Pakistan's ISI chief visits U.S. as ties founder

ISLAMABAD/WASHINGTON (Reuters) - The head of Pakistan's powerful spy agency traveled to Washington on Wednesday for talks with CIA officials and lawmakers just days after the United States suspended a third of its aid to Pakistan military because of deepening tensions.

Lieutenant-General Ahmad Shuja Pasha was to meet with Acting CIA Director Michael Morell and other intelligence officials, followed by meetings with the leaders of the congressional intelligence committees on Thursday, U.S. sources familiar with the visit told Reuters.

Relations between the intelligence establishments of the two countries have been on a downward spiral since January after a CIA contractor killed two Pakistanis. Joint operations against militants were suspended soon afterward.

The relationship was further strained in May when U.S. special forces killed al Qaeda leader Osama bin Laden in a secret raid on his Pakistan hide-out. Pakistan branded the operation a violation of its sovereignty.

"U.S. and Pakistani officials want to find ways to resolve differences that have recently cropped up," a U.S. source said.

Incensed over the bin Laden raid, Pakistan drastically cut the number of U.S. military trainers allowed in the country and set terms for American intelligence activities in the country.

Washington responded by saying it would hold back $800 million -- a third of $2 billion in security assistance -- in a show of displeasure over the cutback of military trainers, limits on visas for U.S. personnel and other irritants.

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.

Pakistan's Inter-Services Intelligence (ISI), the military's intelligence wing, is under intense pressure to sever ties with militant groups.

Pasha was going to Washington to "coordinate intelligence matters," the Pakistani military said in a one-line statement and an official said it signaled efforts to patch up ties.

"Relations have not broken down. Intelligence sharing is going on... We are talking to each other despite difficulties," the senior Pakistani military official said on condition of anonymity.

CONCERN OVER U.S. AID SUSPENSION

Pakistani Prime Minister Yusuf Raza Gilani expressed concerns over the U.S. suspension of some of the assistance.

"It is our military. We have concerns about (the suspension of) aid because we are in the middle of the war on terrorism and extremism," Gilani told a news conference in the southwestern city of Quetta.

"It's our own war but we are fighting this war for the entire world. For the peace, prosperity and progress of the whole world. The entire world is benefiting from this war."

Gilani's concern ran counter to a statement by the Pakistani military which played down the impact of the U.S. aid suspension saying that it would fight the militants with its "own resources."

Relentless missile strikes by U.S. drone aircraft in Pakistan's lawless tribal belt on the Afghan border are also a major bone of contention.

Despite protests by Pakistan in public, the United States has continued the strikes, killing at least 48 suspected militants this week, one of the largest death tolls to date in the controversial air bombing campaign.

(Editing by Sanjeev Miglani and Christopher Wilson)