Last week I tried to bring a new perspective to the crisis in Pakistan by looking at how its problems affect its neighbor and traditional enemy, India.

I spoke with Shashi Tharoor, who is essentially the deputy foreign minister or deputy secretary of state of India.

Last week we talked a lot about Pakistan, but India is also playing a role in Afghanistan, in negotiations with Iran, and he had important things to say on all of those subjects. Listen.

 SHASHI THAROOR, MINISTER OF STATE FOR EXTERNAL AFFAIRS OF INDIA: We are a big player in Afghanistan, but we have absolutely no military role whatsoever.

We spent almost $2 billion. We're one of the biggest donors of development assistance in Afghanistan. But you know what we're spending it on? We're building hospitals. We built a 128-kilometer highway. We put in power transmission lines and electricity supplies.

The reason that Kabul has 24 hours of electricity a day is because of Indian engineers who have actually delivered the power supply.

We're setting up clinics. We're training Afghan administrators. We're doing things to build up civil society and...

ZAKARIA: So, then, why does the Taliban regard you as an enemy?

THAROOR: Taliban doesn't like us, because, in many ways, they're sympathetic to the professed Islamist extremist goals of our enemies.

But, you know, we're not there to please the Taliban. We're there in defense of the legitimate government of Afghanistan -- that is, Mr. Karzai -- and we're not defending him with guns. We're defending him with aid. We're defending him with development assistance.

ZAKARIA: Do you support the...

THAROOR: The Afghan people are our objective.

ZAKARIA: Do you support the foreign troop presence in Afghanistan?

THAROOR: Yes, indeed. And I might say that the NATO elements have actually applauded what we're doing by saying that it's actually useful. Because, after all, you can't bring Afghanistan into the future by military actions alone. You need to have a development component.

And countries like us that go in and give this sort of assistance are actually also reinforcing the longer strategic objectives of the NATO presence.

ZAKARIA: Do you support what the United States is doing with Pakistan? That is, the bill, the military aid bill, the Kerry-Lugar bill, that has some fairly tough conditions on it, but gives them a lot of money?

THAROOR: You see, we have actually applauded the U.S. supporting Pakistan on two things. First is its own economic development, and the second is equipping it to overcome the homegrown horror of terrorism. Whether in this month (ph), Mir Ali (ph), Waziristan, or whatever, these are things that Pakistan needs help from the U.S. to deal with. What we don't want is for the extensive resources the U.S. is offering to be diverted for the purpose for which it was not intended, namely, to be used against us.

But our bitter experience over the last 25 years has been, ever since the Soviet invasion of Afghanistan, money gets poured in from Washington into Islamabad, and a colossally high percentage of it is actually spent, not on the purposes that Washington intends, but to buy tanks and planes and artillery aimed directly at India.

This is something that frustrates us enormously.

ZAKARIA: So, the one thing the Pakistanis want from you is some softening of your attitude on Kashmir. You still have an enormous troop presence in Kashmir, which is still under virtual martial law.

THAROOR: Why was that necessary, sadly? I mean, again, militancy coming in from across the border.

You know, there's always got to be given both sides. And we can certainly talk about how to move forward in Kashmir. As you probably know, there were very, very good talks going on between President Musharraf and Prime Minister Manmohan Singh and their envoys on a long-term, durable peace, including issues relating to Kashmir.

What ended it? The attack on the Indian embassy in Kabul on July 1st derailed it, but didn't end it, and then the Mumbai massacre -- both of which originated from across the border in Pakistan.

So, again, India would say to you very honestly, every gesture for peace has been made by our side; every gesture that has thwarted peace has come from the other side. And that's the regrettable thing.

Pakistan needs peace as much as we do. When will they come to the realization that it's in their interest to end this unproductive approach?

ZAKARIA: Do you believe that the attack outside the Indian embassy was planned in Pakistan and by elements of the Pakistani military?

THAROOR: Well, the attack in July of 2008, apparently, certainly was. And I'm quoting the "New York Times," which quoted American intelligence as saying the ISI's fingerprints were all over it. I'm not referring to any Indian intelligence information on that.

About what happened just a few days before you and I are speaking, we'll have to wait and see. There should be a conclusive investigation that tells us where this is coming from.

But, you know, we're really not interested in finger-pointing. We're interested in moving to a state of affairs where this kind of thing doesn't keep happening. And for that, Pakistan will have to really act decisively to cauterize the cancer in its midst, because this is, unfortunately, the result of a policy, a deliberate policy, carried out over a period of years -- one would argue, a couple of decades -- of actually encouraging jihadist militancy as an instrument of policy.

I don't believe that today's government in Pakistan thinks that was a good idea. But it has to act to end the bitter legacy that that idea has spawned.

