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Daniel Wagner

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Message to Pakistan: China Will Not Replace U.S. Aid

Posted: 05/18/11 11:16 AM ET

The current debate in the U.S. Congress about whether and how to continue economic and military aid to Pakistan is understandably problematic. On one hand, Congress is mindful of Pakistan's long history with the U.S., its unique geostrategic location, its significance as one of the top 7 nuclear powers and the role it plays in enabling supplies to be delivered to U.S./coalition troops in Afghanistan. On the other hand, it is conscious that Pakistan is the epicenter of global terrorism and has abused much of the aid it has been given to date by the U.S., so Congress is weighing the relative costs and benefits of continuing to deliver financial assistance to Pakistan's government and military.

Pakistan has received more than $20 billion in U.S. economic and military aid since 2001. Although $7.5 billion in additional aid was promised by the Obama Administration between 2010 and 2014, only $180 million of the first tranche of $1.5 billion was delivered as of the end of last year. The reason is that disbursement of the aid included specific stipulations that it not be used to promote Pakistan's nuclear program, assist terrorists, or contribute to cross-border military actions. The fact that such stipulations had to be included says a great deal about the lack of basic trust in the relationship and the history of how such aid had been misused in the past. Although other aid has been disbursed through the U.S. Agency for International Development, the U.S. government has had difficulty identifying corruption-free avenues through which to deliver the aid through Pakistan's government.

The Obama administration identified seven high profile 'signature' development projects that would stand as a long-term testament to the beneficial impact of U.S. aid, and help strengthen the standing of the civilian government among the Pakistani people. However, none of these projects have reached a successful conclusion, the result of a combination of inefficiency and ineptitude at various levels of the Pakistani government. According to the U.S. Office of the Inspector General, only approximately half of the aid that has been delivered to Pakistan for this purpose has had the intended impact. Whether the objective was building a dam or constructing schools, a combination of bribery, kickbacks, corruption and collusion prevented successful disbursement of the development aid.

According to the U.S. Embassy in Islamabad, up to 70 percent of the funds given to the Pakistani military to support activities along the Afghanistan/Pakistan border have been misspent, and much has apparently been diverted to bolster Pakistan's arsenal against India. The U.S. government has accused the Pakistanis of utilizing just enough of the money allocated to fighting the Taliban to keep it at bay, ensuring a continuation of U.S. aid. This raises serious question about whether economic or military aid should even be continued.

If the U.S. Congress were honest with itself, the answer would clearly have to be 'no.' If Pakistan weren't of such geostrategic importance and did not have nuclear weapons, Congress would have terminated the aid long ago. This is the heart of the dilemma -- how to maintain integrity in the relationship at a time of budget cutbacks while maintaining continuity of purpose. Pakistan has actively worked against U.S. policies and interests. How can the U.S. strike a balance between being true to itself and its interests, while at the same time drawing a line in the sand with Pakistan, saying continuation of these unacceptable forms of behavior will no longer be tolerated -- as they have been for years?

If U.S. aid were cut to be off from Pakistan, what would the Pakistani government and military do? Work against U.S. interests? Become a nuclear proliferator? Share intelligence with China? It has already done or is continuing to do all of these things. So apart from some limited military benefits (i.e. acting as a supply line for U.S. forces in Afghanistan) the U.S. ultimately has little to lose if the relationship were to disintegrate even further. It has other options for supplying U.S. troops in Afghanistan, such as enhancing its military presence in Turkmenistan. Pakistan became the world's greatest nuclear proliferator when relations with the U.S. were solid and aid was flowing -- so what does the U.S. risk now? That it will do so again? If so, at least this time, the international community is in a position to do something about it.

As for Pakistan's hope/expectation that China may come to its rescue if U.S. aid is cut off, it should consider this: China's State Council Information Office released the country's first white paper earlier this year on China's foreign aid to the rest of the world. In the 60-year period between 1950 and 2009, China's cumulative foreign aid to the entire world had totaled only $39 billion (an average of just $650 million per year). Of this, 40% of the total was grants, with the remainder divided evenly between interest-free or low-interest loans.

By contrast, according to the U.S. Congressional Research Service, for the year 2007 the U.S. had a total foreign operations budget in excess of $26 billion. While the U.S. has given as much as more than $2 billion in a single year in economic and military aid to Pakistan (peaking in the early 1960s), China's cumulative bilateral assistance to Pakistan between 2004 and 2009 totaled just $217 million (an average of $36 million per year), and was often driven by disaster relief. So Pakistan may live in hope that China would fill the substantial void left behind by a U.S. cessation of financial assistance, but Pakistan surely knows that nothing near that amount will be forthcoming from China. Pakistan's ally Saudi Arabia is preoccupied with its own budgetary challenges in response to this year's developments in the Middle East and North Africa, so Pakistan should not count on it to ride to the rescue either.

Given a) the fact that Osama bin Laden was running Al Qaeda within earshot of Pakistan's equivalent of West Point in Abbottabad, b) that so much of the aid the U.S. have given the Pakistanis has either been squandered, misused or stolen, and c) that the Pakistani government and military have clearly been pursuing their own agenda for their own benefit -- which has been contrary to U.S. interests -- it would be irresponsible and hypocritical of the U.S. Congress to vote to continue delivering vast quantities of aid to the Pakistanis unless they demonstrate that they will change their ways. Mere declarations of an intent to change will no longer suffice. Congress should require absolute adherence to strict limitations on future aid of all types to Pakistan. The Pakistanis are posturing at the present time, with Prime Minister Gillani in Beijing this week calling China Pakistan's 'best friend.' Let us see if Pakistan sings the same tune if its economic lifeline were to be seriously curtailed or removed, and China maintains its stingy approach to foreign aid.

Daniel Wagner is CEO of Country Risk Solutions, a political risk consulting firm based in Connecticut and senior advisor to the PRS Group.

 

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