United States Deputy Secretary of State for Management and Resources Thomas R. Nides during his three-day visit to Pakistan mentioned the release of 190 million dollars for the flood-affected people of Pakistan under the Citizens' Damage Compensation Programme.
Hina Rabbani Khar, the Minister of State for Foreign Affairs, took the opportunity to reiterate Pakistan's long-standing demand premised on an equally long-standing rationale: Pakistan deserves market access as compensation for the massive cost borne by this hapless country in terms of lives lost as well as destruction of public and private property due to our engagement in the global war on terror. The following day the approved US defence bill proposed withholding 75 percent of the pledged Kerry-Lugar assistance until the Obama administration can certify to Congress that Pakistan has co-operated with the US in the war against terrorism.
That this point of view has not successfully achieved the desired results is patently evident to all. Only part of the blame for this can be laid at the doorstep of the donors - bilateral and multilateral; unfortunately a major portion of the blame is ours. The international community led by the United States has repeatedly expressed its concern over what it regards as sustained support extended by certain elements of our establishment to the Afghan Taliban by providing them sanctuary in this country. The fact that Osama bin Laden was found living in a settled area - in Abbottabad - and had reportedly been resident there for over five years, is cited as a proof of this contention.
The Americans have also pointed out that sharing of intelligence on the location of two munition factories led to the escape of those engaged in these factories a few hours before the raid was scheduled to take place reflecting complicity with some members of the security forces. In other words, the trust deficit has only widened post bin Laden's killing. The country decision-makers' acceptance of the charge of incompetence instead of complicity, has led to their being reviled domestically as well as internationally. In short, there is an urgent need for the establishment to launch an effective public relations campaign backed by action instead of relying on calls not to malign the entire institution (by focusing on a few rogue personnel) as that is not in the national interest. Such calls were successful in the past - they do not appear to be working at present.
In addition, the donors argue that the country has received considerable injections - with the armed forces receiving in excess of 10 billion dollars over a decade or so as compensation under the Coalition Support Fund (CSF) for fighting the war on terror. In other words, the army submits a set of invoices to the US seeking reimbursement for all expenses incurred in the war on terror. General Musharraf publicly admitted that the government diverted funds under the CSF to conventional hardware to be used against India as per the army's India-centric perception of an existential threat thereby raising concerns in the US leading to greater oversight of claims. Recently, the army corps commanders issued a press statement that they would divert the funds under the CSF for development - a statement that if taken seriously by the US would lead to a cessation of the CSF. However, one would assume that the 495 billion rupees budgetary allocation to defence in 2011-12 includes CSF.
With respect to civilian assistance, corruption and mismanagement are generally the charge leveled by the donors against our bureaucracy. Oversight here too is being strengthened. The country's absorptive capacity remains weak and part of the pledged assistance that is disbursed is not used within the period specified. The Americans, followed by the Germans and the British, our major bilateral donors, have ridiculed our tax structure and accused the legislature of not taxing the rich and wealthy Pakistanis, while relying on the tax payers in the donor countries to foot the development budget. In this context, it is unfortunate that the budget for 2011-12 reflects little change in the tax system.
Be that as it may, it is evident that while US-Pakistan relations are at a low ebb, yet efforts are underway to work together: the US needs Pakistani support for the war on terror and is willing to pay Pakistan roughly one to 1.5 billion dollars a year to fund that war and in an effort to win the hearts and minds of Pakistanis, the US passed the Kerry-Lugar bill that envisages 1.5 billion dollars for development per year for seven years - an amount that clearly remains hostage to our international politics and our mismanagement. In this context, it is extremely disturbing that the recently released budget for 2011-12 neither seeks to reform the tax system nor to reduce corruption nor indeed to reduce its civilian expenditure, excluding defence and interest payments. The remedies available have not been applied and there is little hope of an economic upswing.