Barack Obama

In unveiling the Pentagon's proposed $708 billion budget for the 2011 fiscal year that begins in October, Defense Secretary Robert Gates declared that decades of Pentagon planning, focused on waging two major conventional wars at the same time, had been "overtaken by events."

Faced with insurgencies in Afghanistan and Iraq, and growing al Qaeda safe havens in Yemen and Somalia, Gates said Pentagon war planners now faced "a world where arguably the most likely and lethal threats will emanate from failed or fractured states."

"We must prepare for a much broader range of security challenges on the horizon," he told reporters.

As part of the shift in priorities, Special Ops funding would grow by nearly 6 percent to $6.3 billion, enough to add up to 2,800 more elite troops and increase the military's "irregular warfare" capabilities, budget documents show.

The 2011 spending plan, subject to congressional approval, would also increase the number of advanced unmanned aerial aircraft, including single-engine Predator and Reaper drones, in war zones from 37 to 67 over the next two years.

Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, said increasing flexibility was key in waging a successful counterinsurgency campaign in Afghanistan.

Documents show the Pentagon wants to set aside more than $1 billion in funding that could be doled out by local commanders to undercut the Taliban and increase support for the U.S.-backed government in Kabul.

In a counterinsurgency fight, Mullen said, these funds "are faster, more precise and more impactful than bullets."

CYBER WARFARE

The Defense Department said it was also putting cyberspace on a par with land, sea, air and space as a potential conflict zone, and developing new ways to operate there, according to a top-level Pentagon strategy review.

It said the Defense Department was building a cadre of cyber experts to defend more than 15,000 different computer networks it operates across 4,000 military installations worldwide.

An alleged failed plot by a militant trained by Yemen-based al Qaeda in the Arabian Peninsula to blow up a U.S. airliner bound for Detroit on Christmas Day has increased support in Washington for stronger counterterrorism measures abroad.

The proposed 2011 budget calls for expanding the Pentagon's main publicly disclosed program for training and equipping security forces in countries like Yemen, from $350 million to $500 million, documents show.

Washington has quietly increased assistance to Yemen in the last two months, providing satellite and surveillance imagery, and intercepted communications to help the country's security forces carry out strikes on al Qaeda in the Arabian Peninsula.

Critics say the internal security and intelligence services that could receive the support were major human rights abusers and that an expanded Pentagon role risked fueling anti-American sentiment and boosting al Qaeda's standing.

Yemen is expected to get at least $150 million in security assistance, but Pentagon officials did not offer a breakdown.

U.S. officials also said the State Department and U.S. Agency for International Development would increase their funding for Yemen to $106.6 million from $67.3 million the previous year, with most of the rise for security.

Deputy Secretary of State Jack Lew said the money would improve Yemen's air force intelligence, surveillance and reconnaissance capability, fund counter-terrorism training for its security forces and offer support for the country's coast guard, border guard and special operations forces.

(Additional reporting by Susan Cornwell, Arshad Mohammed and Jim Wolf; Editing by Cynthia Osterman)