Ideas to Action:

Independent research for global prosperity

X

US Development Policy

Feed

This is a joint post with Wren Elhai.

Today on ForeignPolicy.com, we’ve written an op/ed with our colleague Molly Kinder that makes the case for why the United States should do everything possible to help Pakistan rebuild basic infrastructure in the areas devastated by this summer’s catastrophic floods. Here, we wanted to expand on one of the points from that op/ed—the debate over repurposing money from the existing $7.5 U.S. aid commitment, authorized a year ago by what’s called the Kerry-Lugar-Berman bill.

The question of how much can and should be repurposed from Kerry-Lugar-Berman is dividing policymakers in Congress and in the Obama administration. The House of Representatives has already passed a resolution that, among other things, “supports the use of funds authorized by [Kerry-Lugar-Berman] for the purposes of providing long-term recovery and rehabilitation for flood-affected areas and populations.”

But some of their colleagues in the Senate and in the Administration worry about diverting too much money from existing plans. The money was hard to get, and it was passed with the (admirable) intention of making long-term development central to U.S. policy in Pakistan, of making Pakistan in ten to twenty years a more prosperous, more stable, less threatening place. Does repurposing that money for flood reconstruction imperil the long-term development mission in Pakistan? Is there a trade-off between helping Pakistan right now, in its hour of great need, and helping Pakistan over the coming decades?

The answer to both of these questions is a clear ‘no.’

Why so? First, as we explain in Foreign Policy, in geographic areas key to Pakistan’s economy, flood-damaged infrastructure is now the main constraint to long-term economic growth and poverty reduction. In this context, flood reconstruction spending is smart, long-term development spending. Shifting Kerry-Lugar-Berman funds towards reconstruction will provide the necessary foundation for Pakistanis to “build back better” for the long-term. Here it’s worth emphasizing that no one is advocating spending much of the Kerry-Lugar-Berman money on humanitarian relief, which is funded separately. Reconstruction and rebuilding are what comes after the immediate needs for food, shelter, water, and healthcare have been addressed.

As we have written, it is not often that the best strategy for using development aid to spur long-term prosperity is also the best strategy for short-term stabilization. More frequently, the overriding need is to insulate long-term development programs from the pressure to deliver immediate results on stability and security. However, the powerful blow the floods have dealt to Pakistan’s economy and its democratic institutions set up a rare situation where short-term and long-term development interests converge.

Secondly, we emphasize that true solutions to Pakistan’s long-term problems will come only with reforms of Pakistani tax policy, energy policy, and more, all very difficult to secure in Pakistan’s domestic political context. The United States should continue trying to understand the dynamics holding back these reforms and should continue applying pressure where it seems helpful to do so. However, aid dollars are much better equipped to address the other constraint to growth in Pakistan—the billions of dollars in destroyed infrastructure that need to be rebuilt whether or not Pakistan’s policy house can be put in order. Big investments in sectors where policy reforms are what’s really needed should wait until after those reforms have been put in place.

A good reconstruction program will not by itself put Pakistan on the road to prosperity. All the fundamental problems of pre-flood Pakistan must still be addressed. However, a good reconstruction program is a necessary ingredient to economic stability ten and twenty years from now. Spending aid money to ensure such a program is exactly in line with the long-term mission of the Kerry-Lugar-Berman bill.

Disclaimer

CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.