(CNN) -- U.S. Secretary of State Hillary Clinton announced a major aid package for Pakistan on Monday -- with hundreds of millions of dollars pledged on projects to address the country's water and power shortage, and its floundering economy.
Clinton made the announcement at the beginning of a day-long "strategic dialogue" in Islamabad on the second day of her visit to the South Asian country.
The projects, which Clinton called "long-term investment in Pakistan's future," include the construction of several dams, improvements to hydroelectric power plants and the country's power grid, and the construction or renovation of three medical facilities.
The United States will also invest $100 million to expand access to credit for small and medium-sized businesses, and provide $50 million to support investments in innovation and technology projects, she said.
The projects will be funded by the Kerry-Lugar-Berman Act that authorizes $7.5 billion in development aid to Pakistan over the next five years.
"This is a long term process to get Pakistan what it needs in terms of energy. This is a 15-year project," a U.S. official said on Sunday. The official did not want to be named because the comments were made ahead of Monday's official announcement.
On Sunday, Pakistan and Afghanistan signed a landmark trade agreement. Washington is hailing the deal as the most significant bilateral treaty yet between the estranged neighbors, both of which are U.S. allies in the battle against al Qaeda and the Taliban.
In the past year, the United States has started engaging Pakistan more, according to Vali Nasr, a senior adviser to Richard Holbrooke -- the U.S. special representative for the region.
The process included Clinton's visit to the nation last October, and that trip was followed by various high-level visits that have made Pakistan more aware of U.S. intentions, said Nasr.
Anti-American sentiment is widespread in Pakistan, and the United States hopes to build more trust between the two countries.
But there is "a huge trust gap" that won't be overcome quickly, Nasr said.
"We are not going to be able to change their foreign policy on a dime," he said.
Next, Clinton continues on to an international conference in the Afghan capital Kabul on Tuesday, and stops in South Korea and Vietnam before heading home.
