Obama Warns of 'Difficult' Road Ahead in Pakistan, Afghanistan

"We've invested -- we, the United States -- have invested very significantly over the last three years to work with them to improve that security. And we're satisfied, very satisfied, with that progress," he said at the Pentagon.

But Mullen added that this is a "strategic concern" that the United States and Pakistan share.

Clinton said last month that Pakistan "is basically abdicating to the Taliban and to the extremists."

"Look at why this is happening," Clinton said, testifying before Congress. "If you talk to people in Pakistan, especially in the ungoverned territories, which are increasing in number, they don't believe the state has a judiciary system that works. It's corrupt. It doesn't extend its power into the countryside."

"Swat was a real wake-up call to a lot of people in Pakistan," a senior administration official said. "We understood that and we reflected that. ... We said what we said, and they did what they did."

Pakistan Plans to Fight Back Against Taliban

The Pakistani government's deal with the Taliban in the Swat Valley fell through and now the Pakistani government is fighting back.

Testifying before the House Foreign Affairs Committee Tuesday, Richard Holbrooke, the administration's special representative for Afghanistan and Pakistan, said that Zardari told him Monday night that his army would expand its efforts to fight the encroaching Taliban, including sending troops into the Taliban-controlled Swat area.

Holbrooke regarded this as a positive development but cautioned that "we'll see how this goes."

While the United States is working with the Afghans to build up and train their troops, it is an entirely different story in Pakistan.

There, administration sources say, the issue is more one of Gen. David Petraeus, head of U.S. Central Command in Iraq, teaching the Pakistani military how to deal with a counterinsurgency.

A senior military official said Pakistan's military is largely built up for a regional conflict with India. Until the past few months, its frontier corps was underequipped and undermanned.

The United States will provide Pakistan with $400 million for counterinsurgency training and support, and equipment for counterinsurgency measures, such as night-vision goggles, helicopter support and maintenance.

But the leader of Pakistan says that's not enough.

"I need drones to be part of my arsenal," Zardari told CNN's Wolf Blitzer Tuesday. "I need that facility. I need that equipment. I need that to be my police arrangement. I need to own those."

Obama Administration Will Push for Benchmarks for Pakistan

Obama ordered a full-scale review of the policy in the region before his inauguration. As part of that new policy, released at the end of March, he pledged to hold frequent trilateral talks. The next one will be after the Afghan elections in August.

When Obama outlined new diplomatic efforts in Pakistan, he urged Congress to approve legislation to significantly increase aid to Pakistan that could be used for reconstructing projects and democracy efforts.

Senate Foreign Relations Committee Chairman John Kerry, D-Mass., and ranking member Richard Lugar, D-Ind., introduced legislation Tuesday that would provide $1.5 billion in aid every year for the next five years.

Obama cautioned in March that the U.S. aid does not constitute a "blank check" for Pakistan, noting "years of mixed results" in its anti-terrorism efforts.

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