You must have heard about the president's ideas about defining Kashmir -- what are its regions?  Of course, the line of control is a very obvious marker, but apart from that, what is it?  What should be at stake?  What should be involved?  Then there is the question of self-governance, which basically is the -- how -- what kind of arrangements could be suggested which will not just raise the comfort level of the Kashmiris but make this settlement or solution or arrangement viable in their eyes?
 
 There are other areas, because after all, India has interests, Pakistan has interests.  Certain joint mechanisms will have to be involved.  Then there is this question of demilitarization, et cetera, which also evokes -- of course, it resonates with the Kashmiris, but it's an issue.
 
 Now, I can only say that in substance there has been important discussion.  But this is an issue which also has deep political dimension to it which needs to be -- which will have to be addressed as we move along.  Involvement of the Kashmiris -- how do we do that?  Other measures which can basically contribute to raising the comfort level and confidence building among the Kashmiris.  So there are number of things, but we are moving forward.  And hopefully we will continue in that direction.
 
 But Kashmir, again, as I said, it's a difficult, complex issue.  There is one thing that you must have heard quite a bit about the LOC -- no change of borders; the other thing that LOC-based solution is not possible; the other thing is how to make it irrelevant.  So demilitarization of LOC -- is it possible; is it not possible?
 
 Now, these are things which are the focus of discussion.  And some understandings as we move along can be reduced to black and white, but we have to travel some distance.  There are other issues, also, which can help, because the two countries -- they have to show ability to be able to resolve problems, not just manage them but to be able to resolve problems. 
 
 Sir Creek and Siachen are two other issues.  Now, Sir Creek, we have made some progress in the sense that we have now for the first time an agreed map of the area, and on that map we have delineated, demarcated the two positions of the two sides.  So we have now for the first time a very clear idea of what is the difference.  That should enable us to intelligently address the issue and hopefully find some kind of a political solution, but it will have to be now a political level pitch for finding a solution to this.
 
 Siachen -- again, the earlier Indian position, which remains the formal position, is that first Pakistan should authenticate the present positions, and then they will be ready to negotiate.  We say that it is an ingress which is in violation of the Simla agreement; therefore we will not authenticate.  But a sort of possibility came about when Prime Minister Manmohan Singh in 2004 -- in 2004 stated that this mountain could be a mountain of peace, or a zone of peace.  So there was this possibility -- can we work out a solution which is like a package solution in which there could be disengagement, there could be schedules -- the schedules would also give positions which are current positions and then the positions we are -- and as a package, there is an agreement on this.
 
 Now, this is important.  I think that we hope we would be able to move along that line because I personally believe that this is also an important issue not just that if we are able to resolve it there would be trust and it will show that the two countries are in a -- are able to resolve problems, but it is important from an environmental point of view.  Human activity on that is accelerating the melting of the glacier.  Fifteen percent of it is gone.  Now, everybody is concerned about global warming and the Himalayan glaciers.  If the Himalayan glaciers start melting, it would be a disastrous situation for both countries -- for India, for Pakistan.  And these things can trigger, you see.  So whatever we can do, we must do.  So there is a need to contain human activity on this because the presence of armies, et cetera -- they have to cook, they have to do all kinds of things.  It can really -- already there are some lakes which have been formed underneath the glacier.  So we hope that we may be able to move on this one.  It will really -- be really helpful.  So this is the situation more or less.

PONEMAN:  It certainly seems intractable.  

 And one follow-up before we open up -- if there were -- obviously the question of political will is critical on finding some of these confidence building measures and on Siachen, et cetera -- if there were one critical step that, say, you could ask of India to help break through and allow some of these nascent solutions to be actually nailed down and concluded, what would that be?

KHAN:  On Siachen, I would say that the two sides, the army sides, they should sit down and they should agree on where to withdraw to, what would be the zone of disengagement.  If they are able to work on that, I think we would have an agreement in which their concerns about what are the present positions can be accommodated through something becoming part of the agreement.

PONEMAN:  Thank you.  I'm sure there are a number of -- there are a number of questions

KHAN:  On other issues, also hopefully we can move --

PONEMAN:  Yeah.  If I could ask you kindly to identify yourself and there are microphones around.  So why don't we start over here on the left.  And please identify yourselves and kindly keep your questions succinct to we can get as many people in as possible.

QUESTIONER:  I'd like to return to the question of tribal areas, please.  My name -- sorry -- is Chris Isham with CBS. 

