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Who Benefits From Military Aid to Pakistan

Who Benefits From Military Aid to Pakistan

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Published by Ashrafkakkarr
Who Benefits From Military Aid to Pakistan EPW Vol 46 No 32 August 2011
S Akbar Zaidi
Who Benefits From Military Aid to Pakistan EPW Vol 46 No 32 August 2011
S Akbar Zaidi

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Published by: Ashrafkakkarr on Aug 19, 2011
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SPECIAL ARTICLE
Economic & Political
Weekly
 
EPW
august 6, 2011 vol xlvi no 32
103
Who Benefits from US Aid to Pakistan?
S Akbar Zaidi
Given the nature and form of the aid relationshipbetween the
us
and Pakistan, this paper argues that it isnot so obvious what the objectives and purpose of 
us
aidto Pakistan really are, who it actually benefits, andwhether or not, in fact, this aid goes against the interestsof both or either country, benefiting neither.
us
aid toPakistan may, in effect, have made things far worse forall supposed beneficiaries.
S Akbar Zaidi (
 sakbarzaidi@gmail.com
) is a social scientist currently teaching at Columbia University, New York.
W
hat would seem like a straightforward relationshipand simple arithmetic, and should be a win-win situa-tion for both, with the United States (
US
) governmentproviding aid to the Government of Pakistan and to its people,appears to be a far more complicated and complex issue than onecould imagine. One would expect that both governments benet, with the
US
providing aid to full its numerous objectives for dif-ferent purposes to the Government of Pakistan and the latter toobeneting since such aid helps meet its perennial and ever-increasing revenue shortfall problems. However, if ever there was a muddled, deceptive and complicated relationship betweentwo countries on the basis of aid, it must be the one between the
US
and Pakistan in recent years.From what might have been a far simpler, straightforward andtransparent arrangement in the cold war days of the 1960s and1970s, and even in the 1980s following the Soviet invasion of  Afghanistan when Pakistan rst emerged as a front line state, theaid relationship between the
US
and Pakistan since 2001 has beenfraught with the most complicated of cross-purposes and double-speak, shrouded in mystery, with promises and expectationsdiverging between both parties. It is no longer clear what thepurpose of 
US
aid to Pakistan in the post-9/11 era really is. In somebroad sense, of course, one can argue that the
US
wants Pakistanto assist it in its war on terror campaign and root out Al Qaidaand Taliban insurgency in the region, in Afghanistan as well asPakistan. At the same time, one would think that the
US
also hasa keen interest in ensuring a safe and stable nuclear Pakistan, where internal stability assures a democratic future with a pro-gressive, liberal and development-oriented government, and thatthere is peace in Pakistan and with its other neighbours. Onecould then argue, perhaps, that if such objectives are achieved,the
US
benets from giving its taxpayers’ money to Pakistan.Similarly, one would assume that the Government of Paki-stan would also benet from aid, since this would help in mak-ing the region in and around Pakistan safer, securer and morestable, with militancy and terrorism being routed out, and thatdevelopmental aid would be used by the government carefully,providing assistance to its people. In such a scenario, both the
US
and Pakistan, their governments and their people, would beclear beneciaries of this aid from the
US
to Pakistan. However,as this paper argues, given the nature and form of the aid rela-tionship between the
US
and Pakistan, it is not so obvious what the objectives and purpose of 
US
aid to Pakistan really are, who it actually benets, and if in fact, this aid goes againstthe interests of both or either country, beneting neither.
US
aidto Pakistan may, in effect, have made things far worse for allsupposed beneciaries.
 
