• With: Secretary of State Hillary Clinton

    This is a rush transcript from "On the Record," January 29, 2013. This copy may not be in its final form and may be updated.

    GRETA VAN SUSTEREN, FOX NEWS HOST: Madam Secretary, nice to see you.

    HILLARY CLINTON, SECRETARY OF STATE: Great to see you, Greta. Thank you.

    VAN SUSTEREN: You OK?

    CLINTON: I'm good!

    VAN SUSTEREN: Are you...

    CLINTON: I'm absolutely great. I'm, you know, in the final stages of my secretary of state term, and I'm trying to get everything possibly done that I can.

    VAN SUSTEREN: Did it go fast?

    CLINTON: It went really fast. It's hard to imagine how quickly the time passed. There was so much going on that it was just, you know, one thing after another, day after day.

    VAN SUSTEREN: The world is still quite turbulent.

    CLINTON: Yes.

    VAN SUSTEREN: And there's news today about Egypt. And I'm curious, with all the chaos that's breaking out there, I -- your thoughts on what's going to happen? What should we do, if anything? And what does it mean for the region?

    CLINTON: Well, those are three really important questions. And I think that post the Arab revolutions that took place in Egypt and Libya and Tunisia, and you know, bursts of them elsewhere in the region, there was always going to be a period of adjustment.

    And what we have to work for, along with the international community, as well as people inside Egypt, is not to see these revolutions hijacked by extremists, not to see the return of dictatorial rule, the absence of the rule of law.

    And it's hard. It's hard going from decades under one party or one man rule, as somebody said, waking up from a political coma and understanding democracy.

    So we have a lot at stake in trying to keep moving these transformations in the right direction.

    VAN SUSTEREN: Is President Morsi, though -- is he sort of with the program with us or not? Because he's said some horrible things about Israelis two years ago, and there's some things printed today from one of his senior aides about, that the Holocaust didn't exist. And so there's sort of very sort of suspicious things that he's saying. And with all this turmoil, I'm wondering if his -- you know, is he with us or against us?

    CLINTON: Well, we were quite concerned about those statements, and the Egyptian presidency repudiated them and reaffirmed a commitment to the Israel-Egypt peace treaty, which is, of course, absolutely core to everything that we hope to see happen in the Middle East.

    But you have to, I think, take a step back and look at the fact that the people now in power in these countries have never been in government, never had a chance to really learn how to run agencies or to make decisions.

    So we don't, certainly, condone or in any way approve of what a lot of these leaders are doing, or failing to do. But we also know how important it is that we try to avoid even more extreme elements, which are active across the region, taking control of territory, even threatening a regime, where the people are often American-educated, have some ongoing commitment to, you know, make tough decisions.

    When I negotiated the ceasefire in Gaza with President Morsi, he was, you know, very involved. I'd obviously gone to Israel first. Then I went to Egypt, and we got it done. It's still holding.

    So we have to, you know, keep pushing forward, and yet call it like we see it when we think something is not appropriate, as we did with those statements.

    VAN SUSTEREN: When you met him, did you have a sense that he was a good partner, someone that we can deal with, or do we have to, you know, sort of, you know, be very cautious with him?

    CLINTON: I think he has a lot of the right intentions. You know, certainly in my long conversations with him, the many reports of meetings that I've received of other American officials, a recent congressional delegation, you do get the impression that he and the team around him are trying to deal with the economy that is in very bad shape in Egypt, the loss of foreign currency and investment and the tourism trade, the political reforms that are necessary.

    But the -- you know, the jury is out, Greta. You know, I've been around long enough to, so it's not what somebody says, it's what they do. And some of what he's done, we have approved of and supported. And some of what he's done, like abrogating a lot of power unto himself personally, reinstating emergency law provisions that had been a hallmark of the Mubarak regime, are very troubling.

    And, you know, we have a balancing act to do, as do the Egyptian people as to how this is going to turn out.

    VAN SUSTEREN: Now, I'm very suspicious of him because he had invited President Bashir of Sudan and essentially gave him a state visit to Egypt a couple of months ago when he should have, at least in my view, he's under indictment at the International Criminal Court. He should have been arrested. So I mean, anyone who's sort of lending a hand to President Bashir and not arresting him, um, made me suspicious of him, in light of the fact that Iran is up to their eyeballs with Sudan.

    CLINTON: Well, unfortunately, uh, that's not an uncommon story across the African continent. And we have reached out numerous times to countries that have given Bashir a welcome, uh, allowed him to come to meetings, because he is under indictment. And he does need to be held accountable for what happened on his watch as president.

    On the other hand, though, this is a long border with Egypt. One of the biggest problems that Egypt is faces is the lack of border security, the importation of weapons on their way to Gaza, for example coming out of Sudan.

    So we have a lot of very, uh, intense discussions, uh, with our Egyptian counterparts, including him, as to, you know, let's prioritize. We need to stop extremism, uh, in Egypt. We need to stop weapons coming across your border. We need to reassert order in the Sinai. It's in Egypt's interests. It's in Israel's interests. We need to try to stop Hamas from its constant attacks on Israel, something that also redounds to the detriment of Egypt over the long run, because it could become uncontrollable. We have a long list of important issues that we're raising with them. And obviously their borders with Libya and Sudan are critical.

    VAN SUSTEREN: Your predecessor, Secretary of State Henry Kissinger, said the other night that Iran -- if Iran gets a nuclear weapon, that it is a turning point in history. And everybody lives in fear of it, whether it's President Obama has said things. You've said things, your predecessors, Prime Minister Netanyahu, no one wants Iran to have nuclear weapons. But as we all sort of say that, they're marching forward in time. What's going to happen there?

    CLINTON: Well, as you know, our policy is prevention, not containment. And we have through the hard work we've undertaken with the international community, uh, imposed the toughest set of sanctions, international and bilateral on any country. We know it's having an effect. We have a great deal of evidence about the economic impact that the sanctions are having on the Iranian economy, and, therefore, on the political and clerical leadership.

    Now, part of what we have to continue to do is keep them isolated, keep all the countries, including Russia and China, on board, as they have been up to now. So we've said from the very beginning, uh, we're open to diplomacy. We are doing so in the so-called P5-plus-1 format.

    But this is an unacceptable, uh, path that they must, uh, stop or, uh, action will have to be taken. At this point, uh, we are continuing to keep the pressure on them in the pressure track and making it clear that, you know, there's not going to be any alternative but to deny them a nuclear weapons program.

    VAN SUSTEREN: I'm not suggesting we have military action against them. I'm only sort of looking at it from afar. And I see a country that first of all you have some sanctions on it, but we do give waivers to some countries. I mean some countries get to do business with them a little bit. So it's not a completely hermetically sealed country. They do get some relief.

    But the other thing is that they're behind -- they're behind the problems in Syria, they're behind the problem with Hezbollah, with Hamas, I mean Iran -- and they're destabilizing to Israel, say hateful things to Israel. We're busy trying to contain them but we may be on a different time track than their nuclear weapons program. And we -- you know, they may -- it may be a faster program. I don't know if this is.

    So, you know, there is going to come a time when, you know, we're going to have to -- we might have to make a different decision.

    CLINTON: Well, we've always said all options are on the table. The president has been very clear about that.

    And I'm glad you raised the terrorism aspect of Iran's behavior, because there's so much attention on the effort to prevent them from getting a nuclear weapon that we sometimes overlook the very active efforts by the Iranian Revolutionary Guard, the Quds Force, their proxies like the Lebanese Hezbollah and others, who have engaged in assassinations, bombings, destabilizing countries. That has been a very challenging, ongoing threat.