| Summary: | The cost-benefit equation of the Pak-U.S. alliance, in the fight against terrorism, reflects a direct correlation between the fluctuating patterns of U.S. assistance and their direct and indirect implications for Pakistan. While the U.S. strives to achieve a better return on its investment through military-oriented support, Pakistan seeks to adopt an approach that suits both the U.S. and its own domestic and regional interests. This research traces the trend of Pak-U.S. relations, highlights the impact of the fluctuating U.S. aid in shaping perceptions, and provides a game theoretical analysis on the issue. Besides highlighting measures to achieve cost effectiveness through micro alliances, decentralization, accountability, and transparency in fund management, the study supports development of entrepreneurial culture and micro-alliances in Pakistan. More importantly, it provides an in-depth analysis of the military and population-centric approaches and their associated costs and benefits for the two countries. The research concludes by suggesting a more population-centric U.S. approach towards Pakistan to achieve a better return on investment besides laying foundation for a long-term strategic alliance. It suggests future research on the prospects and methodology of achieving a long-term partnership between the two nations.
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