SPECIAL ARTICLE
 august 6, 2011 vol xlvi no 32
EPW
 
Economic & Political
Weekly
104
We begin with a brief history of aid given to Pakistan in yearsfollowing independence, but the main focus here is the natureand consequences of 
US
aid to Pakistan in recent years, parti-cularly since 2001. After a short account of aid in the past, thepaper examines how the aid relationship between the
US
andPakistan has changed over the last decade, and focuses on thetype of aid being given, examining the presumed objectives of that aid. It then looks at how the aid is being used by Pakistan,and examines if the
US
goals and Pakistani objectives are identical,or similar, and who has beneted from this recent aid giving/receiving relationship.
1 Fifty Years of Aid to Pakistan 1950-2002
It is not much of an exaggeration to state that for much of itsexistence since independence in 1947, Pakistan has been an aid-dependent country, even though it is not one of the poorest coun-tries of the world. While numbers about the amount of aidreceived by Pakistan from all sources are hard to come by and havealways been somewhat uncertain,
1
some estimates suggest that thegross disbursement of overseas development assistance to Pakistanin the period 1960-02 (in 2001 prices), was $73.14 billion, includingbilateral and multilateral sources (Anwar and Michaelowa 2004: 3).In this period, almost two-thirds of this ofcial developmentassistance came from bilateral sources, with the
US
providing45% of all bilateral aid given to Pakistan in this period, making itthe largest single bilateral donor, by far (ibid). What is morecritical in this regard is the fact that in the period 1990-98,
US
aidto Pakistan was almost negligible, implying that in the earlierperiod 1960-90, the importance of the
US
cannot be undermined.For example, while
US
aid disbursement to Pakistan in 1989 was$452 million, this fell considerably in the 1990s, falling to a mere$5.4 million in 1998 (ibid). In the decade of the 1990s, it wasmainly Japan which made up the shortfall in aid to Pakistan, andbecause of this, in the overall 1960-02 period, Japan accountedfor as much as 21% of total bilateral aid to Pakistan (ibid). Almost 30% of all aid to Pakistan – bilateral and multilateral –in the 1960-2002 period, came directly from the
US
. We do nothave a breakdown of the source of multilateral aid to Pakistan inthis period, but given the role, leverage and contribution of the
US
in such institutions, one could easily surmise that aid from the
US
has been of even greater volume and signicance. The largestamount of 
US
aid to Pakistan in this period was disbursed bet- ween 1962-63 and 1965, peaking to almost $2 billion in 1963-64.The lowest amount of aid given to Pakistan in the 1960-02 period,as mentioned above, was in the 1990s, particularly between 1995and 1998. This pattern of huge variation in
US
aid to Pakistanclearly underlines the fact that far more than developmental con-cerns have been at play in the past, and various factors, mostrelated to the
US
, some to Pakistan’s actions, have had a signi-cant bearing on the
US
bilateral assistance to Pakistan.In the 1950s and 1960s, the
US
assistance to Pakistan may havearisen due to the latter’s needs for development assistance as anewly independent resource-constrained country, but one cannotignore the fact that Pakistan’s leadership, particularly military leadership after the mid-1950s and more squarely after 1958, clearly aligned itself with the
US
on the world ideological map during thecold war. By joining the South East Asia Treaty Organisation(
SEATO
) and the Central Treaty Organisation (
CENTO
) and by signingmilitary and other pacts of cooperation with the
US
in the 1950sand 1960s, Pakistan was hoping to benet from nancial and mili-tary assistance from the
US
. For the
US
, Pakistan became an ally and a hedge against perceived Soviet expansionism in the region,especially since India had become a close friend and partner tothe Soviet Union, and also against communism, more generally.Reports and studies from the 1960s suggest that the
US
aid toPakistan was critical at times, and helped play a signicant partin numerous development projects. Support under the PublicLaw 480 (
PL
-480), helped provide the Government of Pakistanfood support at critical junctures. The United States Agency forInternational Development (
USAID)
was also active in Pakistan inthe 1960s and proudly displayed its logo and banner and it seemsthat the
US
was well-received by the people of Pakistan as an ally and a friend. By 1964, overall aid and assistance to Pakistan was as much as around 5% of its gross domestic product (
GDP)
probably the highest ever in 63 years – and is said to have been criti-cal in giving Pakistan’s impetus in industrialisation and develop-ment in the early 1960s, with
GDP
growth rates rising to as muchas 6% or 7% per annum. In 1965, when the military governmentin Pakistan started a war with India, the
US
decided to drastically cut off all (or much of) aid to Pakistan, and aid resumed, albeit atmuch lower levels after a few years. Most academics and scholarscomparing the pre- and post-1965 war and the impact of aid ondevelopment are in agreement that aid played a crucial role inthe high growth rates in the 1960s (Hasan 1998).In the 1950s and 1960s, bilateral development assistance fromthe
US
to Pakistan was also supplemented by assistance to Paki-stan’s military, in the form of armaments, training and otherresources. While military assistance was terminated in 1965 to beresumed much later, it was the Soviet invasion of Afghanistan in1979 which ratcheted up the
US
development and military assist-ance to Pakistan as the latter became a front line state in the waragainst Soviet occupation. Large and undisclosed amounts of money and weapons and arms were channelled through to themujahideen ghting against the Red Army in Afghanistan throughPakistan’s military and its clandestine agencies, particularly theInter-Services Intelligence (
ISI
). While this “aid” was not meantdirectly for Pakistan’s military, there is ample evidence that chunks of funds meant for the Afghan Mujahideen were pocketed by mem-bers of Pakistan’s military (Nawaz 2008 and Haqqani 2005). Although Pakistan’s army may not have been directly involvedin the rst Afghan war, it did receive military aid from the
US
, asdid Pakistan’s military government, money which was meantlargely for the rehabilitation of Afghan refugees and for thedevelopment of roads and communication infrastructure built tocreate quick and easy access to Afghanistan, and perhaps also asa “payback” for Pakistan’s role in the Afghan war. However, itis important to add that unlike the positive image of 
US
aid toPakistan of the 1960s, the image of the
US
in Pakistan in the 1980s was far from positive, and once political Islam began to emergein the region and world’s map, the
US
in Pakistan was seen in a muchmore unfavourable light in a hostile environment. The burning of the
US
embassy in Islamabad in 1979, and the subsequent covert
 
