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The first two segments of the "Extreme Challenges" special. The first focuses on the wars in Iraq and Afghanistan; the second on Foreign Policy. The panel is Christiane Amanpour, Fareed Zakaria, David Gergen, and Michael.

ANDERSON COOPER, CNN ANCHOR: We begin outside the country in once exotic places now painfully familiar to Americans with loved ones fighting there in Afghanistan and Iraq.

With us now, CNN's Christiane Amanpour, Michael Ware, Fareed Zakaria, host of "FAREED ZAKARIA GPS" and senior political analyst, David Gergen.

Christiane, the U.S. recently replaced the military commander in charge of Afghanistan, promising new approaches. What should we expect?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, he clearly wants to rely a little bit more on commando tactics and as Secretary of Defense Gates said, new strategy, new president, new commander. And they've got to get on with the business of trying to win this war which is not just about battling the Taliban and al Qaeda, it's about winning hearts and minds as well.

And I think one of the things that struck me so much was that the Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen said that as long as American forces keep killing Afghan civilians, the United States is not going to win this war. And when I was there just recently, this is the bulk of the story...

COOPER: You're talking about civilians being killed because we're relying heavily on air strikes, Predator drones strikes...

AMANPOUR: Correct, correct.

COOPER: ... and that's causing huge...

AMANPOUR: Huge.

COOPER: ... public relations problems, as well as civilian deaths.

AMANPOUR: Not just public relations problems, civilians deaths, turning the people off the government, off the international forces, and this is going to present a big problem if it continues.

COOPER: Is that part of the reason, Fareed, that more U.S. troops are going, because -- so there's not so much reliance on just strikes from the air?

FAREED ZAKARIA, HOST, CNN'S "FAREED ZAKARIA GPS": Precisely. What we're trying to do is a version of the surge in Iraq. The most important part of the surge militarily was to secure local populations so they felt as though they had some basic level of order and didn't have to opt for militia rule and thugs, things like that, terrorism.

So the attempt here is to see if that it will work in Afghanistan; secure civilian populations, secure the cities, security the main supply routes and try to isolate the bad guys into smaller and smaller areas.

COOPER: That worked militarily in Iraq though, because with more troops, they were able to actually not only take but then hold positions where previously U.S. troops would have to just move on to another area. Can they do that in Afghanistan?

ZAKARIA: Theoretically, they could. The one big difference here is that in dealing with Afghanistan, you can get all of the Afghanistan part of this right. They have safer havens in Pakistan.

You know, the reason that the Soviets lost in Afghanistan was because we operated safe havens in Pakistan which allowed jihadis to cross the border. The same -- this is a classic case of blowback because the same tactic is being used against us.

COOPER: Are we losing right now, Michael, in Afghanistan?

MICHAEL WARE, CNN BAGHDAD CORRESPONDENT: Well, I think it's too early to say we're losing but we're not winning. That certainly can be said for sure. And Fareed is right. You can do whatever you want in Afghanistan, but the true answer is going to lie in Pakistan.

So it's time to start looking at cutting serious deals, perhaps with some people that we don't particularly like. We saw that...

COOPER: Negotiations with the Taliban, you're saying?

WARE: With the Taliban, with some other elements. And principally, I think, in some fashion, we need to find an agreement with the dark heart of the ISI, that's the Pakistani intelligence agency, their version of the CIA.

COOPER: Which actually set up the Taliban in the first place.

WARE: Set up the Taliban. Lashkar-e-Tayyiba, they're the ones, the hardliners within that organization who still provide the support and principally the sanctuary.

So until we can find a way to put it in the ISI's interests to stop supporting these people, I don't see an end to this.

COOPER: Do you think the Pakistani government and the military is taking their own internal problems seriously enough? I mean, if most of their forces have been, you know, pointed toward India for these last several years.

DAVID GERGEN, CNN SENIOR POLITICAL CORRESPONDENT: Well, to go back to that map, one of the issues that we have is, as Fareed said, look, if you go after them here in Afghanistan and they're going to come across the border into Pakistan and find safe havens and we want to get the Pakistanis to go after them, and our problem has been the Pakistanis want to pay attention to India which is over here, and one of the things that the Bush administration -- Obama administration is trying to do is to persuade the Indians, especially with the new government, you know, lower the temperature here so we can persuade the Pakistanis to pay more attention to the people who are coming across and pay more attention to their other border.

