The United States is withholding some $800 million in military assistance to Pakistan in a show of displeasure over its cutback on US trainers, limits on visas for US personnel and other bilateral irritants, the White House said.
The move follows weeks of tension between the two nations following the raid by US special forces on May 2 that killed al Qaeda head Osama bin Laden. The raid raised questions about Pakistan's willingness to tackle Islamist militant groups operating on its soil, despite receiving billions of dollars in military aid from the United States.
Here are some questions and answers about the fraught relationship between the two countries.
WHAT ARE PAKISTAN'S ISSUES WITH THE UNITED STATES?
For all the talk of Pakistan and the United States being strategic allies in the war on terrorism, the two countries are a prickly pair, with both sides suspicious of the other.
The May 2 raid, which Pakistan sees as a clear violation of its sovereignty, has further deepened the discord. Pakistan's army has warned the United States it would risk counter-terrorism cooperation if it conducted another assault.
Even before the bin Laden raid, Pakistan had regularly complained about US drone strikes that have killed hundreds in Pakistan's tribal regions. Pakistan says the strikes undermine efforts to deal with militancy because civilian casualties inflame public anger and bolster support for the fighters.
Pakistan has also railed against the presence of US special forces and CIA operatives in the country. Their relations reached a low point early this year after Raymond Davis, a CIA contractor and former US special forces member, killed two Pakistanis in the city of Lahore.
The case severely impacted cooperation between the CIA and Pakistan's top spy agency, the Inter-Services Intelligence (ISI).
Pakistan has also bristled at a number of media reports that have linked the ISI to complicity in hiding bin Laden and the murder of a journalist. The latest provocation was an editorial in The New York Times calling for the removal of ISI head Lieutenant-General Ahmed Shuja Pasha.
Major-General Athar Abbas, the Pakistan army's chief spokesman, said the Times' reporting was part of a calculated plan by "unnamed officials" to "weaken the state".
"This is a direct attack on our security organisation and intelligence agencies," he told Reuters. "We consider ISI as a strategic intelligence organisation, the first line of our defence."
WHAT ARE THE UNITED STATES' ISSUES?
Despite Pakistan being one of the largest non-NATO recipients of American military aid, it has evolved into a hub for some of the world's most lethal militant groups. Militants easily cross the long, porous border to attack U.S.-led NATO troops in Afghanistan. Ambitious militants inspired by bin Laden's calls for global holy war also train along the border region between Afghanistan and Pakistan.
There is also a concern about Pakistan's long-running ties between the ISI and the Afghan Taliban, including the Haqqani network. Pakistan has long defied American pressure to go after the Haqqani network, saying it is overstretched elsewhere.
Relations between the two nations have been further fractured by claims from the United States' top-ranking military officer Admiral Mike Mullen that Pakistan's government sanctioned the death of a journalist who had published articles linking the country's military to al Qaeda.
Beyond that, though, the Americans complain that Pakistan often drags its feet on processing diplomatic visas and imposes what the Americans say are unreasonable restrictions on the movements of its diplomats.
The United States is Pakistan's biggest aid donor and has given more than $20 billion in aid and reimbursements since 2002, with almost $9 billion going to the military.
Acting on a US wish-list seems unlikely now, especially given the high anti-American sentiment among many of the country's mainly Muslim people.
Pakistan has yet to launch a North Waziristan operation, but has asked the United States to provide information about new al Qaeda leader Ayman al-Zawahri, after Defense Secretary Leon Panetta said he believed that Osama bin Laden's successor was in Pakistan's tribal lands.
Pakistan is a vital supply conduit for the US military in Afghanistan, and has disrupted supplies in the past to show its anger over border incursions. The United States has begun moving more of its supplies through a northern route, bypassing Pakistan, and that trend will likely continue.
With the suspension of $800 million in aid, Pakistan could turn to China for more military assistance, or further delay military operations in the northwest.