Wednesday, October 19, 2011

Sharifs' Folly Hurts Punjab's Poor

The Punjab government led by PML's Shahbaz Sharif spurned 20 billion rupees ($232.55 million) in US aid slated for welfare projects in Pakistan's most populous province in the next three years, according to a report in Dawn newspaper. The popular move was motivated by politics to capitalize on a wave of anti-American anger following the US raid that killed Osama Bin Laden in Abbottabad, Pakistan.



While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:

1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.

The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.

The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.

2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.

3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.

Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."

As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States, here is something to ponder:
Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders.

Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.

Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.

Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.

4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

Related Links:

Haq's Musings

Can Pakistan Tell US to Take its Aid and Shove it?

Tax Evasion Fosters Foreign Aid Dependence

Aid, Trade, Investments and Remittances

Can Chinese Yuan Replace US Dollar?

Vito Corleone: Godfather Metaphor for Uncle Sam

Can US Aid Remake Pakistan?

South Asia Slipping in Human Development

Pakistan to Terminate IMF Bailout Early

Pakistani Military and Industrialization

28 comments:

Jai Ram Ji ki said...

In other words you admit Pak is a maha failure, unlike India.

Riaz Haq said...

Jai: "In other words you admit Pak is a maha failure, unlike India."

Not as big a failure as India!

India remains home to the world's largest population of poor, hungry and sick people 64 years after independence.

http://www.riazhaq.com/2010/08/63-years-after-independence-india.html

Based on lots of recent international data from IFPRI, World Bank and UNICEF-WHO, Indians are hungrier, poorer and sicker with worse hygiene than Pakistanis.

And the "Shining India" crowd that talks about refusing billions in foreign aid is advocating a bigger folly as the Pakistani Punjab govt.

Jai Ram Ji Ki said...

More negative news here
http://www.economist.com/node/21532322

Riaz Haq said...

Jai: "More negative news here
http://www.economist.com/node/21532322"

If you think it's good news for you, let me draw your attention to a report in Times of India:

At a time when US-Pakistan relations have hit an all time low, foreign minister S M Krishna on Thursday came up with his own advice to diffuse the situation. Describing the US and Pakistan as friendly powers, Krishna said they should sit across the table and sort out their differences to prevent any devastating consequences for other countries, particularly India.

Krishna's description of US and Pakistan as friendly powers comes at a time when government officials and experts believe that US for the first time seems keen on calling Islamabad's bluff in not reining in the Haqqani network. As US increases troop presence at the Af-Pak border near Waziristan, Pakistani army chief Ashfaq Perzez Kayani is reported have warned Washington that Pakistan cannot be treated like Afghanistan and Iran because it is a nuclear power.

"This question concerns the relationship between two friendly powers, the US and Pakistan. It is India's desire that all outstanding issues between them are settled across the table and thereby a situation created in the region which will be conducive for development," said Krishna, while addressing the media in the presence of his French counterpart Alain Juppe. He was asked about the ongoing flare-up in US-Pakistan relations.

"Anything which upsets the region will have devastating consequences for the developmental agenda of other countries, particularly India. So we sincerely hope they will be able to sort out their differences," he went on to add....


http://timesofindia.indiatimes.com/india/Krishna-hopes-US-Pak-will-settle-differences-across-the-table/articleshow/10434831.cms

Dhiraj said...

Before you cite data from Pakistan and India please note that World Bank relies on "secondary" sources in Pakistan unlike "primary" sources in India.

According to World Bank:

"Pakistan has both administrative and survey data sources, but both
have their limitations: administrative data are incomplete and unreliable; household survey data are representative only to the level of the province (not district) and there is a considerable lag between data collection and data availability."

Riaz Haq said...

Dhiraj: "Pakistan has both administrative and survey data sources, but both have their limitations"

Raising questions about data you don't like is the oldest trick in the book. It was tried against China for years even when the reality of China's extraordinary rapid development became obvious!

And you think India's data used by WB is more reliable?

Here's what the World Bank Data Group says: "At the World Bank, the focal point for statistical and data work is the Development Data Group (DECDG) in the Development Economics Vice Presidency. Working closely with the World Bank’s regions and sectors the department is guided by professional standards in the collection, compilation, and dissemination of data to ensure that all data users can have confidence in the quality and integrity of the data produced."

There are many many foreign independent visitors, even some Indians, who offer anecdotal evidence of life of ordinary Pakistanis being better than those of ordinary Indians.

For example, here's Wiliam Dalrymple in The Guardian article titled "The Poor Neighbor": "On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country's visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation."

Another recent book "Pakistan-A Hard Country" by Anatol Lieven: "Pakistan lacks the huge concentrations of absolute poverty to be found in India's cities and countryside."

In a recent piece titled "Failed state? Try Pakistan's M2 motorway", Alistair Scrutton of Reuters summed it up as follows:"It (M2 motorway) puts paid to what's on offer in Pakistan's traditional foe and emerging economic giant India, where village culture stubbornly refuses to cede to even the most modern motorways, making them battlegrounds of rickshaws, lorries and cows."

Indian Planning Commission member Syeda Hameed:"India is worse than Bangladesh and Pakistan when it comes to nourishment and is showing little improvement in the area despite big money being spent on it".

Riaz Haq said...

