NEW YORK —  The withdrawal of Pakistani army troops from the region near the Afghanistan border last month is merely "a readjustment of position, a tactical readjustment," President Gen. Pervez Musharraf (search ) told FOX News on Sunday.

In November, the Pakistani army said it was withdrawing troops from the area where Usama bin Laden (search ) and a top aide are believed to be hiding.

In an exclusive interview with FOX News, Musharraf said, "We have seized five valleys there where Al Qaeda had their logistics bases, their command bases. ... We have captured those totally, we have smashed them and they are on the run in the mountains now. Therefore, we thought we had to readjust our positions."

Musharraf also said a bigger standing Afghan army is the key to quashing terror in Afghanistan, not more U.S. forces in the hunt for bin Laden.

"I would think that it may be better that we go faster on raising up an Afghan national army," he said, "increase their strength."

The Pakistani president also described the arrest or elimination of bin Laden as "absolutely incidental" to destroying the infrastructure of the greater Al Qaeda terror network.

"Our operation [against Al Qaeda] is not a single-person oriented operation going on," he said, "so therefore within this operation his arrest or his elimination would be absolutely incidental to the whole operation."

Musharraf also would not rule out that bin Laden could be in Iran, and not in the tribal region on Pakistan's western border with Afghanistan where bin Laden and top lieutenant Ayman al-Zawahiri (search) are reported to be hiding out.

"The possibility exists," he said. "Because people do manage to move unnoticed. These are mountainous, inaccessible areas, where movement is not all that difficult or impossible."

On whether Al Qaeda can launch another 9/11-size attack inside the United States, Musharraf said, "I don't think action of that magnitude is possible at all."

Musharraf tempered his words about the U.S.-led war in Iraq, which he was vehemently outspoken against before the invasion.

"The situation is not really good, but the direction that we've taken I think is correct," he said. "To have elections and bring a politically acceptable government in Iraq."

"It is important, I think, that Sunnis participate, or part of the Sunnis participate," he added. "If they can manage that, and hold elections after that ... it will be much better than holding elections with the entire Sunni block boycotting."

The withdrawal of Pakistani troops near the Afghan border followed intense military operations by thousands of troops against remnants of Al Qaeda and its allies.

The top Pakistan general in the region said the army was removing checkpoints in return for local tribesmen's support against foreign militants. He added that some Pakistani soldiers would remain nearby.

Although the tribal region is considered a possible hiding place for bin Laden and al-Zawahiri, a senior Pakistan general has said there's been no sign of them.

But earlier, the deputy commander of U.S. Central Command had said it was "essential" that Pakistan continue military operations in the area.

FOX News' Andrew Hard and The Associated Press contributed to this report.