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The U.S. military said it has made a final decision to cancel $300 million in aid to Pakistan that had been suspended over Islamabad's perceived failure to take decisive action against militants, in a new blow to deteriorating ties.

Pentagon spokesman Koné Faulkner said Saturday that the agency suspend the funding to the Coalition Support Fund, which reimburses Pakistan's military for fighting against terrorists.

With the latest move, the Department of Defence has reprogrammed 800 million dollar CSF destined for Pakistan as US Defence Secretary Jim Mattis did not give the necessary certification to Congress that the country has taken strong steps against terrorist groups like the Haqqani network and Lashkar-e-Taiba (LeT). "This is the money they (US) are supposed to reimburse, but now either they are not willing or unable to pay back", Mr. Qureshi said during a hurriedly called press conference on Sunday after the USA announced the decision.

U.S. frustration has boiled over before: President Donald Trump's predecessor Barack Obama authorised drone strikes on Pakistani safe havens and sent United States commandos to kill militant kingpin Osama bin Laden in his Abbottabad hideout. The request has not yet been approved.

The Defense Department will receive that congressional response before September 30, when the funds expire.

Islamabad has repeatedly denied the accusations, insisting it has eradicated safe havens and accusing the USA of ignoring the thousands killed on Pakistani soil and the billions spent fighting extremists.

The announcement came days before US Secretary of State Mike Pompeo is scheduled to visit Islamabad to meet new Prime Minister Imran Khan.

Minister for Information and Broadcasting Fawad Chaudhry has said the government does not expect the Indian leadership to be inclined to respond positively to Pakistan's desire of talks to resolve issues.

"The $300 million is neither aid nor assistance - it is the money Pakistan spent from its resources against militants and in the war against terrorism".

"We will sit and discuss this with him (Pompeo)". While the United States appears to believe this is a simple way to "punish" Pakistan for not behaving as they'd prefer, it also risks alienating Pakistan, and convincing them to stop providing aid to the U.S. at all, knowing there's a good chance they'll never get paid for it.

Minister for Information and Broadcasting Fawad Hussain Chaudhry says the USA plan to give a role to India in Afghanistan is the main cause of differences between Islamabad and Washington. "We did it for our betterment, which they had to reimburse".

He said Pakistan welcomes the forthcoming visit of Mr. Pompeo as it will help to understand each other's point of view.

On Sunday, Pakistan's Foreign Minister, Shah Mehmood Qureshi, said he hopes Pompeo's visit "will be done in an amicable matter, strengthening the ties", reported local press.

The US and Taliban may be locked in a different kind of race now: both are trying to maximise their advantage on the battlefield to win greater concessions from the other side at the dialogue table.