WASHINGTON, June 1: The United States needs to substantially revamp its approach to Pakistan, focusing on trade and investment, not aid, says a new study released on Wednesday.

The report by the Centre for Global Development, Washington, also urges the US administration to delay much of its multi-billion-dollar aid to Pakistan because it believes the aid has failed to bring prosperity to the nuclear-armed nation.

Instead, the report advocates providing duty- and quota-free access for all Pakistani exports to the US market for at least five years and to increase incentives for investment in that country.

Suggested incentives include new forms of risk insurance and credit programmes for Pakistan's small and medium enterprises.

“The United States is way off course in Pakistan,” says CGD president Nancy Birdsall, who convened the study group and is the lead author of the report. “It's heavily focused on security while neglecting low-cost, low-risk investments in jobs, growth, and the long haul of democracy building.” She also advises “a sense of humility”, acknowledging that “the US can't accomplish that much. If the Pakistanis aren't ready politically, we can't expect miracles overnight”.

The report says that the administration's integrated “Af-Pak” approach — lumping Pakistan together with Afghanistan — has “muddled” the Pakistan development mission. Similarly, “the integration of development, diplomacy and defence has left the programme without a clear, focused mandate”.

The report offers five procedural recommendations to get the US development programme on track:1. Clarify the mission: separate the Pakistan development programme from the Afghanistan programme and from the Pakistan security programme.

2. Name a leader: put one person in charge of the development programme in Washington and in Islamabad.

3. Say what you are doing: set up a website with regularly updated data on US aid commitments and disbursements in Pakistan by project, place, and recipient.

4. Staff the USAID mission for success: allow for greater staff continuity, carve out a greater role for programme staff in policy dialogue, and hire senior-level Pakistani leadership.

5. Measure what matters: track not just the outputs of US aid projects, but Pakistan's overall development progress.

Three of these recommendations are on better ways to deploy aid resources — including paying for verified outcomes and co-financing with other donors for established education programmes that are already working.

Two recommendations focus on the largely untapped potential of trade policy and private investment.

In 2009, the US Congress authorised a $7.5 billion package for Pakistan, hoping that it will help fight anti-Americanism by switching the focus from the military to building the economy and civilian institutions.

“We recommend that much of the $7.5 billion Kerry-Lugar-Berman aid package not be disbursed immediately,” the report says.

The report concedes that setting conditions to assistance is an “extremely sensitive subject” but warns that US assistance would be ineffective without reforms in areas such as education, energy and fiscal policy.

“Pakistan must make a significant course correction if it is to join the ranks of India, Indonesia and other large Asian countries on a clear path of sustainable growth and transformation,” the report says.