"U.S. Aid Plan for Pakistan Is Foundering"

U.S. Aid Plan for Pakistan Is Foundering
By Jane Perlez
May 1, 2011
The New York Times

KHAJURI KACH, Pakistan — A multibillion-dollar aid plan that the Obama administration hoped would win over Pakistanis and buttress the weak civilian government is foundering because Washington’s fears of Pakistani corruption and incompetence has slowed disbursal of the money, undermining a fundamental goal of the United States in Pakistan, officials from both nations say.

The aid program promoted by Senator John Kerry, chairman of the Foreign Relations Committee, promised Pakistan $7.5 billion over five years, much of it delivered through the civilian government.

But so inadequate is Pakistan’s civilian bureaucracy and so rife are United States fears of corruption in the government that American officials, constricted by layers of their own rules, have struggled to find safe places to actually invest the money available. Instead of polishing the tarnished image of America with a suspicious, even hostile, Pakistani public and government, the plan has resulted in bitterness and a sense of broken promises.

In a scathing report, the Government Accountability Office said that only $179.5 million of the first $1.5 billion of the five-year program had been disbursed by last December.

Energy projects that the Obama administration said would improve electricity for households and energy-starved industries have been placed in out-of-the-way areas, and help for the crumbling education system has not materialized.

The United States Agency for International Development’s director for Pakistan, Andrew B. Sisson, defended the pace of spending. “This is a long-term enterprise, and building that takes time, and we’re doing that,” he said. The amount spent on projects from the $1.5 billion, he said, has risen to more than $200 million.

More than $1 billion in American aid was actually spent by U.S.A.I.D. in Pakistan last year from previously unused funds, Mr. Sisson said, including $500 million for flood victims.

During a visit to Pakistan in October 2009, Secretary of State Hillary Rodham Clinton announced that much of the American aid money would be devoted to “seven signature projects.”

They included the Gomal Zam Dam here in South Waziristan, where $20 million helped build the spillway to a power plant lighting one of Pakistan’s most neglected corners.

Built during the last eight years by Chinese engineers of the Sinohydro Corporation, the dam will serve the towns of Wana in South Waziristan and Tank in Khyber-Pakhtunkhwa Province, far from Pakistan’s biggest population centers.

But the Gomal dam — and the other projects — while helpful, barely qualify as “signature,” and none have been completely finished, said Nancy Birdsall, president of the Center for Global Development in Washington.

The overall goals of the aid program were unrealistic, she said. The Obama administration wanted big-impact projects that would win instant love for the civilian government and the United States.

The administration said it would funnel at least 50 percent of the funds through the Pakistani government, rather than using American contractors. The aim was to show America’s commitment to the civilian government and help strengthen its ability to deliver to its citizens, American officials said. Moreover, the large overheads of American contracting companies would be eliminated, they said.

But the Americans have run into problems of corruption and incompetence on the civilian side. After nearly a decade of military rule in Pakistan — the military has run Pakistan for about half of its six decades — the three-year-old civilian government is deeply unpopular, having failed to provide a better life for Pakistanis.

The economy is failing. Education, health care and other services are almost nonexistent, while civilian leaders from the landed and industrialist classes pay hardly any taxes.

Pakistanis see the aid as a crude attempt to buy friendship and an effort to alleviate antipathy toward United States drone attacks against militants in the tribal areas. Last month, the chief minister of Punjab, Shahbaz Sharif, said that if America did not stop the drones, Pakistan should turn down the aid package.

Mr. Kerry, co-sponsor of the 2009 aid legislation with Senator Richard G. Lugar, Republican of Indiana, acknowledged the disappointment.

“I understand that Pakistanis may be frustrated by the slow pace of projects,” Mr. Kerry said. “Moving this much money transparently through any bureaucracy is always a slow process, but the administration must move faster to implement projects.”

U.S.A.I.D. officials point to a report by the agency’s Office of the Inspector General that highlighted the difficulties of operating effective, corruption-free projects in Pakistan. The first two years of a $750 million development program begun in the tribal areas in 2008 were plagued by allegations of corruption and the limitations of sending Americans to such a dangerous area. Only 53 percent of the planned projects had been carried out, the assessment said.

To keep a close watch on corruption, U.S.A.I.D. expanded its inspector general’s office in Pakistan to nine auditors in 2010, from two in 2009. Already, the office has opened 12 cases so far this year — involving bribery, kickbacks and collusion on bidding — compared with 13 cases in 2010, the office said.

Another big goal for the $1.5 billion was to reconstruct schools in the Swat Valley, where the Pakistani Army fought the Taliban two years ago, leaving a devastated economy and hundreds of schools destroyed.

Of 115 schools that the aid agency promised to rebuild, none have been completed, said Ziauddin Yousafzai, the principal of a private school, who has watched the school program closely.

“At this hour, work has only started on 14 to 20 schools,” Mr. Yousafzai said. One school on the outskirts of Mingora, Swat’s main city, was “like the Taj Mahal, very beautiful,” he said. But it was only half done, he said.

The slow progress was due to a clash between Pakistani politicians at the provincial authority created to speed Swat reconstruction, and two monitoring agencies the United States employed to oversee the contracts, Mr. Yousafzai said.

Undeterred by the pace in Swat, Mr. Sisson, the U.S.A.I.D. official, said he was planning to spend $303 million building hundreds of schools in Punjab and Sindh Provinces in the next three years.

To overcome the letdown over the first $1.5 billion of the Kerry-Lugar funds, the Obama administration is considering offering start-up financing for a major dam project, Basha, in the northern region of Gilgit-Baltistan, which would help solve Pakistan’s critical water shortages, American and Pakistani officials involved in the discussions said.

Sakib Sherani, a former principal economic adviser to the Finance Ministry, said that the United States would win more friends by offering trade concessions.

“They would have a big payoff for ordinary Pakistanis and wouldn’t cost the American taxpayer — chief of these would be access for Pakistani textiles,” Mr. Sherani said.