Speaking at the Youth Parliament here yesterday, Musharraf said that Pakistan was the only country that recognised the Taliban government in Afghanistan when it grabbed power in 1996 up to 2001 as Saudi Arabia and UAE later backed out.
He admitted that recognising its brutal rule in the late 1990s was a mistake by Pakistan.
The Soviet invasion of Afghanistan in 1979 changed the political climate worldwide and "three blunders" were made by the US who left the region after withdrawal of the Soviets, said 71-year-old Musharraf, who ruled Pakistan from 1999 to 2008.
"The second blunder was the West's refusal to recognise Taliban."
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He said Pakistan was looked at negatively by the world because of recognising the Taliban government and conceded that in 2000, the then US President Bill Clinton came to Pakistan to reprimand the country for recognising the regime.
The third blunder, the former president said, was the invasion of US-led NATO forces in Afghanistan that pushed militants to mountainous areas.
"But because this did not happen, the Taliban started reviving in 2003".
Musharraf, who is facing a slew of court cases including one for high treason after returning in 2013 from five years of self-exile, said the Taliban was self-created because of the environment that existed in Afghanistan at that time.
"Some say Taliban are our children and we created them... but it's not true," the former army chief said.
Taking a jab at the current government, he said, "The economy is nose-diving and terrorism is prevalent in all provinces".
Musharraf also said tensions between Pakistan and India will always exist till the Kashmir issue is not resolved.
"Political parties do not take better decisions in the greater interest of the nation and democratic governments have never performed well in Pakistan," he claimed.
"Progress was only made during Ayub Khan's regime besides mine," he said, adding that the army must have a constitutional role in Pakistan.