The Politics of US Aid to Pakistan

Aid Allocation and Delivery from Truman to Trump

Murad Ali

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9780367662073
• eBook ISBN: 9780429619946
• Edition: 1
• Topic: Social Sciences
• Subtopic: Asian American Studies
• Index: Social Sciences

This book aims at uncovering the politics behind the provision of US foreign aid to Pakistan during three distinctive periods: the Cold War, the post-Cold War and the "war on terror".

Focusing on a comprehensive analysis of aid allocation and delivery mechanisms, this book uncovers the primary factors behind historical as well as contemporary US aid to Pakistan so far not thoroughly and empirically studied, especially in the post-2001 period of the "war on terror". Furthermore, based on findings that have emerged from interviews with over 200 respondents, including government officials, representatives of donor aid agencies, the private sector, civil society organizations and primary beneficiaries of US-funded projects, this book offers significant insights to researchers, policy-makers and practitioners interested in the discipline of aid and development effectiveness.

Making use of both quantitative and qualitative data and based on extensive fieldwork and primary data, this book fills a significant gap in the empirical analysis of US aid to Pakistan. As such, it will be of great interest to students and scholars of Asian and US politics, as well as to those who have teaching and research interests in disciplines such as international relations, history, strategic studies, international political economy and development studies.

1Introduction

Why a book on US–Pakistan aid relationship?

It was a hot and humid morning at Government Higher Secondary School Jamrud, Khyber Agency in the Federally Administered Tribal Areas (FATA) of northwest Pakistan in September 2009. The students were waiting in queues to receive new school bags distributed by the Ed-Links project staff. According to its mission statement, Ed-Links was a US$90 million countrywide education project of the United States Agency for International Development (USAID), aimed at “bringing about significant and sustainable improvements in student learning and learning environments; teacher education and professional development; and public sector capacity to sustain quality education” (Ed-Links, 2009). Quite surprisingly, I found little enthusiasm among the boys or school staff for this goodwill gesture from USAID. The sceptical school principal, bearded, in his late fifties and wearing a traditional white cap, informed me that the students already had bags and did not need new ones. He explained that it was a waste of money and resources that could have been utilized on essential items that were required but were unavailable due to lack of financial resources. The principal showed me that the school had no proper electricity, no water tanks, few toilets, most doors and windows were broken and a majority of fans were old and out of order. He was unimpressed at Ed-Links distributing these expensive but useless bags among the students. The principal, teachers and students had a long list of far more pressing priorities.

This anecdote from one USAID project in Pakistan points to some of the wider problems of the United States (US) official aid delivery to the country and the way it is utilized. After the deadly attacks of September 11, 2001, in the US, and the subsequent US-led “war against terrorism” to dismantle al Qaeda and the Taliban regime in Afghanistan, Pakistan’s alliance with the US has led to the resumption of US bilateral aid.¹ USAID, the government agency responsible for the delivery of development aid and humanitarian assistance to developing countries, returned to Pakistan in 2002 with an overall mission:

To tangibly improve the well-being of Pakistanis and to support the Government of Pakistan in fulfilling its vision of a moderate, democratic, and prosperous country … to address needs in economic growth, education, health, good governance, earthquake reconstruction assistance, as well as humanitarian assistance.

(USAID/Pakistan, 2010)

Since then, the country has been receiving substantial US official aid due to its role as a frontline US ally in the so-called “war on terror”. On September 24, 2009, while I was in Pakistan carrying out my first fieldwork to collect data for my PhD dissertation, which is the foundation of this book, the US Senate’s Foreign Relations Committee passed the Enhanced Partnership with Pakistan Act, known as the Kerry–Lugar Bill (KLB), and on October 15, 2010, President Obama signed the bill into law. The bipartisan bill, tripling non-military aid to the country, authorizes the provision of US$1.5 billion to Pakistan annually for five years (2010–2014). Against this backdrop, during her fifth visit to Pakistan in October 2009 and her first as the US Secretary of State, Hillary Clinton stated at a press conference in Islamabad along with her Pakistani counterpart that she was there to “turn a new page” in the US–Pakistan relationship (Baabar, 2009). She told reporters that terrorism remained a very high priority but the US also recognized that it was imperative to broaden their engagement with Pakistan and help the country in terms of economic challenges: to help in the creation of jobs, improvement of infrastructure, education, healthcare and energy sectors.

However, keeping in mind the school bags distribution activity of the Ed-Links project in Khyber Agency, the question arises here how this massive aid programme was delivered and whether it addressed the actual needs of Pakistanis. In this context, this book is an attempt to unearth how USAID operates on the ground and to what extent it addresses the real socio-economic issues with which the country is faced. Judging by the response of the disgruntled school principal as well as teachers and students in Jamrud in FATA, it seems US aid delivery policies and practices remain disconnected from actual Pakistani needs.

