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In December 1998, U.S. officials said the United States has reached agreement with Pakistan on how to compensate Pakistan for its aborted purchase of U.S. F-16 fighters. U.S. would compensate Pakistan for the $658 millions it paid for purchasing 28 F-16 fighters while Pakistan agreed to give up the demand of having the plane delivered. The agreement ended 8 year long dispute between U.S. and Pakistan government about the Jet fighter purchase.
During 1988-1989, Pakistan ordered 28 F-16 Jet fighters from United States. But due to the reason that Pakistan got involved in a controversy with the United States over its suspected nuclear weapons capability and refused sign the Nuclear Non-Proliferation Treaty, the United States government announced on October 6, 1990 that it had embargoed further arms deliveries to Pakistan. Since Pakistan had already paid $685 million on the contract for the 28 F-16s, it insisted on either having the planes it ordered delivered or getting its money back. The dispute lasted for 8 years, and finally came to an end with the reach of the agreement in 1998.
| Dec. 1981 | Pakistan government signed a letter of agreement for the purchase of 40 fighters from the United States under the Peace Gate I program. All 40 aircrafts were delivered between 1983 and 1987. |
| Dec. 1988 | Pakistan ordered 11 additional F-16s under Peace Gate II program. These aircraft were purchased as attrition replacements and fully paid for, but were stored and stopped from delivering because of the controversy involve Pakistan's nuclear weapon capabilities. |
| Sep. 1989 | Pakistan announced plan to acquire 60 more F-16s. A contract was signed in the same year under the Peace Gate III/IV program. 17 aircrafts were built and stored by the end of 1994. They were also fully paid for. A stop order affected the remaining 43 planes on the contract. |
| Oct. 1990 | The United States government announced it would embargo further arms deliveries to Pakistan. Thus all 28 F-16s were stored at the AMARC (Aircraft Maintenance and Regeneration Center) in Arizona indefinitely. |
| Dec. 1998 | The New Zealand Government announced that it would lease-buy the 28 Pakistani F-16s stored in AMARC, proving additional fund that could be used to pay back Pakistan. |
| Dec. 1998 | U.S. agreed to compensate Pakistan for the $658 millions it paid for purchase. |