The Reality of US Aid to Pakistan

[SMC]

BTW hafeez is talking about the Kerry Lugar bill specifically. Pakistan has only received a fraction of the that.

 

[Mech]

BTW hafeez is talking about the Kerry Lugar bill specifically. Pakistan has only received a fraction of the that.

if thats the case...he shouldn't have genaralised like he did.

 

[SMC]

That's precisely what he said. He's talking about year-on-year. What Pakistan gets each year.

Btw, one must remember that all this aid is over a period of 10 years. Some 1.5 billion (out of which half are actually payments, so in fact 750 million dollar) per year isn't much at all for a 180 billion dollar economy. And when you factor in that Pakistan has received a small fraction of that, it doesn't look good for those who want to believe in this stuff.

 

[Mike2011]

BTW hafeez is talking about the Kerry Lugar bill specifically. Pakistan has only received a fraction of the that.

Kerry Lugar bill has lot of conditions. Money will not be handed over to gov or army. US directly distribute to needy people.

 

[Mike2011]

I knew some indians would come in here and try to make this thread negative. How typical!

Well those are hard figures. USA paid hard cash and military hardware. Who is lying here?

 

[prototype]

I think he is right

Aid as % of GDP by country. Definition, graph and map.

Excuse me 1 minute,it states 1.1 % for Pakistan,Pakistani GDP is around $ 170 billion i think.

That mean's aid amount equivalent to some $ 1.7 billion.

Now i am not sure weather its from US or any other source,can any Pakistani friend tell it.

 

[All-Green]

I say the "myth that pakistan gets billions in aid" is a myth. Clearely, there are numerous reports of funds exceeding 1 billion which were transferred in full to pakistan. Although i will not go so far as to say pakistan survives on aid.

The so called US Aid of billions which was transferred during Musharraf era was actually mostly compensation for services offered including transit fees, Fuel and logistical support.
Services which incurred a major cost for Pakistan and are still ongoing.

There was no free lunch and it is indeed a myth that the Billions of USD were provided as aid only.

The net gain for Pakistan in economic terms is peanuts and when compared to the long term implication of war on terror; it is best for Pakistan both from economic and strategic perspective to end this partnership.
The Cost to benefit is really negative here.

 

[foxbat]

The so called US Aid of billions which was transferred during Musharraf era was actually mostly compensation for services offered including transit fees, Fuel and logistical support.
Services which incurred a major cost for Pakistan and are still ongoing.

There was no free lunch and it is indeed a myth that the Billions of USD were provided as aid only.

The net gain for Pakistan in economic terms is peanuts and when compared to the long term implication of war on terror; it is best for Pakistan both from economic and strategic perspective to end this partnership.
The Cost to benefit is really negative here.

I dont think Pakistan has an option of ending this partnership. And you are right, the so called aid is one of the compensations provided to Pak for its cooperation in the WOT. The only caveat here is that the cooperation is a forced cooperation and not voluntary in nature.

 

[LEGENDARY WARRIOR]

the problem is not geting aid. . . the problem is that the aid we receive is not spent in the sector where it should have been. . . .

 

[Martian]

Press Releases 2010

U.S. Continues Coalition Support Fund Reimbursements

May 26, 2010

Islamabad - The U.S. transferred $288 million to the Government of Pakistan today to reimburse Pakistan for some of the costs incurred while conducting counterinsurgency operations against violent extremists in 2009. This is in addition to the more than $1.2 billion in reimbursements already transferred to Pakistan this year by the U.S. government under the Coalition Support Fund (CSF).

The Coalition Support Fund was established by the United States in 2001 to support 27 nations, including Pakistan, for some of the costs they incur in the fight against extremist violence. Since 2001, the U.S. has reimbursed Pakistan $7.4 billion for these costs. The last CSF reimbursements were delivered to Pakistan earlier this month and included $656 million for validated CSF claims received from Pakistan for the year 2009.

Since 2001, the United States has provided more than $11 billion to Pakistan in security assistance and CSF reimbursements. During the last three years, specific security assistance provided includes 14 F-16 fighter aircraft, 10 Mi-17 and two Bell 412EP helicopters, 5 fast patrol boats, 115 Howitzer self-propelled field artillery cannons, more than 450 vehicles for Pakistan's Frontier Corps, hundreds of night vision goggles, day/night scopes, radios, and thousands of protective vests and first-aid items for Pakistan's security forces. The U.S. also provided training for more than 370 Pakistani military officers in a wide range of leadership and development programs covering topics such as counterterrorism, intelligence, logistics, medical, flight safety, and military law.