I think we're going to have, in the next couple months -- as I understand it, we're on the verge of an offensive in Afghanistan. That there's going to be a three or four week effort to really bomb and go in heavily and try to get the Taliban on the run and then come in with a counterinsurgency strategy that General Petraeus is bringing to the area.

ZAKARIA: If you want to complicate this even further, Anderson, if you look at this map of Pakistan, we talk about this as almost ideological categories, the Taliban versus the Pakistani military. What's really going on here is the Pashtuns in the tribal areas view this entire incursion as the Punjabis, that is the part -- which is the largest part of Pakistan, trying to take over their part of Pakistan, which has historically been left alone.

So there is a deep ethnic rivalry there, and we're going to have to figure out how to deal with that.

AMANPOUR: If you look at all polls right now from Afghanistan, first of all, almost nobody supports the Taliban. It's one percent in the latest poll. But the majority of people say that our key concern is the economy, is jobs.

COOPER: You're talking about in Pakistan or in Afghanistan?

AMANPOUR: In Afghanistan and also in Pakistan, they need...

ZAKARIA: But we have limited ability...

AMANPOUR: Yes I know, I was there.

ZAKARIA: Christiane, I agree with this, but you're talking about Afghanistan. It's the third poorest country in the world.

WARE: How can that be done?

AMANPOUR: It doesn't matter. We're not talking about making it Manhattan in the desert. We're talking about giving these people a better standard of living.

GERGEN: And how would you do that?

WARE: Yeah...

GERGEN: How, how?

WARE: I'm not sure.

AMANPOUR: It's easy, it's easy. You build the schools, you build roads, you bring in electricity.

GERGEN: We've done all that.

AMANPOUR: But you haven't been doing it right.

COOPER: At the same time aren't we also trying to eliminate a large source of income...

AMANPOUR: This is the key.

COOPER: ... which is the poppy fields, which supplies 95 percent of the world's heroin?

WARE: Again, that's not going to happen. I mean, especially in the south and through much of the country, the entire social and political order is built upon opium poppies. Those crops are what fuel not just Taliban insurgents, where large sums of money are being funneled off as they tax the supply, but it also feeds and supports the warlords, the warlords who are, in fact, in the government who are the local police chiefs.

This is a fundamental part of the structure of Afghanistan.

COOPER: So, how do you define success? What is success, then?

GERGEN: That's the question.

WARE: The delivery of aid, the infrastructure...

ZAKARIA: The most important thing I think to remember in this situation, Anderson, is an Afghan government that has some capacity to build schools but also to take on the bad guys. That means an Afghan national army and an Afghan government with some capacity.

COOPER: We've been dealing with the Afghan national army now for years.

WARE: For a long time.

AMANPOUR: You think you have been, but it's been unfocused.

ZAKARIA: But then Anderson, it's getting better -- it is getting better every month. And over the last year it's actually gotten a lot better.

COOPER: I went in with the Special Forces in 2002. They were doing that and claiming great success with it.

AMANPOUR: Well, yes, and then the eye was taken off the ball, Anderson. The corruption increased after 2002. The insurgency started again after 2002. The lack of progress towards justice and all the other civil and human rights that had been made started to fall off.

Why? Because the U.S. took its eye off the ball; there was a time when things were going in a good direction. And now you have to work doubly hard to get them back.

COOPER: So, you're saying essentially nation-building is required?

AMANPOUR: Yes, I am. Yes I am.

COOPER: It is that -- hasn't the Obama administration now scaled back from that?

AMANPOUR: Yes, and that's going to be their problem.

ZAKARIA: It's state-building. You're not trying to create an Afghan nation. You're trying to say that the core -- the central government needs some capacity, but the second part of this is very important, which is we have to get the Pakistani military...

WARE: Yeah.

ZAKARIA: ... genuinely on our side because we've got to align their incentives. We've got to make them understand that if they want an alliance with the United States, the terms of reference are they have to get serious about terrorism.

WARE: But what's the incentive for them? I mean...

ZAKARIA: $10 billion over ten years. What if we say, you will not get more money from the United States, if you don't deliver on this?

WARE: Well, the money that's going now and has been going has always been sent with conditions.

ZAKARIA: Yes.

WARE: Yet that has not limited their ability to operate against U.S. interests.

GERGEN: I agree with that.

Listen, I think that all of this, all of these complications, the fact that we've been in Afghanistan, how many years now we've been trying to do this? Eight years?

ZAKARIA: Yes.

GERGEN: It's been a long time.

AMANPOUR: But that's eight years with no focus.

