The following is a rush transcript of the June 20, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: But first, amid recent reports of tough going in Afghanistan, the top man of the Pentagon, Secretary of Defense Robert Gates.

Mr. Secretary, welcome back to "Fox News Sunday."

SECRETARY OF DEFENSE ROBERT GATES: Thank you.

WALLACE: You said this week that the narrative in this town about the war in Afghanistan has become too negative. So let's discuss some of the issues that have people worried.

The U.S. commander, General Stanley McChrystal, says that the first operation in Marjah has become a, quote, "bleeding ulcer," and the major offensive in Kandahar has now been delayed, in both cases, largely because the Afghans have been too slow in providing civilian support. Isn't that a concern?

GATES: Sure, it's a concern. But I think that the narrative is perhaps overly negative in part because it's incomplete.

I was just at the NATO defense ministers meeting in Brussels. General McChrystal briefed in detail on the Marjah operation as well as on Kandahar. And the bottom line was progress is being made. It's somewhat slower than anticipated.

The Kandahar operation has actually been under way for a number of weeks, and so what is taking more time is the shaping of the environment before we actually engage with troops and so on. So I think that, you know, it is a — it is a tough pull, and we are suffering significant casualties. We expected that.

We warned everybody that would be the case last winter, that as we went into areas that the Taliban had controlled for two or three years that our casualties would grow, especially this summer.

But I think General McChrystal's message to the defense ministers was he is confident he will be able to demonstrate by December that we not only have the right strategy but that we are making progress.

WALLACE: The key to begin pulling U.S. troops out by next July is to begin to be able to turn operations over to the Afghan army. But here's what Time magazine says about the army, and let's put it up on the screen: "Nine out of 10 Afghan recruits can't read a rifle manual. Commanders routinely steal enlisted men's salaries. Recruits tend to go AWOL after their first leave."

Question: Do you really believe that the Afghan army will be ready to start taking over next July?

GATES: I think that they will be ready to assume primary responsibility for security in certain areas of Afghanistan, certainly by a year from this coming July. We're still looking at 13 months from now.

The reality is the Afghan national army is meeting expectations and above that in terms of recruiting to the larger numbers and toward the goal of 134,000 by this — by this fall. Their attrition and retention rates are both above expectations and above the...

WALLACE: But are those reports about...

GATES: ... above the goals.

WALLACE: ... about recruits going AWOL, about commanders stealing enlistees' salaries — is that true?

GATES: There are — there are some, and there are instances of that, but there are also significant instances where we are — and a large number of examples where we are partnering with the Afghan army and where those operations are working, and that was what General McChrystal was briefing to the defense ministers.

The percentage of those partnered relationships, of those partnered operations, has gone from somewhere around 40 percent six or eight months ago to about 75 or 80 percent now.

WALLACE: You keep saying that the July 2011 date to begin pulling troops out is a starting point, and that the pace of withdrawals will be based on conditions on the ground.

But let's take a look at what Vice President Biden said recently. "In July of 2011," Biden said, "you're going to see a whole lot of people moving out. Bet on it." Who's speaking for the administration, you or the vice president?

GATES: Well, first of all, that's in a book. I don't recall ever hearing the vice president say that. And whether he said it or not, we clearly understand that in July of 2011 we begin to draw down our forces.

The pace in — with which we draw down and how many we draw down is going to be conditions-based. And there is general agreement that those conditions will be determined by General McChrystal, the NATO senior civilian representative, Ambassador Sedwill, and the Afghan government together in terms of making their recommendations.

WALLACE: So if Vice President Biden is telling the reporter — and there's been no statement by the White House that he didn't say it — there are going to be a whole lot of people moving out next July, you're saying that's not been decided?

GATES: That absolutely has not been decided.

WALLACE: Your feeling is that it all will be decided...

GATES: But I also haven't heard Vice President Biden say that, so I'm not accepting at face value that those — that he said those words.

WALLACE: You know, it's interesting, because one of the reasons that you made such a strong statement up on Capitol Hill and why you're talking to us today — are you worried that the narrative is getting away and that there may be a rush to judgment on Afghanistan?

GATES: I think it's more a sense of frustration. I've been here before three years ago with Iraq. And we were just getting to the point where the surge forces had gone into Iraq. There was a lot of concern. There was a lot of anecdotal information that things weren't going well, casualties were very high, American casualties were very high in Iraq.

And what I'm — what I'm saying is people are losing context. This policy, this strategy, has been in place and working for only about four or five months. We have yet to put yet a third of the surge forces into Afghanistan. The president has said we'll wait until December to evaluate how we're doing.

So I think there's a rush to judgment, frankly, that loses sight of the fact we are still in the middle of getting all of the right components into place and giving us a little time to have this — have this work.

WALLACE: Let's turn to the gulf oil spill. Is there anything more the Pentagon could be doing either to help stop the spill or to prevent those millions of gallons of oil from washing up on the gulf coast?

