The correct answer is: Only conclusion I follows.
The statement that America’s defense secretary reiterated that they would continue to supply arms to Pakistan does not provide enough information to support the conclusion that Pakistan is incapable of manufacturing arms. It is possible that Pakistan is capable of manufacturing arms, but that America believes that it is in its own interests to continue to supply arms to Pakistan. It is also possible that Pakistan is not capable of manufacturing arms, but that America believes that it is in its own interests to continue to supply arms to Pakistan in order to maintain stability in the region.
The statement that America’s defense secretary reiterated that they would continue to supply arms to Pakistan does not provide enough information to support the conclusion that it would ensure peace in the region. It is possible that supplying arms to Pakistan would help to ensure peace in the region, but it is also possible that it would have the opposite effect. It is also possible that the decision to supply arms to Pakistan is not based on a desire to ensure peace in the region, but on other factors, such as America’s own national security interests.