 Pakistan has tried several strategies in tribal areas, military operations doing agreements with the tribes themselves.  Nothing seems to have really worked yet.  And there is increasing alarm here that the tribal areas, in particularly North and in South Waziristan have become worse not better and that al Qaeda's reconstituted. 

 What -- how are you going to really tackle these problems and are you concerned maybe the U.S. may be inclined to take unilateral from military action in some of those places?

KHAN:  Well, first, what should be done?  Now, as I said that you cannot simply rely on military action.  Military action alone is not going to be a solution of the situation -- either in the other adjoining areas in Afghanistan or in the tribal areas.  And in the tribal areas as I mentioned that we have seven tribal agencies, here, we have problems in South and North Waziristan.  South and North Waziristan because they have a certain history and if some of my friends who were following the Afghan war, they would recall some of the names like Angurada and others the Soviets used to bombard these quite often because this was one of the really important staging areas. 

 Anyway, we are talking about this situation now.  There is a problem.  We have thrown in close to 100,000 troops, which is important.  We have lost nearly 1,000 of our troops.  This both shows the seriousness of our effort and also the seriousness of the challenge that we face.  You cannot expect in these kinds of situations a solution overnight.  You have experiences of your own elsewhere. 

 So there are no quick solutions.  You have to remain engaged.  You have to try everything.  You have to try the economic approach.  You have to try the political approach.  You have to try the administrative approach.  If there are setbacks, setbacks should not daunt you at all.  We have to pursue here because there is no option to success.  But success will not come overnight.  It is a long-term engagement and that is why we also agree with our friends that they should be understanding and they should be patient. 

 There is absolutely no way that Pakistan would be accommodating al Qaeda and accommodating its regrouping or this and that.  Our army or our government -- you know, we cannot be so irrational as to be sort of on one hand trying to accommodate them, on the other hand trying to eliminate them and fight them. 

 So basically the resolve is there, determination is there and that resolve and determination is first and foremost for the good of our own society -- for the progress and development of our own society.  So there is determination.  But it's a complex issue; it requires a complex approach which means a combination of all these things that I am saying -- political, economic, administrative, et cetera.  We are determined. 

 As to your last part, the American action over there -- direct action -- we are cooperating -- intelligence sharing and everything -- we are cooperating. 

 But if there is -- we have said on our side we will be responsible; we will take action, whatever action is needed, we will take that.  And if there is need for further coordination, we will be prepared for that further coordination.  But in our area we're left to do that.  Because if it is violated -- this parameter is violated -- parameter of cooperation, it is going to have a reaction from the public.  That is not going to be helpful. 

 And of course you do not want this that hands of the government and this effort weakens or that government is embarrassed.  The government is quite determined to do it.  President Musharraf himself has been targeted three times.  The prime minister was also targeted by the same very people.  You find Mr. Zawahiri making these statements that people of Pakistan should rise and somehow get rid of President Musharraf and the present government.

 So do you think that we are going to be accommodating toward these people?  No.  But then if we are the ones who are doing this thing, we also have expectation that our hands should be strengthened rather than weakened.  And any direct action is going to generate a public reaction which is going to weaken the hand of this government.

PONEMAN:  Thank you.  Let's go to this side, Bill Courtney.

QUESTIONER:  Thank you.  Bill Courtney, Computer Sciences Corporation. 

KHAN:  Oh, Bill Courtney -- Kazakhstan?

QUESTIONER:  Yes.

KHAN:  Oh, how are you? How are you?  (Laughs.)

PONEMAN:  I knew you had something in common.

KHAN:  (Laughs.)  We were the first ambassadors to Kazakhstan of our respective countries.

QUESTIONER:  A long time ago. 

KHAN:  (Laughs.)  A long time ago.

QUESTIONER:  Nuclear terrorism is a great concern in the United States.  There was surprise when the A.Q. Khan network was revealed.  There was also surprise when some nuclear scientists in Pakistan were -- apparently had been involved in Afghanistan and providing some information to al Qaeda. 

 Do you think there are new ways that the U.S. and Pakistan can work together to increase confidence and the safety and security of nuclear weapons in the South Asian region and reduce the risks of potential nuclear terrorism in the future?

Thank you.

KHAN:  Nuclear weapons -- first of all, let me say that since 1998 when our program became overt, we have done all that is necessary and that usually most other most countries which are nuclear weapon states do to ensure safety and security of their nuclear weapons -- that means systems.  We have institutions and we have systems -- command and control systems.  We have introduced legislations on export controls.  Violation of this legislation has been criminalized as part of the legislation.  So all those things are there. 

