This is a rush transcript from "On the Record," February 8, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: First, something you will not see anywhere else. "On the Record" went to Rome, Italy, where Secretary of Defense Robert Gates went "On the Record." First stop, Iran.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Things in -- coming out of Germany about Iran, Iran saying -- the Iranian foreign minister saying that they were close to an agreement with the IAEA about nuclear enrichment. And I noticed that you responded to that.

ROBERT GATES, DEFENSE SECRETARY: Well, and apparently, Ahmadinejad, President Ahmadinejad, has since responded to that, saying that he was apparently going to go ahead and enrich, as opposed to the IAEA proposal for the Tehran research reactor.

The truth of the matter is, despite President Obama's effort to engage with the Iranians -- and every U.S. president has tried this. I was in the first official U.S. meeting with the Iranian revolutionary government in October of 1979 in Algiers. Every U.S. president since has reached out to Iran, but none, I think, has directly and with as much sincerity as President Obama has.

But the international community has done so, as well, in terms of the IAEA's proposal on the Tehran research reactor, in terms of the P5-plus-1 wanting to -- offering to talk with the Iranians about their nuclear program. The international community and the U.S. have given the Iranians multiple opportunities in recent months to provide reassurances of their intentions and that they'll begin to stop violating the MPT and various U.N. resolutions. And the response has been consistently disappointing.

And so now I think we're in a position to turn to the pressure track and get broad international support for some serious sanctions in terms of trying to get the Iranian government to change its approach.

VAN SUSTEREN: Today in terms of what Ahmadinejad said is he wanted to enrich it to 20 percent, which seems to me a low-grade uranium, but nonetheless a very crude nuclear weapon can be made with that? Is that your understanding?

GATES: Well, I'm not that expert on the physics of it. But I mean, the proposal had been that they would ship their 1,200 kilograms of low- enriched uranium somewhere else, to Russia or wherever we were able to reach an agreement, and then another country, perhaps Russia, would provide them with the 20 -- enriched 20 percent for the research reactor.

But it would be fully safeguarded under the IAEA so we'd know where it was and we'd know it wasn't being further enriched for a potential weapon. That's what's changed and that's what Ahmadinejad is now apparently saying they will do on their own. I'm not even sure they can do that, but that's what he said.

VAN SUSTEREN: So what's the problem? I mean, we've reached out to them. The international community has reached out to them. Sanctions have been held over their heads. You know, what's the problem? Is it -- well, you tell me what is the problem.

GATES: Well, I think that -- I think that's a good question. I remember after the Iranian revolution in 1979, President Carter sending a letter to the director of CIA, saying, I'm not happy with the quality of our political intelligence. And we've been wrestling with that ever since. Trying to figure out what's going on in Iran in many respects is even more complicated than it was with the Soviet Union.

Watch Greta's Interview with Defense Secretary Robert Gates: On Iran | Afghanistan and Iraq | Pakistan

VAN SUSTEREN: Now, the IAEA agreement that we've been struggling with Iran is that they want to send some of their uranium out for enrichment but not all. They wanted to slow it down. Presumably, I guess, they wanted to hold some back so they can do what they wanted with it. Is that your thinking?

GATES: Well, I think -- I think, basically, their strategy is if they did anything at all, it would be to slow-roll us. And the reality is they are continuing to enrich. So one of the points that I've made on this trip is the longer they wait in terms of this proposal, the less valuable the Tehran research reactor proposal is, from the standpoint of providing international -- the international community with reassurance because they're continuing to enrich. So if they want to send just 20 percent of it out or 10 percent or something at a time and they're still enriching, then the value of the proposal is significantly degraded, in my view.

VAN SUSTEREN: Were the -- I was a little confused with Ahmadinejad's statement. They want to send away 20 percent out, or he says he's going to enrich to 20 percent?

GATES: Well, I haven't actually seen what he said, but what I've been told he said is that he was going to enrich to 20 percent.

VAN SUSTEREN: All right. Now, what can we do? If indeed, he sort of forges ahead, what are our options?

