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

In the 60-year period between 1950 and 2009, China's cumulative foreign aid to the rest of the world totaled only $39 billion. By contrast, for the year 2007 the U.S. had a total foreign operations budget of more than $26 billion.
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The current debate in the U.S. Congress about whether and how to continue economicand military aid to Pakistan is understandably problematic. On one hand, Congressis mindful of Pakistan's long history with the U.S., its unique geostrategic location, itssignificance as one of the top 7 nuclear powers and the role it plays in enabling suppliesto be delivered to U.S./coalition troops in Afghanistan. On the other hand, it is consciousthat Pakistan is the epicenter of global terrorism and has abused much of the aid it hasbeen given to date by the U.S., so Congress is weighing the relative costs and benefitsof 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 since2001. Although $7.5 billion in additional aid was promised by the Obama Administrationbetween 2010 and 2014, only $180 million of the first tranche of $1.5 billion wasdelivered as of the end of last year. The reason is that disbursement of the aid includedspecific stipulations that it not be used to promote Pakistan's nuclear program, assistterrorists, or contribute to cross-border military actions. The fact that such stipulationshad to be included says a great deal about the lack of basic trust in the relationship andthe history of how such aid had been misused in the past. Although other aid has beendisbursed through the U.S. Agency for International Development, the U.S. governmenthas had difficulty identifying corruption-free avenues through which to deliver the aidthrough Pakistan's government.

The Obama administration identified seven high profile 'signature' development projectsthat would stand as a long-term testament to the beneficial impact of U.S. aid, andhelp strengthen the standing of the civilian government among the Pakistani people.However, none of these projects have reached a successful conclusion, the result of acombination 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 theaid 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 ofbribery, kickbacks, corruption and collusion prevented successful disbursement of thedevelopment aid.

According to the U.S. Embassy in Islamabad, up to 70 percent of the funds given to thePakistani military to support activities along the Afghanistan/Pakistan border have beenmisspent, and much has apparently been diverted to bolster Pakistan's arsenal againstIndia. The U.S. government has accused the Pakistanis of utilizing just enough of themoney 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 becontinued.

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 whilemaintaining continuity of purpose. Pakistan has actively worked against U.S. policiesand 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, sayingcontinuation of these unacceptable forms of behavior will no longer be tolerated -- as theyhave been for years?

If U.S. aid were cut to be off from Pakistan, what would the Pakistani governmentand military do? Work against U.S. interests? Become a nuclear proliferator? Shareintelligence with China? It has already done or is continuing to do all of these things. Soapart from some limited military benefits (i.e. acting as a supply line for U.S. forces inAfghanistan) the U.S. ultimately has little to lose if the relationship were to disintegrateeven further. It has other options for supplying U.S. troops in Afghanistan, such asenhancing its military presence in Turkmenistan. Pakistan became the world's greatestnuclear 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, theinternational 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 iscut off, it should consider this: China's State Council Information Office released thecountry'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 theentire world had totaled only $39 billion (an average of just $650 million per year). Ofthis, 40% of the total was grants, with the remainder divided evenly between interest-freeor low-interest loans.

By contrast, according to the U.S. Congressional Research Service, for the year 2007the 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 militaryaid to Pakistan (peaking in the early 1960s), China's cumulative bilateral assistanceto Pakistan between 2004 and 2009 totaled just $217 million (an average of $36million per year), and was often driven by disaster relief. So Pakistan may live in hopethat China would fill the substantial void left behind by a U.S. cessation of financialassistance, but Pakistan surely knows that nothing near that amount will be forthcomingfrom China. Pakistan's ally Saudi Arabia is preoccupied with its own budgetarychallenges 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 ofPakistan'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) thatthe Pakistani government and military have clearly been pursuing their own agenda fortheir own benefit -- which has been contrary to U.S. interests -- it would be irresponsibleand hypocritical of the U.S. Congress to vote to continue delivering vast quantities ofaid to the Pakistanis unless they demonstrate that they will change their ways. Meredeclarations of an intent to change will no longer suffice. Congress should requireabsolute adherence to strict limitations on future aid of all types to Pakistan. ThePakistanis are posturing at the present time, with Prime Minister Gillani in Beijing thisweek calling China Pakistan's 'best friend.' Let us see if Pakistan sings the same tune ifits economic lifeline were to be seriously curtailed or removed, and China maintains itsstingy approach to foreign aid.

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

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