This is a rush transcript from "On the Record," July 20-21, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Secretary of State Hillary Clinton goes "On the Record" from Mumbai, India. And how does India's future directly affect you? And what will the United States do about the North Korean nuclear crisis? And on a totally different note, are the rumors true? Is Chelsea Clinton engaged? We started the -- we started this interview, though, with the more serious news.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: We're here in Mumbai, India, and not just in the city but in this particular hotel, which is hugely significant, isn't it.

HILLARY CLINTON, SECRETARY OF STATE: It is. We're in the Taj Hotel, which was one of the two hotels that were attacked by the terrorist on November the 11th, what they call 2611 (ph) here in India. And I wanted to stay here. I was very anxious to come to India. We waited until after their elections were over, which we thought appropriate. And then as soon as I could, I scheduled a trip to come and talk to the leaders about all the issues that we are going to work on together

But I wanted to start in Mumbai and I wanted to stay here, and I wanted to show our sympathy and solidarity for the people who lost their lives and were injured in the terrorist attack and for those who courageously prevented more deaths and injury, and to make it very clear that, you know, we're going to work together to stamp out the scourge of terrorism.

VAN SUSTEREN: Rumor has it, though, they wanted you to do a press conference on the inside, and you wanted to make it more public. Right, or wrong? Am I right on that one?

CLINTON: You're right. I think part of staying here, part of the message that I want to send is that, just like we did after 9/11, we are not giving in. We are not in any way intimidated by the terrorists.

They can wreak havoc and death, but they are no match for people's feelings of positive energy, their commitment to life, their willingness to keep going.

So I see it as a rebuke to those who plan and plot and carry out these horrible attacks. And I feel very strongly that we have to stand up against that.

VAN SUSTEREN: Is there any discussion about cap and trade? I know that trade is an issue here in this country because they're not going to agree, at least they're saying, to the standard that our Congress wants to set, and that will have an enormous impact if they have tariffs on their products. Where does that stand?

CLINTON: I brought with me our climate change envoy, Todd Stern, and he meeting with a lot of his counterparts in both the public and the private sector to try to see what we could work out with India.

And I have made it very clear, number one, the United States wants to see India develop. We want to see the continuation of this astonishing rate of growth that is lifting millions of people out of poverty.

But we see no contradiction between the eradication of poverty and doing it in a low-carbon economy. In fact, India is well positioned to use alternative form s of energy. They have chosen to invest heavily in nuclear power, which is a non-carbon-producing for of energy. They are looking at more solar and wind and other forms of alternative energy.

So our job is to make it clear that we need a global agreement, because climate change threatens all of us, but it particularly threatens people on the margins, the rural poor, because their soil is literally drying up and blowing away. It threatens people in coastal countries like India.

So to make the case that there has got to be a way for India to leapfrog over the kind of industrial development that the United States and the west did which resulted in such a heavy toll on the environment -- and there is a key difference.

You know, when the United States and Great Britain and other countries were building a massive coal plants and pumping so much pollution into the air, we didn't know any better.

It has only been in the last 20, 25 years that there was this dawning awareness broadly shared that there was something wrong, that we were seeing increases in temperature and changes in weather patterns.

In our own country, it wasn't until Barack Obama became a president that our government said, "You know what? We have got a problem. We have contributed to it, and we need to do something about it."

When my husband signed the Kyoto agreement, it wasn't even sent to Congress. We knew that I couldn't be passed. So think of the awareness that has occurred in a relatively short period of time.

VAN SUSTEREN: There is this whole business or economic issue, and let me just jump ahead a little bit. We are here in India. If you're back in the states, which is quite a distance away, you think, why should they care in the states, not on the big moral picture about helping India, but an a personal level of trying to put food on the table, why should they care? Why should people in America care about India?

CLINTON: Well, people in America care about India, number one, because they are a great and growing nation with more and more not just regional, but global power. Decisions that are made here in India are going to affect the bread and butter issues that are important to Americans.

How India decides to develop is going to impact on our climate, which is global. There is no boundary when it comes to climate.

And there is certainly a lot of connections between India and the United States. We have a very active Indian-American community that has made great contribution to our country.

So there are links that are tangible and understood, but there is also the bigger picture. You know, the United States is looking for partnership. We need partners who will help us combat terrorism, help us combat the spread of deadly weapons, help us patrol the waters of the world so pirates don't interfere with commerce, help us discover new technology and new prescription drugs and all the other great research possibilities that India is focusing on that will improve the lives of Americans.

This should not be like a zero-sum game -- if India is up, the U.S. is down, or if the U.S. is up, India is down. In the world in which we live now, and as I've said repeatedly, we have to be looking for win-win and partnerships that benefit our people and at the same time benefit others.

VAN SUSTEREN: You mentioned piracy. The first thing that I think of is what is going to be one of your next stops, because it makes me think of North Korea and that boat that we chased recently. You are going on to Bangkok, right?

CLINTON: Mm-hmm.

