After suspending military assistance, the United States has now refused to finance the $300 million Pakistan-American Enterprise Fund as tensions between Islamabad and Washington start taking their toll on civilian aid.
The revelation comes after President Obama signed an omnibus spending bill which linked disbursements of the $850 million Country Insurgency Fund with the requirement that any assistance to Pakistan be made conditional to the US Secretary of State and Secretary of Defence certifying that Islamabad is cooperating in the war on terror.
The approval of the Pakistan-American Enterprise Fund has been dropped despite the fact Pakistan had been assured by the US Deputy Secretary of State that the fund would be approved. The US Senate Foreign Relations Committee had earlier cleared the draft legislation and sent it to a conference committee of the United States Congress – a joint body comprising representatives from both houses of the US legislature – for final approval.
Sources in the finance ministry told The Express Tribune that the Obama administration did not put the fund up for a vote and took it out from the draft legislation at conference committee stage. The Pak-American Fund approval had earlier been clubbed with similar funds for three other countries. The US legislature approved such funds for other countries but left out the fund for Pakistan, they added.
The fund was to be financed under the Kerry-Lugar-Berman Act – enshrined into US law to give $7.5 billion over five years in civilian assistance to Pakistan. The implementation period of $300 million fund was five years, with a $60 million annual American investment in small and medium enterprises in Pakistan.
The fund was aimed at empowering Pakistan’s private sector by creating jobs and opportunities for increasing economic growth and stability in the country. The US had modelled the fund over its earlier successful post-Cold War funds established for the development of Eastern Europe.
Mark Stroh, the spokesman for the US Embassy in Islamabad, confirmed that “Congress did not legislate the Pakistan-American Enterprise Fund in the 2012 budget”. In fact the fund was not even tabled for the approval by Congress, he added.
Stroh said: “however, the [Obama] administration continues to pursue access to finance for small and medium businesses in Pakistan through its equity fund.” He said the US government was still looking for ways to give access to capital to small businesses in 2012 but nothing can be said with certainty at this stage.
Sources said that as Congress is currently in a deeply anti-Pakistan mood, the Obama administration was looking for alternative programmes and the Pakistan Equity Fund was one of the possibilities. They added establishing the equity fund would not require Congressional approval.
The denial of the enterprise fund comes as a blow to Finance Minister Abdul Hafeez Shaikh, who had been assured by the US Deputy Secretary of State in September 2011 that the US government would not suspend civilian assistance, despite the strains in the military ties between the two countries.
The Kerry-Lugar-Berman Act was approved by Congress in 2010 and was meant to provide $1.5 billion in assistance to Pakistan every year. Yet so far only the money for 2010 has been authorised, of which only $600 million has actually been disbursed. The US media, however, has a tendency to count announced aid, rather than disbursed aid.
In addition, the US has not paid Pakistan for any services it has rendered in the war on terror since January 2011. The outstanding payments, due to come out of the Coalition Support Fund, now range between $2.5 billion to $3.4 billion, depending whether Islamabad still counts the rejected bills in the outstanding amount.
Published in The Express Tribune, January 5th, 2012.