A stable, democratic, prosperous Pakistan is considered vital to U.S. interests.U.S. concerns regarding Pakistan include regional and global terrorism; Afghanstability; democratization and human rights protection; the ongoing Kashmir problemand Pakistan-India tensions; and economic development. A U.S.-Pakistanrelationship marked by periods of both cooperation and discord was transformed bythe September 2001 terrorist attacks on the United States and the ensuing enlistmentof Pakistan as a key ally in U.S.-led counterterrorism efforts. Top U.S. officials havepraised Pakistan for its ongoing cooperation, although long-held doubts exist aboutIslamabad’s commitment to some core U.S. interests. Pakistan is identified as a basefor terrorist groups and their supporters operating in Kashmir, India, and Afghanistan.Pakistan’s army has conducted unprecedented and largely ineffectualcounterterrorism operations in the country’s western tribal areas, where Al Qaedaoperatives and pro-Taliban militants are said to enjoy “safe haven.” U.S. officialsincreasingly are concerned that the cross-border infiltration of Islamist militants fromPakistan into Afghanistan is a key obstacle to defeating the Taliban insurgency. The United States strongly encourages maintenance of a bilateral cease-fire andcontinued, substantive dialogue between Pakistan and neighboring India, which havefought three wars since 1947. A perceived Pakistan-India nuclear arms race has beenthe focus of U.S. nonproliferation efforts in South Asia. Attention to this issueintensified following nuclear tests by both countries in 1998. The United States hasbeen troubled by evidence of transfers of Pakistani nuclear technologies andmaterials to third parties, including North Korea, Iran, and Libya. Such evidencebecame stark in 2004, and related illicit smuggling networks may still be operative.Pakistan’s macroeconomic indicators turned positive after 2001, with somemeaningful poverty reduction seen in this still poor country. However, economicconditions deteriorated sharply in 2008. President Bush seeks to expand U.S.-Pakistan trade and investment relations. Democracy has fared poorly in Pakistan,with the country enduring direct military rule for more than half of its existence. In1999, the elected government was ousted in a coup led by Army Chief GeneralPervez Musharraf, who later assumed the title of president. Musharraf retained theposition as army chief until his November 2007 retirement. Late 2007 instabilityincluded Musharraf’s six-week-long imposition of emergency rule and theassassination of former Prime Minister and leading opposition figure Benazir Bhutto.However, February 2008 parliamentary elections were relatively credible and seateda coalition led by Bhutto’s widower, Asif Zardari, and opposed to Musharraf’scontinued rule. The coalition’s August vow to launch impeachment proceedingsspurred Musharraf to resign the presidency and exit Pakistan’s political stage.Zardari subsequently was elected as the new President. The Bush Administration hasdetermined that a democratically elected government is restored in Islamabad, thuspermanently removing coup-related aid sanctions. Pakistan is among the world’sleading recipients of U.S. aid, obtaining more than $5.3 billion in overt assistancesince 2001, including about $3.1 billion in development and humanitarian aid.Pakistan also has received about $6.7 billion in military reimbursements for itssupport of U.S.-led counterterrorism efforts. This report is updated regularly.