In a memo to Secretary of State Condoleezza Rice, Bush said he was easing prohibitions under the Appropriations Act, which targets countries where a democratically elected government has been overturned by a coup, according to a White House statement.

Pakistani President Pervez Musharraf grabbed power in a bloodless coup in October 1999, named himself president in June 2001 and was elected to a five-year term in a controversial election in April 2002.

Bush said the waiver would "facilitate the transition to democratic rule in Pakistan" and is "important to United States efforts to respond to, deter or prevent acts of international terrorism," according to the statement.

"Accordingly, I hereby waive, with respect to Pakistan, the prohibition contained" in the Foreign Operations, Export Financing and Related Programs Appropriations Act, Bush told Rice, asking her to inform Congress about the change.

Following the September 11, 2001 terror attacks in the United States, Washington passed broad legislation waiving restrictions on US arms exports and military assistance to Pakistan and India.

These countries were sanctioned following nuclear tests in May 1998, and additional sanctions were levied against Pakistan when Musharraf launched the coup.

US-Pakistani ties have improved considerably since Musharraf made a key decision after the 2001 attacks to back Washington's ouster of Afghanistan's radical Taliban regime, which had supported the terror group Al-Qaeda.

The United States regards Pakistan as a non-NATO ally, a designation given to close friends.

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