There is understandable unhappiness in India over the United States designation of Pakistan as a Major Non-NATO Ally and the circumstances under which the announcement was made. 

This status makes Pakistan eligible for new weapons from US army stockpiles, besides new loans and grants to beef up its military capability. This will impact India's security, given that Pakistan's support for various militant groups fighting in India has not yet ceased. The manner in which Colin Powell made the announcement in Islamabad after completing his trip to Delhi, without giving advance notice to the Indian government, showed great insensitivity.

Observers in the US and elsewhere are mystified at the favours given to Pakistan as MNNA, when there is no proof yet that Pakistan has reversed its militaristic policies. Although Pakistan has publicly come out against the Taliban and Al Qaeda, there are elements in its government that support these groups.

Only a couple of months ago, Pakistan's record of nuclear proliferation to rogue nations became public. Before that, Islamabad as the principal backer of the Taliban that hosted Al Qaeda while its shadowy secret agency, Inter Services Intelligence, has tangled links with various terrorist groups and which is why it did not allow independent investigators to question either Omar Sheikh, the alleged murderer of Daniel Pearl, or Abdul Qadeer Khan, the scapegoat in the nuclear proliferation scandal.

As a country from where weapons of mass destruction have proliferated and with terrorist groups based on its soil, Pakistan satisfies George W Bush's two criteria of an 'axis of evil' country.

But with the American troops in Iraq bogged down and number of soldiers killed rising, Bush's options in an election year have shrunk. Given that no WMD were been found in Iraq, the pressure on the Bush administration for a major success against Al Qaeda in the mountains of Pakistan before the November elections is rising. But that cannot be achieved without Islamabad's help.

Musharraf is well aware of the limitations of American power and has played the game consummately. In the current international climate, America cannot wage a war on Pakistan; it can only give monetary and military inducements to Pakistan to help it out.

It may be argued that Musharraf, reputed to be hawkish on military matters, has reformed and is leading Pakistan in a new direction. But it is more likely that given his own shaky situation within the country, he has come to an arrangement with his allies from the Islamist parties and other anti-US groups to buy time to see how the battle between the Islamists and the West proceeds.

This is the strategy of doing the minimum possible to make America accept that Pakistan is doing its bit in the 'war on terror.' That would explain how Pakistan mysteriously captures an Al Qaeda member or two every time a high-level American official is visiting the country. Recently, during Colin Powell's trip, Pakistani troops embarked on a much-ballyhooed mission in south Waziristan in the autonomous Federally Administered Tribal Areas of the North-West Frontier Province. The mission ultimately failed to produce anything.

But since then, the anti-American Islamist allies of Musharraf have reportedly warned him not to engage militarily in the FATA region. Moreover, Musharraf's own options of military initiative in the tribal areas have declined as the warlords have strengthened their grip on much of Afghanistan. The US had a great opportunity to capture the defeated Taliban and Al Qaeda and their ISI supporters in Kunduz in the first weeks of the Afghanistan war. But in what was perhaps the greatest single blunder of that war, America allowed Musharraf to airlift the besieged warriors to safety in exchange for promises that were never kept.

Since these first weeks of the War on Terror, the international power equations have changed. The American Faustian embrace of Pakistan is born out of necessity. It may involve assurances made by elements in the Bush administration that India will be pressured to change its arrangement in Kashmir. But in the longer run, it is the economic linkages and not the American electoral politics related to Al Qaeda and terrorism that will decide the nature of the relationship between India and the US.

There will be a long-term cost of America's policy in Pakistan. The Taliban and Al Qaeda emerged out of the forces unleashed by the American support for the Islamists in the war against the Soviets in Afghanistan in the '80s. Ironically, what the CIA created, the FBI had to battle in American cities. Similarly, the strengthening of the Pakistani military now, without destroying or reforming the institutions in Pakistan that are committed to religious war, will only embolden the extremist elements in Pakistan, leading to future catastrophes.

America's current Pakistani policy has invested too deeply in Musharraf. It should, rather, strengthen the processes and forces that are likely to help Pakistan come out of its current syndrome. But that means support for democracy, and insistence on the return of the leading politicians who remain exiled. Only a strong, popular, democratic government can rehabilitate Pakistan economically. Without such rehabilitation, the jihadi forces will remain strong and Pakistan will continue as the epicentre of world terrorism.