Monday, August 24, 2009

80/20 Strategy and Marshall Plan for Pakistan

There has been much discussion but little action on the new US strategy to emphasize economic aid for Pakistan, in addition to the concerted NATO-Pakistan military action against the insurgents. The 80/20 rule, as outlined by General Petraeus, calls for 80% emphasis on the political/economic effort backed by 20% military component to fight the Taliban insurgency in both Pakistan and Afghanistan. This rule has led many to speculate about a US-backed "Marshall Plan" style effort to help Pakistan expand the economic opportunity for its young and growing population, vulnerable to exploitation by extremists.


The Marshall Plan, named after General George Marshall, the US secretary of state after the Second World War, is credited with the rapid economic rise of Europe and Japan from the ruins of the war. The Marshall Plan aid by the US amounted to about 100 billion in today's dollars. Pakistani leadership called for their own "Marshall Plan" earlier this year, saying the country needed $30 billion over the next five years to fight Taliban and al-Qaeda militants.

The United States, United Kingdom and Western allies met in Istanbul yesterday to draft a $5 billion "Marshall Plan for Pakistan" to help rebuild the swaths of the country destroyed in its war against terrorism. While $5 billion will help in Pakistan's economic recovery, it is really a stretch to compare it to the $100 billion (today's dollars) US Marshall Plan for Europe after WW II. To put it in perspective in Pakistan's context, let's consider the following: At the end of calender year 2008 in Pakistan, remittances topped 7 billion dollars, an increase of 17 per cent year over year, led by higher remittances from oil-rich GCC countries, which grew by 30 per cent year on year. Similarly, FDI inflows jumped 100 per cent year over year to 708 million dollars for December, 2008, as the telecom, oil and gas, and financial-services sectors continued to attract foreign inventors, according a report in the Nation newspaper. Annual cash remittances from overseas Pakistanis and foreign direct investments (FDI) in Pakistan in this decade have been far larger and much more significant in its economic growth than all of the well-publicized foreign aid put together.

Though the amount of aid appears to be far less than what Pakistanis need and asked for, it does seem that the Friends of Pakistan Aid Consortium, led by US and UK, is beginning to get serious about the economic component of the fight to save nuclear Pakistan from the potential danger of falling prey to the powerful insurgency still plaguing the two neighbors in West Asia.

The Telegraph of London has reported today that "Friends of Democratic Pakistan, including ministers from Japan, Turkey, Saudi Arabia, Germany, France, China, Australia and the European Union, met to agree funding and draft in experts to agree a series of projects to support reconstruction efforts and shore up the country's new democratic government. Gordon Brown and Barack Obama will co-chair the group's next meeting in New York next month where the scale of funding and support will be finalised."

The British newspaper adds that "Britain is expected to take a lead role in creating an education task force to explore non-madrassah (religious) schools. It will also play a role in developing new public-rivate partnerships to accelerate new investment in services. “There’s a bit more openness [in Pakistan] now to discuss these things with friends, the new democratic government is opening up,” said a diplomat."

This reported plan of serious economic aid and expertise, if true, is a step in the direction. But it must not be allowed to become victim of bureaucratic redtape, incompetence and corruption. Such an effort must also address the issues of poor governance and feudal excesses in Pakistan to ensure the effectiveness of the money offered in making a real difference in the lives of the average people of Pakistan in terms of their human development and expanded economic opportunity.

Related Links:

Feudal Punjab Fertile for Terrorism

Taliban target Swat's landed elite

HDF Fundraiser in Silicon Valley

Valuing Life in Afghanistan and Pakistan

Missiles versus Schools

Pakistan's Choice: Globalization versus Talibanization

Feudal Raj in Pakistan

Aid, Trade and FDI in Pakistan

15 comments:

Anonymous said...

Good for pakistan. However the point of consideration is that the willingness of the horse to come to the pond to drink as per the terms of the pond.

Western aids do come with their own strings. Further internal atmosphere is very critical from the perpsective of the success of the plan. English education system is another important component which aids the developmen where as the educational system is tilted towards the madrassas

Anonymous said...

Your article is the probable answer of the dream.

Sunday, August 30, 2009
NY Times Harpoon Aims at Heart of Pak Aid Bill

https://www.blogger.com/comment.g?blogID=5848640164815342479&postID=4290266226134293828

Riaz Haq said...

Here's a report in today's NY Times about deep discontent among Pakistani youth:

LAHORE, Pakistan — Pakistan will face a “demographic disaster” if it does not address the needs of its young generation, the largest in the country’s history, whose views reflect a deep disillusionment with government and democracy, according to a report released here on Saturday.

The report, commissioned by the British Council and conducted by the Nielsen research company, drew a picture of a deeply frustrated young generation that feels abandoned by its government and despondent about its future.

