CAMP DAVID, June 24: President George Bush announced a $3-billion five-year economic assistance package for Pakistan after a meeting with President Pervez Musharraf at the presidential retreat here on Tuesday.

The package does not include F-16 jets, although half of the package relates to defence and security.

At a press briefing following the meeting, President Bush richly praised Pakistan’s efforts to combat global terrorism, and said the US encouraged Pakistan and India to ease tensions in South Asia and resolve all issues, including Kashmir.

He said the US and Pakistan would sign two important agreements later on Tuesday (Wednesday in Pakistan) — a Trade and Investment Framework Agreement and an accord on science and technology. TIFA, Mr Bush hoped, would evolve into a free trade agreement between the two countries.

Calling Gen Musharraf a “visionary and a courageous leader” in the war against terrorism, Mr Bush noted that he was committed to the cause of democracy in Pakistan.

President Musharraf on his part said he was determined to introduce “continued and sustained” democracy in Pakistan.

Mr Bush said the “friendship between the United States and Pakistan is vital to the security and stability of South Asia”, adding “I’m encouraged by the progress President Musharraf and Indian Prime Minister (Atal Behari) Vajpayee may have made in easing tensions between Pakistan and India. I’m hopeful that the two countries will deepen their engagement on all issues, including Kashmir”.

He said the United States would do all it could to promote peace. On the economic package to Pakistan, Mr Bush noted that the United States had cancelled $1-billion debt Pakistan owed to it and announced: “I will work with the United States Congress on a $3-billion assistance package to help advance security and economic opportunity for Pakistan’s citizens.”

On the question about dissolving parliament, President Musharraf said: “I am extremely concerned about introducing sustainable democracy in Pakistan. Over the last 50 years, five decades, we have had dysfunctional democracy in Pakistan. And what I am doing, really, is to introduce sustainable democracy. Let me assure you, all the constitution changes, all the political restructuring that we have done is in line with ensuring sustainable democracy in Pakistan. We will continue with this process, to ensure that democracy is never derailed in Pakistan. This is my assurance”.

When President Bush was asked whether Pakistan would get the F-16s sought by Pakistan, he said: “Let me say, the president (Musharraf) is not afraid to bring up the issue of F-16s. He has been a strong advocate for the sale of F-16s to Pakistan. In the package that we discussed, the five-year, $3-billion package, half of that money goes for defence matters, of which the F-16 won’t be a part. Nevertheless, we want to work closely with our friend to make sure that the package meets the needs of the Pakistan people.”

Later, a senior US official told reporters that the first year of the $3 billion package would be evenly divided between foreign military assistance and fund for economic development.

The rest of the amount will also be flexible, allowing Pakistan to use the money according to its needs. “This can also be used for debt relief,” said the official referring to the $1.8 billion bilateral loan Pakistan owed to the United States.

Refering to talks, the official said the two leaders had “mutual respect” for each other and a desire for establishing “a long-term relationship”.

President Bush was assisted by an eight-member team, including Vice-President Dick Chenney, Secretary of State Colin Powell, National Security Adviser Condoleezza Rice, Assistant Secretary of State Christina Rocca and US ambassador to Pakistan Nancy Powell.

The Pakistani team included Finance Minister Shaukat Aziz, adviser on foreign affairs Sharifuddin Pirzada, Foreign Secretary Riaz M. Khokhar and Ambassador Jahangir Ashraf Qazi.

Reuters adds: “Greater economic development is ... critical to fulfilling the hopes of the Pakistani people,” said the US president at the briefing.

“You’re never going to escape this,” Gen Musharraf told Mr Bush in a joking manner, referring to a reporter’s question about the F-16 planes.

Mr Bush said the leadership of Al Qaeda was being dismantled but it could take some time to finish the job of crushing militant networks.

“Slowly but surely we’re dismantling the networks,” Mr Bush said. “It could take a day, or it could take a month, it could take years.”

President Musharraf said Osama bin Laden might be moving between Afghanistan and Pakistan in a “treacherous” border area. “The possibility of his (Osama’s) maybe shifting sides on the border is very much there,” he said.