GATES: Well, I think there is room left on the pressure track, and I frankly think we have some time to make that work. You know, years and years ago, CIA did a study of international sanctions and when they worked and when they didn't. And central to their working is the entire international community really being serious about it and really enforcing the sanctions. It worked against South Africa. It has worked in other places. Where it didn't work is where a number of countries cheat or a number of countries don't participate.

So my hope is that the way that the Iranians have reacted here to the international community will provide the political impetus to get everybody behind this in terms of sanctions that have a real impact, particularly on the IRGC and the folks who are running Iran.

VAN SUSTEREN: OK. Well, one of the countries that sort of seems to be opting out or dragging its feet is China. Russia seems less interested in the sanctions, as well. So I guess we have to get China and Russia on board? And then -- I mean, how do we do that?

GATES: Well, I think -- you know, it's always a negotiating process, and you know, we're just at the beginning of it. I think it's going to take some period of time, I would say weeks, not months, to see if we can't get another U.N. Security Council resolution. I think that's important because then it provides a legal platform for the EU and individual countries to then perhaps take even more far-reaching steps.

VAN SUSTEREN: And if we don't? Or if we have that leak, if China doesn't -- if China violates it or some other country violates it, then what?

GATES: Well, all I can say is we have been successful in getting several Security Council resolutions, and so I'm optimistic that we'll be successful again.

VAN SUSTEREN: And then you're optimistic that the sanctions will have the impact?

GATES: Well, I think one of the things that has changed is the internal situation in Iran. And this is a leadership that faces some pressures that they didn't a couple of years ago, and questions about their legitimacy from their own people. So I think we don't really know -- as I was saying earlier, I don't think we really know what the political chemistry in Tehran is, but I think we have to go through this step.

VAN SUSTEREN: Any idea how much time we have?

GATES: Well, the intelligence analysts vary on that, but I would say probably a year or two.

VAN SUSTEREN: In terms of wars that we're now fighting, we have Afghanistan, Iraq and the war on terror. Those are our three main wars (INAUDIBLE) imagine have sort of different sort of strategies involved (INAUDIBLE) I want to start first with Afghanistan. What's the state of Afghanistan?

GATES: Well, General McChrystal has been quoted as saying that he thought the situation was serious and deteriorating. Just within the last week, when he's spoken at the NATO defense ministers' meeting in Istanbul, he said he thought the situation was serious, still serious, but no longer deteriorating. So I think we're beginning to see the impact of the Marines going in to Helmand province. We're beginning to see the impact of increased forces in other places.

But here's also -- I think part of what many of us are feeling is that there's an intangible increase in confidence and hope both on part of the Afghans, but also on the part of the nations that are with us in there trying to help them. And you know, it's still going to be a hard fight and there's some very hard days ahead of us. But there are some small signs that the strategy that General McChrystal is following is beginning to bear fruit.

VAN SUSTEREN: I realize that there are limited resources, money, manpower, but are the American people giving you what you need to fight this war? I mean, is there -- are you getting shortchanged any way so that your hands are tied?

GATES: Absolutely not. The American people -- I know one of the misconceptions around the world is that the American people love war. The truth is, we've never had a popular war. First few years of World War II were popular, but then people began to get impatient as the war dragged on. But there has never been a war that was really popular in America. I mean, just think back to Vietnam and Korea, and so on.

So I think, given the challenges and the fact that we've been at war for eight years, the American people have been amazingly patient, amazingly supportive. And of course, the men and women in uniform are unbelievable.

(END VIDEOTAPE)

VAN SUSTEREN: Next, more of our extensive interview with Secretary of Defense Gates. And nothing is off the table -- Iraq, Afghanistan, Pakistan, Usama bin Laden. More with Secretary Gates in two minutes.

(COMMERCIAL BREAK)

VAN SUSTEREN: Continuing with Secretary of Defense Robert Gates. Next stop, the war in Afghanistan.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: What is the difference -- the Soviet Union was in there for 10 years and then went home. They lost because of the challenges of fighting in Afghanistan. What are we doing differently, or how has time changed so that we don't have sort of the same situation the Soviet Union did?

