Bush rewards Musharraf with aid package

"Greater economic development is... critical to fulfilling the hopes of the Pakistani people," Bush told a news conference with Pakistani President Pervez Musharraf at the Camp David presidential retreat in the Maryland mountains.

In their private talks, Bush put pressure on Musharraf to move toward democracy and stop militant extremists from launching attacks on neighbouring Afghanistan from Pakistan, a senior US official said.

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Musharraf said al Qaeda leader Osama bin Laden may be moving between Afghanistan and Pakistan in a "treacherous" border area.

Bush said the leadership of al Qaeda was being dismantled slowly but surely. "It could take a day, or it could take a month, it could take years."

Bush pressured Musharraf to halt any Pakistani proliferation of nuclear or missile technology to North Korea or elsewhere. Musharraf pledged to do nothing that would cause Washington concern, the U.S. official said.

At the news conference, Bush praised Musharraf's leadership in fighting al Qaeda and in helping ease tensions with India over the disputed Kashmir region.

Musharraf told ABC television that he and Bush also discussed the possibility of Pakistani troops going to Iraq. He said Pakistan could provide up to 10,000 troops but certain issues needed to be resolved first.

"One of the issues is certainly the financial package because it wouldn't be fair to expect Pakistan itself to finance such a large force," Musharraf said in an interview taped for broadcast on ABC's "Nightline."

But Bush stopped short of giving Musharraf everything he asked for.

He said he would work with the US Congress on a five-year, $3 billion assistance package "to help advance security and economic opportunity for Pakistan's citizens." Half that money would be used for defence equipment and security.

Bush said Musharraf pressed unsuccessfully for the sale of F-16 planes. The United States is wary of feeding an arms race in the region.