An overwhelming majority of young Pakistanis say their country is headed in the wrong direction, the report said, and only 1 in 10 has confidence in the government. Most see themselves as Muslim first and Pakistani second, and they are now entering a work force in which the lion’s share cannot find jobs, a potentially volatile situation if the government cannot address its concerns.

“This is a real wake-up call for the international community,” said David Steven, a fellow at the Center for International Cooperation at New York University, who was an adviser on the report. “You could get rapid social and economic change. But the other route will lead to a nightmare that would unfold over 20 to 30 years.”

The report provides an unsettling portrait of a difficult time for Pakistan, a 62-year-old nuclear-armed country that is fighting an insurgency in its western mountains and struggling to provide for its rapidly expanding population. The population has risen by almost half in just 20 years, a pace that is double the world average, according to the report................
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The findings were sobering for Pakistani officials. Faisal Subzwari, minister of youth affairs for Sindh Province, who attended the presentation of the report in Lahore, said: “These are the facts. They might be cruel, but we have to admit them.”

But young Pakistanis have demonstrated their appetite for collective action, with thousands of people taking to the streets last spring as part of a movement of lawyers, who were demanding the reinstatement of the chief justice, and Mr. Steven argued that the country’s future would depend on how that energy was channeled. “Can Pakistan harness this energy, or will it continue to fight against it?” he said.

http://www.nytimes.com/2009/11/22/world/asia/22pstan.html?_r=1&scp=1&sq=pakistan%20youth&st=cse

Riaz Haq said...

Lately, there have been some arrests of American-Muslim and Pakistani-American youths on suspicions of terror. The Internet has been identified as a tool for radicalization and proposals made to deal with it. Here's an interesting post by Reem Salahi in HuffingtonPost on this subject:

Yet even in cases where agent provocateurs were not employed, the reality is that the government and media have too long treated Islam and Muslims as a homogeneous, non-dynamic, suspect group. Whenever a Muslim engages in a criminal act, the individual is always qualified by his religious background. Very rarely do we see similar treatment of non-Muslims. For example, I have never read an article describing Timothy McVeigh as the Christian white man. But nearly every article on Nidal Hasan qualifies him as a Muslim and Palestinian within the first few sentences.

As a consequence, Muslims are forced to account for the (negative) actions of a fourth of the world's population. Ironically, I have never been congratulated for the positive actions of other fellow Muslims. The acts of a few bad apples or even a few misguided youth become the norm and not the exceptions. Put differently, it would be like suspecting that every White high school student was prone to commit a massacre as Eric Harris and Dylan Klebold, the killers at Columbine High School, did.

The reality is that the discourse on radicalization and homegrown terrorism is fundamentally racist and Islamophobic. It is based on seeing Muslims as the "other" and viewing our actions through an "orientalist" lens which frames any Muslim's questionable action as terrorism. Hence, a Muslim overstaying an immigration visa or improperly filing taxes or even paintballing becomes evidence of terrorism and radicalization, justifying the government's infiltration of our mosques, surveillance of our youth groups, and mapping of our populations. Maybe, just maybe, Muslims don't need to be understood by a different rubric than other populations. Further, by framing Muslims as terrorists and as the internal enemy within, the government and media have alienated and disenfranchised many law-abiding Muslims who seek nothing more than to actually live "unremarkable" lives.

Those in the media, in the government, and in Muslim organizations who have jumped on the bandwagon, you have missed the boat. Muslims and Muslim youth are not intrinsically prone to radicalization through the aid of the internet, just as White youth are not intrinsically prone to commit massacres or lynch ethnic minorities in solidarity with the KKK. Rather, the problem is the media and the government's continued vilification and the consequential disenfranchisement of the Muslim community. It is the government's infiltration of mosques and community centers with informants and agent provocateurs. It is the FBI's prolonged fishing expeditions and false prosecutions of many innocent Muslims. And it is an ever-worsening foreign policy that wastes away our tax dollars on killing innocent civilians throughout the world. So please stop parroting the misguided construct of homegrown terrorism and Islamic radicalization as the problem, when the real problem is xenophobia couched in politically correct terms.

Riaz Haq said...

According to a PBS news report, the UNODC estimates that the Taliban earned $90 million to $160 million per year from taxing the production and smuggling of opium and heroin between 2005 and 2009, as much as double the amount they earned while in power nearly a decade ago, reported the Agence France-Presse.

"The Taliban's direct involvement in the opium trade allows them to fund a war machine that is becoming technologically more complex and increasingly widespread," Antonio Maria Costa said.