Here's an AP report on US State Dept seeking funding for aid to Pakistan:

WASHINGTON - The Obama administration is pledging robust assistance to Pakistan despite demands on U.S. finances and a sometimes rocky relationship with Islamabad, according to a status report on Afghanistan and Pakistan.

The State Department report outlines U.S. goals in the region more than a decade after the Sept. 11 terror attacks triggered the war against al Qaeda, and the progress after billions of dollars have been spent and American lives lost. It also outlines the steps forward, looking ahead to the withdrawal of U.S. combat forces by the end of 2014.

The report was delivered to Congress on Thursday. The Associated Press obtained a copy.

"Though a tremendous amount has been accomplished, we also have no illusions about the task before us," the report said about Afghanistan. "We expect that ongoing violence, lack of institutional and human capacity, discrimination against women and vulnerable groups, and Afghanistan's incredibly low economic baseline will remain difficult challenges."

The report said the U.S. has reached its "high water mark" for civilian funding and the government in Kabul must move toward establishing revenue sources. The report said the U.S. will build a foundation for the Afghans to assume responsibility for their future.

On Pakistan, the department said the relationship with Islamabad "is not always easy, but it is vital to our national security and regional interests."

In fact, the relationship has been extremely strained the last few months to the point of breaking. Secretary of State Hillary Rodham Clinton recently traveled to the region to pressure Pakistan to crack down on the Taliban-linked Haqqani network, a major threat to American forces in the region. Adm. Mike Mullen, the former chairman of the Joint Chiefs of Staff, said Pakistan's intelligence agency was a "veritable arm" of the Haqqani.

A low point came in May when U.S. forces found and killed al Qaeda leader Osama bin Laden deep inside Pakistan.

Still, the administration insisted it will continue to provide civilian aid to Pakistan, which has fallen from $1.5 billion in the 2010 fiscal year to $1.1 billion this year. The report said next year's levels are uncertain, but the administration reaffirms its "commitment to providing robust, multi-year civilian assistant to Pakistan."

Unclear is how much Congress will push to reduce funds for Pakistan as lawmakers consider spending bills for the State Department and foreign operations.

The report suggested that a low-cost route toward improving stability in the region would be expanding U.S. market access for both Pakistan and Afghanistan.

The department said it was seeking congressional authorization for creating a U.S.-Pakistan Enterprise Fund, similar to funds created in Eastern Europe and with the former Soviet states in the 1990s.


http://www.cbsnews.com/8301-201_162-57318272/u.s-pledges-financial-aid-for-pakistan/

Riaz Haq said...

Here's an excerpt from a Dawn report on Ambassador Munter recounting how US AID has helped Pakistan over 50 years:

The US Ambassador further said Pakistanis who doubt that US assistance has borne fruit in Pakistan would be surprised to know that they have tasted it, adding, “Pakistan’s most popular citrus fruit, the kinoo, comes from California. USAID brought kinoo seeds to Pakistan in the 1960s. Today, we are helping export Pakistan’s sweetest fruit, the mango, in the other direction.”

“In the 1950s, we brought together the University of Karachi, the University of Pennsylvania’s Wharton School of Business, and the University of Southern California to establish a campus in Karachi to meet the demand for business managers in the bustling port city.”

“USAID sponsored the project and the Institute of Business Administration became Pakistan’s first business school and one of the first outside of North America. IBA is recognized today as one of South Asia’s leading institutions,” he maintained.

Ambassador Munter said in 1965, Dr. Norman Borlaug, who later won the Nobel Prize for his contribution to agricultural research, came to Pakistan to introduce his new high-yielding variety of wheat.

“We worked with the Lyallpur Rotary Club to support a program that gave individual farmers a bushel of the new generation of seed if, when the harvest came in, they returned the bushel so we could give it to someone else. While modest in scope, this small project brought Lyallpur into the Green Revolution that in turn converted a food deficit region into an exporter of grains,” he added.

In the 1960s and ’70s, a consortium of U.S. construction firms employing Pakistanis, Americans, Brits, Canadians, Germans, and Irish built the two mighty dams of Tarbela and Mangla with USAID and World Bank financing, US Ambassador said, adding, “Those engineering feats – more complex than anywhere in the world at that time – soon accounted for 70 per cent of the country’s power output and made Pakistan a leading provider of clean energy.”

In the 1980s, the US Ambassador said, with USAID’s assistance, Pakistan’s private industry founded the Lahore University of Management Sciences.

“Pakistanis approached us with the idea for the new institution and we agreed to support it with a contribution of $ 10 million. Today, LUMS incubates the ideas and nurtures the leaders who are critical to Pakistan’s future,” he remarked.

Ambassador Munter said, since the inception of the Fulbright scholarship program, nearly 3,000 Pakistanis have studied in the United States and close to 1,000 Americans have studied in Pakistan, adding, today, the U.S. Fulbright program in Pakistan is the largest in the world.

Key to all these successes was that Pakistanis owned them.

We may have helped sow the seeds but Pakistanis made sure the flowers blossomed, he said, adding, “aid is a catalyst and its success depends on those who receive it.”

“So today, while we help complete dams in Gomal Zam and Satpara and rehabilitate power plants in Muzaffargarh and Jamshoro, only Pakistanis can put an end to circular debt by paying their bills and holding the system accountable.”

