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

The country’s economic losses as a result of the war against terror exceed the amount of aid received from the US.

Shahbaz Rana March 20, 2011


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.


Hafeez | 10 years ago | Reply 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.
pakpinoy | 10 years ago | Reply @Meekal Ahmed: Appreciate your honesty! Sad state of existence considering the mentality of the "beggars" no doubt...
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