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A New Kind of Aid for Pakistan

Author: Jayshree Bajoria
April 8, 2009


The white paper detailing the new U.S. strategy on Pakistan and Afghanistan calls for increasing and broadening development and economic assistance to Pakistan. It echoes recent recommendations by both U.S. and Pakistani policymakers who have argued against too much emphasis on military assistance, the Bush administration's focus. Nonmilitary aid is now seen as an important tool in achieving the core U.S. objective in the region--eliminating terrorist safe havens in Pakistan and preventing them from returning. President Barack Obama called upon Congress to pass pending bills that would authorize $7.5 billion in nonmilitary aid to Pakistan for the next five years and create "reconstruction opportunity zones" to enhance regional trade and foreign investment. But security threats to U.S. personnel, lack of oversight, a weak Pakistani leadership, and mistrust between Islamabad and Washington continue to pose serious hurdles.

Of the total $12.3 billion in U.S. aid to Pakistan since 2002, less than 27 percent went toward development and economic assistance. Meanwhile, growing extremist violence and lack of access to insurgent areas has severely constrained international aid officials as well as their Pakistani counterparts. Anger over suspected U.S. unmanned drone attacks has led militants to kill and abduct (CSMonitor) foreign aid officials in Pakistan's northwest and Balochistan Province. Experts also say the United States lacks the institutional capacity to implement sophisticated, targeted development programs in Pakistan. CFR's Daniel Markey writes any increased levels of assistance programming will require significant expansion of USAID, the U.S. foreign aid agency, and the U.S. State Department.

Experts also say there are serious problems with the way U.S. aid is disbursed. A large portion of development assistance is spent on international consultants and overhead costs, which the new U.S. strategy acknowledges. Some analysts, including the RAND Corporation's C. Christine Fair, say that the United States pursues a policy of supply-driven aid (Washington Quarterly) that measures output, such as schools built, rather than services delivered, such as quality of education. This observation is disputed by Charles North, a senior official for the region at USAID, in a podcast.

Interactive Map: Pakistan's Troubled Tribal BeltSome experts argue the aid must be tied to Pakistan's success on stemming militancy, and there should be better accountability for the money disbursed. In a major departure from previous practice, the United States will demand that Pakistan's government make greater commitments to improving security and implementing economic reform. Islamabad seeks $30 billion (Reuters) in aid and investment over the next ten years as its April 17 donor conference in Tokyo approaches. A new report by the Asia Society estimates that aid to the tune of $50 billion over the next five years (PDF) may be required to halt the country's economic deterioration, a sum that would require donations from multiple countries.

There's also been a push for enhancing economic opportunities inside Pakistan through trade. The U.S. Chamber of Commerce and the U.S.-Pakistan Business Council view expanded bilateral economic cooperation (PDF) as an essential component to achieving security goals for both countries. The United States is Pakistan's largest investor and trading partner; however, U.S. tariffs on Pakistan's textiles (over 50 percent of the country's total global exports) undermine its ability to compete in the U.S. market. A 2001 bill to ease textile trade with Pakistan never passed. Reducing tariffs might be even more difficult in the current global economic crisis. CFR Senior Fellow Isobel Coleman told that by being closed on the trade front, the United States is punishing the same poor, rural populations in Pakistan that it is trying to help through development aid. "It should be viewed in totality," she said.

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