Myth vs reality: US aid to Pakistan dwarfed by economic cost of war

Published: March 20, 2011

Aid insufficient for the price Pakistan has to pay for cooperation with the US: official.

ISLAMABAD: 

The country’s economic losses as a result of the war against terror exceed the amount of aid received from the United States by five times, according to an analysis conducted by the economic affairs division in the finance ministry.

US financial assistance to Pakistan since 2002, both civilian and military, is estimated at $8.5 billion, whereas the government estimates losses in economic productivity due to the war against terror to be around $43 billion.

American aid to Pakistan is split almost evenly between civilian and military assistance, with civilian aid totalling $4.5 billion and military aid amounting to $4 billion.

Washington paid an additional $8.9 billion to Pakistan’s military as compensation for services rendered on behalf of the US military under the Coalition Support Fund. The reimbursements are on account of expenses already incurred by Pakistan in providing assistance to US military operations, said Lt Col Michael Shavers, spokesman for the office of the defense representative in Islamabad.

“The Americans are not giving significant aid to Pakistan but what is important is Washington’s capability to manage everything from politics to economy through various institutions,” said a senior government official who asked to remain anonymous.

Some officials in Islamabad are of the view that Washington’s aid to Pakistan is insufficient compensation for the price that the country has to pay for cooperation with the United States.

The Economic Survey of Pakistan 2010, which estimates economic losses due to the war on terror at over $43 billion between 2001 and 2010, considers lost exports, damage and destruction to infrastructure, diversion of budgetary resources, capital and human flight and exchange rate depreciation.

The survey also gives specific examples such as an average increase in military spending worth 2.4 per cent of the total size of economy. In addition, the government has had to spend up to $600 million a year on rehabilitation of internally displaced persons who were affected by the military campaigns against the Taliban.

Published in The Express Tribune, March 20th, 2011.

Reader Comments (16)

  • Mar 20, 2011 - 11:02AM

    and conditions will be more worse when u.s govt. run away from the this area, and aftershokes will come to pakistan . . .
    God knows what is going to b happen
    we lost our economy , we trapped ourselves in so called war of terror. . .Recommend

  • pakpinoy
    Mar 20, 2011 - 1:51PM

    Very unenlightened analysis! This assumes a heck of a whole lot — and Pakistan has been dearth to prove that it can build anything successfully in the long run, much less a growing economy!

    It also assumes that the “terror war” is only the US’s doing — what an assumption! Pakistan would have had to face its demons one way or the other at some point. Not joining the terror war would have made that journey even longer and more costly!

    The West did not create Islamic terrorism, mind you. You can argue they exasperated the huge problem by certain policies and actions, but Islamic extremist ideology and those who support and adhere to it created and continue to incubate the plague of terrorism.Recommend

  • commonsense
    Mar 20, 2011 - 3:18PM

    This article is naive and biased not based on facts.had imf not provided the loans pakistan would have been bankrupt by now. What makes you think cia operatives were allowed now not before we went to imf. Understand why davis was left. Today pakistan needs US as much as they need us.
    Thats the bottom line we have to finish the militant on our side of the border before US leaves this regionRecommend

  • paklover
    Mar 20, 2011 - 5:24PM

    @commonsense unfortunately you are right. But don’t bother explaining this to pakistanis common sense is not very common these days in our country. Pakistan will be going through a big economic catastrophy and still overseas pakistanis are sending money to pakistani banks which are just sitting on time bomb about to explode. So yes commonsense pakistan will go through a phase in another 6 months to 1 yr where the rupee will be devalued by 20 to 30 % and overseas pakistanis will lose a lot of money.Recommend

  • Nanga Pir
    Mar 20, 2011 - 6:21PM

    The war has strengthen the militants to a capacity to effectly run the society. Poverty will be
    the perfect recipe for their model. Only rich cats have to shed some weight.Recommend

  • Tom
    Mar 20, 2011 - 7:27PM

    What aid has US given to Pakistan? Please name five major projects by US aid.

    China helped Pakistan building nuclear reactors for energy use. US blocked every effort by Pakistan to acquire such reactor. US pressured France to cancel reprocessing plant.
    China built Gwader seaport. US abused our roads built by China.
    China helped Pakistani to developed fighter jets. US took billions of dollars from Pakistan for F-16 and never delivered.
    China helped to develop missile technology for defense of Pakistan and US made nuclear deal with India and shut Pakistan out of it.
    US abused us and dragged us into Afghan war during USSR invasion and left us with 9 million refugees, guns, and drugs and divided society.
    Pakistan never had suicidal Talban till US showed up again as US did in 80s.
    Pakistan paid heavy price for being part of US war on terror. It is US war not Pakistan’s.
    More to come…..
    Recommend

  • Tom
    Mar 20, 2011 - 7:35PM

    I have never received a single Penney from US aid. Has anyone else in pakistan received anything from US aid?
    Please name five major projects by US aid.
    Recommend

  • Salman
    Mar 21, 2011 - 1:49AM

    But the American slavery is priceless! Ask any politician or general Recommend

  • MOZ
    Mar 21, 2011 - 6:53AM

    I believe US gave Pakistan $10 billion just during Musharraf’s era. And the $7.5 billion aid through Kerry Lugar Bill. Not to mention the aid US has been giving Pakistan since its independence. Please clarify all these figures for me, and also provide a name of that official.Recommend

  • Halagu khan
    Mar 21, 2011 - 7:23AM

    I have never understood the sense of entitlement that pakistan carries. Americans have been pursuing terrorists who are pakistanis, who are hell bent on undermining pakistani state, blowing up pakistani infrastructure and they are paying money to pakistanis to make Pakistan safe.