He called the Afghanistan-Pakistan border "the world's largest free-trade zone in anything and everything that is illicit -- drugs of course, but also weapons, bomb-making equipment, chemical precursors, drug money, even people and migrants."

Less than 2 percent of the opium and heroin is seized by authorities before it leaves Afghanistan, with 40 percent of the heroin trafficked out of the country through Pakistan, 30 percent into Iran and about 25 percent through Central Asia, Reuters reported.

Central Asian nations intercept just 5 percent of the drugs flowing into their countries, as opposed to 20 percent in Iran and 17 percent in Pakistan, the report says, according to the AFP.

Worldwide, only 20 percent of Afghan opiates are intercepted before reaching addicts, while twice as much cocaine from South America is seized, the study said.

Of the 15.4 million opiate users worldwide, 11.3 million use heroin, while the rest use opium, the thick paste from poppies that is used to make heroin, reported Reuters.

Nearly half the world's heroin is consumed in Europe and Russia, and 42 percent of the world's opium users are in Iran.

Heroin and opium cause up to 100,000 deaths a year. Opiates are also helping spread HIV at an unprecedented rate through users sharing needles, the report said.


It should be recalled that the Taliban had completely eradicated poppy from Afghanistan when they ruled in 2000-2001.

Riaz Haq said...

Even if most Americans choose to assign no value to the lives of many poor Afghan and Pakistani civilians killed as "collateral", here is an analysis by a blogger at kabulpress.org of the exorbitant financial cost of the US war in Afghanistan to the American taxpayers:

The estimated cost to kill each Taliban is as high as $100 million, with a conservative estimate being $50 million.

1. Taliban Field Strength: 35,000 troops

2. Taliban Killed Per Year by Coalition forces: 2,000 (best available information)

3. Pentagon Direct Costs for Afghan War for 2010: $100 billion

4. Pentagon Indirect Costs for Afghan War for 2010: $100 billion

Using the fact that 2,000 Taliban are being killed each year and that the Pentagon spends $200 billion per year on the war in Afghanistan, one simply has to divide one number into the other. That calculation reveals that $100 million is being spent to kill each Taliban soldier. In order to be conservative, the author decided to double the number of Taliban being killed each year by U.S. and NATO forces (although the likelihood of such being true is unlikely). This reduces the cost to kill each Taliban to $50 million, which is the title of this article. The final number is outrageously high regardless of how one calculates it.

To put this information another way, using the conservative estimate of $50 million to kill each Taliban:

It costs the American taxpayers $1 billion to kill 20 Taliban

As the U.S. military estimates there to be 35,000 hard-core Taliban and assuming that no reinforcements and replacements will arrive from Pakistan and Iran:

Just killing the existing Taliban would cost $1.75 Trillion, not including the growing numbers of new Taliban recruits joining every day.

The reason for these exorbitant costs is that United States has the world’s most mechanized, computerized, weaponized and synchronized military, not to mention the most pampered (at least at Forward Operating Bases). An estimated 150,000 civilian contractors support, protect, feed and cater to the American personnel in Afghanistan, which is an astonishing number. The Americans enjoy such perks and distinctions in part because no other country is willing to pay (waste) so much money on their military.

The ponderous American war machine is a logistics nightmare and a maintenance train wreck. It is also part-myth. This author served at a senior level within the U.S. Air Force. Air Force “smart” bombs are no way near as consistently accurate as the Pentagon boasts; Army mortars remain inaccurate; even standard American field rifles are frequently outmatched by Taliban weapons, which have a longer range. The American public would pale if it actually learned the full story about the poor quality of the weapons and equipment that are being purchased with its tax dollars. The Taliban’s best ally within the United States may be the Pentagon, whose contempt for fiscal responsibility and accountability may force a premature U.S. withdrawal from Afghanistan as the Americans cannot continue to fund these Pentagon excesses.

If President Obama refuses to drastically reform the Pentagon’s inefficient way of making war, he may conclude that the Taliban is simply too expensive an enemy to fight. He would then have little choice but to abandon the Afghan people to the Taliban’s “Super-Soldiers.” That would be an intolerable disgrace.

http://kabulpress.org/my/spip.php?article32304

Riaz Haq said...

Here's an excerpt from a recent piece in Newsweek explaining the critical importance of Pakistan for US Afghan campaign:

The events of the past week make clear why the United States has been so solicitous. After a U.S. helicopter attack across the border killed two Pakistani soldiers at a frontier outpost, Islamabad shut down one of the main crossings into Afghanistan in protest. Three quarters of nonlethal supplies intended for Coalition troops in Afghanistan travel through Pakistan. The crossing point quickly clogged with trucks that couldn’t pass, making them easy targets. Militants torched more than 100 fuel tankers as Pakistani authorities largely stood aside and watched.

