The diplomatically sensitive move — which the administration was ready to announce later Friday — rewards Pakistan for help in the war on terrorism but angers India, a U.S. ally and a fellow democracy.
Mr. Bush, who is spending holiday time at his Texas ranch, called Indian Prime Minister Manmohan Singh early Friday to tell him of the long-anticipated decision. The State Department planned to describe details of the sale later in the day.
Singh "conveyed to President Bush his great disappointment over the United States' decision," Sanjaya Baru, the prime minister's spokesman said. Singh said sales to Pakistan endanger security in the region, Baru said.
A senior U.S. official, speaking on condition of anonymity, linked the proposed sales of the planes, manufactured by Bethesda, Md.-based Lockheed Martin, directly to Musharraf's cooperation after the terror attacks on the United States on Sept. 11, 2001. This official maintained the sale would not upset the balance of power in the region.
"Musharraf made the strategic decision on Sept. 14, 2001 to stand with the United States," the official said, noting that the report of the independent Sept. 11 Commission recommended the United States make a long-term commitment to Pakistan. A five-year, $3 billion assistance program is under way, the official also noted.
"If the United States is giving the planes to Pakistan, it will create better feelings among the people for America," said Pakistan's information minister, Sheikh Rashid Ahmed.
"This will fulfill our defense requirements. We had been lagging behind (India) in conventional weapons. This will improve the situation," Ahmed said.
The sales to two nuclear countries that have warred over the Kashmir territory could raise eyebrows among U.S. allies in Europe who are under White House pressure not to lift an arms embargo on China. The Bush administration argues that European weapons could contribute to rising tensions between Beijing and Taiwan.
Pakistan struck a deal with the United States to buy the nuclear-capable F-16 fighter jets in the late 1980s, but the agreement was scrapped in the 1990s when Washington imposed sanctions on Islamabad over its nuclear weapons program. Since then, Islamabad, which had paid in advance for the F-16s, has been pressuring Washington to supply the rest of the planes.
Renewed sales to Pakistan would reflect U.S. gratitude for Pakistan's cooperation in the global hunt for terrorists. The United States had signed a separate $1.3 billion arms package to Pakistan last year.
India had voiced its opposition to the resumption of supply of F-16s to Pakistan during talks with Secretary of State Condoleezza Rice when she made a whistle-stop tour of South Asia last week.
New Delhi is worried that arming Pakistan with the advanced jet fighters would tilt the military balance in South Asia and could adversely affect the ongoing peace dialogue between India and Pakistan.
Rice had said the F-16 sales were a topic during talks in both India and Pakistan, but that she would not make any announcements during her tour.