Assistance
• From FY2002-FY2008, U.S. economic aid to Pakistan (excluding food aid) totaled $2.83 billion, compared to $7.88 billion for security aid and coalition support funds (CSF).
• After FY2005, two-thirds of the $300 million in annual Economic Support Funds (ESF) to Pakistan were to be delivered as “budget support” that allow the Pakistani government to increase spending on education, health care and macroeconomic performance. The money was intended to be spent on mutually agreed-upon “Shared Objectives” derived from a “Poverty Reduction Strategy Paper” written by the Pakistani government to define its priorities.
• Following the imposition of martial law in Pakistan, the Bush Administration stopped providing the annual $200 million payments to the Pakistani government as budget support, and instead, transferred the money to programs for Pakistan directed by the U.S. Agency for International Development (USAID). On December 19, Congress appropriated $350 million in economic aid to Pakistan.
• At the same time, Congress withheld $50 million of the administration’s $300 million foreign military funding request and restricted the remaining $250 million to “counter- terrorism and law enforcement activities directed against Al Qaeda and the Taliban and associated terrorist groups.” To release the $50 million, Secretary of State Condoleezza Rice was to demonstrate that Pakistan is “making concerted efforts” to fight terrorist havens and is employing democratic reforms, including restoring an independent judiciary." On April 9, 2008, following February elections that brought a new coalition government to power, Secretary Rice issued a notification to Congress to this effect.
Development of FATA
• The government of Pakistan inaugurated a Sustainable Development Plan (SDP) for the Federally Administered Tribal Areas (FATA) in 2006, which aims to improve economic and social development through small community enhancement projects. The Pakistani government has pledged $1 billion in development aid to the region, and is seeking additional funds from donor governments.
• In September 2007, the Bush administration signed a $750 million agreement for FATA development over a five year period in conjunction with Pakistan’s SDP. The pledge is intended to bring increased development to the region and improve the role of local Pakistani authorities vis-a-vis Al Qaeda, the Taliban and other terrorist organizations. There are concerns, however, that the U.S. and Pakistani governments will be unable to monitor the distribution of funds in the region.
• In response to these concerns, U.S. officials indicated that much of the $750 million in aid will be distributed through private contractors, which some analysts estimate will reduce the amount of aid that actually reaches FATA residents by 25 to 50 percent after profit and overhead fees are taken into account.
Training the Frontier Corps for Counterinsurgency
• Since 2001, the United States has disbursed $5.8 billion in CSF to the Pakistani military to support its operations as a partner in the U.S. war on terror. This number is equal to more than one-quarter of Pakistan’s total military expenditures. Despite this, the Pakistani Frontier Corps (FC), a paramilitary guard force that operates along the Afghan border, has remained under-funded and under-equipped.
• In January 2008, the U.S. Congress authorized the Defense Department to spend up to $75 million from funds previously appropriated funds for FY2008 as part of a new initiative to equip and train members of the FC. The authorization greatly increases the size and scope of the U.S. training program by sending 100 U.S. military trainers to the region. It includes two clauses that the U.S. government has formerly used to give U.S. personnel the possibility of taking part in counterterrorist missions. It also requires the Pentagon to report by March 31, 2008, detailing the Pakistani government’s efforts to enhance security and stability along the Afghanistan-Pakistan border, or risk having Congress withhold coalition support reimbursements to Pakistan.
• The U.S. assistance plan for the FC, which is projected to total $350-400 million over five years, has already contributed $25 million worth of body armor, communications and surveillance equipment and vehicles to the FC.
Proposals
• In 2006, President Bush proposed another form of aid; the establishment of “Reconstruction Opportunity Zones” (ROZs) in various underdeveloped districts of Pakistan and Afghanistan. The idea behind the program would be to allow products produced in designated ROZs to be exported duty-free to the United States, in an effort to stimulate sustainable economic growth and entrepreneurship in these areas. Although draft legislation was introduced in March 2008, and was referred to the Senate Finance Committee, support for the initiative is unclear.
• Following the February elections, Senator Joseph Biden called for a long-term “democracy dividend” for the country, proposed to total $1.5 billion in non-military aid to Pakistan over 10 years as well as an additional $1 billion if the new government is “formed consistent with democratic principles.” Implementing legislation has yet to be introduced..