Interview with Mark Haines and Erin Burnett of CNBC

Joining us exclusively on CNBC, about to bring clarity to our chaotic world, the Secretary of State, Condoleezza Rice. Madame Secretary, good morning.

SECRETARY RICE: Pleasure to be with you.

QUESTION: Pleasure to have you here. I want to start with Iran. President Ahmadi-Nejad - I love that name - in New York scheduled to speak at Columbia University. A lot of controversy about that.

SECRETARY RICE: Yeah.

QUESTION: Asked to lay a wreath at World Trade, was told no for security reasons. What's your take on all this?

SECRETARY RICE: Well, first, we weren't asked about either of his appearances and that is befitting for a country like ours that believes in freedom for the individual. I only wish the Iranian people had the chance to hear many different views, just as people are going to hear different views.

As to the World Trade Center, though, I think it would have been a travesty. I think this is somebody who is the president of a country that is probably the greatest sponsor of -- state sponsor of terrorism, someone who is a Holocaust denier, someone who has talked about wiping other countries off the map. I think it would have been a travesty.

QUESTION: How do we - I'll put this bluntly. How do we get him to stop? I mean, how do we engage this man or his country in a way that gets them to moderate what they're doing? Do we need to wait for the next one? Is there any way, in your opinion, to reach this man?

SECRETARY RICE: I really don't think that there is a way to reach Ahmadi-Nejad, but I would hope that there are reasonable elements in the Iranian Government who don't wish to continue to experience the kind of isolation that Iran is experiencing. And that isolation is growing. You're having major financial institutions leave for reputational risk and major companies for investment risk. This is a country that has had two Chapter 7 resolutions against it unanimously.

And it's unfortunate because Iran is a great culture, the Iranians are great people. They deserve better. And hopefully, at some point, there will be leaders in Iran who say we really shouldn't be in a position of being this isolated and they'll start to change their policies.

QUESTION: What would need to happen for you, in your role as Secretary of State, to engage with your counterpart in Iran? I know that you started lower-level discussions and have sort of reignited that commentary back and forth, but what would it take? Is there something specific where, all right, if they do this, then I'll talk to you?

SECRETARY RICE: Yes. We've even told them that we are prepared to change 27 years - 28 years now of American policy and I will meet my counterpart anyplace, anywhere, anytime, if they will just do one thing: suspend their enrichment and reprocessing activities. Those are activities, by the way, that can lead to the development of technologies for a nuclear weapon, which is why we don't want them to keep perfecting that particular technology. And if they will suspend that effort, then the United States is prepared to engage them in talks with our other allies, with Russia, China and the Europeans to talk about how to get a civil nuclear program in Iran that does not have proliferation risk. But so far, they haven't taken up that offer.

QUESTION: It's interesting because a lot of people say that President Ahmadi-Nejad isn't actually even the person - theoretically, he is, but in practice, he's not the one in charge of that decision. It's sort of -- we see him here in the United States as the face of Iran, when actually, over there, the person making the decision is not actually him.

SECRETARY RICE: Well, clearly, the power in Iran is the Ayatollah Khamenei, who is the leader really of - the religious leader of the country and the key decision maker. But we have to treat the Iranian Government as a whole. We can't say, well, perhaps Khamenei thinks something different or whatever. What we need to do is we need to get a change in Iranian behavior. The regime needs to change its behavior. And we and our allies are going to continue to pursue the Security Council track and other financial measures until Iran does that.

QUESTION: I'm sure we could talk about Iran forever. You could probably write several books about it. Let's deal with something that struck home, close to home here on Wall Street, and that was foreign ownership of U.S. assets. Of course, as you're well aware, it really hit the fan with the Ports deal, the Ports of Dubai. The President seemed caught by surprise. A lot of people were, frankly, caught by surprise.

It strikes me that this is not a good idea to oppose these kinds of deals, that we need to be a little more open. How do you - is there a way to structure them to - you know, what can we do about that?

SECRETARY RICE: Well, we do have a process that looks both at the desire for the economic openness that is really at the core of our economic strength, the ability to attract foreign investment, and at the other hand, looks at the security concerns that one might have from foreign ownership of certain kinds of activities.

QUESTION: That's the committee with the weird acronym?

SECRETARY RICE: The CFIUS, yes. Yes, that's right, but --

QUESTION: Okay, but we went through that, didn't we?

SECRETARY RICE: Yes, but we've reformed that process. We've had some work to reform that process through legislation. And we would hope that it is a process that can really balance these two concerns because we do have to stay economically open. We also have to be concerned about security issues. In terms of the specific issue, of course, that will be coming through the process sometime soon.

QUESTION: It's interesting. Last week, you know, Abu Dhabi took a 7.5 percent stake in one of the largest private equity firms in this country, Carlyle. Saudi Aramco is putting $3.5-$ 4 billion in the largest refinery expansion this country's ever seen. One of the Emirates, Dubai, may buy 20 percent of the NASDAQ Stock Exchange. I mean, on the face of it, do any of these deals strike you as problematic or meriting further consideration?

SECRETARY RICE: Well, I can't speak to the specific deals. We do have a new set of circumstances with these sovereign funds that are investing in American companies, some of them strategic companies, strategic -- companies with strategic interests. But what the United States Government owes everyone, I think, is a reasonable process that is not going to be a process that is tainted with protectionist tendencies, but rather, a process that really does look at the security implications, tries in some cases to actually structure or have - to get the prospective owner to structure deals.

