Foreign Policy Blogs

Aid to Pakistan

Does the US care enough about Pakistan to face the long haul? Does Pakistan?

The New York Times reported Sunday that the Obama administration is trying to decide what economic assistance to offer Pakistan, given the level of corruption and waste.

American officials said the need to assist the Pakistani economy directly became alarmingly clear when recent power shortages across the country contributed to Pakistan’s first year of negative industrial growth. There were widespread complaints here, including by Finance Minister Shaukat Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators…
(Tarin said) the United States should invest in developing vast coal reserves in the province of Sindh, and in hydroelectric, wind and solar power to bolster Pakistan’s energy supply…
The administration’s special envoy for Pakistan and Afghanistan, Richard L. Holbrooke, has appointed Robin L. Raphel, an experienced American diplomat, to oversee the planning of the new aid programs. Mr. Holbrooke has also sent David Lipton, a senior member of the National Economic Council, to Islamabad twice to look at ways to fix the Pakistani economy.
One key factor in trying to find more effective ways to deliver aid to Pakistan is a recognition that big projects are likely to win more Pakistani friends because they are more visible, American and Pakistani officials said.
“It was not only an assistance issue but a public image issue, too,” the senior American official said. “People talk about the Chinese nuclear reactors and the Japanese.” The United States was searching for a “signature contract,” the official said.

There is no doubt that the people of all of Pakistan’s provinces need aid. But they need more than a short-term cash infusion on ad hoc projects.

Here’s a thought: one huge, game-changing thing the US could do is to pressure Pakistan to look past its favorite and most populous province of Punjab, with its comfortable business, educational, and military elite, its cronies and special interests, and deal with the way it treats its angry and marginalized provinces of Sindh, the North West Frontier Province (NWFP), and the restive and resource-rich Baluchistan.

The grievances of Baluchistan, Sindh and the NWFP are longstanding. Both the Baluch people and the Pashtun (of the North West Frontier Province) resisted becoming part of Pakistan from the start. These provinces have a much lower per capita income and literacy rate than Punjab, and unequal distribution of tax revenues leaves them stuck in poverty.

Simply deciding that Sindh’s coal reserves should be developed — with the huge environmental destruction coal brings — will only aggravate the situation. As with many developing countries, Pakistan’s national government acts as if it has a right to all the resources a region has to offer, without addressing the very real resentment of the people who actually live on the land.

Both Baluchistan and Sindh have enormous natural resources, including natural gas, gold, copper, and uranium. The constant exploitation of these resources for the enrichment of a few outsiders has only made relations worse. According to the Carnegie Endowment for International Peace, Baluchistan receives only 12.5% of the gas royalties due to it by the central government. There is anger already in Sindh over water rights to the Indus River.

Both Sindh and Baluchistan have spoken of banding together to create a separate federation. All three provinces are moving towards separatism for the same reasons: the same sort of economic inequity was one of the causes for the 1970-1971 separatist war between West and East Pakistan. Today East Pakistan is Bangladesh.

Thankfully, we’ve also seen a solution to this problem before — in the Indonesian province of Aceh. As with Pakistan, Aceh endured decades of enormous popular anger over federal economic exploitation over its huge natural gas fields and massive political corruption, a long-standing violent separatist movement, thousands dead, and widespread human rights abuses by the military.

After the 2004 tsunami, a peace deal was mediated by Nobel Prize winner Martti Ahtisaari between the Acehnese and the Indonesian government. It guaranteed political autonomy, amnesty, the removal of federal troops, oversight by independent monitors, and that 70% of the revenues from natural resources stay in Aceh. So far the peace is holding.

Pakistan could and should negotiate a similar deal in good faith with its provinces.

Whatever other “aid” the US wants to give, the easiest, cheapest and most enduring help it can provide is to mediate an end to the anger in the provinces by offering fairer royalties for natural resources and a mutually agreeable level of local rights in the NWFP, Baluchistan, and Sindh.

History doesn’t repeat itself. The Acehnese agreement was given a tremendous push by a natural disaster, an impetus that cannot be reproduced. However, it was the constant support by Indonesia’s President Yudhoyono that made it work. Those in Pakistan who are corrupt and profiteering — and they are many and powerful — and those who insist on separatism will work against trying such an approach. Only consistent effort from Islamabad and unending US pressure will make it work.

Giving the people of an area the money from their own natural resources and control over the environmental impact can go a long way in placating a population and encouraging trust and capacity.



Jodi Liss

Jodi Liss is a former consultant for the United Nations, the United Nations Development Programme, and UNICEF. She has worked on the “Lessons From Rwanda” outreach project and the Post-Conflict Economic Recovery report. She has written about natural resources for the World Policy Institute's blog and for Punch (Nigeria).