A significant milestone in U.S. economic aid to Pakistan was reached in October 2009 when President Obama signed into law the Enhanced Partnership with Pakistan Act. Better known as the Kerry/Lugar/Berman Act (KLB) it authorized a tripling of U.S. non-security aid to Pakistan from FY 2008 levels to approximately $7.5 million per year from FY 2010 through FY 2014, or about $1.5 billion per year. The Act stated the expectation that the aid would be extended for another five years.

As Pakistani-Americans, the Council and its members are very appreciative of this substantial commitment in economic aid to the people of Pakistan. We recognize that leaders in the U.S. Congress such as Senators John Kerry and Richard Lugar, Representative Howard Berman and others worked hard to pass this legislation in a fiscally constrained environment. Passage of the Act was a bold and visionary step in the right direction.

Like many others who closely watch the U.S.-Pakistan relationship, the Council has concerns about how U.S. economic aid and, specifically, KLB assistance, has been implemented so far.

We agree with the following broad assessment in a report on U.S. aid to Pakistan issued in November 2011 by a Washington think tank, the Woodrow Wilson International Center for Scholars, which said of the initial KLB assistance programs, it is too soon to judge this aid as a failure, as some analysts have done, but it is already clear that mid-course corrections are vital to avoid lost opportunities and disappointed expectations on both sides.

Challenges

The current use of U.S. aid does not seem to be causing significant improvement in U.S.-Pakistan relations. Nor is it allaying the concerns of U.S. taxpayers who see growing anti-Americanism in Pakistan for a variety of security-related factors.

The overall challenge is how to bring about transformative changes in Pakistan with KLB assistance, in spite of poor host-country governance and the failure of successive Pakistani governments to implement much-needed reforms in health, education and energy sectors, as well as tax collection.

Specific Issues:

• Many Pakistani citizens view the relationship between the United States and Pakistan as transactional in nature and do not consider the United States as a reliable partner for the long term.

• How can better implementation of U.S. aid improve America’s image in Pakistan, so that a decade from now Pakistanis will view the United States differently?

• Increase economic opportunity will lessen the jihadists appeal to the youth, resulting in increased stability.

Recommendations

1. Pakistani-American Community Involvement

KLB calls for consultation with the Pakistani-American community and utilization of its expertise and skills. The community is eager to work with USAID in this regard. In addition, community members can provide insights from credible and highly qualified Pakistanis who in many cases are outside the circle of contacts maintained by USAID personnel.

2. Pakistan Enterprise Fund

KLB funds should be used to establish an Enterprise Fund to provide capital for small and medium sized businesses in Pakistan. This could be modeled on Enterprise Funds established in Eastern Europe following the collapse of the Soviet Union, which were quite successful. Establishment of a Pakistan Enterprise Fund is supported by the Department of State and USAID. The Council has been urging key congressional leaders to take such action, particularly since no new funding is involved. In addition to stimulating the Pakistan economy, establishment of an Enterprise Fund would be a significant step forward in positive collaboration between the United States and Pakistan at a time when such progress is badly needed.

3. Signature Infrastructure Project

In addition to its many modest projects in Pakistan, it is very important that USAID take the bold step of announcing U.S. financial support for a large, signature infrastructure project such as a hydroelectric dam. Doing so would unambiguously and substantially address a critical need: Pakistan faces frequent power shortages but the country has not completed a major water storage project in the last 40 years despite the doubling of its population.

In collaboration with the international aid community, the United States should make a significant financial commitment, say, $2-3 billion over several years, to help fund such a project. Even thought he total cost will be several times that amount, the project must be perceived as getting started because of the U.S. commitment.

The result will be that during and after construction, U.S. assistance will be perceived in Pakistan as meeting a vital need of the people.

Attached is a background paper on one such potential project, the Diamer Bhasha Dam.

4. Education

Aid for education is vital for the future of Pakistan. USAID should partner with private organizations like The Citizens Foundation to build and support secondary schools.

U.S. aid should also support higher education. A good example to emulate is the COMSATS Institute of Information Technology (CIIT), which offers college education in computer science. Started in 1998, CIIT now has 18,000 students at eight campuses around Pakistan offering both undergraduate and graduate programs.

5. Health Care

Pakistan’s health care system is largely ineffective and requires significant assistance as well as reform. However, USAID assistance must be closely tied to measureable outcomes such as improving immunization rates or eradicating diseases such as tuberculosis and polio. It is important that USAID seek advice from Pakistani private sector health care experts and collaborate with reputable institutions. A good example of the latter is Indus Hospital, which provides first class care free of cost to its patients, including expensive procedures such as cardiac bypass surgery.

6. Democracy Promotion and Judicial Reform

The Council strongly encourages USAID to collaborate with institutions like Freedom House, which works directly with civil society and non-profit organizations in advocating for democracy and human rights worldwide.

Conclusion

KLB has created an opportunity for the United States to help bring about both short- and long-term improvements in the quality of life for Pakistani citizens, while strengthening the countryÃÃâs institutions of democratic government. Done right, it can achieve such ends while helping to bring about stability in the region. The Council is confident that with some adjustments and refocusing, the opportunity will not be lost and that success will be achieved in the years ahead.

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