re: Why do we continue to do business with Pakistan?

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I agree that was the basis for our relationship during the cold war. I was writing about today not 20 - 50 years ago.

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Yea, but that history still impacts our relationships with the two countries. US people have been setting up shop in Islamabad for decades. Business, politics, military, etc.
On the other hand, before India's economy opened up in the early 90's, It was very much an unknown. Huge country but our ties were tenuous. Even today, they haven't been helped by India's natural tendency to be somewhat aloof and odd internationally. After Pakistan's shown itself repeatedly to be a failing state, we've started shifting slowly towards a more neutral stance, which imo will probably eventually become pro-India. Who knows though.