 Like any other nuclear weapon state, we are also not -- we have absolutely no interest in proliferation of this. A.Q. Khan, yes, it was very unfortunate episode but this is something which is not totally unknown in the history of development of nuclear options in the world starting from 1945.  But we have taken very strong action on -- the man is a hero on the street but we have taken really strong action.  He's under protective custody.  

You mentioned about some other scientists who happened to be, you said.  There are a couple of names which were given but these people were basically not really -- they were associated with our scientific community and -- very early on in the '70s.  But then they were thrown out.  Some of them have odd ideas.  For example, one of them thinks that the jinnis are made of fire.  So one of the things is that you capture a jinni and put it in a turbine and you will have a permanent source of energy.  So I will say that this kind of thing is -- (laughter) --

PONEMAN: Works for me.

KHAN:  So the thing is that we have now systems which are in place and therefore there should be no concerns with regard to this aspect. Why we did it -- why we exercised the nuclear option -- we did not have this thing in mind prior to 1974.  Otherwise -- 1950, we had the option to get a nuclear power reactor.  We said, "No, we will go for hydropower."  In 1967, we were offered a reprocessing plant. We said, "No because we don't have infrastructure for nuclear power generation."  We refused that. 

(Nineteen) seventy-four, when there was a test in our neighborhood, then we had to do something to restore the completely disrupted strategic balance.  But we also at that time had some diplomatic effort to keep South Asia free of nuclear weapons, nuclear weapon free zone, et cetera, but nobody paid much attention at that time.  In '98, again we had a great dilemma when there were tests.  We were asked by United States not to do it.  There would be sanctions.  But the dilemma was that had we not done it, there would have been ambiguity about our capability.  And I was at that time sitting in Europe and I knew -- people used to say, "If you have it, you will do it.  If you don't have the capacity -- capability, you will not do it."  So had there been ambiguity about our capability, then it could have led to miscalculations.  There was a grave risk, and this was validated in 2002 when India had mobilized troops.  But then the deterrence was established fact and good sense prevailed on both sides. And there's the genesis of the peace process that we are engaged in since 19 -- since 2004. 

But we are responsible.  We have all the controls -- command control -- everything and it is in safe hands.  This is what I can say.

PONEMAN:  Okay. Let's go to the center. Yeah.

QUESTIONER:  Yes, sir.  My name is Cami (sp) but I work for Pakistan Chronicle, and my question is about the recognition of Pakistani foreign policy by U.S. establishment.  Compared to India, Pakistan has done too much for America.  We made Pakistan a laboratory for our own experimentation.  For example, these people -- (inaudible) now we want to call Taliban, are terrorists -- they used to be President Reagan's heroes.  What is the reason that American -- we want to say, "Oh, Pakistan is ally on War on Terror -- terrorists.  We don't want to call more than that."  Is that because Pakistan has Islamic status or Pakistan is known for its dictatorship?  Both terms are very unfavorable in the state.  So either you guys are not doing good job.  So what do you think -- what is the reason that Pakistani foreign policy doesn't seem too much -- seem to get much recognition in Washington? 

Thanks.

KHAN:  Well, sir, you happen to be in the United States.  I think you must be having a very good idea why we seem to be getting this kind of a projection.  But I think as far as the administration is concerned here, there is an understanding of the challenges that we have, the issues we have.  And that is why, as I said, that there is a deep awareness that there must be a sustained, strong -- sustainable strong relationship between the two countries because that is helpful for both the countries. That's why there is this so-called strategy dialogue in various other areas -- cooperation in various other areas.  I do not detect thought that well, this is a kind of short-term relationship which oriented towards one point agenda to struggle against terrorism and after that it will prove to be ephemeral.  No, this time I think there is a deeper realization that it is an important country and there must be important -- the relationship must develop in an important way. 

When it comes to these areas of Pakistan getting this kind of image, we have our own peculiar situation.  We have our challenges.  We are also going through our own political processes where army has been having a role in the past.  I mean -- so we can't -- things cannot be divorced from reality, and that is part of the reality.  But we also have reality of having all the attributes of a democratic society.  For example, look at the press, media.  Today there are more than 50 channels in Pakistan operating all the time.  Ten of them are devoted exclusively to news 24 hours and talk shows.  And all the opposition leaders, they have -- they are all the time there cursing the government because this is how they look at the government policies.  Fine.  This is it.  Look at the press media.  Please -- any day of -- any day that you take six -- five, six major papers in English of Pakistan -- I am not talking about the Urdu press.  You go through that and then you make your own judgment whether this is a free press or it is not.  Free press, freedom of expression -- that's an attribute of a democratic polity. 