What is development aid?

Development aid, or as it is formally termed, official development assistance (ODA) in its current form, is almost seven decades old. The most comprehensive definition of foreign assistance is that of the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD) (1985), which is used in this book.² According to this, aid includes grants or loans to developing countries which: (1) are undertaken by the official sector of the donor country, (2) aim at promotion of economic development and welfare in the recipient country as the main objective, and (3) are at concessional financial terms having a grant element of at least 25 per cent. In addition to these financial flows, technical cooperation is included in ODA, while grants, loans and credits for military purposes are excluded, regardless of their concessionality.

The OECD definition implies that the stated objective of foreign aid is to promote development in countries receiving aid and that it is used for the well-being and betterment of the masses. Though aid delivery modalities and mechanisms have evolved considerably over time, its avowed objectives are the same today as in the past. Whatever its form – project, programme or budgetary support – the avowed intentions are to help fulfil the needs of recipient countries or governments, and enhance their capacity in the provision of basic necessities to their citizens. For example, aid may be used in improving social infrastructure such as health and education sectors or physical infrastructure like roads, dams, bridges and telecommunication. Apparently it may be so, but this book also illustrates that the practice of aid-giving is inherently a political process driven by political motives either alongside or without developmental objectives.

Origin and evolution of international aid

As explained later in the context of US aid to Pakistan, the very idea of foreign aid is quite political in nature: the US utilized aid to make alliances with friendly countries, such as Pakistan, that could work as a stalwart opponent of communism in the Cold War era, and more recently against extremism in the “war against global terrorism”. Valentine (1950, p. 60) predicted about seventy years ago that aid “shall be part of American foreign policy – a policy which is and must be primarily political”. What Valentine said decades ago, former USAID administrator Natsios (2006) reiterated in the twenty-first century: the history of foreign aid clearly illustrates that “politics is part and parcel of aid delivery in all donor countries, in Europe as well as in America” (Natsios, 2006, p. 137). Hence, in the context of Pakistan as well as globally, the origin of aid was politically motivated, aimed at containing the expansion of communism.

Alongside political motives, the origin of ODA is also linked to other coincidental processes: the reconstruction of Europe and decolonization. In the immediate post-World War II landscape, the US Secretary of State General George Marshall elaborated a long and detailed programme for the reconstruction of war-ravaged Europe (Browne, 1999). Under Marshall’s eponymous plan, the US provided US$13 billion assistance (approximately US$150 billion in 2017 dollars) to its European allies to rebuild their war-battered economies. According to Raffer and Singer (1996, p. 59), “after approval by Congress in 1948 the US spent 2–3 percent (excluding military aid) of its [gross national product] under this initiative during the six years 1948–53, almost entirely on a grant basis.”

The Marshall Plan played a significant role in the restoration of the war-ravaged European economy. By most accounts, the Marshall Plan was a successful initiative, as by the end of 1951, industrial production for participating countries had increased by 64 per cent and gross national product had risen by 25 per cent (Friedman & Shapiro, 2017). It was the triumph of the Marshall Plan that led to US President Truman’s “Point Four Programme”, which he outlined in his historic inaugural address in 1949. Rist (2002) points out that President Truman had the unprecedented triumph of the Marshall Plan in mind, which made him optimistic about the success of the Point Four Programme. In the context of a wide-ranging socio-economic vision for the US, President Truman (1949) stated, “fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas” (Truman, 1949). In the same tone, President Truman mentioned that more than half of the world population was suffering from hunger, disease and poverty and that other industrial nations should cooperate with the US to help these underdeveloped people. In a nutshell, it was the Marshall Plan and Truman’s Point Four Programme that led to the beginning of foreign assistance. This does not mean that there was no aid prior to World War II, particularly between colonizers and their colonies, but aid in its current form has its origins in the post-WWII era, and since then it has become an important constituent in bilateral relations between developed and underdeveloped or developing countries.

Besides rebuilding European countries under the Marshall Plan, this period also saw the beginning of the process of decolonization taking place in other parts of the world, leading to the emergence of new states, including Pakistan. During the period between 1945 and 1970, about 60 countries achieved independence throughout Africa, Asia, the Pacific and the Near East. As a result of rapid decolonization, according to McMichael (2008, p. 40), “from 1945 to 1981, 105 new states joined the United Nations (UN) … swelling UN ranks from 51 to 156.” The onset of the Cold War between the US and the Union of Soviet Socialist Republics (USSR) and the success of the Marshall Plan persuaded the US to employ a similar mechanism of the injection of capital and technological assistance to bring development to underdeveloped countries. This was intellectually supported by a set of development ideas in the form of modernization theory, the major proponent of which was Rostow (1960), who argued that all countries needed to follow the same road to development, passing through different sequential stages of growth. Foreign assistance was considered essential to fill the gaps in the macro-economy of developing countries and provide the much needed surplus capital for economic progress (Chenery & Strout, 1966; Rosentein-Rodan, 1961). Lewis (1954, 1955) and Rostow (1956) proposed that developing countries needed capital, investment and savings to maximize their economic growth and propel their economies towards “take-off” and attain self-sustainable growth. Hence, the rationale for foreign aid was on the one hand to enable newly independent countries to achieve economic growth, and on the other hand to keep them from joining the communist bloc.

