Wealthy nations move to shore up Pakistan

Concerns about the stability of Pakistan are opening up the international community's wallet.

In Tokyo Friday, a group of wealthy nations pledged to give Pakistan $5.28 billion over the next two years to help shore up its slumping economy and fragile civilian government. The US kicked in $1 billion, a downpayment on plans moving through Congress to send $1.5 billion a year in development aid for at least the next five years.

The money has touched off a controversy over how to improve the effectiveness of aid to Pakistan, as well as how much reform to expect from Islamabad in return. Pakistani officials are balking at "micromanagement," but many experts argue passionately for more dialogue on accountability.

"I think the time is passed where we can keep cutting checks to Pakistan without knowing how this money is going to be spent," says Ashley Tellis, a South Asia analyst at the Carnegie Endowment for International Peace.

Between 2002 and 2008, the US poured $11.2 billion into Pakistan – more than $8 billion of it to the military. Some of that money remains poorly accounted for, according to the General Accounting Office and aid experts.

And the return on that investment has been minimal, argues Christine Fair, a regional expert at the RAND Corp. She places blame on both sides of the relationship. In some cases, the US knew it was funding programs that were bound to fall flat, she says, because their real purpose was more a "strategic bribe" to gain influence over the military regime in Islamabad.

"We even lie to ourselves internally about the program objectives of our aid. Until we clarify for ourselves, how can we lay forward benchmarks for the Pakistanis?" she asks.

As the hat gets passed around again for Pakistan, donor countries are voicing more of these concerns. Rather than reserving most money for the military, Congress is focusing its aid on civilian development. Varying bills contain provisions that aim to enforce more accountability for the spending and to nudge Islamabad to do more to fight militancy.

Officials from some of the nearly 30 countries and international organizations at the Tokyo gathering also used the moment to urge Pakistan to crackdown on the spreading insurgency.

Pakistan's President Asif Ali Zardari assured leaders that such action was a priority. "Despite the fact that I lost the mother of my children [to assassination], I have taken up this challenge – to lead Pakistan out of these difficult times," he said. "If we lose, you lose. If we lose, the world loses."

Yet earlier this week, top Pakistani officials objected strongly to initial efforts to tie American aid to progress in that fight. The prime minister warned against attaching "conditionalities," a message echoed by Pakistan's ambassador to the US, Husain Haqqani.

"It is not prudent to put conditions on assistance to Pakistan in an aid bill because it gives the wrong signal to the Pakistani people, and at the same time limits the options of the executive branch of the US government in the conduct of foreign policy," Mr. Haqqani told FOX News.

The statements came the same week as Sen. John Kerry (D) of Massachusetts, cosponsor of the Senate aid bill, visited Pakistan.

Some Pakistani experts, including author Ahmed Rashid, have warned that some of the toughest conditions added to a draft bill in the House – those that appear aimed at shaping Pakistan's foreign policy – would be difficult for any Pakistani government to commit to.

Analysts are divided over how much the US should continue to use aid to bend Islamabad toward Washington's security objectives – including the severing of all Pakistan's ties with militant groups. "I'm not sure how far the money carrot is going to break this bond. I'm skeptical about this," says Kaiser Bengali, an economic analyst in Karachi.

Ms. Fair argues for negotiation with Pakistan over the terms of the aid, and thinks accountability measures as well as inducements to tackle militancy should both be on the table.

"We want to make sure everyone is getting value from this expenditure, including the Pakistani government," says Fair. "I believe this with all conviction: the $11 billion given without stern accountability has made the Pakistani government less capable, not more."

For its part, the US government agency in charge of disbursing the sliver of non-military aid touts what some of that money has produced. The USAID website says that funds spent in the tribal areas have fixed 58 schools and helped raise vaccination levels from 30 percent to 41 percent. The money has also provided more than 65,000 microcredit loans, trained more than 20,000 election monitors, and trained 42 percent of the government primary school teachers in two of the nation's four provinces.

Yet, says Mr. Tellis, the international community has been giving money to help stabilize Pakistan since the 1950s and the question remains why it hasn't been more effective.

"We have done projects, but the projects have not translated into institutional change and this is the most serious risk we face today," says Tellis. He says that change must be insisted upon by donors as a quid pro quo – aid in exchange for the government doing a certain number of things. "The international community has never done the work required to figure out what those things were."

What's being funded is also a major concern of most experts. In the past two decades, international donors have moved away from giving money toward such projects like building power plants and roads, and opted instead to give it either to the military or to open-ended budgetary assistance to Pakistan, says Mr. Bengali.

"What that means is the government can continue to spend money on nondevelopment and nonproductive areas, and if it runs up a fiscal deficit, there are foreign loans available to bridge that gap," he says. "It's encouraged governments to be irresponsible."

In a nod to such concerns, Pakistan brought to the Tokyo conference a prioritized lists of projects. Fair, however, cautions that there are pitfalls in viewing development as a collection of projects rather than as a series of performance goals. For instance, in some countries the US ties education aid to academic testing, and expects to see improvement.

"You can build a school. That is the easy part," she says. "But unless you collaborate with your counterpart in the Ministry of Education, a year later, the schools becomes a storage shed."