Pakistan getting good money. see above list...This list is till last year only.
U.S. Continues Coalition Support Fund Reimbursements (05/26/2010) - U.S. Embassy Islamabad, Pakistan

Key word is "REIMBURSEMENT" i.e. payment of already incurred expenses.

 

[AgNoStiC MuSliM]

Stick to the topic please - we are not comparing the aid India receives with that of Pakistan.

 

[AgNoStiC MuSliM]

Threads merged. For those of you wondering how the CSF payments fit in, please see the earlier posts in the thread.

 

[AgNoStiC MuSliM]

Press Releases 2010

U.S. Continues Coalition Support Fund Reimbursements

May 26, 2010

Islamabad - The U.S. transferred $288 million to the Government of Pakistan today to reimburse Pakistan for some of the costs incurred while conducting counterinsurgency operations against violent extremists in 2009. This is in addition to the more than $1.2 billion in reimbursements already transferred to Pakistan this year by the U.S. government under the Coalition Support Fund (CSF).

The Coalition Support Fund was established by the United States in 2001 to support 27 nations, including Pakistan, for some of the costs they incur in the fight against extremist violence. Since 2001, the U.S. has reimbursed Pakistan $7.4 billion for these costs. The last CSF reimbursements were delivered to Pakistan earlier this month and included $656 million for validated CSF claims received from Pakistan for the year 2009.

Since 2001, the United States has provided more than $11 billion to Pakistan in security assistance and CSF reimbursements. During the last three years, specific security assistance provided includes 14 F-16 fighter aircraft, 10 Mi-17 and two Bell 412EP helicopters, 5 fast patrol boats, 115 Howitzer self-propelled field artillery cannons, more than 450 vehicles for Pakistan's Frontier Corps, hundreds of night vision goggles, day/night scopes, radios, and thousands of protective vests and first-aid items for Pakistan's security forces. The U.S. also provided training for more than 370 Pakistani military officers in a wide range of leadership and development programs covering topics such as counterterrorism, intelligence, logistics, medical, flight safety, and military law.

Pakistan getting good money. see above list...This list is till last year only.
U.S. Continues Coalition Support Fund Reimbursements (05/26/2010) - U.S. Embassy Islamabad, Pakistan

US releases $633m Coalition Support Fund tranche to Pak
December 24, 2010

United States has released US $633 million dollars Coalition Support Funds (CSF) to Pakistan. The United States has paid US$ 8.760 billion to Pakistan for the war against terrorism, the US Embassy in Islamabad said. According to sources US$ 1.270 billion of the CSF are still payable to Pakistan. US $633 million CSF tranche has been paid for January to June period. The payment will help Pakistan to meet its budgetary and military needs.

US releases $633m Coalition Support Fund tranche to Pak | Pakistan | News | Newspaper | Daily | English | Online

As pointed out already - CSF payments are not aid, they are reimbursements for expenses incurred by Pakistan for anti-terrorism and Coalition Support operations (necessitated by the US invasion of Afghanistan) that the US has agreed to fund.

Pakistan spends the money on these operations out of its own pocket and the US later reimburses Pakistan for the amount it approves. In the past few years these reimbursements have been delayed by up to two years, and AFAIK, there is currently a backlog of over a billion dollars delayed by over a year.

The earlier posts in the thread talk break down the CSF reimbursements, military aid and budgetary aid numbers. The latter two would qualify as 'aid'.

 

[Bossman]

I dont think Pakistan has an option of ending this partnership. And you are right, the so called aid is one of the compensations provided to Pak for its cooperation in the WOT. The only caveat here is that the cooperation is a forced cooperation and not voluntary in nature.

For all the Indians, we survived decades without aid and will do it again if it comes to that.

 

[AgNoStiC MuSliM]

The politics of aid​

​

By Shahid Javed Burki
Published: May 29, 2011

The writer is former vice-president of the World Bank and former finance minister of Pakistan

In a speech given recently at the Woodrow Wilson Centre in Washington, I made two points about the flow of aid to Pakistan. I said that the American assistance to the country was overestimated since some of the numbers that were discussed in the press — in particular the American press — did not differentiate between commitments and disbursements. The programme envisaged under the Kerry-Lugar bill was moving very slowly. There were several other aspects of aid-counting that had to be factored in before aggregate numbers were used.