ZAKARIA: You know that the Pakistanis are very fearful of a blossoming relationship between the United States and India. They fear that the United States and India are in a kind of long-term love affair, because India is becoming this rising power, potentially a counterweight to China, two great democracies, and that they will get left behind in all this.

THAROOR: Well, look. First of all, I don't think that the U.S.'s relationship with India has anything to do with a third country, just as the U.S.'s relationship with Pakistan doesn't have anything to do with a third country.

We expect that there will be, naturally, sort of a dehyphenated perception of the bilateral relationships.

Certainly, as far as Pakistan is concerned, we believe that, if India becomes a successful, prosperous economy, free of the fear of terrorist attack, Pakistan will benefit very much from being next door to it.

Do you know that India has offered most-favored nation trading status unilaterally to Pakistan in the mid-'90s, and Pakistan has still not reciprocated?

ZAKARIA: Is that offer still on the table?

THAROOR: Oh, it's been extended. Today, Pakistan can export things to India on that basis.

The problem at the moment, frankly, is that it's been Pakistan throughout that has turned down these overtures.

So, I would say to Pakistan, instead of fearing that you will be isolated, come in and join the party. There's a great deal we can do together. Our peoples have so much in common. We were one for millennia before 1947. We can get on together. We have a lot of common, shared interests.

To this day, Pakistani musicians, writers, and so on, flourish in India. And the Indian market and the Indian audience are important to them.

We'd like to be -- you know, to embrace them in that spirit, but only if they stop sending us people who the kinds of things that happened in Mumbai just nine months ago.

ZAKARIA: Will India support the efforts by the international community -- the United Nations, the Europeans and the Americans -- to put greater pressure on Iran, to make sure that whatever nuclear program they have is open, transparent and within the Nuclear Non- Proliferation Treaty, which Iran has signed? THAROOR: Freely and voluntarily signed. Opposition has been very clear. And we've said it to the Iranians. We respect totally their sovereign right to develop nuclear energy for peaceful purposes. Every country has that right.

We also feel that, having signed the NPT, having chosen freely and voluntarily to do so, they have certain obligations to fulfill. And the impression we have had in recent years -- and IAEA reports have borne this out -- is that they have failed to fulfill those obligations, which is why we have voted against them and with the Western countries in the IAEA, not once, but twice. So, our position in that respect is very clear.

We would encourage, however, dialogue with the Iranians to come to a peaceful accommodation. We certainly don't want the situation spiraling out of control. And we have some hesitation about the utility of sanctions that will hurt innocent civilians.

We believe there are ways in which this dialogue should bring us all to a satisfactory conclusion.

ZAKARIA: But what do you do...

THAROOR: But weapons are not to be used, are not to be developed. But Iran's other sovereign rights can be preserved.

ZAKARIA: But what do you do if the Iranians continue to deceive the IAEA? In that circumstance, would you consider voting for additional sanctions?

THAROOR: Well, at this stage, that's a hypothetical question, Fareed. We are talking to all of the parties concerned, and we're getting extensive briefings from the director general of the IAEA, who keeps us fully informed. We're on the board of governors of the IAEA.

So, we will take the decision at the appropriate time, but we are looking at this very carefully. And though we have a long and almost sort of civilizational relationship with Iran going back millennia as well -- they are really a historic neighbor of ours, and we've really had a lot to do with other -- on this issue, India is not a proliferator and does not welcome proliferation.

ZAKARIA: On that note, Shashi Tharoor, a pleasure to have you on.

THAROOR: Nice to see you, Fareed. Thanks for having me.

ZAKARIA: And we will be right back.

(END VIDEO)

(COMMERCIAL BREAK)

ZAKARIA: Now, to the question of the week.

We spent a lot of time last Sunday talking about the Dow hitting 10,000. And I asked you where you thought the Dow would be in a year.

The optimists outweighed the pessimists by a 2-to-1 ratio. But, boy, was there a wide range.

The most bearish viewer, Eric, said that one year from now, the Dow would be at 1,000 -- yes, a drop of 9,000 points -- due to what he called a perfect storm of catastrophic events coalescing.

On the more optimistic side, Craig Rittenhouse of West Lafayette, Indiana, said the Dow would be at 15,000 in a year's time.

Thank God for the bulls of the year. Hopefully, they will be right.

And as always, I'd like to recommend a book. This time it's a novel by my guest, Shashi Tharoor. It's called "The Great Indian Novel," and it is just that. It is based on the 2,000-year-old Hindu epic, the Mahabharata. But it recasts the poem's tale as one of India's independence movement of the mid 20th century.

Now, the Mahabharata is famous for its length -- 100,000 verses, almost two million words.

Shashi's book, I assure you, is a much more manageable length, and it is an absolutely delightful read.

Also, test how well you've been following world affairs this week. Take the Fareed Challenge at cnn.com/gps. It's great fun.

Thanks to all of you for being part of my program this week. I will see you next week.