"Irrespective of the differences on Kashmir, India and Pakistan have to move forward. One of the key ways that we can move forward is by copying Europe's example. Europe was torn apart by war until it decided to build a common market," the Pakistan People's Party leader told Newsweek magazine when asked about her views on Indo-Pak relations.
Bhutto said she had spoken to Indian leaders on the issue and "within India and Pakistan there is an emerging consensus that while we have differences, these differences should not stop us from economic development and cooperation in terms of trade and travel. But obviously we need safe borders.
While militants hold guns in their hands and disturb the peace, it is very difficult to get safe and open borders."
"Attacking militancy is important, not only vis-a-vis Afghanistan, but also vis-a-vis India," she stressed.
The former Pakistani Premier also noted that "militant groups that were (once) banned -- who were attacking New Delhi, Bombay -- are re-emerging and hold peace between India and Pakistan hostage. When I look at the rise of religious parties, the reorganisation of the Taliban and the persistence of the militant groups, I worry for Pakistan's future".
Bhutto said she plans to return to Pakistan to help her party in the next general elections and would run for the post of Prime Minister if the term limitation, which prohibits a person to hold that office more than twice is lifted.
Asked why Pakistan has not been able to capture terror mastermind Osama bin Laden, Bhutto said elements of the Pakistani military security apparatus have a lot of sympathy for him.
"General Musharraf is relying on the military to find bin Laden, and it's simply not going to happen. What we really need is a change, and I believe that change has to come by going to the civilian option," she added.
Asked to rate the performance of Musharraf as a partner of the United States in the fight against terror, Bhutto said he took the right decision following the events of 9/11 to stand with the international community to fight terrorism.
"But I question how effective he has been in eliminating terrorism. There is a lack of implementation of his decisions in many parts of the country, and we have seen in recent years how the Taliban have reorganised themselves and their goal is to take over Afghanistan once again," she said.
The religious parties, Bhutto added, have gained strength within Pakistan and "today control two of our most important provinces that border Afghanistan."
Asked whether she initially supported the Taliban, Bhutto said when the Taliban first emerged, the United States, Pakistan and many other countries saw them as a force for peace, but "soon we became disillusioned."
"There's a difference between Taliban with Al Qaeda and Taliban without Al Qaeda. When the first Taliban emerged, there was no Al Qaeda. They were there as Afghans trying to be a political force within Afghanistan," she said.