This is a partial transcript of Special Report with Brit Hume, June 24, that has been edited for clarity. Click here to order the complete transcript.

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BRIT HUME, HOST: Pakistani President Pervez Musharraf (search) may not be elected and he may be rattling his nuclear saber at America's friends in India. But he is a crucial ally in the war on terror, and particularly on Usama bin Laden's Al Qaeda (search) network. The U.S.-Pakistani relationship, therefore, is a tricky business.

To find out how tricky, we're pleased to be joined by FOX News foreign affairs analyst, Mansoor Ijaz (search), who is also an American of Pakistani decent. He joins us tonight from London.

Mansoor, welcome. And tell us if you can, Musharraf will go home with words of praise and a $3 billion aid package, but not those F-16 jets. Will he have gotten what he needs for his purposes?

MANSOOR IJAZ, FOX NEWS FOREIGN AFFAIRS ANALYST: I think it's a tricky business, as you said, Brit. I don't think that it's probably enough to keep the hardliners in the army that he needed to satisfy happy. And I think it's not going to help him with the Islamist parties that are giving him a very difficult time in Parliament right now because they essentially look at everything that he's getting from the United States as taking him deeper and deeper into the pocket of the enemy. Let's not forget that these Islamic fundamentalists are sympathetic to the Taliban, to Al Qaeda, to a host of other things that we in the United States would rather they not see.

HUME: Quickly. Why do we keep denying the F-16's? I gather they paid for them years and years ago and have never got them?

IJAZ: Well, there is a little bit of a misnomer on that. Actually what happened is that the F-16's were paid for. Then during the Clinton administration, the -- there was an amendment called the Brown Amendment, which essentially returned all the money that they had paid, $350 million. And now what they're essentially saying is that because we've, you know, come back on the right side of the fence, we don't want the conventional military balance between India and Pakistan to get so wide.

Because the Indians are able to basically buy anything they want from Russia or other places, to let that conventional balance get so wide that Pakistan's only choice is to rely on its nuclear weapons and missiles.

And frankly, I think that is a pretty legitimate argument. That's something that we in the United States need to think twice about. And maybe if there is more progress in the war on terrorism in terms of getting the senior Al Qaeda leaders, then I think we ought to consider whether or not redressing that military balance is a good idea.

HUME: Well, the reason I take it the jets were not provided is because of their nuclear program, though, correct?

IJAZ: Well, I think the reason they're not provided is what the Indian argument is that, look, until you are able, you, the United States, or you President Bush are able to persuade your friend and ally, General Musharraf, to stop these militants that are being trained by the bin Laden- types, coming across the border into India, getting as far as attacking our Parliament building and things of that nature, frankly giving them, you know, the reward of having a conventional military buttress that is just not something that we think makes sense.

And so far, the Indians are winning that argument in Washington because they have got a very powerful lobby in Congress and ultimately it's the Congress that makes that decision, not the president.

HUME: You've now describe a man who has multiple political difficulties at home, with his army, with terrorists of the kind that are causing the trouble with India over the province of Kashmir.

He said today and we heard him say it earlier, he was talking about going into an area to help us in the search for Al Qaeda, that the Indy -- Pakistani military and nobody else had been into up in the north for perhaps a hundred years. At the same time, we're asking him to cool it with the terrorists. It seems to me we have fairly heavy case we're making of him. Is he politically and militarily able to carry out those requests?

IJAZ: Well, it is a very important question that you ask and I think the answer has to look a little bit like this. That part of what his problem is self-manufactured. He created the political crisis that he's having to deal with at home right now. And he can end that political crisis by just simply agreeing to compromise on a few important items that relatively speaking are easy to see do.

I mean I can tell you I met with some of these Islamist religious leaders when I was in Pakistan about a month ago and they are prepared to compromise with him if they have to.

The real problem is that the army hardliners are now beginning to think that he may be getting soft on Kashmir. And that is where the -- shall we say, the crux of this whole problem is. That until the Indians are willing to give him some breathing space in which he can operate both politically and militarily with his army hardliners, that is the moment at which you'll be able to say Pervez Musharraf succeed. Without that space, and Indians are the ones who can give it to him, I think it will be very, very difficult for him to sell peace with India to anyone in Pakistan right now.

HUME: And what about the search for bin Lade nor bin Laden's top lieutenants? How well do you understand or badly do you understand that's going?

IJAZ: Well, you know, General Musharraf sort of laid a bombshell. And I don't think everyone quite understands what is he said today. He said today that he is sending his own army and civil police people into those northern tribal regions to search for Al Qaeda, which is something that he has never admitted to before. And it was a huge admission as far as his religious parties are concerned at home.

Now, having gone out on the limb to say that, the question is whether or not they're really getting anywhere and getting anything done. I believe that Pakistani intelligence has a pretty good idea where bin Laden is and if they really want to close the noose on him, they could. The question is whether $3 billion in aid without the F-16's is enough to goad them to do it. My answer to that is probably not. But we're real close to getting them to understand they have to come clean on terrorism first and then we'll be able to do anything else.

HUME: Mansoor I jazz, what a pleasure to have you. Thank you very much.

IJAZ: Thank you Brit.

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