VAN SUSTEREN: What is, and the ambassador to North Korea, I guess, will be at the conference. You do not get any intention to meet with him, do you?

CLINTON: No. I am going to Thailand for two reasons, first to go to Bangkok to meet with representatives of the Thai government, their prime minister and others, and to show our respect and appreciation, because a lot of Americans don't know, Thailand has very deep and important ties with the United States

We have one of our biggest embassy operations in Thailand because Bangkok is the center for a lot of what we do in so many important areas. We have huge military exercises every single year with Thailand where about 15,000 American troops are involved.

Then I am going to Phuket for the foreign ministers' meeting of the Association of Southeast Asian Nations, and countries from all of the world will be there. But I will be talking to the Chinese, to the Russians, to the South Koreans, to the Japanese, to others who will be there.

But I do not have any plans to talk to the North Koreans. They know where we stand, and they know what we expect.

VAN SUSTEREN: They are going to have a representative there, right?

CLINTON: They are a member of the organization, so they will be there, as will the Burmese.

VAN SUSTEREN: So will you be in the same room with them?

CLINTON: I do not know. We'll see. I'm not sure.

It's like we went and had our big conference in the Hague to try to get a global response about what we were going to do in Afghanistan, the Iranians were represented. And, obviously, I did not talk to them. They didn't talk to me. But they were there. I assume it will be similar for this.

VAN SUSTEREN: So you could be in the same room with them and just sort of not talk to each other? I mean, how does it work?

CLINTON: Well, we really don't have any intention of talking to them, at least, I do not, because what we are interested in is North Korea coming back to the table and continuing the negotiation that will lead to a denuclearized Korean peninsula. We have made that abundantly clear over and over again.

We could have a different relationship with North Korea, but it is conditioned on their willingness to give up nuclear weapons. And they have not yet agreed to do that.

VAN SUSTEREN: How does that even ever happen? Because the U.N. just upped the sanctions again. They have been sanctioned and sanctioned and sanctioned.

And the North Koreans, the government of the people, the people think we are about to invade them any second, and the government of course hates us as well. How can we ever get them to do anything? Nothing has worked so far.

CLINTON: Greta, I think there is a difference. In the last several months we have had such a unanimity on the part of China, Russia, South Korea, Japan, and the entire world.

We have all worked together. We've passed very tough sanctions. We keep adding as we get new information entities and individuals whose lives will be directly impacted because they are part of the North Korean weapons and nuclear supply chain.

And China is very clear in its condemnation of what North Korea has done, which is different in degree than it has been in the past.

And I have had many conversations with my Chinese counterpart and other Chinese officials. They are extremely frustrated with the North Koreans, and they are sending extremely strong messages to them.

Now, look at what happened with Libya. Starting when Bill was president, continuing when President Bush was there, there was a constant diplomatic effort. It was difficult, patient, persistent, but it paid off.

VAN SUSTEREN: Hear is the difference, though, is I think the Libyan - - I think Gaddafi cared about his people. And if you don't care about your people, if you allow them starve like what happened in the '90s, what makes you think that they would even respond, even China, if you do not care enough about your people? That's the problem.

CLINTON: Because apparently the people in charge there care about themselves. They care about their perks, and we are going after specific goods and services that will impact the people in power.

(END VIDEOTAPE)

VAN SUSTEREN: Up next, more with Secretary Clinton. Will North Korea be placed back on the state sponsor of terror list? What will happen to the two female American journalists being held prisoner in North Korea?

And on a totally different subject, an answer to this question -- is Chelsea Clinton engaged? You will find out.

And later, big news for former Miss California Carrie Prejean. She may have been stripped of her crown, but Carrie started a firestorm by opposing gay marriage. And now could she end up getting the last laugh after all? Perez Hilton, listen closely. Carrie Prejean has something to say.

(COMMERCIAL BREAK)

(NEWS BREAK)

VAN SUSTEREN: More with Secretary of State Hillary Clinton.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: One of the reasons that North Korea seems to have nuclear technology that it does is because of Pakistan and A.Q. Khan, who is the father of nuclear weapons in Pakistan.

Are we confident that Pakistan is no longer exchanging nuclear weapons, advice, to North Korea?

CLINTON: We have no evidence of that.

VAN SUSTEREN: No evidence that they are no longer doing it or no evidence that they are doing it?

CLINTON: No evidence that they are doing it. We have no evidence that they are doing it. This is something that would obviously be of grave concern to us. We raise it with our counterparts in Pakistan.

I think the relationships that we are building with our counterparts in intelligence and military in the government with those in Pakistan are becoming quite positive. And this is not in Pakistan's Pakistan at all for many reasons.

So we have no evidence, and we are very vigilant about keeping an eye on that.

VAN SUSTEREN: Is there a timetable for putting North Korea on the state sponsor of terrorist list? I know it was being discussed earlier. Is there a timetable on that?

CLINTON: We are looking into it, and we are gathering information. There has to be a trigger to it. There is a legislative process. You have to have evidence that they are actually promoting and supporting, funding, assisting terrorism.

