The (unspent) money trail

Published July 6, 2015
"KLB only authorised $7.5 billion, but the actual amount appropriated could have been – and has been – lower than this figure," says Jonah Blank. ─ AFP/File
"KLB only authorised $7.5 billion, but the actual amount appropriated could have been – and has been – lower than this figure," says Jonah Blank. ─ AFP/File

It will take more than ten years to spend what the US thought it could do in five.

Of a $7.5 billion aid package, only $4.7 billion was spent in Pakistan during its five-year lifetime.

When the aid package was announced in October 2009, Pakistanis saw it as a promise from the United States. It was popularly known as “KLB” or Kerry-Lugar-Berman.

But today, Jonah Blank, who helped author the bill for then-Senator John Kerry, admits that the number was more of a Congressional wish than a bilateral promise.

“Unfortunately, there is no such thing as a 5-year budget appropriation,” he admits. “We can give authority to budget funds for multiple years, but the actual numbers are decided year-by-year. KLB only authorised $7.5 billion, but the actual amount appropriated could have been – and has been – lower than this figure.”


Pakistan received less than $200 million in the first year of KLB, Former finance minister Hafeez Sheikh


Money matters

The Pakistani government has frequently complained that KLB was a hoax.

In the first year of the bill, Finance Minister Hafeez Sheikh complained that he had received less than $200 million, far short of the promised $1.5 billion per year.

Five years later, Planning and Development Minister Ahsan Iqbal echoed the sentiment when he said the government had received only between $600-700 million. The bulk of the aid money, he alleged, went to US companies while the rest went to non-governmental organisations (NGOs).

But the reality is not as simple as government officials suggest.

According to figures posted on the USAID website, $1.2 billion, or 25 percent of the $4.7 billion in KLB money, went to the government of Pakistan.

Thirty-eight percent, or $1.7 billion went to the NGO sector, including private companies.

The rest was provided in-kind, including tents, boats, and hospital equipment for flood relief.

An extra one billion dollars was spent in Pakistan during the KLB period for emergency assistance, in response to floods or IDP crises. If included, it would bring spending in the KLB period to $5.7 billion.

But the US government does not include emergency money in its reported KLB figure because it comes from money intended for global emergencies rather than the funds set aside for Pakistan at the start of the year.

However, whether or not the extra billion is added to the total, it’s not clear from these numbers how much was spent on administration, offices expenses, security, travel, and housing versus outputs of use to the Pakistani people.

The delay in the release of the funds is simply due to budget battles between the US president and Congress in Washington – funds are never released in the year they are meant for. For example, the $4.7 billion KLB figure leaves out $1.3 billion in KLB funds that were allocated for 2013 and 2014 – the last two years of the bill.

Congress released the 2013 budget days before KLB expired in 2014 so it could not be spent in time. The 2014 budget has still not arrived in Pakistan.

It is in part because of the US embassy’s large “pipeline” of unspent funds that the US Congress cut funding for Pakistan down to around $550 million in 2014, the final year of the bill.

The State Department’s budget request for Pakistan post-KLB – meaning 2015 and 2016 – averages around $550 million per year. (2015 is $597 million and 2016 is $524 million).


Unfortunately, there is no such thing as a 5-year budget appropriation, KLB author Jonah Blank


Endgame

KLB ended up delivering far less than the anticipated $7.5 billion. But the money is still coming.

Since KLB expired in September 2014, an additional $1.3 billion is set to be spent.

On top of that, the State Department has requested another approximately $1 billion for Pakistan.

All of this money keeps KLB alive. It will be spent on KLB-era strategy and programs.

By 2017, the US will likely meet the $7.5 billion allocation. Spending the last of that money may take even longer.

Read more: Lost in a bureaucratic maze

Published in Dawn, July 6th, 2015

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