GATES: Not to my knowledge. We have offered whatever capabilities we have. We don't have the kinds of equipment or particular expertise. I have authorized the mobilization of up to 17,500 National Guard troops in the four states that are — that are most affected.

We have a standing offer. If there's anything people think we can do, we absolutely will do it.

WALLACE: The U.N. Security Council has passed another round of sanctions against Iran. And following up on that, the United States and the European Union have imposed a set of unilateral sanctions.

For all that, honestly, do you see any sign that these sanctions, these efforts, have caused any weakening of the will of the regime in Tehran to develop a nuclear weapon?

GATES: Actually, what we've seen is a change in the nature of the regime in Tehran over the past 18 months or so. You have — you have a much narrower based government in Tehran now. Many of the religious figures are being set aside. As Secretary Clinton has said, they appear to be moving more in the direction of a military dictatorship. Khamenei is leaning on a smaller and smaller group of advisors.

In the meantime, you have an illegitimate election that has divided the country. So I think adding economic pressures on top of that, and particularly targeted economic pressures, has real potential.

WALLACE: Do you think it could weaken the will of the regime in Tehran?

GATES: I think that it could add to the pressures on the regime, that if you add the things we're doing to help our allies in the gulf area improve their defenses, improve their military capabilities, you put that together with sanctions, you put that together with diplomatic pressures and a variety of other things that are going on — and I think — I think you have a reasonable chance of getting the Iranian regime finally to come to their senses and realize their security is probably more endangered by going forward, thereby...

WALLACE: A reasonable chance?

GATES: ... stopping them. Yeah, I think so.

WALLACE: Can we contain a nuclear Iran?

GATES: I don't think we're prepared to even talk about containing a nuclear Iran. I think we're — we — our view still is we do not accept the idea of Iran having nuclear weapons. And our policies and our efforts are all aimed at preventing that from happening.

WALLACE: When you say that a — we would not accept a nuclear Iran, does that mean that a military strike either by the U.S. or Israel is preferable to a nuclear Iran?

GATES: I — we obviously leave all options on the table. I think we have some time to continue working this problem.

WALLACE: In the time we have left, let's do a lightning round of quick questions and quick answers. I know you always enjoy this so much, Mr. Secretary.

GATES: The ones that always get you in trouble.

WALLACE: The House and a Senate committee have voted to repeal "don't ask, don't tell" over your objections that the Pentagon review should be completed first. Is a repeal inevitable?

GATES: Well, I think you'd have to ask the members of Congress that. I haven't done any head counts. We are — the president has made his decision.

Our review is about how to implement this and what are the obstacles, what are the problems, what are the challenges, what are the issues. How do we mitigate the negative consequences if we identify negative consequences? What are the questions we have to address? Those are the things this review is all about.

And I feel it's very important for the military to have the opportunity to weigh in, to register their views on these issues, and to give us help on how to do this smart should the legislation pass.

WALLACE: As part of your new drive to try to cut the budget for non- combat operations, has the president agreed to veto any bill that would include continued funding for the C-17 cargo plane or an alternative engine for the Joint Strike Fighter, even if that legislation also included repeal of "don't ask, don't tell?"

GATES: Well, as I told the Senate Appropriations Committee, the defense subcommittee, this week, it would be a very serious mistake to believe that the president would not veto a bill that has the C-17 or the alternative engine in it just because it had other provisions that the president and the administration want.

WALLACE: Have you been given an assurance by the president that he will enforce his feelings, your feelings, about the budget even at the expense of social policy?

GATES: Well, I think the White House has put out a very strong statement in support. I would also just say that I don't go way out on a limb without looking back to make sure nobody's back there with a saw.

WALLACE: So you think that they veto the bill even with repeal of "don't ask, don't tell?"

GATES: I think so.

WALLACE: You set a deadline for Congress to pass a war supplemental bill by Memorial Day. I don't have to tell you that marker has come and gone, and Democrats are still trying to put money for social programs into the supplemental bill.

At what point delay in passing this bill do we begin to hurt the troops?

GATES: Well, first of all, I didn't set a deadline. I wish I could set deadlines for the Congress, but that's just not the way the Constitution is written.

But as I told the Congress this week, this past week, we will have to start doing stupid things after the 4th of July recess in terms of planning for major disruptions if we don't have the supplemental by the 4th of July recess.

We actually begin to have to take really serious negative actions that impact our troops as well as our civilians in mid to — in early to mid August.

WALLACE: Finally, how long are you committed to staying in this job?

GATES: Well, we just said that we'll see.

WALLACE: Well, at one point — the reason I ask is you talked about till the end of the year, till December of 2010. But now you seem to have taken on a new fight over the budget which gets you into 2011.

GATES: Well, we'll just see.

WALLACE: But would you have started this fight if you weren't going to see it through, sir?

GATES: Well, I didn't want to get bored.

WALLACE: Well, there's very little opportunity for that. Mr. Secretary, I want to thank you so much for coming in. It's always a pleasure to talk to you. Please come back, sir.

GATES: Thanks a lot.