President Barack Obama's chief of staff, William Daley, said in a broadcast interview the estranged relationship between the United States and Pakistan must be made "to work over time," but until it does, "we'll hold back some of the money that the American taxpayers are committed to give" to the country's powerful military forces.
The suspension of US aid, first reported by the New York Times, followed a statement last week by Adm. Mike Mullen, chairman of the US Joint Chiefs of Staff, that Pakistan's security services may have sanctioned the killing of Pakistani journalist Saleem Shahzad, who wrote about infiltration of the military by extremists. His battered body was found in June.
The allegation was rejected by Pakistan's powerful military establishment, including the Inter-Services Intelligence Agency, which has historic ties to the Taliban and other militant groups and which many Western analysts regard as a state-within-a-state.
George Perkovich, an expert on Pakistan with the Carnegie Endowment for International Peace in Washington, said Mullen's comments and the suspension of aid represent "the end of happy talk," where the US tries to paper over differences between the two nations.
Daley, interviewed on ABC's "This Week," suggested the decision to suspend military aid resulted from the increasing estrangement between the US and Pakistan. "Obviously there's still a lot of pain that the political system in Pakistan is feeling by virtue of the raid that we did to get Osama bin Laden," Daley said.
Defense Secretary Leon Panetta told reporters traveling with him to Afghanistan on Saturday that the US would continue to press Pakistan in the fight against extremists, including al-Qaeda's new leader, Ayman al-Zawahri.
"We have to continue to emphasise with the Pakistanis that in the end it's in their interest to be able to go after these targets as well," Panetta said. "And in the discussions I've had with them, I have to say that, you know, they're giving us cooperation in going after some of these targets. We've got to continue to push them to do that. That's key."
The US has long been unhappy with Pakistan's evident lack of enthusiasm for carrying the fight against terrorists to its tribal areas, as well as its covert support for the Taliban and anti-Indian extremist groups.
But tensions ratcheted up in January, when CIA security contractor Raymond Davis shot and killed two Pakistanis who he said were trying to rob him. They spiked in May, when US forces killed bin Laden during a covert raid on a home in Abbottabad, the location of Pakistan's military academy.
In the US, there was anger at the possibility that some Pakistan officials had harbored the terrorist leader. In Pakistan, there was outrage that the US operation had violated its sovereignty.
The $800 million in suspended aid represents 40 percent of the $2 billion in US military aid to Pakistan, and according to the Times includes money for counterterror operations.
The report said some of the money represented equipment that can't be set up for training because Pakistan won't give visas to the trainers. About $300 million was intended to reimburse Pakistan for the cost of deploying 100,000 troops along the Afghan border, the newspaper said.
A senior US official confirmed that the suspension came in response to the Pakistani army's decision to significantly reduce the number of visas for US military trainers. "We remain committed to helping Pakistan build its capabilities, but we have communicated to Pakistani officials on numerous occasions that we require certain support in order to provide certain assistance," a senior US official told The Associated Press. The official was not authorised to discuss the issue publicly and spoke only on condition of anonymity.
Secretary of State Hillary Clinton recently told senators that "when it comes to our military aid, we are not prepared to continue providing that at the pace we were providing it unless we see certain steps taken."
Pakistan army spokesman Maj. Gen. Athar Abbas declined comment on the suspension. He pointed to comments by Army Chief Ashfaq Parvez Kayani, who last month said US military aid should be diverted to civilian projects.
Hasan-Askari Rizvi, a Pakistani political and defense analyst, said the US decision to suspend aid is an attempt to increase pressure on Pakistan, but he believes it could hurt both sides.
"The Pakistani military has been the major supporter of the US in the region because it needed weapons and money," said Rizvi. "Now, when the US builds pressure on the military, it will lose that support."
Rivzi said the move could make it harder for the US to push the Taliban into peace talks, in preparation for its withdrawal from Afghanistan. At the same time, he said, the Pakistani military relies on US aid in its fight against militant groups.
"This kind of public denunciation needs to stop, and they need to talk," Rivzi said. "They shouldn't go to the brink because both will suffer."
But Abbas, the Pakistani military spokesman, said the loss of aid would have no effect on military operations. "In the past, we have not been dependent on any external support for these operations, and they will continue," Abbas said.
Perkovich, the Carnegie Endowment expert, called the suspension of US aid "overdue."
"We've been trying for years to get, persuade, push the Pakistani army to conduct military operations on their border with Afghanistan, especially in North Waziristan, and they've said it's not in their interest, that they're overstretched already," Perkovich said in a telephone interview from Paris. "I think it's smart to say, 'We hear you.'... If the army doesn't want the support, we hear them and we'll withdraw the support."
Perkovich said if billions in US financial aid didn't change the behaviour of the Pakistan military, then withdrawing it probably wouldn't either. The shift in the administration's policy, was prompted by recent tensions, he said. But it also grew out of the US decision to begin withdrawing troops from Afghanistan.
"That decision to withdraw from Afghanistan finally enables us to focus on Pakistan, and basically confront the reality that Pakistan's the bigger problem," he said.
Perkovich said he doesn't think Pakistan will shift its policies in order to restore US military aid. But he said the suspension could have some positive effect in the long run, by forcing Pakistan to take a hard look at the dominant role the security services play in Pakistan.
"Internally in Pakistan, there's going to be a much more intense debate now on whether the Army has put the country on a good course," he said.
