By Phil Stewart
WASHINGTON (Reuters) - Nearly one year ago, U.S. Defense Secretary Leon Panetta predicted the strategic defeat of al Qaeda was within reach if the United States could kill or capture up to 20 leaders of the core group and its affiliates.
In an interview on Thursday with Reuters, Panetta disclosed that only a "small handful" of the individuals on that original list remained on the battlefield and that Saudi Arabia - the birthplace of late al Qaeda leader Osama bin Laden - was reporting a drop-off in recruitment.
"We've not only impacted on their leadership, we've impacted on their capability to provide any kind of command and control in terms of operations," Panetta said.
The U.S. defense chief visited Saudi Arabia on Wednesday and after paying U.S. condolences over the death of the late crown prince, spoke about al Qaeda with one of his sons, Saudi Prince Mohammed bin Nayef, who has run the kingdom's operations against al Qaeda as a deputy interior minister.
"I asked him the question - as a result of the bin Laden raid, as a result of what we've done to their leadership, where are we with al Qaeda," Panetta recounted, adding that al Qaeda and bin Laden "came out of Saudi Arabia."
"Bin Nayef said, ‘For the first time, what I'm seeing is that young people are no longer attracted to al Qaeda in Saudi Arabia.'"
Panetta did not single out which leaders from his target list last year remained, but current al Qaeda chief Ayman al-Zawahri is one he named last year and who is still believed to be living in the border region of Afghanistan and Pakistan.
Asked how many targets remained, Panetta said, "It's a small handful and it's growing smaller all the time."
On other topics, Panetta in the interview:
* Defended the U.S. decision not to arm opponents of Syrian President Bashar al-Assad, but said he was concerned that shoulder-fired missiles stolen from Libya last year could make their way to Syria. He said he had seen no direct intelligence yet suggesting they had.
* All but ruled out an apology over an air strike last year that killed 24 Pakistani soldiers, as Islamabad has demanded, saying it was "time to move on" in the troubled U.S.-Pakistan relationship.
* Said Iraq had given assurances to the United States that it would not release a suspected Hezbollah operative accused of killing American troops, whom the United States turned over to Iraqi custody last December just before the last U.S. troops exited the country.
AL QAEDA SURVIVAL PROSPECTS
After addressing questions about the future of al Qaeda's top leadership, Panetta shifted his focus to the group's ability to survive as a movement at all.
"We'll keep the pressure on at the top and we'll keep going after their leadership," Panetta said.
"But the real issue that will determine the end of al Qaeda is when they find it difficult to recruit any new people."
The killing of bin Laden in a covert U.S. raid in Pakistan last year has been followed by a series of unmanned aerial attacks that have crushed al Qaeda's network along Pakistan's border with Afghanistan.
The latest high-profile al Qaeda leader killed in the U.S. campaign was Abu Yahya al-Libi, the group's second-in-command, who broke out of a high-security U.S. prison in neighboring Afghanistan in 2005 and was a key strategist.
Beyond the Afghan-Pakistan region, another key figure killed last year was Anwar al-Awlaki, an American imam who became a senior leader of al Qaeda's Yemen-based affiliate.
While successful tactically, the drone strikes have further poisoned U.S.-Pakistan relations and, critics say, raise questions about international law and could boost militant recruiting.
Only about eight hard-core al Qaeda leaders are still believed to be based in the lawless borderlands of Afghanistan and Pakistan, compared with dozens a few years ago.
(Editing by Warren Strobel and Peter Cooney)