The bill explained
By Shahid Javed Burki
Tuesday, 20 Oct, 2009
THE reaction in Pakistan to the Kerry-Lugar bill surprised both Islamabad and Washington. Foreign Minister Shah Mehmood Qureshi conveyed to the Obama administration the Pakistani military’s unhappiness with some of the provisions of the bill.
Following the meeting with the minister, the sponsors of the bill agreed to issue a statement clarifying that it was neither the intention of the US authorities to micromanage Pakistani affairs nor to do anything that would subvert the country’s sovereignty.
The bill passed by the US Congress, popularly known as the Kerry-Lugar bill, seeks to restructure Pakistan’s relations with the United States on a more durable basis. In the past these relations were on an ‘on-and-off’ basis; they were ‘on’ when Washington needed Pakistan in pursuit of its strategic interests and ‘off’ when Washington’s attention was diverted away from the region of which Pakistan is a part.
While it is easy to understand why the military high command was upset with some of the provisions in the bill, the reaction of some of the politicians and a section of the press and electronic media is more puzzling. The bill, now the Enhanced Partnership with Pakistan Act of 2009, after President Obama’s signature, covers a fair amount of ground: it defines the objectives the United States would like to see achieved after the large amount of assistance it is planning to provide; it has many expectations from Pakistan and includes provisos for evaluating the performance of the country in the use of the funds released by the United States.
It is worth quoting at some length what are described as the ‘findings’ of Congress in the bill. These usually express the sentiment in the legislative body at a given time. The bill states that “the people of the Islamic Republic of Pakistan and the United States share a long history of friendship and comity, and the interests of both nations are well served by strengthening and deepening this friendship”. Only those would quarrel with this statement who would not like to have a close relationship with Washington.
Then there is the question of the orientation of the earlier help provided to Pakistan. The bill states: “Since 2001, the United States has contributed more than $15bn to Pakistan of which more than $10bn has been security-related and direct payments” to compensate Islamabad for the services provided to the American forces operating in Afghanistan.
One of the criticisms against American assistance in the past was that it concentrated a lot of effort on providing to the military and not for developing the economy. The bill seeks to address this imbalance by providing a much greater amount for economic development. In addition it would support the country’s efforts to move towards democracy. “With the free and fair election of February 18, 2008, Pakistan returned to civilian rule, reversing years of political tension and mounting popular concern over military rule and Pakistan’s own democratic reform and political development.”
Once again, there cannot be any problem with this finding or with the requirement that Pakistan’s continued progress towards putting in place a democratic structure would be periodically reported upon by the administration in Washington to Congress. There are also Congress’s ‘findings’ about the progress Pakistan has made in controlling the increase in domestic terrorism. I will take up this issue in a later article.
The bill is divided into three parts, or ‘titles’ in the language of the American legislature. The first covers economic assistance, the second security assistance and the third accounting and monitoring. What is laudable — and should be seen as such in Pakistan — is that separate provisions are made for the two objectives of the bill: economic development and security.
A total of $7.5bn is to be provided for developing the economy but an unspecified additional amount will be given for aiding the security forces. Neither of the two titles carries the kind of conditionality that comes with loans from the World Bank and the Asian Development Bank or the programmes negotiated with the International Monetary Fund. In those cases, the country usually commits itself to taking a number of specific steps.
Two examples illustrate this point.
When a decade ago Pakistan borrowed from the World Bank some funds to develop its power sector it agreed to restructure Wapda according to a plan essentially developed in Washington. This was implemented but it had the unintended consequence of reducing investment in the power sector. Similarly Islamabad agreed to very specific fiscal and monetary targets with the IMF when it negotiated an agreement with that organisation in November 2008. It is understood that the flow of funds would stop if these conditions were not met. The World Bank sends out supervision missions and the IMF review missions to make sure that their conditions are being met.
The American bill does not have such conditions. The only requirement is that the administration report to the various committees of Congress on the expectations it has of the policies Pakistan will adopt. The bill does not have the provision that economic aid to Pakistan will be terminated or reduced if the country does not implement some of the recommendations made by the US Congress. The World Bank and IMF support comes with this kind of contingency. However, since Congress will authorise expenditure on a yearly basis in the context of the overall bill, it is possible that a change in political system could lead to a reduction in the amounts that would be made available. This is the way the US system works. It is not peculiar to aid to Pakistan.