Several policy-makers, politicians, and development professionals in the west believe that the economic survival of Pakistan rests on handouts from the United States. Often American legislators ridicule Pakistan for willingly accepting American dollars in charity, but not delivering on American demands in return.
The Westerners are not alone in believing that Pakistan’s survival rests on handouts from the US. While speaking on Canadian TV earlier this week, Raheel Raza, a Canadian of Pakistani origin, argued the same. “Ever since the inception of Pakistan the United States has given Pakistan aid without which it cannot survive,” said Ms. Raza.
The US economic and military assistance to Pakistan indeed has a long history stretched over decades during which several American governments have poured billions of dollars into Pakistan. The question, however, is to determine first why Americans aided Pakistan and second what was the money intended for. And even more importantly, one should determine if indeed Pakistan’s economic survival rests on American aid.
The British newspaper Guardian maintains an active database documenting six decades of American aid to Pakistan. The data is compiled by Wren Elhai of the Center for Global Development in Washington, DC. The database reveals that since 1948 the US assistance to Pakistan has largely been for civilian purposes. Of the $61.7 billion in total assistance (in constant 2009 dollars) provided to Pakistan between 1948 and 2010, $40.4 billion were provided for economic assistance and $21.3 billion in military assistance. The economic assistance to Pakistan peaked in the early 60s when in excess of $2 billion annually were provided to Pakistan.
Title: US Aid to Pakistan, 1948-2010, (millions, constant 2009 US$)
Since 1982, the United States has provided $17 billion in military assistance compared to $13.5 billion in economic assistance. This has largely been a result of covert and overt American military operations in Afghanistan that began in late 70s. And while there has been a slowdown in economic and military assistance between 1992 and 2001, the US revived its economic and military assistance to Pakistan after 9/11. In fact, since 2002 the US military assistance to Pakistan at $13billion dollars is two-times the economic assistance it provided to Pakistan. The dramatic increase in military assistance to Pakistan in the recent past has contributed to the weakening of democratic and civilian institutions in Pakistan, while it has helped strengthen military’s grip on the socio-political spheres in Pakistan.
One cannot consider military assistance as a favour to Pakistanis. In fact, the US military assistance has been instrumental in reinforcing Pakistani armed forces against the civilian governments. The American military and economic assistance offered to General Zia in early 80s and later to General Musharraf since 2002 are examples of how American funds have strengthened military dictators against civilian setups in Pakistan. Notice in the above graph how the US assistance has largely been absent in the 1990s when parliamentary democracy prevailed in Pakistan.
In 2010, the US economic assistance to Pakistan equalled $1.8 billion. While the amount is indeed large, however on a per capita basis, this translates into a mere $10.3 for the 180-million Pakistanis. Should we believe that Pakistan’s survival has rested on a mere $10.3 per person in civilian assistance from the United States?
Some fact-checking is indeed in order. Pakistan is a $175 billion economy. Since 2002, the US has provided on average $825 million annually in economic assistance to Pakistan. On the other hand, Pakistani expatriates have remitted on average $1 billion each month in 2011, making remittances an order of magnitude higher than what the US has been providing to Pakistan. I would argue that Pakistan’s economy owes much more to what the expatriates contribute than what comes in charity from the United States.
While I remain grateful to American taxpayers who have contributed billions of dollars to Pakistan, for instance, American help with the rescue and relief efforts after the floods in 2011 is indeed commendable, I must also point out that the American wars in the region have played havoc with Pakistan’s economic and social infrastructure. According to the Government of Pakistan, the direct and indirect costs from Nato’s war in Afghanistan, which began on October 07, 2001, has reached over $68 billion. These economic losses are an order of magnitude higher than what the US has offered in economic and military assistance to Pakistan. And who to account for the 36,000-plus Pakistanis who have perished as a result of the Nato' war efforts in the region. A fair compensation would require the US to engage the United Nations to verify Pakistan’s claims and then reimburse Pakistan in full for proven claims.
* The 2010-11 figures are estimated from 8 months of data.
The nature of development aid business is such that large sums of donated money in fact return to the donor country in the form of contractual payments to consultants and manufacturers. I recall listening to the former World Bank president James Wolfensohn in 2004 at the 16th Annual Bank Conference on Development Economics in Washington DC where he offered his candid views about how development aid was misspent by donors. In 2003-04 development aid was estimated at $58 billion of which $14 billion were pocketed by the consultants alone.