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Making Aid Work

Interviewees: Isobel Coleman, Senior Fellow for U.S. Foreign Policy, Council on Foreign Relations
Charles North, Deputy Director, Pakistan and Afghanistan Taskforce, United States Agency for International Development (USAID)
Interviewer: Jayshree Bajoria, Staff Writer, CFR.org
April 8, 2009

The new U.S. strategy to fight extremism in Pakistan recommends increasing development and economic assistance to the region. Since 2002, the United States Agency for International Development (USAID), the principal agency for disbursing U.S. development aid abroad, has been ramping up its program in Pakistan. For the last few years its annual spending in Pakistan has been $400 million; this year's budget is $590 million. USAID's deputy director for the region, Charles North, says education and health care are, and will continue to be, the top development priorities in Pakistan. As this Backgrounder points out, Pakistan spends only about 2 percent of gross domestic product (GDP) on education and 0.5 percent of GDP on health, resulting in notably low human development indicators.

But Isobel Coleman, CFR's senior fellow for U.S. foreign policy, says she sees the government in Islamabad as "largely dysfunctional" and is skeptical that it would prove to be an effective partner, which is "critical if these programs are to be successful."

Coleman also points out that aid delivery needs to be reformed, which will require better partnerships with local communities. Currently, as North points out, USAID is required to maintain high standards of financial accountability that make it difficult for it to work with local NGOs. "So often we need to work through international organizations that provide that kind of accounting for their resources," he says. But experts say this system of using contractors results in high overhead costs and large amounts of money being channeled back to donor countries. Coleman recommends that the U.S. Congress ease up on some of the accounting requirements. "It has to over time be able to get comfortable with losing money," she says.

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