Aiding Without Abetting

In October 2009, President Obama signed the Kerry-Lugar-Berman (KLB) Act into law, thereby authorizing $7.5 billion in civilian assistance to Pakistan.

More than two years later, however, KLB has seemingly produced more acrimony than aid.

With only a relatively small percentage of KLB aid released, and with that aid having a minimal public impact, many Pakistanis complain that Washington’s promise of expanded development aid rings hollow.  Meanwhile, with the United States mired in economic malaise, many Americans are increasingly uneasy about sending any tax dollars to a nation they believe sheltered Osama Bin Laden and maintains links with other anti-American militants.

Predictably, KLB has become a political hot potato. Pakistani President Asif Ali Zardari speaks of the need to focus on "trade not aid." The chief minister of Punjab Province, Shahbaz Sharif, has called for Pakistan to refuse American aid, while political upstart Imran Khan denounces American largesse as a "curse." In Washington, House Republicans advanced a bill this summer that would cut off military and civilian aid to Pakistan unless Islamabad demonstrates counterterrorism progress — and some Congressmen suspect civilian funding would get axed first. 

Additionally, in the aftermath of the NATO border attack that killed at least 24 Pakistani soldiers last weekend, many Pakistanis are in no mood for U.S. aid — much less for any sort of relationship with America.

In this hostile environment, urging continued U.S. civilian aid to Pakistan is a hard sell. Yet it is also vital. This is the chief message of a major new Woodrow Wilson Center report, Aiding Without Abetting: Making U.S. Civilian Assistance to Pakistan Work for Both Sides. This study — to be released at a Wilson Center rollout today — is the product of extensive deliberations, both in Pakistan and Washington, undertaken by a 17-member expert working group over the last year, of which I was a member.

Washington cannot afford to let KLB fail. Long after the last American soldier has left Afghanistan, U.S. interests will still require a prosperous and stable Pakistan. Such a Pakistan is unlikely anytime soon, given the unprecedented "perfect storm" of negative factors impacting the country – among them stagflation, rapid urbanization, militancy, political stasis, and rampant societal cleavages. However, Aiding Without Abetting argues that a robust U.S. civilian aid program can help lessen the fury of this coming storm by investing in rapidly expanding urban areas (where resources and basic services are increasingly scarce) and in small and mid-scale private enterprises (which enjoy immense export and job-generation potential). Such efforts, if sustained and successful, can enhance Pakistan’s prospects for eventual stability and prosperity.

Nevertheless, major changes must occur if KLB is to have any chance of attaining such outcomes.  The most common complaint heard by working group members in Pakistan was a lack of evidence of assistance. Yet we also heard many comments about the U.S. Agency for International Development (USAID)’s poor management of KLB. Pakistanis with whom we spoke were nearly unanimous in stating that if USAID does not change, KLB will be hard-pressed to succeed.

Accordingly, Aiding Without Abetting offers several recommendations germane to USAID. One is greater transparency. The State Department and U.S. Embassy (Islamabad) websites should post information about KLB aid flows. USAID graciously supplied our working group with an accounting of KLB-authorized funds through June 30, 2011 (published for the first time in our report), revealing that nearly $530 million has been disbursed — significantly more than the $285 million figure cited by the State Department several months ago and covering the same period.

USAID should also make information available about the status of proposed programs wallowing in the bowels of the deeply bureaucratic congressional funding process — in order to demonstrate that hold-ups in aid disbursement have little to do with Washington being unreliable and insincere, and more to do with the glacier-like pace of the interagency aid approval process. We cannot know if Pakistanis will actually make use of this resource, but it would still set an important precedent for making information publicly available.

Improving KLB, however, will require much more than changing USAID.  Our report offers nearly 30 recommendations to rescue a civilian assistance program that is struggling, yet salvageable. These include:

Unconditional yet complimentary aid. Contrary to the beliefs of many Pakistanis and Americans, conditions are not attached to the non-security assistance authorized by KLB (the legislation also authorizes "such sums as may be necessary" for security assistance, for which conditionalities do apply). Retroactively applying conditions to civilian aid would send the wrong signal to a country that already regards Washington as fickle and untrustworthy. Additionally, conditionality has rarely worked in Pakistan; far larger amounts of conditional multilateral aid have induced little more than lip service from Islamabad. (Successive governments have agreed, for instance, to undertake economic reforms to qualify for IMF packages, only to renege later.)

