Bush rewards Pakistan with $5bn deal

CAMP DAVID - US President George W. Bush has proposed a US$3 billion ($5.1 billion) aid package to Pakistan for its help in the war on terrorism, but has not offered the fighter jets Islamabad has long sought.

"Greater economic development is ... critical to fulfilling the hopes of the Pakistani people," Bush told a news conference with Pakistani President Pervez Musharraf at the Camp David retreat in Maryland.

In their private talks, Bush put pressure on Musharraf, a military coup leader, to move toward democracy and stop militant extremists from launching attacks on neighbouring Afghanistan from Pakistan, a United States official said.

Many al Qaeda leaders fled across the mountainous border to Pakistan when US forces toppled the Taleban from control of Afghanistan after the September 11, 2001, attacks.

Musharraf said al Qaeda leader Osama bin Laden may be moving between Afghanistan and Pakistan in a "treacherous" border area.

Bush said the leadership of al Qaeda was being dismantled slowly but surely.

"It could take a day, or it could take a month, it could take years."

He pressured Musharraf to halt any Pakistani proliferation of nuclear or missile technology to North Korea or elsewhere.

Musharraf pledged to do nothing that would cause Washington concern, the US official said.

At the news conference, Bush praised Musharraf's leadership in fighting al Qaeda and in helping to ease tensions with India over the disputed Kashmir region.

The official said Bush offered US assistance on Kashmir, leaving it up to the two sides to decide what the US role should be.

Musharraf told ABC television that he and Bush also discussed the possibility of Pakistani troops going to Iraq.

He said Pakistan could provide up to 10,000 troops but certain issues needed to be resolved first.

"One of the issues is certainly the financial package because it wouldn't be fair to expect Pakistan itself to finance such a large force," Musharraf said in an interview taped for broadcast.

Bush stopped short of giving Musharraf everything he asked for.

He said he would work with the US Congress on a five-year, US$3 billion assistance package "to help advance security and economic opportunity for Pakistan's citizens".

Half that money would be used for defence equipment and security.

Bush said Musharraf pressed unsuccessfully for the sale of F-16 planes. The United States is wary of feeding an arms race in the region.

Many in Pakistan have still not forgiven Washington for refusing to deliver 28 F-16 fighters in the 1990s because of concerns over the country's nuclear programme.

Bush also announced a trade and investment "framework agreement", which he said would expand economic co-operation.

Musharraf said the agreement was a step toward a free-trade pact. He had hoped to win more sweeping trade concessions, particularly for hard-hit Pakistani textile manufacturers.

Bush said Musharraf's vision of progress at home would "require movement toward democracy in Pakistan".

- REUTERS