SMITH: Madam Secretary, thank you so much for taking the time to speak with us.

CLINTON: Thank you, Harry.

SMITH: The president said, about this secret facility that's been uncovered in Iran, that it is inconsistent with a peaceful nuclear program. What does the United States think this secret facility is for?

CLINTON: Well, we believe that it is a covert facility designed for uranium enrichment. It has not been disclosed. And therefore it raises additional suspicions about the Iranian intent regarding their nuclear program.

And this week we had several very important developments. First, we had, in this room, a bilateral meeting with President Medvedev and President Obama.

And in a very small setting where I was there, the president, you know, talked with great specificity with president Medvedev about the dual track that we are on regarding the Iranian nuclear program and the upcoming meeting on October 1st, and opened the discussion about the information that we had concerning this facility.

SMITH: So he told President Medvedev?

CLINTON: Yes. Yes. And what we also saw happen today, later that day, was an agreement by all the members of the so-called P-5- plus-1, United States, Germany, France, United Kingdom, Russia and China, all in agreement, saying that we expected answers from Iran in the October 1st meeting and that we were working on what's called a dual track.

We're pursuing the answers. We have made it clear to Iran that they have a right to peaceful nuclear energy for civilian purposes under appropriate safeguards and monitoring, but not to a nuclear weapons program.

And if we don't get the answers that we're expecting and the changes in behavior that we're looking for, then we will work with our partners to move toward sanctions.

SMITH: You talked this summer about, if diplomacy failed, you called the sanctions "crippling sanctions" would be in order. What would those be?

CLINTON: Well, harry, we're exploring how you broaden and deepen sanctions. Now, sanctions are already in place, as you know. But, like many sanction regimes, they're leaky.

But in the last eight months, since we've been dealing with North Korea on a similar set of issues, we have forged an international consensus around very tough sanctions. And that's given us some additional information about how to proceed on the Iranian front.

But this is a very serious matter. The Russians have come out with a strong statement saying that the burden has now shifted. It has shifted to Iran. They have to come to this meeting on October 1st and present convincing evidence as to the purpose of their nuclear program.

We don't believe that they can present convincing evidence that it's only for peaceful purposes. But we are going to put them to the test on October 1st.

SMITH: They've managed to hide a nuclear weapons development system for almost 20 years. Do you suspect that this is other than peaceful purposes? Because they have insisted, for the last half dozen a years or so, the only reason they're interested in enriching uranium is for nuclear power for electricity.

CLINTON: Well, it certainly is hard to accept that at face value.

CLINTON: This latest incident concerning the facility at Qom, it would have been disclosed were it for peaceful purposes. There would have already been IAEA inspections.

We have been following this for several years in cooperation with some of our international partners, watching and assessing what the Iranians were doing. And then when this became known actually through the Iranians beginning to provide some information about it, we disclosed the fact and gave the information we had to the International Atomic Energy Agency.

So I guess one has to ask, if it's for a peaceful purposes, why was it not public? Why was the fact of it not generally known instead of through our working with partners to discover it?

SMITH: Because the IAEA guidelines basically dictate that if you're even...

CLINTON: That's right.

SMITH: ... going to do anything like this, you have to send us your plans to start with.

CLINTON: That's exactly right. And of course, as you point out rightly, there have been many other actions along the way that raise similar doubts.

Now, the Iranians keep insisting, no, no, this is just for peaceful purposes. Well, I think, as the Russians said in their statement, and as we believe, and what this meeting on October 1st is to test, is, fine, prove it, don't assert it, prove it.

And we are looking to see what they have to say.

SMITH: You keep talking about the Russians and it's interesting because President Medvedev almost did cartwheels once the president announced that the radar shields were going to not be constructed in the Czech Republic and the missile systems were going to be constructed in Poland.

Do you really have -- is Russia really in tune with the United States on this? Because they've made verbal statements in the past and then when it has come time to have the rubber meet the road, so to speak, they haven't been there.

Will they really be there this time?

CLINTON: I think Russia has begun to see many more indications that Iran is engaging in threatening behavior, certainly these last incidents seem to confirm that.

And finally the Russians were very supportive of our sanctions against North Korea. President Medvedev said in this room that sanctions may not be preferable, but they may be inevitable.

So I think this is what diplomacy and engagement is about. We are doing what we think is right for the United States. The missile defense decision, the Iranian process, this is in the interest of our people, our security, our safety, and our friends and allies.

But we also believe that in working closely with Russia, sharing information, that they have been quite helpful this past week.

SMITH: Is there anything the Iranians can do in this meeting on October 1st to dissuade you from what you believe they're up to? What can they say in this meeting to say we're really -- all we're trying to do is make electricity?

CLINTON: Well, they can't say anything, because they've said that for years. But they can open up their entire system to the kind of extensive investigation that the facts call for.

SMITH: Is that the only thing the U.S. and the other nations that will be there -- is that the only thing you'll be satisfied with, if they completely open the doors?

CLINTON: Well, we have to be satisfied. And there may be other approaches short of that. But, you know, I think it's really essential that we satisfy ourselves and the international community, which has passed numerous resolutions against Iran's program, pointing out that they're violating U.N. and IAEA obligations and the Non- Proliferation Treaty.

