In his 15-minute address to Pakistanis on national television, President Clinton made a point of castigating his hosts, lest he be viewed as condoning terrorism and military coups. "This era does not reward people who struggle in vain to redraw borders with blood," Clinton said, referring to Pakistani-supported separatists in Kashmir. "It does not favor nations where governments claim all the power to solve every problem." Clinton's visit was par for the course in what was steadily becoming a tense US-Pakistani relationship marked by tension over Pakistan's nuclear ambitions and its alleged sponsorship of terrorists in Kashmir.

NEW WAR, NEW FRIENDSHIP

But a new administration is at the helm in Washington and America's war on terrorism has seemingly cooled some of the simmering tensions in this relationship, rejuvenating an old friendship rooted in cold war politics. Only weeks after the September 11 attacks, Pakistan hosted US Secretary of State Colin Powell, and it was clear from Powell's remarks that America views the situation currently unfolding in Afghanistan as a pivot point in US-Pakistani relations. "We believe, as a result of the actions taken by Pakistan over the last five weeks, we're truly at the beginning of a strengthened relationship, a relationship that will grow and thrive in the months and years ahead," Powell said.

Behind the high profile diplomatic gestures, American and Pakistani officials are already making some headway. Amidst the daily hype of Pentagon briefings and anthrax scares on Capitol Hill, a delegation of economic and banking ministers from Pakistan came to Washington recently and quietly negotiated for increased economic assistance from the US and international lending institutions such as the IMF and World Bank. The delegation's meetings with top officials at these organizations went largely unnoticed, but they were an important reflection of how dramatically the landscape of US-Pakistani relations has changed since September 11th.

During the delegation's trip, other positive developments unfolded. Congress voted to lift economic sanctions on Pakistan, which it originally imposed to express American disapproval of Pakistan's nuclear program and the military coup that brought President Pervez Musharraf to power in 1999. Legislators said the lifting of sanctions was necessary at a time when Pakistan's stability is crucial for the United States. "Our assistance to Pakistan helps ensure the stability of the government of an ally and the welfare of its people," said Representative Henry Hyde, Republican of Illinois, and chairman of the House International Relations Committee.

The sanctions banned the export of various materials deemed to have military value and restricted the ability of the US to provide economic assistance to any government that earned its power through a military coup. The removal of sanctions has paved the way for the kind of substantive aid the US is looking to provide to its Asian ally. While traveling in South Asia, US Secretary of State Powell indicated the Bush administration might ask Congress to provide as much as $500 million in total aid to Pakistan, but the state department says no concrete proposals have been finalized. "What the Secretary gave was a broad framework, but we have not yet filled in the details and a lot of things have not yet been decided on," a State Department spokesman said.

In addition to this direct assistance, the US is continuing its credit payments to Pakistan through an IMF "stand-by" program. The US recently made a $135 million payment, the last in Pakistan's current IMF program. The IMF and the World Bank both announced new aid projects with Pakistan that will include US-backing. Meanwhile, American officials are also considering forgiving a significant portion of Pakistan's $3 bilateral debt with the US, as well as loosening trade restrictions on imports from Pakistan.

THE COST OF AN ALLY

Some experts say the American rapprochement with Pakistan -- especially the new aid programs the US is backing -- is nothing more than a down-payment to secure Pakistan's crucial cooperation in the war ahead. "It simply amounts to 'buying' Pakistan's support and little else," said Sumit Ganguly, professor of political science at the University of Texas, Austin.

In fact, according to Ayesha Jalal, a professor of history at Tufts University and an expert on Pakistan, this phenomenon would not be unique in the history of US-Pakistani relations. In 1954 Pakistan signed a deal with the US offering its strategic support in the containment of communism in exchange for economic and military assistance. "For a paltry sum of $25 million for starters, Pakistan undertook to secure Western strategic interests," Jalal wrote last year in Pakistan's newspaper Dawn. In this case the US seeks to contain the spread of terrorism by capturing or killing the leaders of the Al-Qaeda terrorist network.