Then you come to other things like -- for example, institutions.  These -- in institutions -- the grass-root level institutions the evolution which -- there was a lot of controversy, but it is good because now at least at the district level, there is decision-making.  And in that decision-making, one-third is mandatory participation of women.  Toward the -- you know the district council's 21 -- there's always 21 members.  Seven members have to be women -- elected.  This is now working for the last five, six years.  There are many other things which have happened.  Yes, Parliament -- Parliament has been vibrant.  We do say that for the first time in the national assemblies and provincial assemblies are finishing their -- completing their terms.  There are aspects, but let me also say that -- you mentioned dictatorship -- dictatorship, no.  What kind of dictatorship if there is freedom of press -- if these institutions are vibrant in themselves?

Secondly, the government is -- you have seen, regardless of matters -- what they did wrong, right -- but whatever decisions have come from the Supreme Court, they have been respected by the government -- by President Musharraf also.  Similarly, I think the others should also respect those decisions.  This is a process.  It's a unique one.  There is no formula democracy -- that this is the only formula which should fit the description of democracy, nothing else.  We are going through our own processes.  It's a -- the process we're hopefully moving in the right direction. 

PONEMAN:  Okay let's go -- someone way, way in the back. 

KHAN:  Pamela, how are you?

QUESTIONER:  Pamela Constable from the Washington Post.

Mr. Secretary, everyone's concerned about the increase in terrorism and fundamentalist violence in Pakistan and coming also from Afghanistan.  I have two questions for you about this problem.  It seems that there is a lack of will in the Pakistan Army to fight their fellow Pakistanis even if they are terrorists, even if they are fundamentalists.  How do you deal with this problem?  What can you do about it?

And number two, it seems that because of the political crisis in Pakistan, there seems to be a kind of pause while this gets sorted out -- before a decision is made to really go after the bad guys.  Is it necessary for this very --

KHAN:  The pause?

QUESTIONER:  -- a pause while the political crisis is sported out and elections are held in Pakistan?  Is it necessary to get through that before really turning to make a hard decision to fight against the Taliban and the fundamentalists? 

KHAN:  Mm-hmm.

QUESTIONER:  Do you -- you understood the question?

SEC. KHAN.  Yeah.

Now for the second part of your question, the will to fight and all that, yes, these are difficult decisions.  But difficult decisions sometimes become necessary and they have to be taken by people who are in responsible positions.  Like, for example, the Lal Masjid -- the Red Mosque case.  Do you think that it was something which was taken lightly by the government?  Do you think that it was an easy decision?  It was a very difficult decision.  But in the end, it was taken.  There was action.  And there were, regrettably, casualties also.  That also shows that when the chips are down, really, the army is capable of acting.

So I think that shows that we are quite willing.  But these things are not easy.  These things are never easy.  We have deployed, as I said in my preliminary remarks, close to 100,000 troops in just two tribal agencies.  But we take the (terrain ?), take the tradition, take what has happened all these 30 years.  It's a difficult challenge.  And some of the issues that you have mentioned -- would they be prepared to fight, would they not be prepared to fight -- after all, more than 1,000 of our soldiers have sacrificed their lives.  They must be fighting.  They must be doing something.

And then we also have been able to eliminate many of these militants and others.  But as I said, also in my preliminary remarks, that this is going to be somewhat protracted challenge to overcome.  It is not going to be -- it will not succeed overnight.

About the sort of pause, there is no pause because the deployments have been there.  And there is no pause in the same way as, for example, the Lal Masjid case came when there was this -- we can call it political crisis or the judicial crisis or whatever crisis you may want to name it.  But it was during that period that these decisions were taken.  So I don't think that there is that kind of a pause in this policy.

PONEMAN:  Thank you.  Now let's come way up to the front.

QUESTIONER:  Thank you.  My name is Andrey Surzhanskiy.  I am with ITAR-TASS News Agency of Russia.

Mr. Secretary, if I'm not mistaken, Pakistan is seeking membership in Shanghai with organization.  What do you think -- when do you expect -- when would you expect to finalize the process of getting full membership in that organization?  And secondly, if I may, they, for example, regularly conduct military exercises.  Is that something you would want to participate in?