GATES: Well, I think this is one of those cases where history is just completely misread. First of all, the Soviet Union invaded Afghanistan. They killed a million people. They forced five million to flee as refugees. They conducted a war of terror against them. And they had major powers working against them, mostly us, and providing a steady supply of very sophisticated weapons to the mujahedeen.

We're in a completely different position. We've been invited in by the Afghans. Our presence there has been sanctioned by both the U.N. and NATO. We have 44 nations that are contributing troops, the heart of it being NATO but a lot of non-NATO partners. And we are partners with the Afghan people.

And this is what's important about McChrystal's change of strategy, when he says that the core of this, the key to success is not how many Taliban you kill but how many Afghans you protect. So what's central in that is that the Afghans see us as their partners. The Afghans sure never saw the Soviets as their partners.

VAN SUSTEREN: In terms of partnership, we're reaching out to the low- level Taliban. President Karzai has talked about dealing with the Taliban both at the high level and the low level. You have any problem with us -- I mean, not problem, but do you have any thought about reaching out to the Taliban at this point and sort of bringing them on board?

GATES: Well, first of all, we sort of in our own thinking about it differentiate between reconciliation, which is sort of at the political and leadership level, and reintegration, which is the foot soldiers and local leaders and commanders.

We think a lot of the Taliban participate because they are paid, others because they or their families are intimidated. And so we think that as the momentum begins to shift in this conflict in the direction of the Afghan government and the coalition that's in there helping them, we think there's a chance that a substantial number of these lower-level Taliban will be willing to put down their weapons and rejoin Afghan society.

We have to do two things, though. We have to create the conditions in which they can have a job, and we have to protect -- provide the security to protect them and their families because one of the things the Taliban does, when some of these people do cross back over, is kill them and their families. So we have to provide them with the security so they know that won't happen.

VAN SUSTEREN: Well, it's sort of interesting we almost have to buy their loyalty. No?

GATES: We really just have to give them an alternative way of supporting their families. And you know, as for the reconciliation part of it, President Karzai is putting together his own plans on this. We've been talking with him about it. That always ends up being a part of the end of a conflict like this. But the key is, it seems to me, is that that reconciliation has to be on the terms of the Afghan government and consistent with the Afghan constitution.

VAN SUSTEREN: Is it working? I mean, do you see some sort of progress with it so far?

GATES: In terms of reintegration?

VAN SUSTEREN: Yes.

GATES: On a very small scale so far. The key -- the first thing that has to be done is to reverse the momentum of the Taliban.

VAN SUSTEREN: Iraq, our other war -- what's -- how are we doing there?

GATES: Actually, I think we're pretty much on track. We're -- General Odierno is pretty comfortable with the arrangements that we have, the responsible drawdown that's taking place. The Iraqi security forces have continued to improve. We will continue that training role with them through the end of 2011. We'll continue to do counterterrorism operations with them, but we are pretty much on schedule.

VAN SUSTEREN: So we're on track to do our draw-down and to leave. There's been -- but there continues to be violence there. I mean, you continue to...

GATES: Well, this is really...

VAN SUSTEREN: ... to read these terrible stories about being people blown up...

GATES: Oh, sure.

VAN SUSTEREN: ... by suicide bombers.

GATES: And it's pretty clear that it's al Qaeda and it is al Qaeda trying to come back, trying to show that they still matter, trying to turn the Sunnis again the government, trying to foment sectarian violence. All the information we have points to al Qaeda in this. And so they are somewhat resurgent, but that's why we will continue to work with the Iraqi security forces in trying to take these guys out.

But what is important is that although, occasionally, it looks like "The Perils of Pauline" when it comes to politics in Baghdad, the reality is, these guys are trying to solve their problems politically, rather than with guns.

VAN SUSTEREN: You mentioned al Qaeda, so of course, I think of Usama bin Laden. Any thought on whether he's dead or alive, whether we're going to get him or not?

GATES: I have no idea.

VAN SUSTEREN: Just nothing?

GATES: Nothing.

VAN SUSTEREN: And the same with al Zawahiri, his lieutenant, his next in command, no idea about him?