The lifting of sanctions and the pledges of forthcoming financial support are considered by many as Pakistan's compensation for the losses it has sustained fighting terrorism on the front lines. Pakistan's economy took a severe hit as a result of the September 11th attacks -- heightened security led to a drop in exports, most international airlines canceled their flights to Pakistan, and freight rates increased. Most importantly, Pakistan has had to brace for financial costs of dealing with a flood of Afghan refugees on its northern border.

But Carol Lancaster, former deputy administrator for USAID, says that while the new aid may help catalyze Pakistan's economy, the real end game of America's efforts is to capture or kill terrorist ringleaders. "US aid is linked to US goals in Afghanistan, especially to bringing Osama bin Laden to justice," Lancaster said. "Hopefully, the aid will help the Pakistani economy, but this is surely a secondary consideration at this point."

The IMF and World Bank, however, barely mentioned Pakistan's role in the war on terrorism as a key reason for their new aid projects. Both institutions indicated they were rewarding Pakistan for adhering to its economic reform program and said these aid discussions would have taken place regardless of the events of September 11th. "Over the past two years, Pakistan has been implementing a national reform program demonstrating its commitment to addressing long-standing problems of poverty, education and health...We have been very impressed by that program," a Bank spokesperson said.

THE PUSH FOR POLITICAL REFORMS

This flurry of support for Pakistan raises the question of whether fundamental US goals in the region that are not directly related to terrorism, including substantive democratization and political reform in Pakistan, will remain intact despite the recent diplomatic and strategic maneuvering. On his trip to the subcontinent President Clinton made the restoration of democracy a high priority and the Bush administration has largely followed that path. But it is not clear how the US can continue to press this agenda. Given America's dependence on the stability of President Musharraf's regime, it could be dangerous for the United States to publicly advocate national elections -- which are now slated for October of 2002 -- while would-be militant groups hover about Pakistan's major cities, waiting for an opportunity to take power.

Even so, US officials insist that the government's efforts to support its important ally in South Asia have not compromised America's broader policy in the region, including its efforts to promote democracy and political reforms in Pakistan. "We are urging President Musharraf and those around him to return to democracy as soon as possible," a State Department spokesman said.

Philip Oldenburg, director of the Southern Asian Institute at Columbia University, says the future of the democratization process in Pakistan depends significantly on whether American diplomats are making future US aid contingent on political reform and democratization in Pakistan. "If Pakistan's aid is given without strings, the chances are not much will change in terms of Pakistan's political structure," Oldenburg said.

Pakistan is already in the midst of a political de-centralization program initiated by Musharraf's government earlier this year. The goal is to create elected municipal governments to oversee the work of bureaucrats, in the hope that the provision of basic government services -- health care, education, sanitation -- will improve as a result. But according to Oldenburg, while these initial political reforms are a step in the right direction, they do not provide the funding bureaucrats need to actually improve the services they provide. "In theory, elected officials can tell bureaucrats what to do, but if they can't pay for it it's meaningless," he said.

WHAT LIES AHEAD

Oldenburg says the current situation will continue to force some very difficult decisions on American policy makers. On the one hand, the US has to show its allegiance to Pakistan at every turn. On the other hand, he says, America "shouldn't be in the business of giving terrific economic breaks to a country that has some very dirty hands."

Despite the cordial joint statements and military cooperation, a number of contentious areas remain in the US-Pakistani friendship. The US will have to find a way to push for restraint in Pakistan's nuclear program, something proliferation experts like George Perkovich acknowledge will be a painstaking affair.

But the most vexing issue of all will continue to be Kashmir. The US will have to walk the balance beam between Islamabad and New Delhi in hopes of restarting productive peace talks. Recent American cooperation with Pakistan has fomented a great deal of bitterness in India and drawn the ire of Indian politicians.

India, says Sumit Ganguly, will be expecting that America's anti-terrorism fervor will translate into increased pressure on Pakistan to crack down on what New Delhi sees as Taliban-grade terrorists: "India should and probably will hold Powell's feet to the fire on Pakistan's shameless and moronic support to the most vicious terrorist groups in Kashmir."

If India takes Ganguly up on that diplomatic call to arms, American policy makers will have their work cut out for them.