My second point was to suggest that China had become the largest provider of aid to Pakistan and would become even larger, once the various programmes and projects that were in the planning stage were implemented. The second point drew some attention from some people in the audience. In one email, I was told that the numbers available in various documents suggest that China was nowhere near the position I had assigned the country in my comments. This reaction reflected less than full understanding of what is really meant by ‘aid’. I think this subject is important enough to be given some careful thought, especially by those in Islamabad’s official establishment who have the data to estimate the amount of total aid the country receives from various bilateral and multilateral sources.

Aid is commonly associated with what is generally called budgetary and balance of payments support. This assistance may come with policy conditions. Once they are met, the provider of aid writes a cheque, the proceeds from which can be used in any way the recipient wishes. This is the way the International Monetary Fund (IMF) aids the countries in economic distress. In Pakistan’s long history with the Fund, the country has seldom succeeded in completing what the IMF calls the “programme”. This is likely to happen once again, as the Fund is not satisfied with Pakistan’s performance and has suspended disbursements from the $11 billion plus programme it signed with Islamabad in late 2008.

The World Bank began to provide non-project assistance in the early 1980s when its introduced ‘structural adjustment lending’. The idea was to provide free money to the recipients when the needed structural adjustments were promised. Mahbubul Haq and I — both of us then worked in the Bank’s policy department — opposed this move by suggesting that this kind of money would be wasted and also develop poor habits. I believe our assessment was right. Pakistan is a good example of a county where this has been the outcome.

Aid has always been difficult to define. Several decades ago, Mahbubul Haq had the Planning Commission carry out a study in which he drew a sharp distinction between gross and net flows of aid. In determining net flows, he factored out from the total the amount that went back to the donors in various forms. Often — at least at that time — aid came to be tied to the procurement of goods and commodities being financed. Their prices could be much higher than those in the international market place. Some of the project aid came with the condition that the consulting services being provided would come from the donor, even when those skills were available from within the country receiving aid.

Haq’s work in the Planning Commission had an important impact in the sense that the members of the OECD (Organisation for Economic Co-operation and Development), the organisation of rich countries, pledged that they would not tie their aid to procurement from the countries providing it. Development agencies such as the World Bank and the Asian Development Bank insisted on the provision that the procurement from their funds would be on the basis of international competitive bidding — contracts go to the cheapest bidder.

This last provision brings me to case of China’s assistance to Pakistan. There is an impression that the Chinese assistance is more talk than substance; that the country promises more than it gives. This feeling is based on a misunderstanding of what is really meant by assistance. The Chinese are interested in giving mostly project support. It was, after all, Mao Zedong who said that it is much better teaching the needy to fish, rather than giving them fish to eat. Beijing considers budgetary support equivalent to giving fish and project assistance teaching the recipient to fish. One of the few occasions the Chinese departed from this practice was when I went to Beijing to seek their support to help us service debt we had with such ‘preferred creditors’ as the IMF and the World Bank. This was in late 1996, when I had taken leave of absence from the World Bank to manage Pakistan’s finance and development. We were then very close to bankruptcy. Telling me that they would not let Pakistan default while I was in charge, they made a deposit of $500 million in our account with the Federal Reserve System in New York. That saved the situation for us.

Today, China is by far the largest provider of project assistance to Pakistan. The financing of these projects comes mostly from Chinese sources which combine loans at commercial rates with grants. This helps to lower the cost to Pakistan in terms of both the amount of interest paid on the loan, as well as the period over which it needs to be serviced. China, as is well known, has financed the construction of several high profile projects — roads, nuclear stations, dams and railway equipment. For proper aid accounting, the terms of financing for each of these projects will need to be compared with alternative sources of supply and the difference between the two would constitute the component of aid.

If this calculation is done, it will show that an impressive amount of assistance is coming to Pakistan from China. Having some firm estimates — something the economic affairs division should be able to do — will put in perspective the amount of help Pakistan is receiving from China compared to other donors. Since our foreign policy focuses on economic relations, such an estimate will put the sources and amounts of aid the country receives in the right context.

Published in The Express Tribune, May 30th, 2011.

http://tribune.com.pk/story/178259/the-politics-of-aid/