SPECIAL ARTICLE
Economic & Political
Weekly
 
EPW
august 6, 2011 vol xlvi no 32
105
and overt
US
role in Afghanistan helped create a less-than-friendly image of the
US
and Pakistan, even though it may havebeen providing large sums of assistance. The popular perceptionby the Pakistani people of the
US
as a reliable friend changedconsiderably in the 1980s, as did the
US
contributions fordevelopmental assistance.The Pressler Amendment passed by the
US
Senate in 1985severely limited the
US
assistance to Pakistan on account of thelatter’s covert nuclear programme. As we show above, the
US
 development assistance fell from $452 million in 1989, to 1% of that in 1998 on account of sanctions imposed by the
US
. Even
USAID
, which had a long history of working in Pakistan, had toclose its mission in 1990. The
US
suspended alleconomic aid and military sales to Pakistan in Au-gust 1990 as part of sanctions imposed in accord-ance with the
US
laws for pursuing a clandestinenuclear weapons’ programme in violation of theinternational non-proliferation regime. The
US
 military and economic assistance to Pakistan inthe 1990s was heavily coloured by the shadows of the Afghan war and subsequently, by sanctionsimposed on Pakistan. It was only after 2001 thata very different
US
aid relationship to Pakistan,in nature, form and dynamics, has emerged.
2 Complicated Issues of US Aid after 9/11
The rst difference from the previous patterns of the
US
aid to Pakistan is that there is apparently far greater public information about the natureand amount of aid given to Pakistan, as Table 1shows, which allows us to make better-informed judgments.
2
Moreover, for once, we also haveclear demarcations between security related (ormilitary) aid and aid granted in the form of economic assistance. As Table 1 reveals, from 2002 to 2010 (and notincluding commitments such as the EnhancedPartnership with Pakistan Act of 2009), the
US
 has given Pakistan almost $19 billion, or over $2billion on an average each year, with the amountrising over the last three years, with twice as muchdisbursed/allocated in 2010 ($3.6 billion) com-pared to 2007. Over the period 2002-08, only 10%of this money “was explicitly for Pakistani devel-opment” and as much as “75% of the money wasexplicitly for military purposes” (Ibrahim 2009: 6).This is a particularly important distribution of resources, a point raised and discussed lateralthough, as the table points out, in more recent years, the share of economic-related aid has risenbut is still less than half.
3 The Purpose of Aid
One would expect that for the
US
the main pur-pose of providing large amounts of military aid toPakistan following 9/11 was to assist in numerous ways in the war against terrorism focusing on a war against Al Qaida,the Taliban, and all forms of terrorism and militancy in the region,in federally administered tribal areas (
FATA
) and Waziristan inPakistan directly, and in Afghanistan, indirectly. The
US
considersPakistan to be an essential ally in the war on terror since 2001,and as part of its broader strategy it has asked Pakistan’s military to undertake counterterrorism operations in order to meet itsobjectives. The coalition support fund (
CSF
) which was createdfor this purpose was “designed to support only the costs of ghtingterrorism over and above regular military costs incurred by Paki-stan. Nearly two-thirds – 60% – of the money that the United Statesgave Pakistan was part of the
CSF
” (Ibrahim 2009). The Bush
Table 1: Direct Overt US Aid and Military Reimbursements to Pakistan, Financial Year 2002-11
(Rounded to the nearest millions of dollars)
Programme or Account FY 2002 FY 2006 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Programme FY 2011FY2004 (est) or Account (req)Total
1206 28 14 56 114 f 212
 
