WASHINGTON, July 10, 2011 -- In a sign of tensions with Pakistan following the U.S. raid on former Al Qaeda leader Osama bin Laden, White House chief of staff Bill Daley said today that the U.S. will suspend some $800 million in aid to Pakistan's military.
"Obviously they have been an important ally in the fight on terrorism. They've been the victim of enormous amounts of terrorism," Daley said. "But right now they have taken some steps that have given us reason to pause on some of the aid which we were giving to their military, and we're trying to work through that."
Daley confirmed a report in The New York Times this morning that "up to about $800 million in military aid and equipment, or over one-third of the more than $2 billion in annual American security assistance to Pakistan, could be affected" because of concerns over Pakistan's expulsion of American military trainers, as well as Pakistan's ineffectiveness in fighting militants.
Tensions have been on the rise since the successful U.S. mission against bin Laden in May, who was hiding in a suburb of Pakistan's capital, with Pakistani officials angry over the incursion into their territory without permission.
"It's a complicated relationship in a very difficult complicated part of the world," Daley said. "Obviously there is still a lot of pain that the political system in Pakistan is feeling by virtue of the raid that we did to get Osama bin Laden, something that the President felt strongly about, that we have no regrets over.
"The Pakistan relationship is difficult, but it must be made to work over time," Daley added. "But until we get through these difficulties, we will hold back some of the money that the American taxpayers have committed to give to them."
Frustration with Pakistan boiled over in Congress in June, after news that the half-dozen-or-so Pakistanis who were vital to the mission to get bin Laden had been detained by Pakistan's top spy agency.
"How long do we support governments that lie to us? When do we say, 'Enough is enough'?" Sen. Patrick Leahy, D-Vt., asked Secretary of Defense Robert Gates at a Senate Appropriations Committee hearing June 15. "They arrested people who helped us get him."
Gates prompted laughter with his response.
"First of all, I would say, based on 27 years in CIA and four-and-a-half years in this job, most governments lie to each other," he said. "That's the way business gets done."
Humor aside, the implications of the arrests could be serious, according to former U.S. counter-terrorism czar Richard Clarke.
"If the U.S. doesn't have local Pakistani informants, then it's going to be very, very difficult for the United States to stage operations inside Pakistan," Clarke said. "And that's exactly what the Pakistani government wants, for it to be very difficult for the Americans to be able to do this again."
Informants are crucial to U.S. counter-terrorism efforts. It is informants on the ground, usually locals, who provide tips on an enemy target.
While information can come by tapping in to cell phone calls and texts, informants can help track and back up what technical monitoring provides.
Informants can provide eyes on the ground if a drone strike is called in or a secret raid is conducted to make certain the human target is inside and innocents are not.
"With only satellites 200 miles in space, with only intercepts of phone calls, you really don't have the kind of granularity you need if you are going to put American boots on the ground," Clarke said.
He added that the U.S. is in the midst of building a relationship with Pakistan, which was "badly broken" in the '80s and '90s.
Mullen said that "some of the criticism is more than warranted" when it comes to the relationship with Pakistan.
"Nobody's worked that harder than me, very frankly, with the leadership -- and it's a conscious decision, I think, that we have to make," he said. "If we walk away from it, it's my view it'll be a much more dangerous place a decade from now, and we'll be back."
ABC News' Kristina Wong and Luis Martinez contributed to this report.