We are in a race between cooperation and catastrophe, and the threat is outrunning our response.

The Iranians know that if they develop nuclear weapons, they will be in tremendous jeopardy from military capabilities of their neighbors and of the United States. I am not predicting what will happen in 2013, but I do think it is a crucial year. I hope we can make it clear to the Iranians that we do not object to them having peaceful use of nuclear power. But when they enrich Uranium to a 20 percent level, people think they are going for the bomb. Their uranium enrichment program is a real danger.

We need a dialogue with the Iranians, and it is going to take both carrots and sticks. We employed very tough economic sanctions, and they are having an effect. But we also have to give the Iranians an idea of what the economic and cooperative possibilities would be if they did give up their quest for a nuclear weapon.

You have to pay the price. You will find that everything in life exacts a price, and you will have to decide whether the price is worth the prize.

I think if terrorists had nuclear materials and found people to put a bomb together - both of which are possible - we would already have seen a nuclear explosion. But we have literally thousands of people around the world working their tails off and making a lot of sacrifices to contain nuclear materials. I particularly would like to compliment the Russians on this. In times of great economic distress, many of them could have made an awful lot of money if they had sold their expertise.

The war between the Iranians and Iraqis is a touchy issue. To be quite honest, they each other's guts. It was not responsible to let one of our ships be put into a war zone like that.

The steady progress made by North Korea on its nuclear and missile programs is deeply concerning. The US cannot solve this problem alone. However, in order to take steps that could fundamentally affect the North Korean leadership and its decision-making, we need to work even more closely with our allies in the region who feel this threat acutely. I would urge China, in particular, to intensify its leadership role in helping to solve this crisis.