Whether the $3 billion US aid offered during the President’s recent visit to the USA should be viewed as a feather in the cap of some depends upon the vantage point from which the scenario is observed.

There is no denying the fact that economic aid given during the last two decades has been driven primarily by political as opposed to economic reasons. Even the post-World War II aid to developing countries and also to Western European countries had strong political underpinnings even though the stated goals were strictly economic.

However, the idea behind economic development was either to create a politico-economic bulwark against the former Soviet Union in Western Europe and/or to win ideological support of developing countries during the Cold War. Economic development, therefore, featured as a key element of a defence strategy to avert the then Soviet threat.

While Western Europe made good use of the aid under the Marshall Plan, most developing countries turned out to be bottomless pits whose appetite for aid could never be satiated due to an absence of structural, institutional, attitudinal, and behavioural factors required essentially to turn aid over into economic growth and inclusive development. Consequently, as European debtor countries would graduate to become creditors, most developing countries would remain relegated to the status of debtors for a long time to come. Unfortunately, Pakistan happens to be one of them!

So, every time we are able to line up foreign assistance, we give a pat on our backs as though a tremendous economic achievement has been made when, actually, it is a reflection of our continued dependence on donor countries from which we have, thus far, failed to emerge due to a host of non-economic, political, social, administrative, and historical factors. However, if viewed from the vantage point of the Ministry of Finance, they have something to be happy about as their restricted job description is primarily to keep the economy afloat with the help of resources that may be generated internally and/or externally, if not internally. The post-9/11 situation facilitated this part of the finance ministry’s job alright!

Notwithstanding the political reasons for giving and withdrawing aid, the developed countries grew weary of aid over time as it failed to achieve the economic goals in developing countries in the post-World War II phase. The official development assistance declined below the UN mandated 0.7 per cent of the GNP in the cases of USA and UK.

There was also resistance from their people who learnt that their taxpayers’ money was instead flowing into the coffers of the rich in the developing countries who were richer than most of the rich in the developed countries themselves. Amongst other factors, as aid served to promote dualism in developing countries, aid weariness grew in the developed countries. They were, however, compelled to increase their aid commitments after the Soviet invasion of Afghanistan. In the 1980s, Pakistan stood to gain in terms of aid for its geo-strategic importance. The reasons for aid would now be more explicitly political than was the case in the past.

The end of the Cold War did not augur well for Pakistan’s aid inflows. US sanctions were slapped on Pakistan for its nuclear programme which it would neither freeze nor roll back due to its security considerations. Come September 11, 2001 and the world in general and the developed West in particular found itself trapped again in a certain security situation whose symptoms they would choose to address first even though they had all contributed to the sources and causes of terrorism which they must now fight. Pakistan again emerged to be of strategic importance in this global fight against terrorism or militancy as, reportedly, it had been a source of informal fighters who would wage informal wars in the various hotspots of the region.

These informal armies came to be viewed either as jihadis or freedom fighters or militants or terrorists depending upon the angle of the lens from which they were viewed. After 9/11, however, they would all be called “terrorists” in all official and diplomatic quarters the world over. As the official terminology got harmonized, the forces of the world aligned to fight terror for no options were allowed. Pakistan’s strategic position in the fight against terror gained salience. This would then be another turning point in US-Pakistan’s political and thereby economic relationship. Pakistan would then qualify for not only waivers from US nuclear-related sanctions but would also get a share of the US largesse doled to its allies.

The recent $1 billion Pakistan debt write-off by the USA and a $3 billion aid offer are in consideration of the changed political and strategic situation as known by all. It should, therefore, be viewed as an unearned gain by the finance ministry. At best, they might be scoring some points in negotiating the details of the package. However, it might be a political gain in the sense that Pakistan has been able to get this much aid and offers even though President Musharraf’s speech of January 12, 2002 has yet to be put into perceptible action. To this extent, it can be viewed as an achievement. But, for how long can we remain sanguine about both our economic and political outlook?

Going gaga over aid after 55 years of independence is a sure sign of underdevelopment rather than that of development which should have occurred by the end of over half a century of independence. “Development of underdevelopment” took place despite all the aid poured in since the first two decades of inception. There has been a lack of “absorptive capacity” in the country for aid. Had this absorptive capacity improved over the decades, we would not have been in need for more aid. Demand for more aid is a reflection again on the country’s capability to turn aid over into sustainable economic benefits. Unfortunately, all aid packages have come with strings attached. In the earliest decades of “development,” aid packages came tied with economic ideological prescriptions that were more suited for the developed countries.