So words are not enough. They're going to have to come and demonstrate clearly to the international community what they're up to.

SMITH: In a region and in a nation that has known some instability over the last couple of months, what do you think this means in light of that as a backdrop?

CLINTON: Well, Harry, that's a really important question because we know that there has been instability. It's not only what we see on the television screens, but what is reported to us. But we're dealing with the government that is there.

We encourage the free expression of ideas and political choices, but this nuclear program really is the core of our concern right now. And we are very urgently pursuing the engagement strategy that the president talked about, while simultaneously working to get the kind of very tough sanctions that, you know, may well have to be imposed.

SMITH: All right. Let's talk about Afghanistan for a couple of minutes.

General McChrystal made his report to President Obama. One of the things he says is there's a year window in which the United States has to act in order to ensure that the insurgency doesn't basically take over the country.

Do you agree with that assessment?

CLINTON: Well, let me just put General McChrystal's report into the broader context because it doesn't stand alone. It is part of a process. And let's look at what we've done during the last nine months under President Obama's leadership.

We inherited a situation. We didn't reject it out of hand. We didn't accept it out of hand. We engaged in a very thorough review. We reached some critical decisions, including looking at both Afghanistan and Pakistan together because, of course, the threat goes back and forth across the borders.

We also reaffirmed our commitment to going after Al Qaida, to dismantling, defeating them. We believe, and we've seen just this week here in New York; we believe that Al Qaida poses a direct threat to the United States, to friends and allies throughout the world.

So we are very clear about our mission. Our mission is to protect the United States and protect our friends and allies, and to go after the scourge of Al Qaida and related extremist groups.

Now, the decision that was made to add troops in the spring has not even been fully implemented yet. You know, you don't get up and just deploy the 82nd Airborne and they get there the next day. We are only now reaching the end of the deployment cycle.

We also know that, going hand in hand with our military strategy was our civilian strategy, a much more focused effort, a much more accountable one, dealing with the government of Afghanistan. So we not only saw the change of commanders in the military, we saw a change in our ambassador and a beefing up of the embassy in Kabul.

At the same time, Afghanistan is going through an election. This is not like an election, you know, in Western Europe or in the United States. To carry out an election under these circumstances was going to be difficult under any conditions.

It's not over yet. We have to wait until it is resolved -- hopefully, very soon, then make a new commitment about how we're going to meet our strategic goals. And it's going to be up to the president to determine how best to achieve that.

So, you know, General McChrystal, the new commander, was asked for his assessment. There's other input that's coming throughout the government that the president will take on board. But I think we ought to look at it in context.

SMITH: There's growing, sort of, discontent with sending more troops into Afghanistan. And one of the issues is the Karzai government, which is corrupt, at least, and may, in fact, have tried to steal this most recent election.

Is it worth American blood and treasure to help support a regime like that?

CLINTON: Well, with all respect, we're doing this for the United States. We're doing this because we think that a return to a safe haven in Afghanistan with Al Qaida, with Taliban elements associated with Al Qaida, with the same purpose, to basically run a syndicate of terror out of either Afghanistan or the border region, is something we cannot tolerate.

And, you know, we have to recognize that this was always going to be a challenge.

Now, having said that, does the Karzai government or whoever is the next president have to do more to fulfill the needs of the Afghan people to understand what is expected from the rule of law, transparency and accountability? Absolutely.

But, again, we inherited a situation with a set of expectations and behaviors that we have gone about attempting to influence and change. And one of my highest priorities is, once this election is finalized, to work with our entire civilian team, with Special Representative Holbrooke, with Ambassador Eikenberry and everyone else, to really impress upon the new government what is expected of them.

But let's not forget, Harry, this is about us sitting right here in New York. This is about making sure that we've got the intelligence and the capacity to interrupt potential attacks, that we try to continue our effort to destroy and defeat Al Qaida, which are unfortunately still, to this day, attempting to kill and destroy Americans and others.

SMITH: Najibullah Zazi went to Pakistan...

CLINTON: That's right.

SMITH: ... to the border areas, in order to get bomb training. Is Pakistan doing enough to clean up its own house?

CLINTON: Well, look at -- again, what has happened in the last nine months? Pakistan has increased its commitment in the fight against the Taliban.

SMITH: They were successful in the Swat Valley.

CLINTON: Absolutely successful. A lot of people thought that would never happen. I believe that, if we engaged very intensively with our Pakistani friends -- and we did, through meetings in Washington and in Islamabad -- if we shared information, we listened to each other, that there would be a decision by the civilian and military leadership that the threat was directed at them, that it could undermine their government, in fact, you know, would lead to very dangerous consequences in terms of the survivability of the state in many parts of the country. So, yes, have they taken action? Absolutely.

SMITH: "Have they done enough?" was the question.

CLINTON: Well, you know, we are always working for more. I mean, as I just finished saying, we're -- we're not satisfied with anything. This is not, you know, a check-box kind of experience where, "Oh, we're done with that. We're done with that."