Impeding supply routes is not the strongest leverage Pakistan can bring to bear. The high-tech drone war that has eviscerated Al Qaeda’s ranks—killing 17 commanders in the last nine months—is run out of Pakistan and is largely dependent on Pakistani intelligence for targeting. Islamabad publicly denies any role in the Predator strikes, and loudly protests the collateral damage when civilians are killed. But it hasn’t grounded the CIA’s drones—so far.

America’s forbearance, though, is waning. In a report sent to Congress on Oct. 4, the Obama administration admitted that “the Pakistan military [has] continued to avoid military engagements that would put it in direct conflict with Afghan Taliban or Al Qaeda forces in North Waziristan.” There is a reason for this—a “political choice,” as the report says. The Pakistani military has long tolerated Afghan insurgents like the Haqqanis, who direct their attacks into Afghanistan only. Those groups—which include the Quetta Shura, led by the one-eyed Mullah Mohammed Omar—are Islamabad’s insurance policy, agents who are meant to look after Pakistani interests when the United States eventually withdraws the bulk of its forces from the region. (Pakistan vehemently denies supporting any militant groups.)

Riaz Haq said...

Here's an excerpt from a Dawn report on Pakistan's dissatisfaction with KLB follow-up:

ISLAMABAD: In the run-up to the third round of strategic dialogue, Pakistani authorities are getting irritated over the lack of US interest in resolving the country’s long-term regional issues and in providing economic support despite publicly declaring it a key ally in the war on terror and appreciating its sacrifices.

The authorities are also dissatisfied with the ‘triple accounting’ by the United States of its economic assistance to Pakistan, although the overall assistance remained less than $1.5 billion in a year. They also grumble that Pakistan has not been given market access for its products they believe it deserves in comparison to other countries.

“Since our engagement with US after 9/11 about more than nine years ago, the United States has made wide-ranging trading arrangements with Latin American countries, African nations and even some states in the Middle East but greater market access to Pakistan still remains far off,” said a government official.

Officials said that these were some of the issues Pakistani delegation led by Army Chief Ashfaq Parvez Kayani would raise again with the US authorities as part of the Pakistan-US strategic dialogue to be held in Washington next week.

“The US actions and assurances do not match when it comes to Pakistan’s role and returns it should get,” the official said.

In background discussions, the official said the US leadership never missed an opportunity to assure Islamabad how central they considered a stable Pakistan to achieve global and regional peace and yet they looked the other way when the government discussed US role in resolving a ‘proxy water war launched by India’ besides the longstanding Kashmir issue that was the key to regional stability.

They said India had launched a full-scale water aggression against Pakistan by initiating a number of controversial projects on rivers allocated to Pakistan under the 1960 waters treaty.

Pakistan wanted the US to play its role in addressing its concerns, they said.

They said these irritants had repeatedly been discussed with Secretary of State Hillary Clinton and President Obama’s special envoy Richard Holbrooke but without any tangible progress beyond diplomatic pleasantries. They, however, agree that the US has moved in appreciating Pakistan’s concerns relating to the Afghan situation.

Sources said the United States had committed to provide $7.5 billion assistance in five years to Islamabad under the Kerry-Lugar-Berman Act at the rate of $1.5 billion in a year.

As part of Friends of Democratic Pakistan, the United States had assured last year to help Pakistan overcome its economic problems by offering more assistance but “when we got back to the US authorities for follow up, we realised that its pledges at FoDP were part of its earlier commitments made under the KLB Act”.

The flood-related US support, the sources said, also came under the KLB amount of $1.5 billion a year.

Riaz Haq said...

Here is an Op Ed by NY Times Columnist Nicholas Kristoff:

A visitor to Afghanistan who ventures outside the American security bubble sees pretty quickly that President Obama’s decision to triple the number of troops in Afghanistan has resulted, with some exceptions, mostly in more dead Americans and Afghans alike.

So what can we do instead? Some useful guidance comes from the man whom Afghans refer to as “Dr. Greg” — Greg Mortenson, an American who runs around in Afghan clothing building schools, as chronicled in the best-selling book “Three Cups of Tea.”

The conventional wisdom is that education and development are impossible in insecure parts of Afghanistan that the Taliban control. That view is wrong.

An organization set up by Mr. Mortenson and a number of others are showing that it is quite possible to run schools in Taliban-controlled areas. I visited some of Mr. Mortenson’s schools, literacy centers and vocational training centers, and they survive the Taliban not because of military protection (which they eschew) but because local people feel “ownership” rather than “occupation.”

“Aid can be done anywhere, including where Taliban are,” Mr. Mortenson said. “But it’s imperative the elders are consulted, and that the development staff is all local, with no foreigners.”

