A New Strategy for Aid to Pakistan

This is a joint post with Wren Elhai and Molly Kinder and first appeared on ForeignPolicy.com’s AfPak Channel blog. Read the report of the Study Group on U.S. Development Strategy in Pakistan here. A response from Alexander Thier, head of USAID’s Office of Afghanistan and Pakistan Affairs can be found here. For nearly two years, the United States has been trying something completely new in Pakistan. In 2009, with President Obama’s backing, Congress passed a bold piece of legislation that committed the United States to support Pakistan’s people and its economy, as opposed to focusing almost exclusively on the country’s military. The United States would try to help Pakistanis consolidate the transition to democracy they won in 2008, and -- for the first time -- it seemed the United States would place an equal emphasis on long-term development and short-term stability in Pakistan.So far, however, this new approach has not lived up to its potential. During a recent trip to Pakistan, we listened to dozens of Pakistanis in and out of government tell us of their frustrations with the U.S. aid program and American inaction on trade and investment policies (just look at the ongoing debate about lifting tariffs on the Pakistani textile trade with the United States) that would naturally complement aid. Over the past year, a study group of American and Pakistani experts convened by the Center for Global Development have gathered to figure out what’s amiss—and how to put it right. In a report released today, we sum up the problem this way:

No one is sure what the United States is trying to accomplish in the development space. Because of a debilitating lack of transparency in the aid program, no one is even sure what the United States is doing. With an approach to foreign policy in Washington that emphasizes integrating development and diplomacy, lines of authority over planning and implementing development policy are blurred. Long-term and short-term objectives compete for the same resources, and suspicion abounds in Pakistan that the United States’ aid spending is driven more by security concerns and objectives than by development best practice. On the ground in Pakistan, an aid mission already asked to instantly scale up its operations is hampered by shifting (and often conflicting) instructions from Washington and by burdensome oversight and bureaucracy that limit flexibility, innovation, and risk taking.

No reasonable analyst could expect the United States to fundamentally change Pakistan’s future. Pakistan is too large and the key obstacles to progress there are often problems of domestic politics, not a lack of aid. And just as aid cannot purchase military cooperation, it cannot buy sound economic policies. Those will come only with courageous and sustained effort on the part of Pakistani reformers inside and outside government.  However, reform efforts in Pakistan are more likely to succeed with America’s support, in the form of carefully spent aid as well as trade and investment policies designed to spur private sector growth.First, the bureaucratic muddle that is the U.S. development program must be cleaned up. One person should be charged with crafting and implementing a development strategy, one with clear priorities, separated institutionally from the Afghanistan strategy and from U.S. security policy in Pakistan. We recommend being clear and transparent about what the United States is doing (including by finally sharing useful information on how much aid has been disbursed). We also suggest ways to improve the USAID staffing system in Pakistan—increasing staff continuity and making better use of Pakistan’s own pool of talent.Second, the United States needs to deploy the trade and investment tools that can contribute to the growth of the Pakistani private sector and middle class. It must also make better use of aid (starting by not spending it where it might do more harm than good). We suggest rewarding success by expanding programs (including ones started by other donors) that are working and increasingly paying for verified progress in expanding access to education, healthcare and clean water. Finally, the United States should support the efforts of Pakistani advocates for reform by asking the Pakistani government to include them in policy discussions and by financing small but meaningful upgrades to Pakistan’s democratic system—a quality national census, open budgets, and independent policy research for example.Very little in the U.S.-Pakistan relationship is free of contention or controversy—except for one thing. More so than is the case with other nations, Pakistan’s stability and prosperity are intertwined with the United States’ own. If the United States can support Pakistan’s gradual transformation into a place where more young people have economic opportunities, more companies can do business, and the government can better enforce its laws, the American people will benefit. Investing in that future is the way U.S. development policies can promote American national security and prosperity—not through futile efforts to pay individual Pakistanis to renounce violence or to bribe the Pakistani security establishment to hand over Taliban or al-Qaeda leaders.While our relationship with Pakistan is often seen within the context of the war in Afghanistan, it is time the common “AfPak” pairing, now out of fashion in policy circles, be broken apart in the minds of policymakers for good. A better comparison for understanding what is at stake in Pakistan is Indonesia, the country Pakistan will soon pass to become the most populous Muslim nation in the world.In 1970, when a young Barack Obama attended school in Jakarta, the average Pakistani made twice as much as the average Indonesian. But today, that statistic is exactly reversed. Much of that divergence has taken place just in the last ten years. Indonesia’s economy has taken off, while Pakistan’s growth has slowed. Meanwhile, Indonesia has successfully transitioned from autocratic rule to establish a well-rooted, federal democratic system. Now, that nation is mentioned in the same breath as Brazil and India as an emerging power on the world stage and a force for regional security. Fundamentally, few threats to American interests and American lives now emanate from Indonesia. That is the hope and the promise of development in Pakistan, a promise the United States has a role to play in fulfilling.Nancy Birdsall is president of the Center for Global Development and chair of the CGD Study Group on a U.S. Development Strategy in Pakistan. Wren Elhai is a policy analyst and Molly Kinder is a senior policy analyst at the Center for Global Development.