But look at what has been accomplished. And I think that we will continue to see a very close coordination. But it is important for Americans to understand that focusing on Al Qaida and the Taliban -- who are largely, but not exclusively, now in Pakistan -- cannot be done if we allow them to return to a safe haven in Afghanistan. So this has to be viewed as part of the overall strategy.

SMITH: Madam Secretary, we thank you so much for your time.

CLINTON: Thank you, Harry. It's always good to talk to you.

SMITH: Thank you.

We'll be back in one minute with Republican Senator Lindsey Graham .

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SMITH: We're back with Senator Lindsey Graham , who joins us this morning from Clemson, South Carolina.

Senator, good morning.

GRAHAM: Good morning, Harry.

SMITH: Let's first start with Afghanistan. General McChrystal apparently wants 40,000 more troops. Should he get what he wants?

GRAHAM: Yes, I would give the general the resources he needs to regain lost momentum. He says in his report, while the situation has deteriorated, success is possible, but to regain the momentum that we've lost we're going to need additional troops.

And without better security, without dislodging the Taliban, this new effort at governance will fail. You can't have a second shot at governance until you get the security situation right. This counterinsurgency strategy of General McChrystal's has been well- thought-out. I hope the president will give him the troops he says he needs.

SMITH: You have made numerous trips to Afghanistan. Before we went on television, during the commercial break, you said the situation there has deteriorated measurably. How bad is it?

GRAHAM: You can't travel like you once could. I was there about a year ago, and the environment of getting off the base is much more difficult.

You could have 10,000 Department of State lawyers over there working on the rule of law; you could have all kind of agricultural experts trying to help, you know, do away with the drug problem or replace it with a commercial agriculture. You just can't travel. Civilians just can't operate right now.

So we need more combat power -- not just us, but NATO -- to take the fight back to the Taliban, because they have re-emerged because of lack of governance and lack of enough troops. The 68,000 American soldiers there now cannot turn Afghanistan around without some help. And that's the big question.

SMITH: How...

GRAHAM: I hope they get the help they need.

SMITH: How urgent is this decision?

GRAHAM: He said -- General McChrystal said, if we don't do it within a year, the insurgency cannot be defeated.

Here's my concern about the next 18 months. We're looking at a trifecta of disasters here. If Iran is not checked, they're going to have a nuclear weapon in the next 18 months. If we don't reinforce Afghanistan now and turn around the military situation, the Taliban are going to take over part or all of Afghanistan. And if NATO doesn't jump into the fight with both feet, they're going to become a paper tiger.

We could have three major disasters that affect our national security for years to come if we use half-measures. Reject half- measures.

SMITH: I tried to get an answer from the secretary of state. Do you really believe the Iranians are currently working on a nuclear weapon?

GRAHAM: Absolutely I believe they are. I believe the holocaust existed.

I've got one rule of thumb: If the president of a country denies the holocaust, you should believe the worst, not the best, about what they're doing.

Clearly they're hiding nuclear programs for a purpose. They're trying to develop a nuclear weapon. And if they are successful, the Sunni-Arab states in the region will want a nuclear weapon. Israel becomes much at risk. And we're walking down the road to Armageddon.

We have about 18 months using the international community to decisively act, no more half-measures. China is supplying one-third of the refined petroleum to Iran. They need to join with the Russians, the United States, and the international community to bring this regime to reality.

Sanctions only work if they change behavior.

SMITH: All right.

GRAHAM: We need to empower the Iranian people and deter their regime.

SMITH: Crippling sanctions have been talked about, and the idea...

GRAHAM: Yes.

SMITH: ... that all options should be left open opens the door to military action. When might military action -- when -- when should it be considered?

GRAHAM: At the last resort, when all meaningful sanctions fail. And what we do in Afghanistan will affect the ability of Iran to get the message.

This regime needs to be delivered a message that the international community is deadly serious about stopping their nuclear program. So we have not tried meaningful sanctions yet. We've got a little bit of time to do that.

But at the end of the day, the worst thing that could happen to this country, in my view, is for Iran to get a nuclear weapon, because that changes everything in the Mideast for the worst. And what we do in Afghanistan I think will affect the outcome in Iran.

SMITH: So let's stay on Afghanistan for a second. What if -- if General McChrystal doesn't get the 40,000 troops he asked for?

GRAHAM: We're going to lose. We'll be driven out. The Taliban will come back stronger than they were before. The moderates in Afghanistan will go back in hiding or get killed. NATO will be seen as a failure. And America will go it alone in the future. We cannot let NATO fail in Afghanistan. This is NATO's fight, just not America's fight. The Taliban have come back for a reason. But the good news is, the Afghan people don't want them back. With additional military power, we can defeat them.

And we've got to do what Secretary Clinton said: Push the Karzai government or the next government to do better. But until you get the military situation right, you'll never get better governance. So failing in Afghanistan is a disaster for NATO, and it will affect Pakistan. The same people trying to fight the Pakistani government are the same ones trying to come back in Afghanistan.

SMITH: Senator Lindsey Graham , we thank you so much for your time this morning.

GRAHAM: Thank you.