ISLAMABAD (Reuters) - The United States this year will start spending in earnest $750 million where its troops can't go in the hope of making Pakistan's unruly tribal lands less hospitable for al Qaeda and the Taliban.
If the Americans succeed they hope other nations will join them in putting up a total $2 billion for development and security in Pakistan's semi-autonomous Federally Administered Tribal Areas (FATA) by 2015.
No-one has thought it worth risking lives and money before to bring lasting change to a region where fiercely independent tribes have fought against outside interference for centuries.
But today's alternative is to let the environment in FATA become more conducive for Islamist militancy.
"We don't have that choice. We have to go in and do this thing," a senior U.S. diplomat in Islamabad told journalists.
A ferocious suicide bombing campaign run out of the tribal lands to destabilize President Pervez Musharraf has fuelled dread in the West over the future of nuclear-armed Pakistan, especially after the assassination of opposition leader Benazir Bhutto last month.
The United States fears Islamist militants using satellite telephones and laptops in mud-walled compounds on Pakistan's fabled north west frontier are plotting a devastating attack in the West, just as al Qaeda did from Afghanistan in 2001.
The abiding threat from the Taliban has forced Washington to raise troop strength in Afghanistan by over 10 percent to 30,000.
Musharraf won't allow American forces to enter Pakistani territory to fight a common enemy.
But U.S. military officials see greater willingness on Pakistan's part to accept some kind of help, including training for counter-insurgency operations.
Pakistan has deployed about 100,000 troops in the tribal region bordering Afghanistan, but results have been patchy, largely because the militants have garnered support among poor, illiterate tribesmen, all too ready to answer calls for jihad.
"The military campaign in FATA has not degraded extremist recruitment, training or operations," the U.S. diplomat said.
The United States has already given about $10 billion to Pakistan, most for its military, in the six years since it strong-armed Musharraf to become an ally following al Qaeda's attack on the Twin Towers and the Pentagon.
Hundreds of al Qaeda members were arrested in the early years, but the network has regrouped, as has the Taliban.
Critics say the United States struck a bad bargain, and has also retarded democracy by supporting a leader who came to power in a military coup more than eight years ago.
But the alliance has also cost Musharraf.
He is accused of fighting America's war, and an election next month could prove crucial for his future.
Independent observers like the Brussels-based International Crisis Group have long argued for a development programme to bring the tribal region into the Pakistani mainstream, but they also say other political parties should be allowed to operate there to break the Islamist parties' monopoly.
Overall literacy among FATA's 3.2 million people is just 17 percent compared with 56 percent nationally, and there is only one doctor for every 6,750 people.
Tribal communities are tired of the government's empty promises of development, and a Crisis Group report in late 2006 said "anticipation is turning into alienation."
"The government has spent billions of rupees in recent years but where are the results?," said Malik Khan Marjan, a tribal elder from the volatile North Waziristan.
Asked by Musharraf to help, Washington announced the $750 million disbursement over five years in early 2007, but real spending will start this year to provide jobs, train teachers, build schools, lay roads, grow businesses, and generally improve the capacity of FATA's administration.
Implementation will be carried out through Pakistani military and civil authorities to avoid distrust.
"Aid is welcome, but with no strings attached," said retired Brigadier Mahmood Shah, a former head of security in FATA, told Reuters in Peshawar, the capital of North West Frontier Province.
"It should not be used as an instrument to penetrate our system of administration in the tribal areas."
The plan for FATA is two-pronged.
"You can't have development without security and you can't have security without development," said a U.S. official familiar with FATA, repeating a maxim often heard in Afghanistan and Iraq.
The Pakistani army went into FATA after 2001. It is the first time the army has been deployed there since Pakistan's formation in 1947, and locals resent the presence of largely ethnic-Punjabi soldiers.
So, a big chunk of money will also go into expanding, equipping and training the Frontier Corps, as tribal militias are called, and improving law enforcement agencies there.
The U.S. military also plans to supply Pakistani commandos with more aircraft to fight the guerrilla war.
Britain is also lining up $470 million for development in FATA and Baluchistan, the poorest of Pakistan's four provinces, and another haven for the Taliban, plus another $30 million for law enforcement in the region.
By the end of 2008, U.S. officials say there would be some activity under the FATA development and security plan going on in all seven tribal agencies.
That includes South Waziristan, where close to 200 people have been killed in the first weeks of January in clashes between security forces and fighters loyal to Baitullah Mehsud, a Taliban commander regarded as a cat's paw for al Qaeda.
Editing by Megan Goldin