Questions About US Aid to Pakistan Put Focus on Military's Spending

When President Donald Trump tweeted that all the U.S. had gotten for $33 billion in aid to Pakistan was "lies and deceit," he ventured into sensitive territory for a country that says it is doing all it can to fight terrorism and is being unfairly criticized for its efforts.

Now, financially strapped Islamabad will be looking to fill a hole in its annual military budget with the Trump administration's announcement Thursday that it's suspending security assistance to the Pakistani military until it takes "decisive action" against the Afghan Taliban and Haqqani network that are targeting U.S. personnel in Afghanistan.

A U.S. official said the amount being withheld totals $255 million. The New York Times has quoted Trump administration officials as saying "around $1.3 billion could be frozen." The impact isn't clear because few details have been released on how the Pakistani military has been using the funds.

Increased pressure

Under his new policy for Afghanistan, Trump has been putting increased pressure on Pakistan to root out safe havens for terror groups near its border with Afghanistan. Islamabad has persistently denied that any such groups operate from its territory.

Trump's first tweet of the year signaled his unhappiness over the impasse, and the country's top civilian and military leaders, in a brainstorming meeting Tuesday, said their sacrifices "could not be trivialized so heartlessly by pushing all of it behind a monetary value — and that, too, an imagined one."

The financial aid started flowing soon after the 9/11 attacks on New York and Washington, following 11 years of sanctions over Pakistan's nuclear weapons program.

Having an Afghan neighbor as an ally in the global war on terrorism was key to the U.S. ousting the terror groups that had set up training camps in Afghanistan, and Pakistan quickly became the third-largest recipient of United States military and economic support.

Since then, U.S. economic aid to Pakistan has totaled around $33.4 billion since 2002. However, details over where the money goes isn't clear, and Pakistan official reaction has downplayed the significance of the funds.

The widely reported data collected from U.S. and Pakistan government agencies suggest a huge chunk, around $14.5 billion, has gone to the Pakistani military for covering its claimed costs of anti-terror operations. Pakistan received the remaining $18.8 billion as economic assistance.

"Pakistan has been reflecting the U.S. money in its annual budget. I think there was a line item which showed these transfers from the U.S. and it was similar to show the budget from 'other' sources," said Dr. Salman Shah, a former finance minister of Pakistan. He was supervising Pakistan's finances when foreign aid was at its peak under General Pervez Musharraf's rule.

No breakdown of funds

Pakistan's influential military has not come up with a verified breakdown to convince the U.S. that it is spending the money wisely along the guidelines for how it can be used, which is essentially supposed to go only toward expenses that go above what the army would spend on normal operations.

"For the last 70 years, defense is a one-line budget," said Qaisar Bengali, a leading Pakistani economist and former adviser to the government on economy and finance. "There are no questions asked, no discussion takes place, no scrutiny takes place [on the defense budget]."

Bengali says Washington could make Pakistan's life more difficult by using IMF and World Bank forums to tighten up much-needed dollars for Pakistan.

Questions about where the money has gone have been rife from the start.

"The United States relies upon the Pakistan military to patrol Pakistan's western border and to help achieve the U.S. goal of denying safe haven to the terrorists and extremists," said a 2009 report by the Department of Defense's inspector general.

"However, Congress and the public are concerned that Pakistan is not producing a measurable result to correlate with U.S. investment," the report said.

'Reimbursement claims'

It added that funds were being disbursed "without always following the DoD policies and procedures to validate whether actual logistical and military support was provided and without adequate documentation to support its analysis of the reasonableness of Pakistan reimbursement claims" and that "officials stated that they were not allowed to observe or validate military operations within Pakistan."

Statistics quoted in the U.S. and Pakistani media say the U.S. funds' flow to Pakistan have fluctuated, depending on Islamabad's actions against terror sanctuaries. Pakistan Finance Ministry estimates show the amount was higher under President George W. Bush and President Barack Obama, with an average $723 million per year between 2002 and 2014.

The U.S. aid, however, began shrinking during Obama's last years by an average $345 million per year. Shah says that amounts to about 1 percent of Pakistan's current annual budget.

The latest U.S. defense budget signed by Trump in December allocates $700 million in conditional aid to reimburse Pakistan for supporting U.S. military operations in Afghanistan, but the aid is facing more scrutiny. The U.S. defense secretary must certify Pakistan's action against terrorist sanctuaries — especially the Haqqani network — on its soil.

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