Western European countries had the physical and social infrastructures to convert aid into tangible economic gain and independence over time. These structures were missing in most of the developing countries which too were fed the same dose even though the nature of their ailment was quite different. The strings attached to economic ideological prescriptions did not work in most developing countries due to a different set of initial conditions prevailing there.

Since the recipient countries’ economies were managed by the nationals honed intellectually in donor countries, none in the recipient country would challenge the ideological strings attached. As for the donors, they pushed the strings because, inter alia, it was also a part of their Cold War agenda to promote markets and capitalism upfront instead of first preparing ground for the same in those countries which were too backward to receive the above ultimate in economic development in their first stage. It was the primacy of politics over economics that drove the donors’ economic agenda even in the earliest aid packages. As the recipients received the same mindlessly, the donors were no less mindless as their horizons too were short-term.

Despite the intellectual capital accumulated in the developed countries in general and the USA in particular, their policy makers cannot see beyond the immediate goals of an encounter. Neither can they visualize the spillovers or negative fallouts from their key thrusts. The aid in the earliest decades of independence promoted dualism, as mentioned above. And, these dualistic societies would then provide breeding grounds for militants as alternative occupations or vocations in economies that failed to generate adequate employment despite all the aid packages they received. Had the initial aid packages focused on “inclusive” growth and development, none would have been “excluded” to find alternates in informal armies. As people would thus have been liberated from oppression, President Bush and his hawkish inner circle would not have been worrying about “liberating” the oppressed and the deprived as a strategy against “terrorism” around the turn of the century. It was the very myopic view of economics and politics that came tied with the earliest aid packages that provided a potent economic source of what we now call militancy or terrorism, the religious and/or political disposition of some notwithstanding. So, had the donors seen beyond the then immediate goal of defeating communism on politico-economic grounds, they would not have given rise to a fresh source of threat to world security in its current form. That is, they would have been earnest about the development of the recipient developing countries instead of having viewed their economic relationship with the recipients as a mere stop-gap arrangement to ward off communism.

They would then have jointly developed country-specific solutions instead of mindlessly exporting a market-based trickle down model that may have worked in one part of the world due to its suitable conditions but proved to be a “false paradigm” for other parts of the world known for market failures.

Important question is whether this lesson has even been learnt now despite the “reverse dependence” of the developed world on the third world in the form of security this time around? That is, the developed world’s security is a function of the threats to security being generated from the third world. Can these threats be dealt with by merely forcing the developing countries to freeze and/or roll back their nuclear programmes or to compel them to recognize Israel or to seek help of their formal armies to help them consolidate their position in occupied Muslim lands or to convert their madressahs into public schools? Or, do we require a socio-economic uplift of the third world countries so as to pre-empt the supply of potential candidates to match the demand for informal armies?

While the demand side requires a resolution of the issues in Palestine, Kashmir, and Chechnya, the supply-side requires socio-economic development of the third world countries. This is how the two prongs of the scissors can work to provide the much desired security.

Further, allies in one cause if ditched after victory can also be a potent source to fuel the supply-side which lesson too the donor in the US should have seen by now especially after the end of the Cold War when the region was abandoned economically and politically by the US.

This was yet another variable that fuelled the insecurity the world is grappling with currently.

So, a farsighted approach to the problem of security would require an ability to see beyond the $3 billion US aid package to win support for some highly contentious issues in the short run. Resolution of the world’s security issue in general and that of the USA in particular requires an approach and an earnest mindset that would strike at the very roots of the sources and causes discussed herein which cannot be removed through a symptomatic cure envisaged again in the recent aid package.

While a long term sincere relationship is required between the two countries to aim decisively at both economic and political development, aid is no reason to celebrate unless viewed as a means to the end of a respectable mutual coexistence of the developed and the developing countries alike in general and that of the donor and the recipient in particular. If aid is seen as an end in itself by the recipient government to stay afloat and by the donor government as a consideration for some political decisions in the short run, we will not only find ourselves marking time on the front of economic development but the issue of security will also remain largely unresolved year after year and decade after decade despite the short-run costs the donors may be willing to incur for the purpose.