GERGEN: Without focus, that's true. But for the president, the patience level within his own party for this may not match the scope of the problem.

AMANPOUR: Right.

COOPER: Is withdrawal an option?

GERGEN: I think lowering the -- what is defined by success, defining it down, so to speak, is probably the option we're going to use....

COOPER: Defining down to what, protecting Americans?

GERGEN: To -- absolutely, whatever the minimum is to keep us safe, so that they can...

WARE: Which we already see them doing. It's about cutting deals.

GERGEN: That's right.

WARE: And perhaps with some unpalatable interests. Because militarily -- we all agree it can't be won that way. And even the delivery of aid and economic infrastructure isn't going to happen without security and without sanctions.

GERGEN: I just want to emphasize from the president's point of view, he does not have unlimited time to do this.

AMANPOUR: You're right. The Congress has just given him one year.

WARE: That's the problem.

GERGEN: The Congress is essentially telling him, you've got a year to show real progress. He can't make it.

AMANPOUR: It's a joke. This is not mature policy-making. Of course not.

WARE: It's foreign policy dictated by domestic interest, and that's the problem because those interests often run counter.

AMANPOUR: Look, America has gone in with peace accord, with peace enforcement and with nation-building in other places and it's worked.

The notion that they're not going to give that the opportunity to work in Afghanistan, which is one of the most important places there, given that terrorism has a fertile bed in which to grow, is beyond the beyond.

COOPER: We've got to take a break. When we come back, a lot of other issues to talk about. Success or failure in the countries we spoke about could determine in large part America's image abroad. As we said, there are other global hot spots to deal with.

We'll have more on that when our panel continues on EXTREME CHALLENGES: THE NEXT 100 DAYS.

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COOPER: We're back talking about the extreme challenges facing President Obama in his next 100 days. Some of them unique to his administration, others have troubled American presidents as far back as Harry Truman. Israel for one.

President Obama entered office firmly committed to a two-state solution, Israel and Palestine side by side. His Israeli counterpart, on the other hand, does not share that commitment nor does Hamas which controls Gaza.

Then there's Iran's nuclear program which poses a dire threat to Israel. Listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have said from the outset that when it comes to my policies towards Israel and the Middle East, that Israel's security is paramount. And I repeated that to Prime Minister Netanyahu.

It is in U.S. national security interests to assure that Israel's security as an independent Jewish state is maintained.

(END VIDEO CLIP)

COOPER: President Obama with the new Israeli Prime Minister Benjamin Netanyahu at the White House.

Back with our panel: David Gergen, Fareed Zakaria, Christiane Amanpour and Michael Ware.

Fareed, what is U.S. policy -- how much difference is there between President Obama's policy and where Israel is right now?

ZAKARIA: There's a big difference in the sense that first of all, I don't think President Obama wants the agenda to be entirely about Iran.

I think he wants to approach the Israeli/Palestinian issue centrally. He's appointed a very high-level negotiator. Clearly he hopes to get some movement there because clearly he believes that that could be a kind of key that unlocks U.S. relations with the Islamic world, the Arab world more broadly.

Prime Minister Netanyahu, on the other hand, wants to speak about Iran, Iran, Iran and the threat from Iran. So they see things differently.

I also think that there is a broader structural difference. I think as you put it, Iran does pose a security threat to Israel. We can debate how extreme it is.

Iran does not pose an immediate security threat to American security. It poses a threat to American interests in the region. Maybe it's making a play for dominance which would displace the United States.

But it's a second-order problem.

AMANPOUR: It seemed that Prime Minister Netanyahu got his agenda to be successful at least in the public iterations of the two leaders because what President Obama didn't get him to say was the two-state solution or to stop the settlements.

He, in fact, did say that what we're going to do is give a limit to our diplomacy on Iran. That's the first time we've heard President Obama say that.

COOPER: Israel is concerned that too long of a negotiation with Iran would just allow Iran essentially to stall while they build up a nuclear program.

GERGEN: Exactly. Well, Israel feels that they have to base their security on the worst-case scenario. In other words, how soon could Iran possibly get nuclear capability and they think that's sometime next year.

So, for them, this is the looming deadline, and it puts a lot of pressure on President Obama in terms of time frame because he does not want Israel to act on its own against Iran.

AMANPOUR: Do you see this map?

GERGEN: Yes.

AMANPOUR: Iran. Every major issue that the United States has right now involves Iran. There's Afghanistan, Pakistan, Iraq, there's the Persian Gulf, there's the Arab Sunni neighbors. And it was -- many, many analysts have said, and President Obama essentially had a referendum on this in his election, "I am going to reach out and try diplomacy to engage adversaries."

