Clinton offers aid and seeks stronger Pakistan ties

ISLAMABAD (Reuters) - Secretary of State Hillary Clinton announced more than $500 million (327.2 million pound) in new aid projects for Pakistan Monday, which Washington hopes will help win over a sceptical public in an ally vital to winning the war in neighbouring Afghanistan.

Clinton was in Islamabad for two days as part of the U.S.-Pakistan strategic dialogue, a series of talks aimed at strengthening the relationship between the wary allies in the struggle against al Qaeda and the Taliban.

"The United States does not only want a dialogue between governments, we also want a dialogue between peoples," she said ahead of the second "strategic dialogue" meeting between the countries in Islamabad Tuesday.

Clinton will later fly on to Kabul for an international conference as the U.S.-led war in Afghanistan runs into mounting doubt in the U.S. Congress.

She announced a string of new projects -- including dams, power generation, agricultural development and hospital construction -- funded under U.S. legislation passed last year that tripled civilian aid to Pakistan to $7.5 billion over the next five years.

The projects, the first to be launched under a new aid plan, are seen as crucial to shoring up support for the U.S.-led struggle against militant extremists in a country where opinion polls show under one in five view the United States favourably.

"These aren't one-time expenditures; they are long-term investments in Pakistan's future," she said.

Pakistan Foreign Minister Shah Mehmood Qureshi echoed Clinton's optimism.

"This is a transformational phase in our bilateral relations," he said.

Pakistan also wants enhanced market access, strengthening of its resources to take up the anti-terror fight and "non-discriminatory access" to energy and other technology.

The latter two requests are long-standing Pakistani desires for more military equipment and a civilian nuclear deal such as the one between India and the United States.

Clinton's two-day visit includes talks with top military and civilian leaders.

The Pakistan and Afghan commerce ministers signed a trade deal during her visit that the United States also hopes will help boost cooperation between the countries.

HISTORY OF MISTRUST

The Obama administration sees nuclear-armed Pakistan as a pivotal player in the struggle against militant Islamist groups in both countries. But the two sides are divided by a history of mistrust and sometimes diverging goals over a war that is increasingly unpopular.

Opinion polls have shown many Pakistanis doubtful about long-term U.S. intentions, citing examples of abandonment, particularly after the Soviets withdrew from Afghanistan.

U.S. officials, meanwhile, are wary of the role Pakistan is playing in Afghanistan and believe it needs to do more to fight its own homegrown Taliban militants, which Washington blames for the attempted bombing in New York's Times Square on May 1.

Richard Holbrooke, the Obama administration's special representative for Afghanistan and Pakistan, said there was a "dramatic acceleration" in cooperation between Washington and Islamabad, but conceded Pakistani public opinion was lagging.

(Editing by Chris Allbritton)

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