And so, we are looking for any evidence that there may be, and, certainly, I welcome any of the viewers of your show or the FOX network, if you have such evidence, to let us know.

VAN SUSTEREN: And is there any sense -- I mean, if they do get put on that list, what does that mean to them?

CLINTON: Well, it further sort of put the screws on them, at least from the United States' perspective.

But we have got international screws that are pretty strong right now, and we want to keep working those. I think those will have a greater impact because there is very little commerce, if any, and very little that we can do strictly from the American perspective without partners, without people who see the world the way we do.

And I am really gratified that more and more people see those threats as we see them.

VAN SUSTEREN: And, of course, North Korea has our two American journalists.

CLINTON: Yes, deeply, deeply concerning to me. I want to reiterate what I said about a week ago, that the United States wants to have these young women released, and we would hope that the North Korean government would provide amnesty, would act, you know, to let them come home.

I know how sorry they are for what they did. It is very regrettable. But it is really something that would be an important action by the North Koreans if they would be willing to take it.

VAN SUSTEREN: Now, to really shift gears. There are rumors about your daughter Chelsea getting married. Yes, or no?

CLINTON: If that is true, I do not know about it, so I hope the answer is no.

No, she's not. There is no truth to that. I keep reading it, and we keep saying, "It's not true, it's not true." But for some reason it doesn't got away.

VAN SUSTEREN: It's impossible to shut down some rumors, isn't it?

CLINTON: It is. I have a lot of experience with that. Shutting down rumors is certainly not something I know how to do. But thank you for asking. Maybe we can please shut it down with your viewers.

VAN SUSTEREN: Let's hope so. Someday she will get married, and we look forward to that. It's just not now.

CLINTON: Not now, not now.

(END VIDEOTAPE)

PART II, AIR DATE: JULY 22, 2009

GRETA VAN SUSTEREN, FOX NEWS HOST: Well, now for part two of your interview with Secretary of State Hillary Clinton from Mumbai, India. One of the threats on everyone's mind, North Korea's dangerous nuclear program.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Do you have any sense of a timetable in terms of how much time we have? The North Koreans don't, apparently, have a delivery system for a nuclear weapon at all. But I mean, how much time do we have to try to -- you know, with the sanctions, to hope that sanctions and the increased pressure on the world -- by the world community, before -- before they'll have a delivery system? Any idea?

HILLARY CLINTON, SECRETARY OF STATE: Well, I think we have time. I don't want to put, you know, numbers of years on it, but we have time. I mean, their program is not that advanced. It's not that sophisticated, in our assessment.

And you made a point which is very critical. It's not only what they might do, but it's what others might do in reaction to what they might do. And I think neither China nor we want to see Japan feel the necessity to move in that direction, or South Korea, but neither do the North Koreans. So there comes a point when your pursuit of nuclear weapons renders you less secure, not more secure.

And I really believe that there are a lot of moving parts to this. And I'm not in any way, you know, saying it's going to be easy, but you can begin to see the pieces on the chess board. And I think that there's going to come a moment -- I don't want to predict exactly when -- when North Korea is going to want to come back to the table to start talking about the way forward.

VAN SUSTEREN: Boy, it's amazing how their sort of unwillingness to talk -- they're so sealed off from the world, is that, you know, it -- it's so -- it's so impossible to even deal with them, isn't it.

CLINTON: Well, it's difficult because we don't have the kind of opportunities that I think are important to discuss with one another. We have channels. We use other countries who have more established formal channels. But we also know that the North Koreans follow our country and what we say very closely. So just even talking to you, I imagine, you know, they will be reporting back to North Korea. And we hope that there will be a consensus reached within their leadership that the path they're on is not sustainable.

VAN SUSTEREN: But it's interesting. When you look at, like, Iran, where you had the protesters on their election, is that, in part because, you know, many Iranians travel the world and they meet Americans and they have some sort of sense of -- you know, of our, you know, democracy. And when you go to North Korea, the North Koreans, because they're so sealed off from the world, they have no concept of it, and they literally see us as being these horrible -- horrible people trying to invade them.

CLINTON: Well, you are so right, and you speak from firsthand experience. I mean, what's tragic is that this has been such a controlled society, with so few sources of information coming into the country, that I'm told when people escape, when they get to South Korea or they get to China, they're just stunned by what they find. It's not only the prosperity and the, you know, abundance of food and other goods, it's that the world is not at all as it's been described to them. And it's tragic because the -- you know, the opportunities for the people of North Korea are just as great as for people anywhere, but they are, you know, abused and victimized by their own government.

VAN SUSTEREN: They're going to have, it looks like, a change of leadership at some point in the near future, the son, the brother-in-law, or maybe a military leadership of some sort. Any thought about that?

CLINTON: No. Obviously, this is something we're watching closely. We have, you know, no insight into what the final decision will be. But we would hope that the current government would, you know, begin a dialogue with us and others that would lead to some positive change that whoever were to come next would be able to build on.

(END VIDEOTAPE)

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