Full Transcript: Defense Secretary Leon Panetta

Secretary of State Hillary Clinton says the arrest was unwarranted. Congress has proposed cutting aid to Pakistan by $33 million, $1 million for each year of his sentence. Realistically, is there anything that the U.S. can do to help this doctor?

It certainly seems like this is a shot across the bow, saying anyone who ever helps the United States, you know, the U.S. is not going to be there, and you're going to be held accountable by your own government.

PANETTA: It's -- it is so difficult to understand and it's so disturbing that they would sentence this doctor to 33 years for helping in the search for the most notorious terrorist in our times. This doctor was not working against Pakistan.

He was working against Al Qaeda. And I hope that ultimately Pakistan understands that, because what they have done here, I think, you know, does not help in the effort to try to reestablish a relationship between the United States and Pakistan.

TAPPER: Secretary Panetta, can we call Pakistan an ally when they do something like this, when they sentence a doctor who helps the United States find bin Laden, who has killed more Muslims than I can count? How can we call them an ally when they sentence this guy to prison?

PANETTA: Well, Jake, this has been one of the most complicated relationships that we've had, working with Pakistan. You know, we have to continue to work at it. It is important. This is a country that has -- that has nuclear weapons.

This is a country that still is critical in that region of the world. This is a country in which we have to go after an enemy that's located in their country as we have. So we have to continue to try to work with them. It's an up-and-down relationship. There have been periods where we've had good cooperation and they have worked with us.

And there have been periods where we've had conflict. But both countries have a responsibility to work together because we're dealing with common threats. They're dealing with the terrorist threat just like we are.

They've had huge numbers of Pakistanis who've been killed by terrorists. So our responsibility here is to keep pushing them to understand how important it is for them to work with us to try to deal with the common threats we both face. And what they did with this doctor doesn't help in the effort to try to do that.

TAPPER: And you've been in the middle of a very difficult negotiation with the Pakistanis about the lines of transit through which we supply U.S. troops in Afghanistan by using Pakistan and they shut them down after that incident at the border in November. They initially charged about $250 per truck.

They are now trying to charge $5,000 per truck. We already give them – the U.S. taxpayer already gives the Pakistanis billions of dollars a year. And now they're trying to charge $5,000 per truck. First of all, how high are you willing to go in this negotiation? Are you willing to pay more than $1,000 a truck?

And second of all, what are the American people to make of this relationship, when they hear about this doctor going to prison, when they hear about they're trying to charge us, even though we already give them billions of dollars?

PANETTA: Yeah. No, I -- you know, I think the American people are concerned. We're all concerned about the relationship. And at the same time, as I said, we have to do everything possible to try to work with them in order to protect our interests.

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