Not only was the origin of aid spurred by political intents but later the entire foreign aid regime was driven primarily by foreign policy pursuits of bilateral aid donors during and after the Cold War period. There is vast literature that draws attention to different motivations of bilateral donors, such as geo-strategic, political, security, trade and economic interests, which they pursue through the provision of development aid. Some of the earlier works focusing on donors’ motives and self-interest for giving aid are Griffin and Enos (1970), McKinlay (1978) and McKinlay and Little (1977, 1978a, 1978b, 1979), showing that during the Cold War period foreign aid was largely used as a foreign policy tool by developed countries. Most bilateral aid donors continued to do so in the post-Cold War years. In recent times, numerous studies have highlighted how some bilateral donors typically prioritize self-interest and largely ignore the needs of developing countries and their levels of poverty (Browne, 1999, 2006; Lumsdaine, 1993; Maizels & Nissanke, 1984; McGillivray, 1989, 2003; McGillivray, Leavy, & White, 2002; McGillivray & Oczkowski, 1992; Meernik, Krueger, & Poe, 1998; Morrissey, 1990; Mosley, 1987).

By citing the adage that “there is no such thing as a free lunch” (p. 1), Riddel (2007) acknowledges that nothing is free and that the policy and practice of aid-giving has undoubtedly been motivated and sustained largely by donors’ own interests. According to Lumsdaine (1993, p. 5), a programme of such massive magnitude involving “half a trillion dollars, a score of donor countries, many international agencies and 120 recipient countries over half a century” will certainly be guided by donors’ selfish pursuits, either with or without having primary concern for the developmental needs of aid recipients. The motives and interests of the developed countries vary broadly but largely relate to trade, political, strategic and security concerns. Different bilateral donors prioritize different sets of interests at different times, and factors such as past colonial links, culture, language and traditional ties are also taken into account. To what extent the US has taken into account these factors and to what extent it has provided aid in response to the developmental needs of Pakistan constitutes the main theme of this book.

After the end of the Cold War, strategic and security interests of major bilateral donors changed for a while as there was no longer any threat of communism, hence donors and aid organizations shifted focus to a new set of issues. These included democratization, good governance, human rights, control of corruption, misuse of power and authority, the rule of law, and a renewed focus on poverty alleviation (Crawford, 2001; Dollar & Levin, 2006; Neumayer, 2003; Raffer, 1999). Recent scholarship indicates that the priority agenda of most bilateral donors and aid agencies in the decade of the 1990s was democratization and good governance (Burnell, 1994; Carapico, 2002; Carothers, 1997; Chakravarti, 2005; Neumayer, 2003). It is interesting to recall that during most of the Cold War period, all these issues were conveniently ignored by a majority of Western capitalist donors. For example, the regimes of Marcos (1965–1986) in the Philippines, General Zia (1977–1988) in Pakistan, Suharto (1967–1998) in Indonesia and the Samozas in Nicaragua were marred by massive corruption, political repression and human rights abuses. However, as mentioned earlier, because of the Cold War compulsions, major bilateral donors generally overlooked these issues in the disbursement of foreign aid and pursued their own ideological and geo-strategic goals.

At the same time, and regardless of what may have been the form of aid delivery or motives for its allocation, the issue of its effectiveness became increasingly contested. Because of this, there were calls for the reformation of the international aid system as early as the 1960s. It was argued that for aid effectiveness, it is essential to let aid-recipient ...

Table of contents

• Cover Page
• Half Title Page
• Series Page
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Figures
• List of Tables
• Acknowledgments
• List of Abbreviations
• 1 Introduction: why a book on US-Pakistan aid relationship?
• 2 An analysis of US foreign aid policies towards Pakistan, from Truman to Trump
• 3 The 2005 Paris Declaration on Aid Effectiveness, a new aid paradigm and Pakistan: an overview
• 4 The delivery and utilization of US aid in Pakistan and the aid-effectiveness principles
• 5 Discussion and conclusion: an assessment of US aid allocation and delivery to Pakistan
• Appendix I: chronology of key developments in the history of aid
• Appendix II: US economic and military aid and arms’ sales to Pakistan
• Appendix III: chronology of major events affecting US-Pakistan bilateral aid relationship
• Index