In volatile Kunar Province, which borders Pakistan, the Taliban recently ordered a halt to a school being built by Mr. Mortenson’s organization, the Central Asia Institute. But the villagers rushed to the school’s defense. The Taliban, which have been mounting a campaign for hearts and minds, dropped the issue, according to Wakil Karimi, who leads Mr. Mortenson’s team in Afghanistan.

In another part of Kunar Province, the Central Asia Institute is running a girls’ primary school and middle school in the heart of a Taliban-controlled area. Some of the girls are 17 or 18, which is particularly problematic for fundamentalists (who don’t always mind girls getting an education as long as they drop out by puberty). Yet this school is expanding, and now has 320 girls, Mr. Karimi said.

It survives because it is run by the imam of the mosque, and he overcomes Taliban protests by framing it as a madrassa, not a school. That seems less alien to fundamentalists and gives them a face-saving excuse to look the other way.

In Uruzgan Province, Mr. Mortenson and Mr. Karimi are beginning to pay imams to hold classes for girls in their mosques. That puts a divine stamp on girls’ education.
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Government schools regularly get burned down, but villagers tell me that that’s because they’re seen as alien institutions built by outside construction crews. In contrast, CARE runs 300 schools in Afghanistan and not one has been burned down, the aid organization says. The Afghan Institute of Learning, run by a redoubtable Afghan woman named Sakena Yacoobi, has supported more than 300 schools and none have been burned, the institute says. Another great aid organization, BRAC, runs schools, clinics and microfinance programs — and operates in every single province in Afghanistan.

Then there’s the Global Partnership for Afghanistan, which is based in New York and helps Afghan villagers improve agricultural yields in the most unstable parts of the country. Some Taliban commanders have even sent word inviting the group into their areas.

Mr. Mortenson says that $243 million is needed to fund all higher education in Afghanistan this year. He suggests that America hold a press conference here in Kabul and put just 243 of our 100,000 soldiers (each costing $1 million per year) on planes home. Then the U.S. could take the savings and hand over a check to pay for Afghanistan’s universities.

Is this talk of schools and development naïve? Military power is essential, but it’s limited in what it can achieve. There’s abundant evidence that while bombs harden hearts, schooling, over time, can transform them. That’s just being pragmatic.

Riaz Haq said...

Here's a Dawn news report on US bipartisan panel recommending Pakistan's membership of G20:

WASHINGTON: The United States should seek Pakistan’s membership or at least observer status in major international forums, such as the Group of Twenty, a US task force recommended on Friday.

The panel – led by Richard Armitage and Samuel Berger, top aides to former presidents George W. Bush and Bill Clinton – notes that Pakistan’s presence in such groups would enable it “to connect with new power structures and familiarise it with emerging norms and responsible international behaviour”.

In a report released on Friday, the task force, which enjoys support of the administration, endorses the Obama administration’s effort to cultivate cooperation with Pakistan as the best way to “secure vital US interests in the short, medium, and long run”.

It recommends that this approach should include significant investments in Pakistan’s own stability, particularly after this summer’s floods. But in order for US assistance to be effective over the long-term, Washington must make clear that it “expects Pakistan to make a sustained effort to undermine Pakistan-based terrorist organisations and their sympathisers.” The task force warns that “two realistic scenarios” could force a fundamental reassessment of US strategy and policy.

First, it is possible that Pakistan-based terrorists conduct a large-scale attack on the United States and that the Pakistani government – for any number of reasons – refuses to take adequate action against the perpetrators. In the aftermath of a traumatic terrorist attack, it would be impossible for US leaders to accept Pakistani inaction.

The United States most likely would launch a targeted strike on Pakistani territory led by Special Forces raids or aerial attacks on suspected terrorist compounds. Even limited US military action would provoke a strong backlash among Pakistanis. Public anger in both countries would open a rift between Washington and Islamabad.

In a second scenario, Washington could reach the conclusion that Pakistan is unwilling to improve its cooperation on US counter-terrorism priorities. The panel warns that frustration over Pakistan’s persistent relationships with groups like Lashkar-e-Taiba and the Afghan Taliban at some point could cause the United States to shift its approach towards Pakistan.

In this case, Washington will have a number of points of leverage with Pakistan. It could curtail civilian and military assistance. It could also work bilaterally and through international institutions, such as the International Monetary Fund and the UN, to sanction and isolate Pakistan.

US operations against Pakistan-based terrorist groups could be expanded and intensified.
In the region, the United States could pursue closer ties with India at Pakistan’s expense.
“Sticks would be directed against Pakistan-based terrorists, but also against the Pakistani state, in an effort to alter its policies. The US-Pakistan relationship would become openly adversarial.”

