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Deputy Defence Secretary Paul Wolfowitz, a key architect of the Iraq war, told the House Armed Services Committee the money would be used "for training and equipping local security forces - not just armies - to counter terrorism and insurgencies".
If approved as part of a larger defence bill, the package would "provide greater internal security in areas that are or could become sanctuaries for terrorists," he said.
No specific beneficiaries of the program were named, but US officials have repeatedly expressed concern about vast tracts of land along the Afghan-Pakistani border, in Iraq, the Caucasus, the Horn of Africa and various islands in the Philippines, where radical Islamic fighters could set up shop.
The strategy has already been used in Afghanistan, where US special forces managed to forge alliances with local warlords, who became instrumental in bringing down the Taliban government in 2001 and keeping its remnants at bay.
"Indeed, our most important allies in the war on terrorism will be Muslims who seek freedom and oppose extremism," Wolfowitz stated.