The Bush administration is preparing to present President-elect Barack Obama with a lengthy, classified strategy review aimed at reversing the gains that militants have made in destabilizing Afghanistan and Pakistan. The review contains an array of options, including telling Pakistan's military that billions of dollars in American aid will depend on the military's being reconfigured to effectively fight militants. That proposal amounts to a tacit acknowledgment that roughly $10 billion in military aid provided to Pakistan as "reimbursements" for its efforts to root out militant groups has largely been wasted. The payments have been the source of increasing criticism on Capitol Hill and from independent review groups, which have concluded that Pakistan diverted much of the money to build up its forces against India. Revamping the aid to the military was part of a three-month study of what has gone wrong in the seven-year war along the Afghanistan-Pakistan border. The study calls for a new and broadly regional approach to insurgencies that move freely across the mountainous border between Afghanistan and Pakistan. In the short term, it calls for continued covert strikes into Pakistani territory from Afghanistan, though the American military has been reluctant to repeat the kind of ground attack that led to an open exchange of fire with Pakistani border forces in September. The report, which is expected to be presented to Mr. Obama's top national security advisers in the next week or two, was the product of a highly unusual strategy review that was begun in mid-September, just four months before President Bush leaves office. "We've gone seven long years proclaiming that Pakistan was an ally and that it was doing everything we asked in the war on terror," said one senior official involved in drafting the report. "And the truth is that $10 billion later, they still don't have the basic capacity for counterinsurgency operations. What we are telling Obama and his people is that has to be reversed." As a war that Mr. Bush once believed he had won came back to life in 2005 and 2006, the White House began a series of strategic reassessments, the most recent one reporting in the fall of 2006, just before the forced resignation of Donald H. Rumsfeld as secretary of defense. But those past studies looked primarily at the dynamics in Afghanistan. The current one, headed by the White House war czar, Lt. Gen. Douglas Lute, took a far broader view. The drafts prepared for the incoming Obama administration suggest that the United States has never focused sufficiently on nation-building, jobs creation, construction of schools and roads, and, most important, pushing the Pakistani government to focus on counterterrorism and counterinsurgency. It also urges Mr. Obama to take a far more regional approach to the problem, something he has indicated in speeches he is inclined to do. "The Pashtun tribes treat these countries as one territory, and we have to begin to do something similar," one official familiar with the report said, declining to speak on the record because the contents of the report are confidential. The report includes options, not "recommendations," so that Mr. Obama would not be put in the position of endorsing or rejecting Mr. Bush's suggested policies. It was completed just before the terrorist attacks in Mumbai, India's commercial capital, last month, and the reaction to those events is likely to complicate some of the central options even before they are handed off to Mr. Obama. Though Pakistani officials regularly promised Mr. Bush, his intelligence chiefs and top American military officials that they would rout Al Qaeda and other militants from their sanctuary in Pakistan's tribal areas, mountains of intelligence suggest that the country was playing both sides, financing the Taliban even while fighting them. The group accused of the Mumbai attacks, Lashkar-e-Taiba, was essentially the creation of the Pakistani intelligence services, as a proxy to fight in Kashmir against India. Now, with the strong possibility that India will strike back for the Mumbai attacks, many in the Pakistani military are expected to argue that they were prudent to keep their forces primarily arrayed against India, rather than hunting down Al Qaeda and other militants. "The real danger here is that what happened in Mumbai is gong to reinforce all the instincts to focus on India," said one official familiar with the contents of the strategy review. "It worsens their paranoia." As recently as 2006, Mr. Bush would speak regularly of eventual "victory" in Afghanistan, as he did in Iraq. He is leaving office declaring that the so-called military surge in Iraq was successful, and with a status of forces agreement that calls for the withdrawal of the bulk of the American force over the next two years. But he has said little about Afghanistan, where the fighting has worsened, and the strategy review was premised on intelligence assessments that said that the United States was not losing the war, but was in danger of losing ground. Several members of the strategy review, notably David J. Kilcullen, an Australian counterinsurgency expert, have publicly offered a significantly grimmer view. Mr. Kilcullen told senior officials before he left a State Department post that the United States could begin to lose the war soon if strategy was not reversed. He has advocated working to secure major population centers rather than using NATO troops to chase the Taliban around the Afghan countryside. A senior aide to Secretary of State Condoleezza Rice, Eliot Cohen, also joined the panel, along with a top marine general and a number of officials from the intelligence agencies. Asked about the study, a White House spokesman, Gordon D. Johndroe, said only: "We are concluding our review. We intend to pass it to the new team, since most policy adaptations would take place on their watch. This is another part of our efforts to ensure a smooth transition." The tone of the new report, officials familiar with it say, is in line with arguments made over the past year by Secretary of Defense Robert M. Gates, who has agreed to remain in his post under Mr. Obama. He has made clear in an article he wrote for a forthcoming issue of the journal Foreign Affairs that the kind of military victory Mr. Bush once spoke of, the military crippling of militants in both Afghanistan and Pakistan, is not the way to think about the future of the conflict. "Over the long term, the United States cannot kill or capture its way to victory," Mr. Gates wrote. "Where possible, what the military calls kinetic operations should be subordinated to measures aimed at promoting better governance, economic programs that spur development, and efforts to address the grievances among the discontented, from whom the terrorists recruit. It will take the patient accumulation of quiet successes over a long time to discredit and defeat extremist movements and their ideologies." Yet the problem in Pakistan has been getting the military to accept help from the United States, which it suspects is tilting toward India and may harbor plans to seize Pakistan's nuclear arsenal if the government in Islamabad collapses. In Afghanistan, the problem is incompetence, corruption, and the inability of President Hamid Karzai to extend his control of the country significantly beyond the capital, Kabul. A senior military official said "the message of the report is that you can't win in Afghanistan without first fixing Pakistan." "But even if you fix Pakistan," the official said, "that won't be enough." That was also the conclusion of a major study of what has gone wrong in Afghanistan, published in January by a group led by Gen. James L. Jones, a former NATO commander. General Jones, who retired from the Marine Corps, was appointed last week to become the next national security adviser.