    The height of this ludicrous argument is that Pakistanis are accusing USA of not giving enough. It is in pakistan’s interest to get rid of this murderous gang of loony beards and spend their own money to fight them. rather than be thankful to USA for weeding out the fundamentalists and trying to make it safer for ordinary citizens, they wan money.

    This is begging with entitlement. First create those Tanzeems and when they are bottled up b’cos of Americans sitting in Afghanistan and Indians having gained experience of fighting them, these yahoos have nothing to do except kill shias, Ahemadiyas, Hindus, christians in Pak. This is a blowback of Pak policy and they want paid for it.Recommend

  • Tim Davidson
    Mar 21, 2011 - 7:33AM

    This is the craziest nonsensical analysis I have ever seen! The writer should be ashamed.

    In the credit-debit equation, the credit (US aid) is certainly real hard-earned money from American tax payers such as myself. It is given from the heart and represents a sincere gift to Pakistani people of our own sweat and toil. And, it is even more creditable as it comes at a bad time for the US economy when many Americans are facing the worst economic downturn since the Great Depression.

    The debit side of the equation is the so-called “Pakistan’s war on terror”. Well, this is your own war, in your own country, and your own making. You are fighting your Islamists and Jihadis for your own survival. Why should the US really pay for that?

    What US does pay, it pays out with hope of a strong democratic Pakistan. Which of course is diverted to fighting secular India rather than the religious extremists within Pakistan!Recommend

  • John
    Mar 21, 2011 - 9:45AM

    @Tom:
    It is the same question people in US congress is also asking, what happened to the money given.

    Contrary to all the military aids from china you have quoted, all US aid are ear marked for civilian use only, except the military reimbursement. If you do not see that, then you should ask where did that money go.

    According to SBP, the US aid is an important part of PAK balance sheet, against which PAK government borrows heavily.

    US aid was an important part of PAK economy since its inception. US does not care if PAK government advertises China aid more than her.

    Only one has to look who did the aid operations when flood hit. Recommend

  • John
    Mar 21, 2011 - 10:07AM

    It is regrettable that the finance ministry views the US aid as a transactional relationship on war on terror.

    The war on terror was PAK making with the cozy relationship with Taliban starting with PAK diplomatic relationship, and turning blind eye to what PAK was breeding.

    What would have been the cost if US had decided to go alone?

    PAK Govt is in the loop with the assumption that she would fully cooperate with NATO for successful operation, which many have doubted from the beginning.

    US brings soft money, from international financial institutions to IMF and others, in case if some wonders.Recommend

  • Meekal Ahmed
    Mar 22, 2011 - 12:49AM

    Unfortunately the government has NO credibility with regard to these numbers. I hope an independent think-tank can review these figures and come out with something more acceptable.

    Didn’t we estimate flood losses of billions to get donors to help us? In the end it turned out to be (only) $10 billion — not an inconsiderable amount but much, much less than we had estimated.

    As someone who has worked on government data and for government for three decades, I can attest to our capacity and inclination for exaggeration. It was usually an order from the highest authorities. So we gave it our best shot when asking for aid, or help for the Afghan refugees, or if there was a natural disaster. Recommend

  • pakpinoy
    Mar 22, 2011 - 11:25AM

    @Meekal Ahmed:
    Appreciate your honesty! Sad state of existence considering the mentality of the “beggars” no doubt…Recommend

  • Hafeez
    Apr 13, 2011 - 10:36PM

    I think, we the citizens of Pakistan can make the change happen.

    A 72 years old social activist in India, has brought the Indian Government on its heels to formulate and pass anti-corruption bill, through peaceful demonstration. He went on to fast unto death and with in four days of fast there were peaceful demonstrations by common citizens in every corner of the country and the government had no choice but to agree to all the demands. He has not given it as yet until the objective is fully achieved.

    The example is meant to show the power common citizens have, provided they unite behind the common cause. Pakistan was not created to fulfill unholy ambitions of polititians or army generals but the other way round. Then why the common citizens are feeling helpless?

    Why are common and innocent people dying on the roads almost everyday? Why the entire Pak and US troops put together can’t cut-off the monetary aid and logistics support to the groups, organization that carry out these ghastly acts? Or they are, one war or the other, party to it?

    it is high time that we stop complaining and take the charge of the situation. All we need is a good leader to lead this movement. Recommend

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