Asking Pakistan to make "inroads" on democracy, the US has said it had made it clear that there should be free and fair elections in 2007.

"Yes, Pakistan has to make inroads on democracy. We have been very clear," Secretary of State Condoleezza Rice [Images] said in an interview on the Public Broadcasting Network.

Asserting that the US has made significant progress with Pakistan, Rice said before 9/11 attacks it had the "closest" relationship with the Taliban and was ready to be taken over by extremists.

"It was a country through which extremists transited all time and used as a base of operations into Afghanistan and, of course, into Kashmir. It had terrible relations with India."

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Pointing to the improved Indo-Pak relations, Rice said President Pervez Musharraf [Images] made clear that extremism had no place in Pakistan and wanted better relationships or better relations with India.

"He and former prime minister Vajpayee and now Prime Minister Manmohan Singh [Images] are achieving that."

"You have a Pakistan that will have elections in 2007 and we've been clear that we believe those elections need to be free and fair," Rice said adding these were sweeping changes which should not be underestimated.

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"I can remember sitting there before September 11th and trying to convince the Pakistani foreign minister that they had to do more about the Taliban. It was very clear to me that I wasn't getting through," Rice said.

"So again, it is awfully important in these great historical sweeps to step back and look at where you were and where you've come...."

On whether democratic India had a better chance for economic success than communist China, Rice said, " I think the kind of creativity that is demanded of people and the freedom to let people do what they do best really does only come in free societies."

"I don't for a moment underestimate or diminish the tremendous steps China has made on the economic front. No one should diminish what China has achieved but when China looks round Asia, it is going to see that it is mostly a democratic continent as well," Rice said.