KHAN:  Who will --

QUESTIONER:  The Shanghai organization members.  They conduct military exercise.  Thank you.

KHAN:  Well, thank you.  We are observers in Shanghai Cooperation Organization, SCO.  And we have an interest in becoming a member.  But so far the procedure for membership, et cetera, has not been agreed upon by the membership of the SCO.  Once they agree upon the procedures and invite new membership, then, of course, our interests will be there on the table.  We have already indicated that.

As regards participation in any SCO exercises, it will depend, of course, whether SCO would like to have contingents drawn from the observers to participate in this, because there are a number of other observers, as you know.  So it is a decision which will be taken by the SCO membership whether they want to.  And once they give us an invitation, give an invitation, then, of course, at that time we will examine it.  And we will examine it, most probably, very positively.  But it is, in that sense, a hypothetical question.

PONEMAN:  Yes, sir.

QUESTIONER:  Jim Moody with Merrill Lynch.  I wasn't an ambassador but I was with the Peace Corps in Pakistan in the early days.

My question is this.  I'd like to connect two data sets that have come to light recently.  CSIS, which you probably know who they are, came up with an exhaustive study analyzing the data, and they discovered, which was heretofore not published or really known, that about 90 percent of U.S. aid to Pakistan goes to the military, either directly or through budgetary support.

The other data set is that America's standing in Pakistan has plummeted over the last several years.  Would it be time for us to consider to redirect or restructure our aid to Pakistan?

KHAN:  The aid package, which is there, the aid package, that is divided 50-50 percent -- 50 percent on the military side and 50 percent for the economic and socioeconomic programs.  That was a five-year program, and that is going to come to an end, I think, in 2008 unless we are able to renegotiate and continue it.  So in that sense, I think that 90 percent figure, because this is well-known thing.

The other thing are some of the things in terms of logistics, et cetera, for which there are charges.  That is a separate -- that is not aid.  That is not assistance.  That is a very different thing.  That may be going to army, because that may be providing some logistic support for various things.  So that is quite different, and that is under the Operation Enduring Freedom.  That is not assistance.

So we have this assistance program which, as I said, about $350 million for the MFM and the almost $350 million for socioeconomic programs, especially for education, primary education, health care.

We would like that there should be targeted assistance.  But on the military side also we have needs, because we feel that a strong Pakistan is important for peace in the region.  So we cannot also allow that our capabilities on the defense side are degraded.

It's not just that we will be banking on our unconventional deterrence.  The conventional deterrence, also conventional level, has to be kept at a level that is viable and that is credible.  So that is why we need some assistance and we also (make sure we ?) acquire equipment to modernize our air force or our navy or our army.  There is a legitimate need.

But more than that, more than everything else, what we need is access in trade.  We need access to your markets.  ROZs, which has been going on now for almost two and a half years; now sometimes you see there is this thing that you cannot have textiles.  If some items, some tariff lines of textiles are added, as I mentioned in my preliminary remarks, that is not going to be disruptive to the American market.  It will not disrupt your economy.  It will help there.

Similarly, if we have some trade access, if we have investments, that is the name of the game.  That will help us counter all these negative phenomena and negative forces which may be growing or which we are now countering.  We will counter because we are determined, but that time will be much longer.  If there is economic-socioeconomic transformation, growth, economic growth, time will be shorter.

So that is the area where basically we need help.  We need investment from the world.  But some of your travel advisories, for example, are such that people don't want to travel to Pakistan.  But Pakistan is not North Waziristan and South Waziristan.  There are many areas there is investment which is taking place from many countries.  From the Gulf we are getting.  From Southeast Asia we are getting.

If there is some relaxation and some investment, that will be very helpful for Pakistan.  But it will also be helpful for this larger challenge that everybody seems to be facing, which is the challenge of modern times, the post-Cold War challenge, in the shape of what we call terror and extremism.

PONEMAN:  One of the wonderful rules about the Council, but it's frustrating at times when there are so many good questions to be asked, is that we are --

KHAN:  I'm still at your disposal, but --

PONEMAN:  No, no.  It's been a fascinating evening.  It could and would go on, but it can't.  I'm sure everyone here will join me in recognizing the great distinction of our speaker -- (applause) -- in the service of Pakistan.

Thank you all for coming, and we'll see you next time.  Thank you very much.

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