But the panel warns that “Americans and Pakistanis must understand that these options carry heavy risks and costs. Both sides have a great deal to lose”.

Riaz Haq said...

Here is an Op Ed by Pakistan's Farahnaz Ispahani published in USA Today:

Just as many Americans are expressing frustration with what they see as Pakistan's slow progress in defeating terrorism (most recently underscored by Secretary of State Hillary Clinton's visit today to Islamabad), Pakistanis are equally frustrated with the increasingly ugly anti-Pakistan sentiment in the United States. Most Pakistanis simply do not understand how cutting U.S. economic and military aid to Pakistan advances the fight against terrorism.

Pakistan is projected by many in the international news media and by some in the U.S. Congress as a purveyor of terrorism but, in cold fact, it remains its chief victim. Three thousand Pakistani troops have been killed (more than all NATO losses in Afghanistan combined). Add to that 2,000 police cut down, the tragedy of 35,000 civilian casualties and the assassination by terrorists of our country's most popular leader, Benazir Bhutto, and one might understand Pakistani exasperation. This recent al-Qaeda attack on a Pakistani Naval Base in Karachi, killing 10 of our sailors, again demonstrates that Pakistan is the principal target of terrorist rage.

How much of our people's blood does it take for Washington to get it? British Prime Minister David Cameron said it most succinctly standing next to President Obama in London earlier this week: "Pakistan has suffered more from terrorism than any country in the world. Their enemy is our enemy. So, far from walking away, we've got to work even more closely with them."

Another Marshall Plan?

At the onset of the Cold War, the U.S. understood that political stability in vulnerable countries like France, Italy and Greece was intrinsically linked to the viability of their economies. President Truman advanced the European Recovery Plan (the Marshall Plan) that brilliantly operationalized this thesis, and by doing so saved Western Europe from communism. The same construct should be applied to Pakistan as we jointly work toward the defeat of the terrorist menace and the rebuilding of a peaceful and stable South and Central Asia.

Secretary of Defense Robert Gates has spoken of Kerry-Lugar-Berman Act for economic development, health, education, energy and infrastructure. Yet only $179 million, according to Sen. Dick Lugar, R-Ind., has actually been spent. The rest sadly has been bottled up in a bureaucratic quagmire within USAID.

The people of Pakistan, especially the poor who were most affected by last year's historic floods, have yet to feel the effects of a U.S. policy that under President Obama was to re-craft the U.S.-Pakistani relationship beyond a short-term military alliance into a sustained economic and social partnership. It is that new relationship that will be the lynchpin to the long-term stabilization of Pakistan and our ability to contain and destroy the terrorist threat to our people, and to the world.

After World War II, the Marshall Plan spent $49.06 per capita in Greece and $30.02 in Italy. Today, the per capita U.S. assistance to Pakistan, adjusted for inflation, is only $7.90. That's a dramatic 400% less than the Marshall Plan's assistance to Italy. And let us be clear: The long-term stakes to world peace are as great or greater in South and Central Asia today as in Europe at the end of the 1940s.

Riaz Haq said...

A recent Princeton study by Blair and Fair based on a survey of 6000 Pakistanis concluded that there is no link between poverty and terrorism:

The policy literature on the causes of militant violence frequently focuses on poverty as a root cause
of support for violent political groups (see e.g. Aziz 2009). Moreover, much of U.S. and Western policies toward Pakistan over the last ten years have been geared toward encouraging economic and
social development as an explicit means of diminishing the terrorist threat. Legislation before the
U.S. House of Representatives in April 2009, for example, called for the United States to
“strengthen Pakistan’s public education system, increase literacy, expand opportunities for
vocational training, and help create an appropriate national curriculum for all schools in Pakistan”
(House 2009).8 In testimony on this bill, U.S. Special Envoy Richard Holbrooke argued that
Washington should “target the economic and social roots of extremism in western Pakistan with
more economic aid” (Holbrooke 2009). This view also played a pivotal role in the April 2009
donors’ conference in Tokyo, where nearly thirty countries and international organizations pledged
some $5 billion in development aid explicitly intended to “enable Pakistan to fight off Islamic
extremism” (“Donors pledge” 2009).9 These policies reflect a belief that poverty is a root cause of
support for militancy, or at least that poorer and less-educated individuals are more prone to
militants’ appeals.10 Despite the strong beliefs about links between poverty and militancy that these
aggressive policy bets reveal, there is little solid evidence to support this contention in the case of
Islamist militant organizations. So what do we know?
First, although the hypothesis that poverty predicts participation in violent political
organizations is widespread in the policy literature it finds little support in rigorous empirical tests
(Abadie 2006; Kreuger and Malečková 2003). That hypothesis is likely so prominent because crossnational
evidence typically shows a positive correlation between overall poverty and levels of militant violence.11 However, the perpetrators of militant violence are predominantly from middle class or
wealthy families (Krueger and Malečková, 2003),12 and there is no reliable link between poverty and
support for specific terrorist tactics. Further damaging the empirical foundations of the povertymilitancy
hypothesis, Tessler and Robbins’ (2007) moderately-sized (n≈1,000) surveys from Algeria
and Jordan find that “neither personal nor societal economic circumstances, by themselves, are
important determinants of attitudes toward terrorism directed at the United States” (323). Using
Pew World Values surveys, Shafiq and Sinno (2010) show that the relationship between “educational
attainment and income on support for suicide bombings varies across countries and targets” (146).
Second, there is a mixed or negative relationship between indicators of poverty such as
unemployment and rates of militant violence within countries (Berman et. al. (2011) find a negative
relationship; Dube and Vargas (2008) find mixed evidence). Across countries scholars have argued
that levels of political violence are increasing in: short-term poverty (Miguel, Satayanth and Serengeti
2004); dashed expectations for material gain (Gurr 1970); and income inequality (Sigelman and
Simpson 1977; Muller 1985), but the overall evidence at the individual and sub-national levels is
deeply ambiguous (Blattman and Miguel 2010).
Given this indeterminacy, making progress in understanding the relationship between
poverty and militant violence requires testing specific mechanisms by which poverty could influence
levels of violence.