“While we work to cultivate international markets for Pakistan’s fruit and fashion, only Pakistanis can deliver quality products that can compete. While we pay for road construction in South Waziristan, only Pakistanis can provide the local population with economic opportunities to make use of those roads.

While we build schools in Azad Jammu and Kashmir and Khyber Pakhtunkhwa, only Pakistanis can ensure that qualified teachers show up to teach in them,” the US Ambassador maintained.


http://www.dawn.com/2011/11/04/pakistan-us-relationship-dogged-by-history-munter.html

Riaz Haq said...

US State Dept & Sen Feinstein defend US aid to Pakistan, according to Dawn:

WASHINGTON: The US State Department on Tuesday defended aid to Pakistan amid calls from senators for a full review of whether economic and military assistance there serves the US national interest.

“We believe our assistance to Pakistan still continues to provide dividends for the American people in trying to grow and strengthen Pakistan’s democratic institutions, boost its economy,” said spokesman Mark Toner.

“In the long term, you know, those are the kinds of things we’re seeking to achieve,” he told reporters one day after Republican Senators John McCain and Lindsey Graham made a full-throated call for reevaluating the aid.

His comments came shortly after US Senate Intelligence Committee Chair Dianne Feinstein said that cutting assistance to Pakistan would be unhelpful but warned that calls to do so had strong congressional support.

“I don’t think that’s useful,” she told reporters. “My understanding is that there’s some overtures under way to restore the relationship. Well, that’s fine, but I suspect that if a bill were to come to the floor which fenced money, the bill would have a good chance of passing,”she said.

US lawmakers have expressed mounting anger at Pakistan, accusing military and intelligence officials there of supporting the Haqqani network blamed here for attacks on US forces and targets in Afghanistan.

“I can only express my profound disappointment with the relationship” and the “deterioration” in an already troubled alliance that “goes up and down, and up and down, and up and down,” she said.

“My very strong feeling is you can’t walk both sides of the street with respect to terror,” said Feinstein.

Relations slid to a new low last month when Nato air strikes killed 24 Pakistani soldiers on the Afghan border, prompting Pakistan to boycott an international conference in Bonn on Afghanistan’s future.

“This is a very complex relationship,” Toner said, adding that the deadly border incident “was difficult for the Pakistani people, for the Pakistani government.”

“They have reacted in a way that shows how important and how significant this tragedy was for them,” Toner said.

“It’s absolutely essential that Pakistan, Afghanistan and the US, other international partners, work through this and beyond. It’s in all our interests.”

But Republican Senator Mark Kirk told AFP that McCain and Graham, who serve on the Senate Armed Services Committee, “are right.”

“Military aid to Pakistan is unsustainable, and in this time of deficits and debt, we ought to save the money,” he said, warning that if Pakistan has chose “to embrace terror and back the Haqqani network,” it should do so “without subsidies from the US taxpayer.

Kirk has also called for bolstering ties to India and “making India a military ally of the United States and to encourage India to fill the vacuum in Kabul once we leave.”


http://www.dawn.com/2011/12/07/us-state-dept-defends-pakistan-aid.html

Riaz Haq said...

United Kingdom will likely to increase its aid to Pakistan upto 350 million (Pounds) a year till 2015, prioritizing uplift of education and health sectors, according to APP:

"The major portion of our aid will focus on getting more than four million children into school, recruit and train 90,000 new teachers and provide more than six million text books," George Turkington, Head of the UK's Department for International Development (DFID) in Pakistan said.

During his visit to a crisis centre for women (Bedari) in Chakwal, he said the UK government would provide assistance to prevent 3,600 mother's deaths in childbirth; another half a million children from becoming under-nourished and another 400,000 couple’s access family planning and contraceptives.

The UK will also support the country to empower women by strengthening legislation on land rights, marriage rights and domestic violence and get more girls and women involved in decision making at community and federal level so that they can demand their basic rights.

Head of DFID said that over recent years, UKaid has provided 35,096 women victims of violence with counselling, refuge, rehabilitation support and legal aid.

He said that UKaid provide monthly stipends to some 680,000 poor girls to help keep them in school and provided millions of free school text books.

He said that UKaid has also facilitated 1.2 million micro finance loans to poor women, helping them to lift their families out of poverty.

The DFID official also met beneficiaries at Bedari office a local NGO.

http://www.brecorder.com/pakistan/banking-a-finance/38265-uk-likely-to-rise-aid-to-pakistan-upto-350m-pounds-.html

Riaz Haq said...

Here's a news story on US civilian aid to Pakistan:

In a written reply to a question raised at the daily press briefing, the State Department said, “Civilian assistance to Pakistan continues and has not been interrupted since the tragic Nov. 26 incident.”

“Since the passage of the Kerry-Lugar-Berman legislation in October 2009, the U.S. government has disbursed $2.2 billion in civilian assistance, including approximately $550 million in emergency humanitarian assistance,” said the statement, adding, “In FY 2011 specifically, we disbursed approximately $855 million (not including any emergency humanitarian assistance).”

With the majority of Pakistanis claiming they see no evidence of U.S. economic assistance, Washington still struggles to fashion an effective program of civilian aid. However, data provided by the U.S. State Department created a different impression.

