31st October 2013

Can Pakistan survive sans aid?

By:Omer Zaheer Meer In the context of PM's US trip In the aftermath of PM Mian Nawaz Sharifs USA visit much is left to be desired. The USA has refused cooperation on three major strategic issues of vital import to Pakistan: Pak-Iran gas pipeline, civil-nuclear agreement and access to American markets with tax rebates like the ones granted to Bangladesh by several western countries. Instead Pakistan is warned of severe consequences on going ahead with the Pak-Iran gas pipeline project without offering attractive alternatives. The US also advocated the Indian stance with regard to terrorism while ignoring Pakistans genuine demands backed up by evidences shared through official channels, of dismantling the Indian terror infrastructure in Afghanistan wreaking havoc in Pakistan. Despite all this humiliation and that too for a country which has sacrificed over 40,000 civilian and 7,000 plus security personnel for the US by importing home its War on Terror, by aligning itself with it, there is still a powerful segment of our intelligentsia claiming that Pakistan cannot survive without the American economic and military assistance. Hence, we have no option or control over our relationship with the US. This is a carefully crafted stance, one that is less frequently examined with out of the box critiques. This reminds me of my research paper delivered at PINA (Pakistan Institute of National Affairs) hosted by Mr Altaf Hassan Quraishi with participants of the likes of Mr Mushahid Hussain Syed, Sartaj Aziz, Khurshid Kasuri, etc. Let us examine if this myth hammered down the sub-conscience of an entire

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31st October 2013 nation actually holds merit. It can then act as a starting point to work out our options and review the strategic ploys we can employ to ensure deliverance of our strategic interests from the Pak-US relationship.

Part 1: US Economic Assistance to Pakistan: Pakistan has incurred material losses of over $ 100 billion as a result of alliance with the US in the war on terror. To date, Pakistan has received a meager $15 billion of which $10 billion relates to the Coalition Support Fund (CSF) reimbursements for expenses incurred by Pakistan in the US-led war. The CSF expense reimbursements are at the mercy of US bureaucracy which routinely rejects up to 40 per cent of the claims already spent by Pakistan without providing any evidence or explanation for rejection, simply terming them suspicious. It is worth mentioning here that the US officials often claim the total monetary assistance during this period to be $25 billion but this seems to include humanitarian assistance for flood victims which mostly included provision of products of US corporations and was part of an international community initiative. Even more importantly it includes claimed funds spent directly through the USAID with Pakistan having no knowledge of the purpose, amount and utilization. In all probability these funds were used to further American interests rather than assisting Pakistans ailing economy. Another major makeup of the figure quoted by American officials includes reimbursements of CSF expenses already incurred by Pakistan for the US. In simple terms, Pakistans state has received economic assistance from the US amounting to $5 billion only against its losses of $100 billion over the last 12 years.

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31st October 2013 The largest economic assistance package announced in this duration was the Kerry-Lugar-Berman Bill (KLB) of 2009 promising $1.5 billion per annum for 2010-2014 totaling $7.5 billion. As per the last available figures at the time of writing, the actual payments received officially by the government of Pakistan to date under KLB amounts to just $4 85 million 6.47 per cent of the total package and 8.08 per cent of the promised disbursements till 2013. Even out of this meagre cash-flow, heavy fees were paid to experts, leaving even lesser to be actually spent. This makes the tall claims of heavy economic assistance seem like a petty joke with a nuclear-armed-nation of 180 million. An additional $1.6 to 2 billion approximately is claimed to have been spent through the USAID and the NGOs, over which Pakistans government has no control and knows nothing about as to the purpose, deliverance or usage. Rather than actually assisting its non -NATO ally substantially, the US focus seems to be on data-crunching and generating media frenzy using distorted facts to psychologically subjugate Pakistans deci sion-making brains.

For the sake of argument, let us assume that the entire 100 per cent was actually paid and that too formally to the government of Pakistan and not through the USAID. An assumed full payment to government of Pakistan of the entire Kerry-Lugar assistance would still amount to 0.64 per cent of the total GDP of Pakistan. Now let us take a minute and ask ourselves which country in the world would fail with having to let go of about half a percent of its total GDP? And let us not forget the possible strategic and economic benefits of an independent foreign and economic policy.

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31st October 2013 This therefore dispels the myth that Pakistan cannot survive without US economic assistance. The necessary steps required for an economic revival are, using an economic stimulus and efficient management policy eradicating the rampant corruption instead of pursuing the IMF dictated austerity and privatization policy currently been pursued by the incumbent government

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