http://www.princeton.edu/~jns/papers/Poverty_Support_For_Militancy_24MAR11.pdf

Riaz Haq said...

Here's an Express Tribune story on Pak and US efforts to develop FATA:

Army chief General Ashfaq Parvez Kayani inaugurated a US-funded road project in South Waziristan Agency on Monday — a move that may indicate easing of tensions between the estranged allies.

The development is being seen as a significant one as the army chief has recently distanced himself from being associated with the Americans. Furthermore, Kayani inaugurated the Tank-Gomal-Wana Road amid reports that Washington had shown willingness to accept some of Islamabad’s demands, including an apology for last year’s Salala air strikes.

A Pakistani official described the development as ‘positive’ saying despite recent hiccups in relations between the two countries, the US continued to fund important projects in the Federally Administered Tribal Areas (Fata).

“The US is proud to partner with the government of Pakistan in rebuilding key roads and infrastructure in Fata,” said Karen Freeman, acting director of the US Agency for International Development (USAID) Mission in Pakistan.

“We believe our joint efforts will bring commerce, jobs, trade and long-term security to this important region of Pakistan,” Freeman added.

The road connects to the US-funded 110 kilometre Tank-Makin Road, which was completed earlier this year at Kaur. The road will provide the people of Murtaza Kot, Nilikatch, Gomal Zam, Tanai, Tiarza and Wana in the South Waziristan Agency access to Tank, DI Khan and other parts of Pakistan, a statement issued by the US Embassy said.

USAID has contributed over $260 million for roads and other key infrastructure projects in Fata.

Meanwhile, the army chief attempted to strike a delicate balance when he suggested the military was compelled to launch an operation against militants in Waziristan.

However, after flushing out terrorists in the area, the army’s focus has now become centered on maintaining peace in the area by concentrating on rehabilitation and reconstruction activities, the army chief pointed out.

In a meeting with tribal elders, Kayani insisted that no army wanted to fight within its own borders.

“The army is concentrating on health and education facilities,” he added.

He also inaugurated Spinkai Ragzai Cadet College and reviewed the security situation besides ongoing developmental work in South Waziristan.

According to APP, Kayani said the army was deployed in the area on the demand of locals and would stay till the completion of development projects.


http://tribune.com.pk/story/395817/kayani-initiates-usaid-project-in-s-waziristan/

Riaz Haq said...

Here's a Dawn story on US AID projects in FATA:

The United States Agency for International Development will construct 200-kilometre roads in South and North Waziristan agencies in addition to undertaking longer term interventions in Khyber Pakhtunkhwa’s education and health sectors.

Andrew Sisson, the agency’s mission director in Pakistan, told Dawn that the USAID had already constructed over 200km roads in South Waziristan and it was planning construction of additional 200km roads primarily in North Waziristan Agency and some in South Waziristan Agency.

“It (road construction) is an excellent investment in opening the Federally Administered Tribal Areas in terms of economy and business to the rest of the country,” he said.

The US agency, he said, had provided $201 million for roads linking North Waziristan and South Waziristan to the rest of Pakistan. He said that USAID was also planning to provide more resources for roads directly to the Fata Civil Secretariat later this year.

