NEW YORK, Dec 7: The Bush administration is preparing to present President-elect Barack Obama with a lengthy, classified strategy review aimed at reversing the gains that militants have made in destabilising Afghanistan and Pakistan, the New York Times reported on Sunday.

The review contains an array of options, including telling Pakistan’s military that billions of dollars in American aid will depend on the military being reconfigured to effectively fight militants. That proposal amounts to a tacit acknowledgment that roughly $10 billion in military aid provided to Pakistan as “reimbursements” for its efforts to root out militant groups has largely been wasted”, the newspaper said.

A senior military official was quoted by the Times as saying: “The message of the report is that you can’t win in Afghanistan without first fixing Pakistan”. “But even if you fix Pakistan,” the official said, “that won’t be enough.”

This was also the conclusion of a major study of what has gone wrong in Afghanistan, published in January by a group led by Gen James L. Jones, a former Nato commander, the newspaper said.

General Jones, who retired from the Marine Corps, was appointed last week by President-elect Obama to become the next national security adviser.

In the short term, the report calls for continued covert strikes into Pakistani territory from Afghanistan, though the American military has been reluctant to repeat the kind of ground attack that led to an open exchange of fire with Pakistani border forces in September.

The newspaper said: “The report, which is expected to be presented to Mr Obama’s top national security advisers in the next week or two, was the product of a highly unusual strategy review that was begun in mid-September, just four months before President Bush leaves office.

“We’ve gone seven long years proclaiming that Pakistan was an ally and that it was doing everything we asked in the war on terror,” said one senior official involved in drafting the report.

“And the truth is that $10 billion later, they still don’t have the basic capacity for counter-insurgency operations. What we are telling Obama and his people is that has to be reversed.”

The report also urges Mr Obama to take a far more regional approach to the problem, something he has indicated in speeches he is inclined to do.

“The Pashtun tribes treat these countries as one territory, and we have to begin to do something similar,” one official familiar with the report said, declining to speak on the record because the contents of the report are confidential.

The report includes options, not ‘recommendations’, so that Mr Obama would not be put in the position of endorsing or rejecting Mr Bush’s suggested policies. It was completed just before the terrorist attacks in Mumbai, India’s commercial capital, last month, and the reaction to those events is likely to complicate some of the central options even before they are handed off to Mr Obama.