CN 8 24 49 54 47 43
225 f CSF
a
3,121
c
964 862 731 1,019 685
g
756
g
8,138
g
gFC 75 25 100 FMF 375 299 297 297 298 300 288
i
2,154 296IMET 3 2 2 2 2 2 5 18 4INCLE 154 32 38 24 22 88 170
i
528 140NADR 16 8 9 10 10 13 21 87 25PCF/PCCF 400 700 1,100 1,200Total security-related 3,669 1,313 1,260 1,127 1,536 1,674
h
1,983 12,562 1,665CSH/GHCS 56 21 28 22 30 33 30 220 67DA 94 29 38 95 30 286 ESF 1,003
d
298 337 394
e
347 1,114 1,292
i
4,785 1,322Food Aid
b
46 32 55 50 55 142 380 HRDF 3 2 1 11 17 IDA 70 50 50 103 89 362 MRA 22 6 10 4 60 42 144 Total Economic-Related 1,224 388 539 576 507 1,365
h
1,595 6,038 1,389Grand Total 4,893 1,701 1,799 1,703 2,043 3,039
h
3,578
i
18,756 3,054
Prepared for the Congressional Research Service by K Alan Kronstadt, Specialist in South Asian Affairs, 2 February 2010.Abbreviations:1206: Section 1206 of the National Defence Authorisation Act (NDAA) for FY2006 (PL 109-163, global train and equip)CN: Counternarcotics Funds (Pentagon budget)CSF: Coalition Support Funds (Pentagon budget)CSH: Child Survival and Health (Global Health and Child Survival, or GHCS, from FY2010)DA: Development AssistanceESF: Economic Support FundsFC: Section 1206 of the NDAA for FY2008 (P.L. 110-181, Pakistan Frontier Corp train and equip)FMF: Foreign Military FinancingHRDF: Human Rights and Democracy FundsIDA: International Disaster Assistance (Pakistani earthquake and internally displaced persons relief)IMET: International Military Education and TrainingINCLE: International Narcotics Control and Law Enforcement (includes border security)MRA: Migration and Refugee AssistanceNADR: Non-proliferation, Anti-Terrorism, Demining, and Related (the majority allocated for Pakistan is foranti-terrorism assistance)PCF/PCCF: Pakistan Counterinsurgency Fund/Counterinsurgency Capability Fund (transferred to State Departmentoversight in FY2010)a. CSF is Pentagon funding to reimburse Pakistan for its support of US military operations. It is not officially designated asforeign assistance.b. PL480 Title I (loans), PL480 Title II (grants), and Section 416(b) of the Agricultural Act of 1949, as amended (surplusagricultural commodity donations). Food aid totals do not include freight costs and total allocations are unavailableuntil the fiscal year’s end.c. Includes $220 million for FY2002 Peacekeeping Operations reported by the State Department.d. Congress authorised Pakistan to use the FY2003 and FY2004 ESF allocations to cancel a total of about $1.5 billion inconcessional debt to the US government.e. Includes $110 million in Pentagon funds transferred to the State Department for projects in Pakistan’s tribal areas(P.L. 110-28).f. This funding is “requirements-based;” there are no pre-allocation data.g. Congress appropriated $1.2 billion for FY2009 and $1.57 billion for FY2010, and the administration requested $2billion for FY2011, in additional CSF for all US coalition partners. Pakistan has in the past received more than three-quarters of such funds. FY2009-FY2011 may thus include billions of dollars in additional CSF payments to Pakistan.h. Includes a “bridge” ESF appropriation of $150 million (PL 110-252), $15 million of which was later transferred to INCLE.Also includes FY2009 supplemental appropriations of $539 million for ESF, $66 million for INCLE, $40 million for MRA,and $2 million for NADR.i. The FY2010 estimate includes supplemental appropriations of $259 million for ESF, $40 million for INCLE, and $50million for FMF funds for Pakistan, as well as ongoing disaster relief in the food aid and IDA accounts.Sources: US Departments of State, Defence and Agriculture; USAID.

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