This is a rush transcript from "Your World with Neil Cavuto," December 27, 2007. This copy may not be in its final form and may be updated.

TERRY KEENAN, "YOUR WORLD" GUEST HOST: Well, cut off all aid to Pakistan, that's what my next guest says that we should do.

Joining me now is presidential candidate Ron Paul.

Congressman, welcome. Very nice to have you with us.

You know, you call this a grave policy failure, and you -- you have been talking about our policy towards Pakistan for — for a long time, been pretty prescient on it.

Explain.

REP. RON PAUL, R-TEXAS, PRESIDENTIAL CANDIDATE: Well, I think we should treat Pakistan a long time ago like we should treat all countries. We should mind our own business and stay out of supporting military dictators.

And that's what Musharraf is. He overthrew an elected government, and we reward him by supporting him. He becomes our puppet. We have sent him about $10 billion over the last eight years. And the candidate that represents democracy, Bhutto, comes in, and she gets killed.

And we're right in the middle of this. And we just sort of stir the pot. And now I'm scared to death that we're going to be marching in there and have another war. We have one in Iraq. We threaten Iran. We're in Afghanistan.

We can't afford to go in and now go into nation-building in Pakistan. I think it's a consequence of us getting involved too many places. And we can't afford it any longer. It's not in our own interest to do this.

KEENAN: It — it begs — it begs the question, though, now, what do we do? You see these scenes, these awful, violent street scenes. What do we do now?

PAUL: Well, I mean, they have to deal with it. It's their country. It's not our country. They have to deal with it. It's their political situation. We probably did way too much already. So, the sooner we do less, the better it is for them and for us.

But I don't think this is a justification to jeopardize American troops or — or tax the American people. It's a real mess. And I think that they have to sort it out. Countries should have the right of self-determination. When they have problems, they work it out. When they have violence, it's an utter tragedy.

But for us to be supporting military dictators, I think, is tragic. And now there's a call to drop our support for Musharraf, on-again, off-again. We used to support Usama bin Laden. Then we quit. Then we supported Saddam Hussein. Then we quit.

And we need to quit this on-again, off-again stuff. And, besides, we just don't have the money anymore to continue to do this. And it does not serve our interests.

KEENAN: Yet — yet, sometimes, you have to be support the better of two evils. Hasn't that been our policy to try to maintain some stability in this country with 60 nuclear warheads?

PAUL: I think that's the problem, always trying to support the lesser of two evils. And we don't have the jurisdiction to do it.

And I'm not sure you can sort out which one is the most evil or the least evil. I mean, here we are — right now, we have supported Turkey all these years, and Turkey now is using our weapons and our money to bomb north Iraq.

This has to quit. I mean, how long can we continue to do this? It just doesn't serve our interests at all.

KEENAN: As — as on most issues, you're the only one really speaking this line on the campaign trail.

How big an issue do you think the situation in Pakistan is going to be, not just, you know, next week in the caucuses, but ongoing in the campaign?

PAUL: Well, I think it's going to be big, but, hopefully, I can put it in context of foreign policy, rather than becoming a management situation.

A lot of people want to talk about Iraq because it's mismanaged, or, "I can manage it differently," rather than talking about strategic policy and what the policy of the United States ought to be. That's what we should be talking about, not just tinkering with foreign policy and tinkering with a war. We need to think more strategically.

KEENAN: You know, Congress did put — tab some conditions to the aid, the latest aid that we were going to send to Pakistan. Did you support that measure?

PAUL: To support? I wouldn't support aid to them, no.

KEENAN: Any aid whatsoever?

PAUL: Oh, no, because this is the whole thing, is, you know, you offer them the aid. You want them to do something. If they don't do it, then we threaten to take their aid away from it. Then, if they don't obey us, we start bombing them.

I just want to become much more neutral, talk to people and reason with people, rather than supporting certain dictators that elicit this — this kind of turmoil in these countries.

I mean, one of the — our support for Saudi Arabia over all these years is a thorn in the side of many of the Al Qaeda. That's the motivation.

KEENAN: Right.

PAUL: And the fact that we support this military dictator in Pakistan is an incentive for the Al Qaeda to organize.

KEENAN: All right, provocative as always. And we appreciate your insights on this tragic day.

Thanks for joining us, presidential candidate Ron — Ron Paul.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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