Pak-US: After American Aid Freeze
Posted on 16. Dec, 2011 by Hamid Waheed in Pak-US Relations
By Hamid Waheed
What will happen if they cut off aid? This is THE Question by Pakistanis in this difficult times of Pak – US relations when US house of representative passed a legislation to freeze 700 million dollar aid to Pakistan. A Common Pakistani perception is that Pakistan has suffered enormous losses financially, economically, socially and psychologically and the compensation being paid by the US for this colossal damage amounts to pea nuts. The American public, on the other hand, feels that Pakistani policy makers and officials continue to benefit from the aid and assistance through their tax money and at the same time use it as punching bag to pursue their own political agenda and accuse it of double game in fight against terrorists and Afghan exit Strategy. Misperceptions that prevail on both sides need a surgery to find facts. Today lets take a ‘transparent look' that explains and unfolds the U.S.-Pakistan relationship with respect to aid to Pak and its utilization.
The total amounts budgeted by the US $20.7 billion in US funding allocated to Pakistan from 2002 to 2010,had $14.2 billion for the Pakistani military. Security-related funding, including CSF (2002-2010).This includes the operational cost of the 140,000 Pakistani troops deployed along the 2,560-kilometer border. However the paper transactions show that amounts actually given to Pakistan, in economic assistance came to $6.5 billion which is less than a third of the total. Almost two-thirds of the amount goes into security-related heads, while the social sector and economic infrastructure receive the remaining one-third. Within social sector US AID and ‘private contractors’ spent more than 70 percent of the funds allocated for socio-economic development on their own support infrastructure. Half of the money never leaves US accounts. It’s the same for Iraq and Afghanistan. Now coming on to spending of $488.537 million being provided under the Kerry-Lugar-Burmen Law (), it was provided for two modes of assistance: one, budget money worth $1,025.335 million for the year 2010-11 and, two, “off the budget” $488.537 million.
Looking at “off the budget” assistance of $488 million, America planed to spend $170 million for International Narcotics Control and Law Enforcement, $106.387 million for Office of Transition and $60 million for humanitarian assistance. The remaining over $240 million will be spent through international and local NGOs. Pakistani authorities do not know details of this spending. The US Government Accountability Office reports that only 12 percent of the $1.5 billion in economic assistance to Pakistan authorized for 2010 was actually disbursed that year. Independent calculations by the Center for Global Development suggest that $2.2 billion of civilian aid budgeted for Pakistan is currently undisbursed, meaning that total economic assistance actually received from the US over the past nine years is in the approximity of $4.3 billion, or $480 million per year. . When this is compared with remittances of, Pakistanis abroad they send more than $11 billion to their families in Pakistan annually, over twenty times the flow of US economic aid. It is estimated that during 2000-10, the US spent Rs2,000 billion in Afghanistan, Iraq and on beefing up domestic security. Pakistan’s share of the amount allotted on papers was 20 billion or 0.1 per cent, while the country has lost 35,000 civilians and soldiers, in addition to suffering disruption and dislocation of the economy, displacement of population, a several-fold increase in expenditure on military operations and internal security. Out of the amount received a huge amount is under the Coalition Support Fund which is simply reimbursement of the expenditures incurred on logistical support and supplies to NATO and US forces and maintenance of own troops fighting WOT.
The Congress authorised a substantial increase of development assistance in 2008 to $1.5 billion per year, the actual disbursements in Fiscal Year 2009 were $275 million and $676 million in Fiscal 2010, including $500 million spent on flood relief. Assuming that the whole $3 billion in economic and military assistance (including $1 billion under the Coalition Support Fund) is disbursed fully, this accounts for less than seven per cent of the total foreign exchange earnings of the country. The increase in export revenues and remittances in the current year was almost twice that amount. Had foreign direct investment flows not been disrupted (Pakistan received Rs5 billion in2006-07) US aid would have become even less significant in the overall capital flows. World Bank data shows that net Official Development Assistance (ODA) from all sources to Pakistan in the last five years has averaged less than 1.5 per cent of Gross National Income (GNI). US aid does not help the government’s precarious fiscal situation in any meaningful way as only 12-15 per cent of the total amount is channeled for budgetary support. These facts do not, by any scale, reflect that the Pakistani economy will collapse if the US decides to withdraw its aid package.
However this is not the only issue, the Anti-American sentiment in Pakistan is strongly attached with public frustrations over the failures of the Pakistani government, which is losing credibility among its own people and political allies. With widespread tax evasion, Pakistan has one of the lowest tax revenues in the world, resulting in a lack of funding for development , infrastructure and basics hitting the public.
The solution lies in understanding of ground realities by both partners and educating and mobilizing their public opinion based on facts. The Pakistani government needs to work out strategy and make a policy to reform the state institutions, improve health, education and other services, and invest in its people to ensure stability looking into the future. The United States can help by expediting and expanding development and economic growth initiatives from the international community for Pakistan . American must beware of the group trying to distance the collation partners as we enter into exit phase of Afghanistan. It is not a matter of life and death for either but if the partnership breaks the effects will certainly be felt by both. In life of Nations TIME is of importance and the question remains can we afford loosing time by adopting a longer route or find a reasonable path through mutual respect. for each other’s National interests.
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Hamid Waheed
Lundi Kotal
17. Dec, 2011
Now we will run to Saudi's and ask for aid so we don't default on our debt.
The saudi's will say to open 100 more madarsay to make our jahil pathan even more jahil……and throw in the bonus to create more and more taliban type people. More suicide bombers that kill our own people.
What a beautiful predicament.