Tillerson's remarks came amid Trump administration's repeated calls to Pakistan to do more against terrorist outfits.
"We want to work with Pakistan to stamp out terrorism within their boundaries as well, but Pakistan has to begin the process of changing its relationship with the Haqqani Network and with others," Tillerson told a Washington audience.
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"I understand that this is a relationship that has emerged probably for, in their view, good reasons a decade ago, but now that relationship has to be altered because if they're not careful, Pakistan is going to lose control of their own country," he warned.
He said the US was willing to share information with them to be successful.
"But we cannot continue with the status quo, where terrorist organisations are allowed to find safe haven inside of Pakistan," the top American diplomat warned. Notably despite repeated warning from the Trump Administration there is not much impact on Pakistans attitude towards terrorist groups.
It has been more than two weeks now that the White House issued a stern warning to Pakistan and asked Islamabad to re- arrest Hafiz Saeed, the 2008 Mumbai attack mastermind. Tillerson made no reference to this in his speech.
The US and Pakistan have had a long history of good relations, but that relationship has really deteriorated over the past decade, he conceded.
"So now were engaged with Pakistan in a conversation to ensure our expectations of them are clear, that our concern is really about Pakistan's stability," he said.
"Pakistan has allowed so many terrorist organisations to find safe haven within its territories, and these organisations are growing in size and influence, that at some point I have said to the leadership of Pakistan, you may be the target, and they turn their attention from Kabul and decide they like Islamabad as a target better," Tillerson said.
The global effort to defeat the Islamic State and the global effort to defeat terrorism is one of President Donald Trump's top priorities, he said.
"The President made a decision and announced the policy that we would remain in Afghanistan, we would remain engaged in the fight to defeat the Taliban, and that the time and effort would be conditions-based. He said its not a blank check," Tillerson said.
Separately during a townhall, Tillerson said he does not enjoy dealing with Pakistan.
"Dealing with Pakistan I don't enjoy that," Tillerson said in response to a specific query during the town hall with the State Department employees here.
His remark, without any further explanation, was in response to a question posed by a State Department employee who asked: "Is it fair to ask and say do you enjoy your job as Secretary of State?"
"...Pakistan is still an important and valued partner of the United States. Over the last decade, the relationship has drifted, and we've got to bring this relationship back to one of common interest," Tillerson said.
Today that's just not the case, he told his State Department colleagues.
"So we're engaged in very frank discussions with Pakistan over the concerns we have about their own stability and their future, and the threat they're under by allowing terrorist organisations to operate in their territory," Tillerson said.
The top US diplomat said the two countries should find ways as to how they could work together to bring stability and peace to the whole region.
"We've got a great team working in that region as well. A lot of work left to do," Tillerson said.
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