“In 2011 the people of the United States supported the construction of 210 kilometers of road in FATA and Khyber-Pakhtunkhwa, funded the world’s largest Fulbright exchange program, and sponsored initiatives promoting private sector growth and civil society development in Pakistan,” said the statement.


http://gantdaily.com/2012/01/20/u-s-confirms-no-interruption-in-flow-of-american-taxpayer-dollars-to-pakistan/

Riaz Haq said...

Here is a News report on US Aid for Pakistani universities:

The United States will build new Faculty of Education buildings at six Pakistani universities and renovate a seventh education facility, as part of an agreement signed Wednesday between the universities and the US Agency for International Development (USAID), said Karen Freeman, USAID Deputy Director for Pakistan.

She stated this while addressing the signing ceremony of a memorandum of Understanding for construction and rehabilitation of faculty of education buildings, says a press release. The construction will take place over the next two year and the new and renovated buildings will eventually house approximately 2,000 students of two new teaching degrees: the four year Bachelor’ Degree in Education and a two-year Associate Degree in Education in teaching that USAID helped design and introduce in order to increase quality of teacher preparation across the country and 100 faculty members each year.

“Pakistan and the United States have enjoyed a long and productive relationship that spans more than 60 years and covers a variety of fields. Today’s ceremony is yet another expression of the US Government’s long-term commitment to help build a stronger, more prosperous Pakistan,” she added.

“It gives me great pleasure to be here with you today to witness the signing of the MoU between the seven of country’s public universities and two of USAID implementing partners for the construction and rehabilitation of Faculty of Education buildings across the country. The contribution to the Pakistani education system is yet another example of the US long-term commitment to helping Pakistan address its development priorities.

“Our collaboration in higher education sector spans more than five decades. One of our first undertakings in this sector was the construction of the Institute of Education and Research at the University of Punjab in 1960s. fifty years later, this institute continues to help the country shape its education policies. Over the years, we have worked together to build more higher education institutions that have since become premier centres for knowledge and learning. I am very proud to list among such the Institute of Business administration in Karachi, the Lahore University of Management Sciences, the Faisalabad Agriculture University as well as the Peshawar Agriculture University, and many more,” she said.

Karen Freeman said: “I am happy that through today’s commitment we are continuing this tradition of supporting Pakistan in its efforts to develop strong education institutions.” She said that these new facilities will help attract and train best young minds to teaching profession and will help improve the professional knowledge and skills of many other teachers.

Higher Education Commission Chairman Dr. Javaid Laghari appreciated the efforts of the US Government for improving the quality of education across the country. The $15 million construction initiative was officially launched today at the Higher Education Commission, where representatives of the USAID signed MoU with representatives of the seven universities. As part of the agreement, the US will construct new Faculty of Education buildings at the Sardar Bahadur Khan Women University in Quetta; the Hazara University in Mansehra; the University of Education in Lahore; the University of Sindh in Hyderabad; the University of Karachi in Karachi; and the Sardar Abdul Latif University in Khairpur (Sindh). The US will also help renovate the Institute of Education and Research at the University of the Punjab.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=90967&Cat=6&dt=2/3/2012

Riaz Haq said...

"We do not require the (British) aid. It is a peanut in our total development spending," said Indian finance minister Mukherjee.

Refusal of British aid just confirms that India's ruling elite don't care for the poor in India who benefit from such aid. Their false pride trumps the needs of the poor.

And this is not the first Indian leaders have done so. In 2009, the Indian government banned the import of Plumpy'Nut nutrient bar by UNICEF to treat moderate to severe acute malnutrition rampant among Indian children. Defending the government action, Mr. Shreeranjan, the joint secretary of the Ministry of Women and Child Development, told the Reuters that "Nothing should come behind our back. Nothing should be done in the name of emergency when we have not declared an emergency."

Indian politicians do not allocate funds to replace foreign aid either, even as they embark on a massive arms build-up, becoming the world's largest importer of weapons in the process.

http://www.riazhaq.com/2010/03/malnutrition-challenge-in-india.html

Riaz Haq said...

US allocates $2.4 billion in aid for Pakistan in 2013, according to Express Tribune:

The White House has allocated $800 million for Pakistan’s Counterinsurgency Capability Fund (PCCF) in its budget for fiscal year 2013, whereas the State Department and USAID budget for Pakistan comes to $2.4 billion.

The budget, which will go to Congress for approval, shows a decrease of $50 million in the allocation figure for PCCF from last year. The purpose of the fund is to “build and maintain the counterinsurgency capability” of Pakistan’s security forces. The services provided by the US include human rights training, providing equipment, supplies, training and infrastructure repair.

The description of the PCCF stated in the budget documents released by the State Department state that the PCCF “enhances the capabilities of the Pakistan Army, the Pakistan Air Force, and the Frontier Corps by meeting their needs for training, equipment, and infrastructure. The PCCF will assist the Government of Pakistan to eliminate the violent extremists’ ability to operate along its border with Afghanistan. The PCCF account will draw down when the need for intensive support for engagement against terrorist organisations in Pakistan declines.”

State Department

In a press release issued by the State Department, the budget allocation requested for Pakistan for FY2013 is $2.4 billion. This includes the $800 million cited in the PCCF, and is meant for assistance to “strengthen democratic and civil institutions that provide a bulwark against extremism, and support joint security and counterterrorism efforts.

