The US military said it has made a final decision to cancel $300 million (Dh1.1 billion) in aid to Pakistan that had been suspended over Islamabad's perceived failure to take decisive action against militants, in a new blow to deteriorating ties.
The so-called Coalition Support Funds were part of a broader suspension in aid to Pakistan announced by President Donald Trump at the start of the year, when he accused Pakistan of rewarding past assistance with "nothing but lies & deceit".
The Trump government says Islamabad is granting safe haven to insurgents who are waging a 17-year-old war in neighbouring Afghanistan, a charge Pakistan denies.
But US officials had held out the possibility that Pakistan could win back that support if it changed its behaviour.
US Defence Secretary Jim Mattis, in particular, had an opportunity to authorise $300m in CSF funds through this summer – if he saw concrete Pakistani actions to go after insurgents. Mr Mattis chose not to, a US official said.
"Due to a lack of Pakistani decisive actions in support of the South Asia Strategy the remaining $300 [million] was reprogrammed," Pentagon spokesman Lt Col Kone Faulkner said.
Col Faulkner said the Pentagon aimed to spend the $300m on "other urgent priorities" if approved by Congress. He said another $500m in CSF was stripped by Congress from Pakistan earlier this year, to bring the total withheld to $800m.
The disclosure came ahead of an expected visit by US Secretary of State Mike Pompeo and the top US military officer, Gen Joseph Dunford, to Islamabad. Mr Mattis told reporters on Tuesday that combating militants would be a "primary part of the discussion".
Experts on the Afghan conflict, America's longest war, argue that militant safe havens in Pakistan have allowed Taliban-linked insurgents in Afghanistan a place to plot deadly strikes and regroup after ground offensives.
The Pentagon's decision showed that the United States, which has sought to change Pakistani behaviour, is still increasing pressure on Pakistan's security apparatus.
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It also underscored that Islamabad has yet to deliver the kind of change sought by Washington.
"It is a calibrated, incremental ratcheting up of pressure on Pakistan," said Sameer Lalwani, co-director of the South Asia programme at the Stimson Centre think tank in Washington.
Reuters reported in August that the Trump government had quietly started cutting scores of Pakistani officers from coveted training and educational programmes that have been a hallmark of bilateral military relations for more than a decade.
The Pentagon made similar determinations on CSF in the past, but this year's move could get more attention from Islamabad and its new Prime Minister, Imran Khan, at a time when its economy is struggling.
Pakistan's foreign exchange reserves have plummeted over the past year and it will soon decide on whether to seek a bailout from the International Monetary Fund or friendly nations such as China.
"They are squeezing them when they know that they're vulnerable and it is probably a signal about what to expect should Pakistan come to the IMF for a loan," Mr Lalwani said. The United States has the largest share of votes at the IMF.
Mr Khan, who once suggested he might order the shooting down of US drones if they entered Pakistani airspace, has opposed the open-ended presence of the US in Afghanistan. In his victory speech, he said he wanted "mutually beneficial" relations with Washington.
A Pakistani official said he was unaware of a formal notification of the US decision on assistance but said one was expected by the end of September.
Pakistan has received more than $33 billion in US assistance since 2002, including more than $14bn in CSF, a US Defence Department programme to reimburse allies that have incurred costs in supporting counter-insurgency operations.
Pakistan could be eligible for CSF again next year.