Former Pakistani President Pervez Musharraf said Monday the White House's suspension of $800 million in U.S. aid to the Pakistani military is not in the interest of either nation and could hamper anti-terror efforts.

"We are weakening the country and the army," Musharraf said during an address at Rice University's Baker Institute of Public Policy. "It will have a negative effect certainly on the Pakistan army, on its capability to fight terrorism."

President Barack Obama's chief of staff, William Daley confirmed over the weekend the withholding of the cash intended for the Pakistani military, saying while the strained relationship between the United States and Pakistan must be made "to work over time," until it does, "we'll hold back some of the money that the American taxpayers are committed to give" to the country's powerful military forces.

Musharraf said he was saddened by the "present environment of confrontation almost between Pakistan and the United States, between the two armies, the two intelligence services."

"It saddens me because I remember when there was trust," he said, pointing to what he said were his strong relationships with President George W. Bush and then-Secretary of State Colin Powell.

"I could pick up the phone," he said. "The line was always open. I wonder now if that degree of communication exists."

He said there was a "trust deficit" and a "confidence deficit" between the countries and the restoration of better relations depended on leadership and straight talk, beginning with Pakistani assurances to Washington that there was no complicity with providing haven for Osama bin Laden.

The former military ruler's tenure as president included years Osama bin Laden apparently moved in the compound in Abbottabad, home of Pakistan's military academy, where he was killed May 2 by U.S. commandos during a covert raid. As he has in the past, Musharraf Monday denied he or Pakistan's domestic spy services knew of bin Laden's location, at least during his time in power.

"For two years, I can for sure, with 100 percent guarantee, whether you believe it or not, I didn't know," he said.

As for the possibility of the army or the Pakistani intelligence service hiding that knowledge from him, he said: "No. Absolutely zero. They are my people. I commanded them. How could they hide from me?"

He said a step in easing the rift between the nations would start with the U.S. taking into concern "our sensitivities, our own honor and dignity as a sovereign nation."

While Americans were angered at the possibility Pakistan was providing bin Laden cover, Pakistanis were enraged over what they saw as American violation of their sovereignty.

On Sunday, Daley acknowledged much the same, saying the decision to suspend military aid resulted from the increasing estrangement between the U.S. and its sometimes unreliable partner in the fight against terrorism.

"Obviously there's still a lot of pain that the political system in Pakistan is feeling by virtue of the raid that we did to get Osama bin Laden," Daley said.

The U.S. long has been unhappy with Pakistan's evident lack of enthusiasm for carrying the fight against terrorists to its tribal areas, as well as its covert support for the Taliban and anti-Indian extremist groups. A senior U.S. official has confirmed the aid suspension came in response to the Pakistani army's decision to significantly reduce the number of visas for U.S. military trainers.

Musharraf said the start of any trust would begin "at the top level."

"At the people's level, I think gradually it will take time and be restored," he said.

Musharraf took power in Pakistan in a 1999 coup and held it until stepping down in 2008 after months of protests and election losses among his supporters. He also drew criticism for his ouster of a supreme court judge, an action he defended Monday as constitutional.

Since his departure from Pakistan, he has been living in Dubai and London and has been making speaking appearances at colleges and universities.

He has said he'll return to his homeland no later than next March to resume his political ambitions and is considering a presidential run in 2013, which he called "the mother of all elections."

"I am very conscious of this," he said. "I am trying to contribute my bit to bring change about. We need to have determination and if it's in Pakistan's destiny to rise as moderate progressive Islamic state."

He said a return to Pakistan would be for the nation's sake, not his.

"I'm very happy on the lecture circuit," he said. "They give me good money. I can live anywhere. As far as I'm concerned I'm comfortable."

Musharraf also has been dogged by allegations he was part of a conspiracy to assassinate ex-Prime Minister Benazir Bhutto in late 2007. He did not address that Monday in Houston but in the past has denied any involvement.