Certifications

The budget documents also outline certifications that the US secretary of State is required to make to various Congress committees before funds such as the Foreign Military Financing Program, PCCF etc. can be allocated.

According to the conditions, the Secretary must certify that Pakistan is cooperating with the US in counterterrorism efforts against the Quetta Shura, Haqqani Network, Jaish-e-Mohammad, Lashkar-e-Taiba, al Qaeda and other domestic and foreign terrorist organizations. Pakistan must not be supporting terrorist activities against the US or coalition forces in Afghanistan.

Interestingly, a condition includes that the Secretary of State must certify that, “Pakistan’s military and intelligence agencies are not intervening extra-judicially into political and judicial processes in Pakistan”


http://tribune.com.pk/story/336108/us-unveils-budget-with-trimmed-pakistan-aid-subject-to-conditions-of-course/

Riaz Haq said...

Here are excepts of an Op Ed by Andrew Michell, British secretary of DFID, published in The News:

Over the last year, the UK has worked closely with Pakistan to deliver strong results, including supporting nearly half a million children in school; providing practical job training to more than 1,100 poor people in Punjab; providing microfinance loans to more than one hundred thousand people across Pakistan so they can start small businesses and lift their families out of poverty; and helping millions of people affected by the floods in 2010 and 2011.

Education is the single most important factor that can transform Pakistan’s future. With a population that is expected to increase by 50 per cent in less than forty years, it is worrying that half the country’s adults can’t read or write, and that more than a third of primary school aged children are not in school. That’s why the UK is committed to working in partnership with Pakistan to tackle its education emergency.

If educated, healthy and working, this burgeoning youth population will provide a demographic boost to drive Pakistan’s economic growth and unlock Pakistan’s potential on the global stage.

That’s why education is the UK’s top priority and why over the next four years, the UK will work in partnership with Pakistan to:

* support four million children in school;

* recruit and train 90,000 new teachers;

* provide more than six million text book sets; and

* construct or rebuild more than 43,000 classrooms.

Every full year of extra schooling across the population increases economic growth by up to one percentage point, as more people with better reading, writing, and maths skills enter the workforce.

The UK government is also working with Pakistan to empower and protect women and girls, to end violence against them and to help harness their talent and productivity. I welcome the legislation recently passed by Pakistan’s parliament that bans domestic violence, and congratulate Pakistan on its first Oscar for an outstanding film which throws the international spotlight on the horrific crime of acid attacks on women.

Other priorities for the UK include working with Pakistan to prevent 3,600 mothers dying in childbirth; enabling 500,000 couples to choose when and how many children they have; providing practical job training (such as car mechanics, cooks, weavers, carpenters, etc) to tens of thousands of people living in poverty; and enable millions of people, half of them women, to access financial services such as microfinance loans so they can earn more money and lift their families out of poverty.

The UK’s aid to Pakistan could potentially more than double, to become the UK’s largest recipient of aid. However this increase in UK aid is dependent on securing value for money and results, and linked to the Government of Pakistan’s own progress on reform at both the federal and provincial levels. This includes taking steps to build a more dynamic economy, strengthen the country’s tax base, and tackle corruption.


http://www.thenews.com.pk/Todays-News-2-97151-UK-and-Pakistan-partners-for-the-long-term

Riaz Haq said...

Here's an Atlantic piece on a new better model for delivering US aid in Pakistan:

So while USAID is very good at quickly mobilizing assistance to disaster-afflicted communities, it carries a lot of political baggage -- so much so in places like Pakistan that the U.S might be better off in the long run by downsizing USAID's direct activities there and working through alternative programs.

One good model might be the Rural Support Programmes Network. A sprawling collection of local NGOs, the RSPN was founded by the Agha Khan Network in 1982, and has since become its own, separate program. While the stats about its reach are impressive -- reaching millions of the poorest homes across a vast swath of Pakistan -- what's especially fascinating about RSPN are its methods.

Put simply, RSPN has a different focus than normal aid programs. They emphasize the development of institutions first, and only after that institution is established do they worry about its output or performance. The NGO also heavily invests in the smallest scale of the community, from conceptualization to execution, hiring mostly locals to administer projects. Lastly, they have extraordinarily long project timelines -- sometimes as long as 15 years from start to finish.

Focusing on short term projects is a critical weakness of how the U.S. conducts both warfare and aid. Put simply, you make very different decisions if you have to show progress next year than if you have to show progress next decade. RSPN's longer term focus lets it work on more difficult goals, such as creating institutional capacity that can exist without foreign input. It also means RSPN can build out micro-infrastructure projects like micro-hydro power plants that allow communities to finance their own development -- again, without foreign input.

But the most interesting project RSPN has done in rural Pakistan is a collaborative micro-healthcare insurance system. For very little money -- $3.50 a year in some cases -- poor people can get access to basic medical care (especially maternity care) and assistance if they face hospitalization.

A hyper-local focus on poor, isolated communities has created an unexpected way to provide previously unfathomable sorts of services to the poor at very low cost. The RSPN affiliates who provide microinsurance reach almost a million people, and at very little cost, by employing local community members for expertise, services, and administration.

