Oct. 29 (Bloomberg) -- U.S. Secretary of State Hillary Clinton said some Pakistani officials probably know where al- Qaeda is holed up in the country and urged the government to hunt down the terrorist group.

“Al-Qaeda has had safe haven in Pakistan since 2002,” Clinton told a group of editors in the eastern Pakistani city of Lahore. “I find it hard to believe that nobody in your government knows where they are and couldn’t get them if they really wanted to. Maybe that’s the case; maybe they’re not gettable. I don’t know.”

Clinton made the comments on the second day of a visit to support economic development, counter rising anti-American sentiment and chip away at mistrust of U.S. aims in the region, during which she was due to meet with Pakistani opposition leaders as well as military and intelligence chiefs.

Clinton, who condemned yesterday’s bombing in the northwestern city of Peshawar that killed at least 105 people, called on former premier Nawaz Sharif, leader of the main opposition. She is scheduled to meet Pakistan’s most powerful national security policymaker, the army chief General Ashfaq Pervez Kayani, this evening in Islamabad.

Saying that she was “more than willing” to listen to Pakistani complaints about U.S. policies, Clinton stressed that Pakistan has to be mindful of American security concerns.

“But this is a two-way street,” Clinton said. “I ask in the pursuit of mutual respect that you take seriously our concerns.”

‘Dismantle Democracies’

The Peshawar bombing, hours after she arrived in the capital of Islamabad, emphasized the need for an “an even stronger commitment” to combat militants who threaten the region’s stability, she told an audience at a Lahore college earlier.

“We are confronted by people who seek to divide communities, dismantle democracies,” Clinton said as she faced tough questioning over the U.S. role in Pakistan and Afghanistan and its motives for being there.

Questioning at the Government College in Lahore, a city struck by commando-style raids on police complexes this month, repeatedly turned to distrust over U.S. policy in the region, with Clinton receiving a polite welcome and faint applause for her answers.

Asked if the U.S. was forcing the Pakistan military to take on the Taliban along the country’s western flank, Clinton denied pressuring the government and said the battle against militancy was a “fight that has to be won.” She added that allowing territory to be taken over by terrorists was the wrong choice.

Retaliatory Attacks

General Kayani’s troops have launched the country’s largest offensive against Taliban militants. About 28,000 troops are fighting guerrillas in their South Waziristan stronghold near the border with Afghanistan. The army said today it killed 250 militants during the first 12 days of the campaign. The response has been a wave of retaliatory attacks on crowded cities and military targets that have left at least 270 people dead.

Clinton is seeking to reassure ordinary Pakistanis and the country’s leaders of America’s commitment to a broad-based relationship, and dispel the view that the U.S. will abandon the region once its counterterrorism goals are achieved.

In Lahore she said it was a “fair criticism” that the U.S. abandoned Pakistan once Soviet forces were driven out of Afghanistan, adding that a repeat is “what we are trying to avoid.” That is difficult “if we are always looking in the rear-view mirror,” she said. Clinton is hoping to chip away at growing resentment at U.S. policy in the region.

Abuses Power

An August survey by the Washington-based Pew Research Center showed that 64 percent of Pakistanis regard the U.S. as an enemy. A poll released July 1 by the Program on International Policy Attitudes at the University of Maryland shows 90 percent of Pakistanis think the U.S. abuses its power, the highest among the 22 countries surveyed.

Missile attacks by unmanned U.S. drone aircraft are especially unpopular. Pakistan’s Interior Ministry says at least 528 civilians had been killed by drones, without specifying the period. Baitullah Mehsud, the former leader of the Taliban faction targeted by the army in South Waziristan, died in one such rocket raid.

The attack in Peshawar, capital of the North West Frontier Province, was the deadliest in Pakistan since October 2007, when 170 people died in a suicide bombing in Karachi. Peshawar is less than 100 miles (160 kilometers) from Islamabad.

So far, the attacks in Pakistan have galvanized public support behind security forces. Television in Pakistan yesterday was dominated by images of dismembered bodies in the low-priced bazaar frequented by women.

Counter-Terrorism

Clinton’s meeting with Kayani will include Lieutenant General Ahmed Shujaa Pasha, who heads Pakistan’s Inter-Services Intelligence (ISI) directorate. Pakistan says the ISI, which coordinates with the Central Intelligence Agency in counter- terrorism operations, has ended its onetime support for the Taliban and other militant groups.

The escalation of violence in Pakistan and in neighboring Afghanistan, where gunmen yesterday killed 11 people in a guesthouse and U.S. troops suffered their highest casualties this month since the war began in October 2001, is complicating President Barack Obama’s search for a strategy to contain the Taliban and allied militants.

Obama is weighing advice on how best to address the worsening insurgencies eight years after the Sept. 11 terrorist attack on the U.S., and the retreat of its architects into ethnic Pashtun tribal areas along the Pakistan-Afghanistan border.

Afghan Election

Obama is likely to announce a decision on troop levels in Afghanistan once the results of a presidential runoff election to be held next month are clear, Clinton said.

“I would imagine that he will be coming to a decision sometime after the Afghan election is finally resolved,” Clinton told the editors.

Clinton said in Lahore that the U.S. will provide $45 million to expand university and technical education for students in poorer areas. Yesterday she announced a $125 million grant to address chronic electricity shortages by upgrading Pakistani power plants where production is restricted by outdated equipment.

To contact the reporter on this story: Indira Lakshmanan in Islamabad at ilakshmanan@bloomberg.net.

Last Updated: October 29, 2009 08:54 EDT