Given Aid’s Track Record in Pakistan, Why Shouldn’t the United States Scrap It?

My colleagues and I have written in this space explaining why we do not think the diplomatic commotion following the killing of Osama bin Laden should lead the United States to cut off economic aid to Pakistan. In so doing, we were speaking mostly to those here in the USA who see Pakistan as an unreliable partner, one “undeserving” of U.S. taxpayer support.There’s another argument for cutting off aid to Pakistan that goes like this: it’s not helping and may even be doing harm. Pakistan’s future will not hinge on a few billion dollars in external assistance. It will depend mostly on whether its democratic political system can function well enough to deliver a list of long-delayed economic and social reforms (we could start the list with tax, energy, civil service, land, and local government reforms). While none of these reforms have the sex appeal of a SEAL raid or a squadron of armed robotic planes, they are as important if not more so to long-term American interests. Aid can sometimes be actively harmful to a reform movement—and it has an especially poor track record in Pakistan. This is the argument I want to address now, by defending the case that (done right) aid can help.The most scathing review so far of our recent report Beyond Bullets and Bombs: Fixing the U.S. Approach to Development in Pakistan, comes from Anjum Altaf, a Pakistani academic who represents this viewpoint well. He commends us for observing the poor track record donors have of pushing reform in Pakistan and the potential pitfalls inherent in the aid business. But he all but accuses us of intellectual cowardice for not following up by endorsing a total aid cut-off. Altaf concludes:

“It is not aid that needs to be fixed, but the governance of the country. The report makes it quite clear that it is not aid that will do so and acknowledges it may be worsening the problem. Yet it proceeds to make the case for aid. And that is what makes Beyond Bullets and Bombs almost beyond belief as well.”

The difference in our perspectives seems to boil down to two questions: is Pakistan more likely to solve its fundamental development problems with American engagement and support or without it? And, can aid be given more effectively than it has been given in the past?Dr. Altaf and others (including some of my colleagues here at CGD) are ready to wash their hands of aid to Pakistan altogether. Yes, they say, reform tariffs and create investment policies to help the Pakistani private sector expand. But stop giving aid. It’s not helping and trying to change it to be better is futile. Come back maybe when Pakistan has sorted out some of these issues on its own—at which point, it may not even need or want aid.In contrast, our report describes a set of policies—financing programs where reform is already underway, paying for verified results, delaying disbursement where it seems aid is most likely to blunt pressure building for reform, and supporting upgrades to the democratic process that expand the space available to Pakistanis advocating for change—that could make aid play a net positive role in promoting reform in Pakistan. We suggest that other tools, ranging from sensible trade policy to diplomatic engagement to get stalled political negotiations on certain reforms moving again, must be part of the solution.Altaf and others suggest that Pakistan would be better off under a counterfactual scenario in which the United States gives no civilian aid to Pakistan. But this approach has been tried before. At several points in Pakistan’s history, the United States has turned away from Pakistan, most recently for much of the 1990s. That period exacted a lasting toll on the U.S.-Pakistan relationship and did not spur significant motion on economic reform.In 2009, the United States decided on a new approach to Pakistan—offering greater support to Pakistan’s people and its democratic system, not just its military. Regardless of whether you think a $7.5 billion aid package was a good way to show that support, cutting off economic aid would set the United States’ relationship with Pakistan back by a decade. Far from increasing the legitimacy of Pakistan’s civilian leaders, it would show that the leadership that matters in Pakistan still sits in General Headquarters in Rawalpindi, not in the democratic federal or provincial governments.We agree with our critics that aid will be only a small piece of the solution in Pakistan, and there are many other things that matter more. But we believe that aid can help. Done well, aid can be part of a broader strategy of engagement that supports Pakistani efforts to finally take the necessary steps to become a prosperous and secure country over the next decade. That is the way development in Pakistan will support U.S. interests—and the metric by which a U.S. development strategy should be judged.