This structure applies to much of what RSPN does: local projects, run by locals. It is a sharp contrast to even the ostensibly locally focused aid projects administered by U.S. and European NGOs and aid agencies, which focus on establishing a strong presence in capital cities and rely on expensive expatriate administrators. RSPN's local focus carries significant spillover effects in its communities as well: providing opportunities and improving the quality of life makes those communities significantly better off as a consequence. The "brain drain" of young people leaving to find opportunity elsewhere is diminished, and with better health and finances they can develop themselves, without the distorting effect of foreign money.
-------------
If anything, what the RSPN shows is that focusing on the small scale, and on the hyper-local, is actually a more effective way of developing isolated, poor, rural communities..


http://www.theatlantic.com/international/archive/2012/04/a-radically-different-way-of-bringing-us-aid-to-pakistan/256459/

Riaz Haq said...

Here's an excerpt from Dawn report on Punjab's economy:

The slowing regional growth has led to contraction in Punjab’s share in the national economy to 54.9 per cent in 2011 from 55.5 per cent in 2000 and 55.7 per cent in 2007.

Punjab’s economy, according to the IPP, is composed of 24 per cent agriculture (17 per cent for the rest of Pakistan and 20.9 per cent for Pakistan), 21.2 per cent industry (31 per cent for the rest of Pakistan and 25.8 per cent for Pakistan) and 54.8 per cent services (52 per cent for the rest of Pakistan and 53.3 per cent for Pakistan). The provincial economy’s sectoral composition signifies relative importance of agriculture in its economy and underdevelopment of industry as compared to the rest of Pakistan, says the IPP.

The report identifies three major factors that have dragged down economic growth in Punjab in recent years: decreasing water availability for agriculture, growing energy crunch for industry and declining public sector investment in economic infrastructure.

The IPP points out that performance of agriculture plays a major part in the economic growth of the province. During the last few years, it contends, the performance of agriculture sector has been disappointing, especially of major crops that have shown little growth since 2007 due to growing water shortages and rising fertiliser prices. Wheat production was virtually stagnant and output of sugarcane and cotton dropped by 10 per cent and 17 per cent respectively. The only crop with significant growth of 26 per cent was rice. In addition, there was hardly any growth in minor crops. Given the relatively large share of agriculture in the regional (Punjab) economy, the growth rate is likely to be lower because even in good years agriculture is unlikely to average a growth rate above four to five per cent,” it underlines.

The annual average agriculture growth rate in Punjab declined to just one per cent between 2007 and 2011 from 3.3 per cent between 2000 and 2007. In contrast, the average agriculture growth rate rose to three per cent for the rest of Pakistan from 2.5 per cent.

Growing energy shortages have affected industrial output in Punjab disproportionately, according to the report. There has been cumulative drop in gas consumption in the province of 13 per cent in the last few years compared to an increase of 16 per cent in the rest of Pakistan, especially in Sindh.

Similarly, increase in electricity consumption since 2007 has been restricted to only two per cent compared to six per cent in the rest of Pakistan. Punjab’s share in the national production of cotton yarn, for example, dropped from 33 per cent in 2007 to 29 per cent in 2011 and in cotton cloth from 43 per cent to 37 per cent.

Additionally, the report underlines the weaker presence in Punjab of industry producing consumer durable and construction inputs compared to Sindh as another factor for slower growth. “In the peak of business cycle, industries producing consumer durables like automobiles and industries providing construction inputs like cement show very high growth rates. During 2003 and 2007, for example, production of automobiles showed extraordinarily high growth rate of 31 per cent. The growth rate of cement industry was also high at 18 per cent.


http://dawn.com/2012/05/21/punjabs-lost-growth-momentum/

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/

HopeWins Junior said...

SEPTEMBER 27,2011: Can Pak Tell US: Take This Aid and Shove It!
http://alturl.com/2qc34

"Aid only postpones the basic solutions to crucial development problems by tentatively ameliorating their manifestations without tackling their root causes. The structural, political, economic, etc. damage that it inflicts upon recipient countries is also enormous...."

----And then ONLY 3 Weeks later---

OCTOBER 19,2011: Punjab's Rejection of US Aid Hurts the Poor
http://alturl.com/n4xhv

"The Punjab government led by PML's Shahbaz Sharif spurned US aid slated for welfare projects.... The popular move was motivated by politics to capitalize on a wave of anti-American anger....the decision's outsized impact on the poor is now coming to light...."

----

Well? One-year later have you finally made up your mind?

Does Aid HELP the poor by way of providing relief in the short-term MORE than the it HARMS them by increasing dependency in the long-term?

What do you now think?

Riaz Haq said...

HWJ: "Does Aid HELP the poor by way of providing relief in the short-term MORE than the it HARMS them by increasing dependency in the long-term?"

It depends on what it funds.

A good example of aid funding is the US aid for Green Revolution in 1960s which has done long-term good for both India and Pakistan.

Other good examples are foreign aid funding education and healthcare programs which have long-term positive effects.

Riaz Haq said...

Here's a News story on British aid for social sector development in Pakistan:

ISLAMABAD: United Kingdom’s (UK) Department for International Development (DFID) has committed to provide £266 million in shape of grants to Pakistan during the current fiscal year in areas of education, poverty alleviation, development in Balochistan and the Federally Administered Tribal Areas (Fata), as disclosed during the House of Commons Committee’s review meeting.