The American people didn't oppose that. They voted him into office. And many, many people say that unless you really do engage with Iran, not just on one issue, a very important issue, but on a whole new set of strategic relationships and objectives, it's going to be very difficult to either secure Israel or Afghanistan, Pakistan, Iraq.

COOPER: What about Iraq? I mean, is the United States going to be able to withdraw on the timetable that they have now put forward?

WARE: Well, in many ways, they have little choice. I mean, the deal is signed and sealed.

COOPER: But you already hear from some American commanders on the ground talking about extending it in some cities.

WARE: Yes, Mosul is something that they're looking at there. But even there, you're seeing this ever-increasingly concentrated Iraqi government which is evolving around the orbit of the prime minister, Nouri al-Maliki, who day by day is consolidating further and further power.

He is not budging. Even in Mosul, which is the last holdout, urban holdout of Al Qaeda, despite at least two major offenses to wipe them out from that city, he is saying no. June 30 is the day. There's no room for negotiation on this.

COOPER: Can they provide for the security themselves? The Iraqi forces?

WARE: No. No. But there're so many interests afoot here that there are certain things that the Iraqi factions are prepared to tolerate on the security front to make gains in other areas, principally politically and elsewhere.

COOPER: So, a certain number of deaths, a certain number of suicide bombings?

WARE: It's a high gamble but don't forget, not only are there common enemies like, say, al Qaeda, but there's enemies within the government. Don't forget, this is a deeply factionalized government.

And we're not just talking about political factions that you'll see warring in Congress or on the Hill. We're talking about people with militias; we're talking about armed forces.

COOPER: So, what happens when U.S. troops leave?

ZAKARIA: I think the likely scenario -- first of all, Michael is exactly right. We have to be out. There's an agreement with the government of Iraq. You know, we have to be down to zero by June. So it's going to happen, with maybe a few exceptions, Mosul being perhaps the principal one.

I think what's going to happen is there will be a resumption of some violence. There will be flare-ups, but you will not have the resumption of the civil war between the Sunnis and Shia.

WARE: Yeah.

ZAKARIA: That is the bet that the U.S. government is making. That is the bet that Prime Minister Maliki is making, that the Sunnis, while disgruntled, feel disempowered, will not return to a full-scale civil war and thus you will be able to get by with some substantial withdrawal of US troops.

AMANPOUR: Yet there's been the highest number of Iraqis killed, you know, many, many years just this year alone.

WARE: There was a spike. However, I think Fareed is right. There is a delicate scenario in place that bodes some hope for the future.

However, it is so precarious. The Mehdi army is still in place. The commanders are in sanctuary in Iran and in Syria. The foot soldiers are still there. The weapons are at home, they're not on the streets. The same with the Sunnis; they have not been integrated into the Iraqi government as promised. And in some areas they're not being paid by the Iraqi government.

GERGEN: Look at it from the president's point of view and what he faces. His ultimate challenge is going to be can he pull out and not have Iraq fall apart in some fashion? Because if that happens, he's going to be the president who lost Iraq and that would be devastating for him politically.

COOPER: Has America's role, image in the world changed already?

AMANPOUR: Yes. The page has been turned. The first 100 days especially the first trip overseas did that. And now the second 100 days, in fact the rest of the administration is going to be determined by the policies.

And President Obama was elected with a huge mandate to take on some very bold new initiatives.

ZAKARIA: What we've been talking about have been the crises, the failures, the hot spots, the places you've got to send troops. But there's actually a much broader agenda in foreign policy. At the end of the day, some of these areas are peripheral parts of the world.

A strategic relationship with China; we need China to continue to buy U.S. debt every day. The strategic relationship with Russia. How do you integrate India into this new international order? Those are issues that are going to require presidential attention.

If the president isn't personally engaged with China, you are not going to have any breakthroughs on energy, on environment.

COOPER: You're totally stressing me out. It gets worse and worse the more we talk.

GERGEN: It's just tough, it's just tough.

COOPER: It's incredible, I mean, the number of things on his plate is truly extraordinary.

WARE: Yes.

ZAKARIA: And in addition to all the domestic problems, that's the extraordinary thing.

COOPER: We're going to have more on that. Up next, two simple words that dwarf all the other extreme challenges facing President Obama; two words that will almost certainly define his presidency -- the economy. We'll be right back.