We recommend, however, that (excluding disaster relief) Washington only provide aid for projects that Islamabad is also willing to fund. If a project is not sufficiently important to Pakistan to fund, then neither should it be important to U.S. taxpayers. To its credit, USAID has utilized this co-investment model; the agency’s Afghanistan and Pakistan director recently described a dam project in South Waziristan that is 75 percent paid for by Islamabad, and 25 percent by Washington.

Empowerment of small and medium enterprises. Pakistan’s civil society lacks the absorptive capacity to manage large inflows of aid, while Islamabad is hampered by deficiencies of will and capacity — and by the chaotic implementation of the 18^th Amendment, which devolves resources and autonomy to the provinces, now under way. While our report still calls for Washington to channel aid through Pakistani NGOs and the government, and offers suggestions to boost the capacities of both, we underscore the imperative of engaging the private sector as well.

Specifically, we suggest strengthening Pakistan’s small and medium enterprise (SME) sector. SMEs generate 85 percent of Pakistan’s non-agricultural jobs, yet job skills training programs are in short supply in the country — a great loss for its many semi-educated unemployed(unemployment is about 15 percent in Pakistan, yet according to some estimates almost half the country’s unemployed have had some level of education). Numerous Pakistanis have impressed upon us the urgency of establishing vocational certification programs. KLB funds should support such programs to help grow the SME sector.

Emphasis on cities and youth. Most Pakistani SMEs are located in urban settings. In fact, much of Pakistan is gravitating toward cities, with half the population projected to be urban by 2030. Additionally, Pakistan could one day have a 100-million-strong urban middle class. Potential for economic growth, coupled with rising levels of poverty, make urban Pakistan a logical focus for U.S. aid efforts. KLB monies should fund clean water, electricity, and sanitation in cities, and serve adult literacy training programs in poor urban areas. Additionally, in recognition of Pakistan’s youth bulge (the country’s median age is 21), KLB should sponsor youth-targeted urban community organizations.

Respect for aid limitations. Pakistan’s development cannot be imposed from the outside. This is why our report suggests ways toward eventual aid independence — such as the co-investment arrangements and vocational training programs mentioned above. Additionally, we argue that U.S. aid for the Benazir Income Support Program — a cash transfer initiative funded mostly by Washington — should continue only if the program establishes provisions (such as adult skills acquisition opportunities) that help beneficiaries graduate.

We also identify sensitive areas that are best left untouched by U.S. aid or advice. These include not only the oft-discussed areas of textbook reform and the military’s powerful role in the economy, but also water resources management. Vested interests — from wealthy farmers to sugar barons, many of them politicians — steal irrigation water from smallholders, resist water-saving policies, and reject water-conserving technologies. While KLB can and should fund clean water, attempts to revamp the entire water management system would fail mightily in the face of these vested interests.

Some may argue that last weekend’s border raid underscores the difficulty — if not the futility — of crafting a long-term civilian assistance program in Pakistan. We contend, however, that considerations about civilian assistance should be divorced from the security situation. It should continue regardless of the state of U.S.-Pakistan security relations, through the five-year timeframe envisioned in the KLB legislation — so long as Islamabad permits it. Such continuity can help ease, even if only modestly, Pakistani suspicions that U.S. civilian aid is a mere appendage of Washington’s security-driven policies in Pakistan — a tool to be deployed to buy support for U.S. objectives, and to be discarded if Pakistan no longer supports American goals.  

There is still hope for KLB. In recent weeks, Washington has telegraphed a renewed desire to push forward with the civilian aid program. In a statement attached to a State Department report on civilian assistance to Pakistan and Afghanistan submitted to Congress in early November, Secretary of State Hillary Clinton vowed to keep civilian assistance to Pakistan flowing, warning that "disengaging now would undermine our military and political efforts and the national security interests of the United States." If there has ever been a time to get U.S. aid right, it is now.  

Seven and a half billion dollars in civilian assistance will neither transform Pakistan’s economy nor win over a population deeply hostile toward the United States. Yet with the right changes, American aid can make visible improvements in Pakistani lives, and help edge the country a bit closer to the prosperity and stability that its people — and the United States — have long hoped it will achieve.

Michael Kugelman is the South Asia associate at the Woodrow Wilson International Center for Scholars. He can be reached at michael.kugelman@wilsoncenter.org or on Twitter @MichaelKugelman.