U.S. aid to Pakistan shrinks amid mounting frustration over militants

By Idrees Ali

WASHINGTON, Aug 26 (Reuters) - Pakistan's continued support for resurgent militant groups hostile to the United States, coupled with warming U.S. military and business relations with India, is sharply diminishing Islamabad's strategic importance as an ally to Washington, U.S. military, diplomatic, and intelligence officials and outside experts said.

The United States has cut both military and economic aid to Pakistan sharply in recent years, reflecting mounting frustration among a growing number of officials with the nuclear-armed country's support for the Taliban in neighboring Afghanistan.

That frustration has dogged U.S.-Pakistan ties for more than a decade, but has spiked anew as the militant Islamic group has advanced in parts of Afghanistan that U.S. and allied forces once helped to secure, U.S. officials and analysts say.

"We're seeing a very definitive and very sharp reorienting of U.S. policy in South Asia away from Afghanistan-Pakistan and more towards India," said Michael Kugelman, a South Asia expert with the Woodrow Wilson Center, a Washington think-tank.

(Graphic showing U.S. annual military and civilian aid to Pakistan since 2011: http://tmsnrt.rs/2boG04J)

The U.S. relationship with Pakistan has long been a transactional one marked by mutual mistrust, marriages of convenience, and mood swings.

The long-standing U.S. frustration with Pakistan's refusal to stop supporting the Taliban, especially within the U.S. military and intelligence community, is now overriding President Barack Obama's administration's desire to avoid renewed military involvement in Afghanistan, as well as concerns that China could capitalize on fraying ties between Washington and Islamabad, the U.S. officials said.

Obama announced last month he would keep U.S. troop levels in Afghanistan at 8,400 through the end of his administration, shelving plans to cut the force in half by year end.

American civilian and military aid to Pakistan, once the third-largest recipient of U.S. foreign assistance, is expected to total less than $1 billion in 2016, down from a recent peak of more than $3.5 billion in 2011, according to U.S. government data. The United States has not appropriated less than $1 billion to Pakistan since at least 2007.

The decrease also comes amid budget constraints and shifting global priorities for the United States, including fighting Islamic State militants, a resurgent Russia and an increasingly assertive China.

In March, Republican Senator Bob Corker, chairman of the Senate Foreign Relations Committee, said he would seek to bar $430 million in U.S. funding for Islamabad's purchase of $700 million of Lockheed Martin Corp. F-16 fighter jets.