GATES: No idea. But I will tell you I think that the actions that the Pakistani government is taking in South Waziristan, one of positive -- on of the many positive aspects of that has been flushing some of these guys out of South Waziristan. And the minute they begin to move around, then -- then there are some opportunities.

(END VIDEOTAPE)

VAN SUSTEREN: Next up, Secretary Gates on Pakistan. When "On the Record" went to Pakistan, we met a civilian population very hostile to the United States. What are we doing to change that? Find out next.

(COMMERCIAL BREAK)

VAN SUSTEREN: More with Secretary of Defense Robert Gates in Rome, Italy.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Pakistan -- how are things in Pakistan?

GATES: Better than I would have dreamed possible 18 months ago. If you had told me 18 months or two years ago that the Pakistani army would be operating in South Waziristan, that they would have gone into the Bajaur agency, that they'd have gone into Swat, I'd have thought that'd be a miracle.

We always want them to do more. They push back. They're going to do at their own pace and in their own way. We will help them as much as possible. And I told them when I was out there a couple of weeks ago, I said, You know, we're in this car together, but we recognize on your side of the border, you're in the driver's seat and you've got your foot on the accelerator.

But I think there has been an improvement in coordination. And frankly, I think the Pakistanis have done a terrific job. They've lost a lot of people, at least 3,000 soldiers, so it's not like they're not in the fight.

VAN SUSTEREN: That's military to military. When I was in Islamabad about six or eight weeks ago, I was surprised at how angry the civilian population was against the United States. And the thing that was rather outstanding to me in terms of -- well, maybe -- maybe it was -- seemed stunning was that we had just given them or pledged $7.5 billion, but we wanted to know where it was going to go, the United States, and they were all grossly offended that the United States would want to know where the money was going. And there was a lot of hostility towards the United States.

GATES: I think anti-Americanism in Pakistan is a real problem for us. And I think it's a legacy issue. This is not something that just happened a few months ago or a year ago. The Pakistanis believe we've betrayed them on several occasions. We clearly left them in the lurch when we turned our backs on Afghanistan in 1989, 1990. I was in the government then, so I bear some responsibility for that. And then with the implementation of the Pressler amendment in the early '90s, we had to basically break off our military-to-military relationship.

So these guys figure that we're in this for ourselves, we have no interest in them, we will leave as soon as the situation in Afghanistan is stabilized. We have to just have a long-term approach to Pakistan that reassures them that we are a long-time, reliable ally for Pakistan, we're going to be there with them and for them going into the future. And it's in every aspect -- politically, economically, and so on.

The only way you can build that kind of trust -- they call it the "trust deficit." The only way you can build that kind of trust is by actions and over time.

VAN SUSTEREN: In Karachi the other day, terrible bombing, I think 33 dead. And the headline that I read with it talks about the instability within Pakistan. And of course, the first thing I think of is their nuclear arsenal and how secure is it. Do you have a strong confidence that their nuclear arsenal is under control?

GATES: I would just echo what the Chairman Joint Chiefs of Staff Admiral Mullen said. We're comfortable with the security.

You know, just to go back to an earlier point, one of the things that I talked about when I was in Pakistan is that al Qaeda, the Taliban in Pakistan, and the Taliban in Afghanistan are all working together. And the al Qaeda -- al Qaeda is helping the Pakistani Taliban try to destabilize the Pakistani government there. There is evidence that al Qaeda is helping them plan these attacks, the targeting, the training on capabilities, and so on.

These threats are all mixed together. It's a syndicate. And trying to help the Pakistanis understand that each -- if any of the three of these, or others such as the Haqqani network, are successful, it redounds to the benefit of the others. And so we've got to attack this problem as a whole, rather than piecemeal.

(END VIDEOTAPE)

VAN SUSTEREN: We have much more of our interview with Secretary Gates tomorrow night. What does he think about "Don't ask, don't tell"? Is he in line with President Obama on that? Does he think gays and lesbians should be allowed to serve openly? Check out "On the Record" at 10:00 PM tomorrow night.

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