We have many, many, many of these that go through this process and come out on the other end every single year. And so it's not as if there isn't a process that can deal with this, but we owe it to the open economy to be very certain that we're not doing this for protectionist reasons.

QUESTION: Are you concerned that - you know, when we hear just the rhetoric out of Washington from either side of the political aisle on these deals or on any issue involving foreign countries, whether it be a currency issue with China or deals, that we are simply becoming too protectionist and frankly, too xenophobic in this country?

SECRETARY RICE: Well, I do worry that we really have to keep the strength of our economy in mind, and the strength of this economy is that it is open. It's the most open economy in the world. We do attract foreign investment. And by the way, there are elements of this that go together. We have to guard against protectionism. I'm very concerned about free trade. We are going to have some very important free trade agreements coming before the Congress with Latin America in our neighborhood, free trade agreements with Peru and Panama and Colombia, some of our strongest friends in Latin America that have really made difficult choices about opening their economies, about being friends with the United States despite the pressures of populist governments like Venezuela's government.

I am concerned that the consensus on free trade is very hard to maintain at this point. Free trade is good for America, good for American workers. We work to help with trade adjustment assistance for countries and for American workers who might be hurt by trade agreements. But we need to keep a focus on our economic openness and, by the way, I think on our openness to people who also want to come to the United States to make a better life.

QUESTION: China must be a difficult situation to deal with. The - you know, their currency is an issue between us. Clearly, in economic terms, it should be floating, it should be higher. I mean, it is a sovereign nation. If it wants to do what it will with its currency, I mean, how do you approach that without offending them?

SECRETARY RICE: Yeah. Well, you - first of all, we do have these discussions and the good thing is that we have a good enough relationship with the Chinese that we can have those discussion. Hank Paulson, the Treasury Secretary, leads something called the Strategic Economic Dialogue where these issues are brought up and discussed. And the Chinese have taken some actions; not enough. On something like the currency, the argument with China is that they really need to make structural reforms so that they really are playing by the same rules as everyone else in the international economy.

Look, we've been very big advocates -- this Administration and, frankly, administrations before - of China participating fully in the international economy. It's why we were so much in favor of accession for China to the World Trade Organization. But you can't have a circumstance in which China is in the international economy but not playing by its rules. That would be bad for the international economy.

QUESTION: Do you figure it would change that much, though? I mean, you know, one of the great advantages they have in competition is the wages they pay their workers. I mean, even if the currency appreciated a great deal, that would still be a very cheap component for them and a more - a stronger currency on their end could allow them (inaudible) buy more oil, drive the price of goods up.

SECRETARY RICE: There are always going to be different advantages for different countries in an open international economic system, but what you can't have is countries that will not - that join the world trading system and then don't play by the rules. We've been concerned not just about the currency issue, but about intellectual property rights, for instance, where China needs to prosecute some people who violate international property rights. We're concerned about laws that might have cut off investment in the software industry for Chinese governmental entities.

These are protectionist measures that really are violative of China's obligation to play by the same rules that everyone else does. I think we've made some progress. We're going to continue to raise the issues every time. But generally, the relationship with China is a good one.

QUESTION: One question for you and I guess I'm - this is more a sense of your personal view and not a political question at all. When we look around the world and you see female presidents in Chile and you see presidents - I was actually in Iceland last week, they had one of the first female --

SECRETARY RICE: Yes, they do.

QUESTION: -- presidents there.

QUESTION: Benazir Bhutto's trying to make a comeback in Pakistan.

SECRETARY RICE: That's right.

QUESTION: So politics aside, do you think this country is ready for a female president?

SECRETARY RICE: Oh, I do, I do. I don't think it's an issue of not wanting to elect a woman. I do think that we have to recognize that the way that we elect presidents is that people come on to the scene as governor or senator or something like this, a pool issue. And women have now begun to show up in those places from which we tend to select presidents, and I'm sure it's only a matter of time and I don't think there will be a prejudice against a woman running for office.

QUESTION: So you got your resume out?

SECRETARY RICE: (Laughter.) I'm --

QUESTION: I hear you're at least maybe running -

SECRETARY RICE: The presidency that I'm looking for is, I don't know, president of the 49ers, Oakland Raiders, something like that if they need some help. But I do think that Americans are getting to the place that color, skin and gender is going to matter less than does that person agree with my point of view, is that person going to represent my values, do I trust that person in the most sensitive and difficult job in the world, which is President of the United States.

QUESTION: Thank you so much.

QUESTION: From your mouth to God's ears, let's hope that's true.

SECRETARY RICE: That's right. Thank you.

QUESTION: Thank you very much, Madame Secretary, appreciate your time. Condoleezza Rice, Secretary of State of the United States.

QUESTION: And up next, we --

QUESTION: Up next, we're going to - I love this.

SECRETARY RICE: What?

QUESTION: We're going to instantly analyze everything you just said.

QUESTION: It's a two-minute delay because we're going to take a commercial break.

QUESTION: As if we have no clue what you really meant.

SECRETARY RICE: Well, I'm sorry I won't be around for it. (Laughter.)

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