Since independence Pakistan has
had to depend on foreign assistance in its development efforts and
to balance its international debt payments. In 1960 the World Bank
organized the Aid-to-Pakistan Consortium to facilitate coordination
among the major providers of international assistance. The
consortium held 92 percent of Pakistan's outstanding disbursed debt
at the end of June 1991. The consortium's members include the
United States, Canada, Japan, Britain, Germany, France, and
international organizations such as the World Bank and the Asian
Development Bank (ADB). The World Bank accounted for 26 percent of
the outstanding debt, and the ADB, which was the largest lender in
the early 1990s, accounted for 15 percent. Most nonconsortium
funding comes from Saudi Arabia and other oil-producing Middle
Eastern countries. Most aid is in the form of loans, although the
proportion of grants increased from around 12 percent in the late
1970s to around 25 percent in the 1980s, mainly because of food aid
and other funds directed toward Afghan refugees. With the decline
in this aid after 1988, the proportion of grants decreased to 16
percent in FY 1992.
The white paper detailing the new
U.S. strategy on Pakistan and Afghanistan calls for increasing and
broadening development and economic assistance to Pakistan. It
echoes recent recommendations by both U.S. and Pakistani
policymakers who have argued against too much emphasis on military
assistance, the Bush administration's focus. Nonmilitary aid is now
seen as an important tool in achieving the core U.S. objective in
the region--eliminating terrorist safe havens in Pakistan and
preventing them from returning. President Barack Obama called upon
Congress to pass pending bills that would authorize $7.5 billion in
nonmilitary aid to Pakistan for the next five years and create
"reconstruction opportunity zones" to enhance regional trade and
foreign investment. But security threats to U.S. personnel, lack of
oversight, a weak Pakistani leadership, and mistrust between
Islamabad and Washington continue to pose serious hurdles.
Of the total $12.3 billion in U.S. aid to Pakistan since 2002, less
than 27 percent went toward development and economic assistance.
Meanwhile, growing extremist violence and lack of access to
insurgent areas has severely constrained international aid
officials as well as their Pakistani counterparts. Anger over
suspected U.S. unmanned drone attacks has led militants to kill and
abduct (CSMonitor) foreign aid officials in Pakistan's northwest
and Balochistan Province. Experts also say the United States lacks
the institutional capacity to implement sophisticated, targeted
development programs in Pakistan. CFR's Daniel Markey writes any
increased levels of assistance programming will require significant
expansion of USAID, the U.S. foreign aid agency, and the U.S. State
Department