Similarly, the USAID signed an agreement in October last year for disbursing funds for the construction of irrigation network downstream Gomal Zam dam that, he said, would irrigate 120,000 cultivable acres, benefiting thousands of farm families. Some $9 million for construction irrigation network, he said, had been released to the Water and Power Development Authority in December last.

Mr Sisson said that investment in this part of Pakistan (KP and Fata), especially for education, health, infrastructure, community level activities, irrigation and business development, remained ‘a very high priority’ of the US government.

“We are budgeting for the future..we are hopeful that the funds would come after approval by our Congress,” said Mr Sisson, adding that the Obama administration was committed to maintaining high level of aid to Pakistan even during this rocky period (of relationship).

“Despite our relations, our aid levels are high,” he said, adding that his organisation would continue building schools in Fata and KP, which was a very important part of the bilateral relationship.

He said that their assistance to Pakistan was in the interest of the people of both the countries and that it had been achieving great results. The USAID-funded projects, according to him, put 400MW to the grid last year, some 500MW would be added to the system next year, and one million children went to schools constructed by the agency over the past few years.

“We want Pakistan to succeed, to be more stable and have a more prosperous economy,” he said, adding that their interest in Pakistan would continue no matter who was in power in the US.

He said that apart from funding five major interventions in the energy sector the US was looking into making other investments to help Pakistan overcome its energy sector. “We are in discussion with the government for carrying out feasibility studies for Diamer-Bhasha dam,” said the USAID director.

He said that the USAID was also assisting the Fata secretariat and the KP to help build their capabilities. Justifying delays in the execution of infrastructure projects in the KP and Fata, Mr Sisson said “Even in the United States complicated infrastructure projects don’t go on schedule and that’s very true in Pakistan (as well).”

He said that some of the infrastructure projects were being carried out in tough regions where security formed a major impediment to the on time completion of projects.

About corruption-free use of USAID funds, he said that except for two cases in which the USAID Office of Inspector General had collaborated with National Accountability Bureau, a majority of the projects had seen apt and honest use of funds.


http://dawn.com/2012/01/26/focus-on-rebuilding-roads-in-waziristan-2/

Riaz Haq said...

US AID promoting private equity investment in Pakistan's SME sector, reports Express Trib:

..$80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative

Crowding-out of the private sector from credit channels due to reckless government borrowing has provided a unique public relations opportunity to the US. The US has said it will offer loans ranging from $500,000 to $5 million to small and medium sized business in Pakistan, to help the latter expand and create jobs.

In total, $80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative, will go towards providing cheaper financing and equity to small and medium enterprises (SMEs) in Pakistan.

“The United States Agency for International Development (USAID) will provide up to $24 million for an equity fund, and fund managers will be required to match the requested funding to take the size of each equity fund to at least $45 million,” said Theodore Heisler, the project manager and senior economic growth advisor to USAID.

Heisler said that co-investment was essential in bringing the size of each fund to a level where it can cover operating expenses. The US intends to create at least three funds, but is, as yet, noncommittal to the total number. US authorities are on the lookout for good fund managers, and the availability of quality managers will determine the numbers of the funds, officials have said. During the last fiscal year, the federal government borrowed Rs1.77 trillion to finance the budget deficit. The State Bank of Pakistan has already warned that due to increasing government borrowing, there is little credit available for the private sector to grow.

“Having access to finances is a challenge for SMEs, as there is little equity and debt available for the sector,” said Heisler. “The longer term goal is to help expand the market for private equity investment and provide money that is not available through banks and other international lending agencies,” he added. He said the real job growth potential lies in the SME sector, as the corporate and public sectors cannot create unlimited jobs.

Heisler said each fund will have a 10-12 year lifespan. Individual investment sizes will range from $500,000 to $5 million, but could vary depending upon requirements. The initiative has been modelled on the Polish American Enterprise Fund, which was started with $140 million and has now grown to a multi-billion dollar fund.

Heisler said the US is looking to create a private equity industry in line with global standards, as there is hardly any private equity investment fund in Pakistan. He said the other purpose was fetching foreign investment through co-investment, as investment in Pakistan is dwindling.

The US is currently looking for fund managers who have a successful history, and Heisler said that both local and international fund managers have expressed interest in the project.

To a question whether Pakistani fund managers have expressed reluctance due to doubts over long-term commitment issues with the US, the US embassy replied “we believe there will be substantial interest from local, regional and international investors”.

It further said that “the US government designed the Pakistan Private Investment Initiative after a year of research and consultations with numerous stakeholders, including the Pakistani private sector and regulatory authorities.” It added that USAID will structure the funding to ensure that it is sustainable.


http://tribune.com.pk/story/442469/credit-crunch-as-banks-turn-their-backs-on-private-sector-us-steps-in/