The objective of the meeting was to assess aid effectiveness being provided by the UK to Pakistan over the medium term. “During the review meeting, the UK delegation pressed upon Islamabad authorities to improve the country’s fiscal situation by mobilising tax revenues and abolishing untargeted subsidies,” said an official source.



“Aid provided by the DFID would gradually increase by up to £446 million by 2014-15,” said Javed Iqbal, secretary of Economic Affairs Division. “The DFID is providing financial assistance to enhance the number of enrolled children in school by up to four million as well as for other areas, including health, poverty alleviation and improved governance.”



DFID has planned to provide £155 million to the Benazir Income Support Programme (BISP) for unconditional cash transfer over medium to long term, while another £124 million would be provided for conditional cash transfer under the BISP programme under Waseela-e-Taleem programme. “DFID would provide four million pounds for the Multi Donor Trust Fund (MDTF) under the World Bank’s supervision to undertake development projects in Balochistan and FATA,” said an official source.



According to DFID’s findings, almost 60 million Pakistanis – equivalent to the entire UK population – lives below the food poverty line. Pakistan is off-track on the education and health millennium development goals. Half of all adults, and two out of every three women, are illiterate. One in eleven children die before their fifth birthday and 14,000 mothers die during childbirth.



This entrenched poverty leads to suffering, lost opportunity and a sense of grievance; all of which undermine Pakistan’s long-term stability and prosperity. Comparatively poor data in Pakistan and frequent crises exacerbate the challenge of assessing development programmes.


http://www.thenews.com.pk/Todays-News-3-145839-DFID-to-provide-%C2%A3266-million-for-development

HopeWins Junior said...

^^RH:"It depends on what it funds....Other good examples are foreign aid funding education and healthcare programs which have long-term positive effects"
----

What else would foreign AID be funding? Cocaine and hookers?

I think you may have misunderstood WHY Aid harms nations. According to Damibisa Moyo, it is precisely the continuing funding of education & healthcare programs by foreign aid that creates the maximum harm.

She explains that this sort of foreign charity allows the local governing elite to shirk their responsibility to their own people and so prevents the emergence of a viable State.

In her analysis, excessive and continuing foreign aid CREATES failed states. She has also pointed to Pakistan as an example of the dangers of continuing aid dependency. She says that our government in Islamabad is more accountable to Western-donor countries like US, Britain, Europe and less accountable to the Pakistani people.....

http://alturl.com/ovxze

Riaz Haq said...

HWJ: "I think you may have misunderstood WHY Aid harms nations. According to Damibisa Moyo,..."

Moyo also thinks US aid for Green Revolution made a huge difference in South Asia.

Also read Jeffrey Sachs' response to Moyo's arguments:

The debate about foreign aid has become farcical. The big opponents of aid today are Dambisa Moyo, an African-born economist who reportedly received scholarships so that she could go to Harvard and Oxford but sees nothing wrong with denying $10 in aid to an African child for an anti-malaria bed net. Her colleague in opposing aid, Bill Easterly, received large-scale government support from the National Science Foundation for his own graduate training.

I certainly don't begrudge any of them the help that they got. Far from it. I believe in this kind of help. And I'd find Moyo's views cruel and mistaken even she did not get the scholarships that have been reported (Easterly mentioned his receipt of NSF support in the same book in which he denounces aid). I begrudge them trying to pull up the ladder for those still left behind. Before peddling their simplistic concoction of free markets and self-help, they and we should think about the realities of life, in which all of us need help at some time or other and in countless ways, and even more importantly we should think about the life-and-death consequences for impoverished people who are denied that help.....


http://www.huffingtonpost.com/jeffrey-sachs/aid-ironies_b_207181.html

HopeWins Junior said...

^^^RH:"Moyo also thinks US aid for Green Revolution made a huge difference in South Asia.

Also read Jeffrey Sachs' response to Moyo's arguments.."
---

Again, a misunderstanding.

The key word that makes Aid a disaster is "continuing".

The Green Revolution aid was short, specific to a task and wrapped up at its conclusion. Damisa has always said that this sort of aid is not harmful and may even help under certain circumstances.

The Green Revolution aid was not "continuing, perpetual aid".

Jeff Sachs has also misunderstood what Dambisa has been saying. Dambisa's Harvard scholarship was NOT a basic responsibility of Zambia's government that they happend to shirk. Those scholarships are offered to student from rich countries as well. However, the malaria-net issue that Sachs mentions IS indeed a basic responsibility of the local governing elite that they have been continuously shirking for 40 years. And the reason they can get away with shirking their responsibilities is precisely because the aid KEEPS ON COMING IN without any end. This is what Dambisa has been critisizing as responsible for creating the Failed State Syndrome.

Here is Dambisa's RESPONSE TO Jeff Sachs that was published in the same paper that you are quoting (Huffington post)---
http://alturl.com/xnycg

Riaz Haq said...

HWJ: "The Green Revolution aid was short, specific to a task and wrapped up at its conclusion."

Green Revolution aid lasted ten years...there was nothing short of sharp about it.

I do think that aid should be project oriented rather than undifferentiated budgetary support that fuels corruption.

There are plenty of education, health care and infrastructure projects that aid (govt, IFI and private) can and should fund in former colonies for capacity building to enable the recipient nations to get up on their own feet.

