Obama calls Pakistan's Zardari, urges more effort

WASHINGTON Tue Oct 26, 2010 7:47pm EDT

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WASHINGTON (Reuters) - President Barack Obama called his Pakistani counterpart Asif Ali Zardari on Tuesday, the White House said, as Washington steps up pressure on Pakistan to do more against Taliban and al Qaeda militants.

Obama also urged Zardari to tackle financial problems through tax reforms, the White House said. Pakistan, heavily reliant on foreign aid, suffers from chronic tax evasion.

The United States, which last week announced $2 billion in military aid for Pakistan, wants Islamabad's forces to attack the al Qaeda-linked Haqqani Taliban faction in the North Waziristan region. Washington blames the group for deadly attacks on U.S. troops in Afghanistan.

"Both President Obama and President Zardari acknowledged that more work needed to be done to address the direct threat to our countries posed by terrorist groups in Pakistan," the White House said in a statement.

Pakistan's army says it is stretched too thin and a senior military officer told reporters on Tuesday that an attack on North Waziristan would have to wait until other tribal areas have been stabilized.

U.S. officials have grown skeptical of Pakistan's commitment to fighting the Taliban and other militant groups. There have been reports that Pakistan's intelligence services have helped militants fighting U.S. forces as a way to counter the influence of its arch-rival India in Afghanistan.

The White House said Obama addressed the issue of mutual trust during the call with Zardari.

"They also agreed that the U.S. and Pakistan have worked hard to build an atmosphere of trust and cooperation, and committed to ongoing efforts to build a stronger, strategic, and more collaborative U.S.-Pakistan relationship," it said.

Obama, who visits India next month during a 10-day Asian tour that also includes Indonesia, South Korea and Japan, will travel to Pakistan in 2011. Zardari is expected to visit the United States in the coming year.

Obama also urged Zardari to cut energy subsidies, a move that will be unpopular with Pakistanis but which the United States deems essential, along with the tax reforms, to bolster its ally's finances.

Pervasive tax evasion undercuts revenue collection in Pakistan, which had to go to the International Monetary Fund for help in 2008, receiving an $11 billion loan.

(Reporting by Alister Bull; Editing by John O'Callaghan)

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