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US Formally Forgives $1B in Pakistani Loans

The United States has formally forgiven $1 billion worth of loans to Pakistan, a reward for Pakistan's cooperation in the global war against terrorism.

The U.S. ambassador in Islamabad, Nancy Powell, and senior Pakistani officials signed a formal agreement on Saturday, writing off $1 billion in Pakistani debt. The relief represents nearly one-third of what Pakistan owes to the United States.

Speaking to reporters after the signing, Ambassador Powell said the decision to cancel the debt was made during President Pervez Musharraf's visit last year to Washington. "Today's signing represents a promise kept and another milestone in our expanding partnership. I want to stress that this forgiveness of $1 billion in official debt is just one piece of a multi-faceted, multi-billion dollar assistance package the U.S. is providing to Pakistan," he said.

Ms. Powell said the debt relief is a sign of renewed friendship between the two countries. "The new relationship between the United States and Pakistan is not just about September 11," he said. "It is about the rebirth of a long term partnership between our countries."

Relations between Pakistan and the United States were strained before the September 11 terrorist attacks in New York and Washington. This was mainly due to Pakistan's strong support for the Taleban government in neighboring Afghanistan, which was harboring Osama bin Laden and his al-Qaida terrorist network.

Relations between Islamabad and Washington improved after Pakistan abandoned the Taleban and decided instead to back the U.S. led effort to rid Afghanistan of both the Taleban and the al-Qaida bases.

Officials here say the United States has given $3 billion in aid to Pakistan since the war on terrorism was launched 18 months ago.