HopeWins Junior said...

^^^RH: "Green Revolution aid lasted ten years...there was nothing short of sharp about it....
....There are plenty of education, health care and infrastructure projects that aid (govt, IFI and private) can and should fund in former colonies for capacity building to enable the recipient nations to get up on their own feet."
----

(1) Ten years is very short and very sharp when you consider the time-scale and reach-extent of the ongoing aid programs in Africa. South-Korea also received GR aid for about 10 years.

In addition, remember that the Green revolution was a true technology-transfer. Third-world countries did not have the technology, so they could not have done it on their own. Help was absolutely required in that case.


(2)However, all the other items you mention, like education, vaccination, drinking water are not problems created by the lack of availability of technology.

These are problems created because the governing elite are shirking the responsibility of the State.

If Pakistan's leaders wanted to do something about education, healthcare, water-supply et cetera, they could EASILY do it with LOCAL resources by making people PAY THEIR fair share of TAXES.

But as long as the British, Americans & Europeans keep sending in "free money", our feudal elite will keep shirking their responsibilities. Why should they do the right thing, when they know that Western do-gooders are going to keep doing it for them? This is what Dambisa is saying.

Here is an excellent article by an authority on Pakistan's foreign aid program that decribes this shameless shirking of responsibility:
http://alturl.com/2yhwx

Riaz Haq said...

Here's ET on management of Punjab development budget under Sharifs:

LAHORE:

The Punjab government has spent just Rs70 billion of its Rs250 billion development budget for fiscal 2012-13 in the first seven months of the year, around half of it in Lahore alone, The Express Tribune has learnt.

Under finance rules, the Punjab government should have spent around Rs145 billion on development by the end of January, but had only spent Rs70 billion. Of this, Rs34.19 billion was spent on projects in Lahore, the vast majority of it, Rs31 billion, on the Metro Bus Service.

A senior Finance Department official said it was normal for utilisation of the Annual Development Programme (ADP) to remain low in the first six months of the financial year, and for spending to pick up in the remaining six months. He said that the low utilisation was due to the poor financial position of the province.

Last year, the Punjab government utilised only Rs150 billion of the Rs220 billion ADP presented for 2011-12.

In Lahore in 2012-13, apart from the spending on the Metro Bus Service, the Punjab government has spent Rs1.65 billion on the Kalma Chowk underpasses and Rs540 million on the Model Town underpass. Another Rs1 billion came out of the provincial kitty for the purchase of 100 buses, originally meant to be plied on the MBS corridor, but later given to girls colleges.

Other notable expenses included Rs4 billion for the procurement of 100,000 laptops, which are being handed out to students who perform well in exams. The Energy Department spent Rs2.5 billion on solar lamps, being handed out to 240,000 students under the Ujala programme.

Around Rs1.447 billion has been spent on the Pirwadhai Mor underpass and flyover project.

Another Rs1.25 billion has been spent on the Abdullahpur underpasses in Faisalabad, which involved the construction of three underpasses beneath the Tariqabad bridge leading to Chak Jhumra Road.


http://tribune.com.pk/story/514954/development-budget-half-of-punjabs-spending-concentrated-in-lahore/

Riaz Haq said...

Here's PakObserver on US help to improve Pak agri productivity:

Tuesday, March 12, 2013 - Islamabad—The U.S. Agency for International Development (USAID), the International Maize and Wheat Improvement Center (CIMMYT), and the Pakistan Agricultural Research Council (PARC) launched a new project to expand the use of modern technologies in Pakistan’s agriculture sector.

“Boosting Pakistan’s economy is one of our top assistance priorities. That’s why this project will work to modernize agricultural practices to increase the production and quality of livestock and horticultural goods. This in turn will enhance economic development in the country,” said USAID Country Director Jonathan M. Conly at the launch of the project in Islamabad on March 8.

Innovative technologies, introduced in Pakistan with support from the U.S. Government, spurred the Green Revolution in the 1960s and 1970s. The adoption of improved rice and wheat varieties, combined with strategic policies and investments, led to a doubling of yields and output in those two decades. With investment in research, Pakistan transformed its agricultural sector into a driver for economic growth.

Currently, Pakistan’s agricultural sector is growing at a much slower pace than other sectors. “Pakistan’s agricultural productivity has fallen behind comparable countries with similar agro-ecologies,” said Thomas Lumpkin, Director General of CIMMYT. “There is a tremendous potential for growth, but we must act now.”

Through its new four-year, $30 million project, USAID will sponsor research to encourage adoption of new technologies in agriculture, such as laser land leveling, zero tillage, residue management, introducing short duration legumes into rice-wheat cropping systems, and custom service systems for machinery.

The project will also offer short and long-term training. The U.S.-funded project will be implemented by CIMMYT and PARC in cooperation with the International Livestock Research Institute, the World Vegetable Center, the International Rice Research Institute, and the University of California, Davis.

Promoting economic growth is one of the many ways that the United States is helping to create a brighter future for the people of Pakistan. The United States funds large-scale energy projects that will provide electricity to two million households by the end of 2013. The U.S. has rebuilt and renovated 800 schools and has provided scholarships to 12,000 students to attend universities in Pakistan.


http://pakobserver.net/detailnews.asp?id=199817