Whatever happened to Kerry-Lugar?

Pakistan’s dire fiscal situation has resulted in the reduction of development spending by 40 per cent. This does not bode well for the citizens who have been tormented by an energy crisis, persistent food inflation and rampant unemployment. In these circumstances, the development assistance under the Kerry-Lugar Bill (KLB) is much needed. Pakistan’s civilian government braved a media onslaught and the ire of the security establishment for tacitly supporting the US legislation. Other than the rhetoric around the ‘conditions’ drafted in Washington, there was an unstated agreement that the development assistance was welcome. It was expected that given the urgency of the situation, USAID was going to kick start the delivery of its interventions. Well, the progress so far has been disappointing.

First, there seems to be no public sign of a consensus within the US bureaucratic machine on how the aid under KLB will be delivered. Unconfirmed media reports suggest that the political versus the bureaucratic channels are not on the same page. The ‘political’ administration is ostensibly managing USAID systems and processes. There may be strategic reasons for that but the net result is that things are delayed. Not long ago, the Pakistani government’s procedures were thought to be a problem, but the trajectory of US bureaucracy only proves that public sector ailments are common. Second, USAID is unfamiliar with the methods of working with the governments. In fact, its operations keep the government systems out of the programme design and create parallel structures for big US firms for accountability and results. On the ‘results’ front the experience of USAID has not been flattering to say the least. The case of irregularities in the ongoing Fata programme, highlighted by the media in recent months, is a case in point. Third, there is no clear roadmap for the key priorities that KLB will help address. We read about the energy sector support and other immediate responses to Pakistani government’s needs. But surely, the sizeable pipeline of $7.5 billion needs to be well planned. Needs identification and programme design should be responsive as well as flexible. Bureaucracies are averse to out-of-the-box thinking, and perhaps this is what explains lack of alternatives to lengthy, US firms-centric approach typically employed by USAID.

Finally, the capacity of the US aid handlers seems to be as problematic as that of Pakistani government and nongovernmental channels. Delays define the culture of aid, and in our case the government machinery and business processes are unable to execute development budgets even when they are available. For the US administration it is imperative that modalities of aid delivery are finalised. There is of course no one solution to this dilemma. Foremost, budgetary support is critical: to restore the development budget, handle the circular debt to overcome the energy crisis and undertake major investments in the water sector.

By the time, KLB will be operational, Pakistan will be a changed polity. Assuming that the 18th amendment is fully implemented by July 2011, the locus of power and development planning would shift to the provinces. This is why the US administration needs to do business with the provincial and (yet to be defined) local governments. Thus USAID needs decentralisation in the host country as well. But provincial capacities in Pakistan remain weak to manage aid budgets and convert resources into results. As provinces redefine their operations, and settle power distribution with local governments, this is a critical time for USAID to enter into constructive engagement with provincial governments. Under the Paris declaration other donors have agreed to use country systems to achieve aid effectiveness.

Pakistan is an alliance of provinces and not a small, easy to fix unitary state where directives from Islamabad will be blindly followed. Pakistan has suffered badly due to the crisis in Afghanistan and being a partner of US strategies since the late seventies. It cannot be treated as just another ‘poor’ country where a routine USAID operation will do. It is a transitional society undergoing political and institutional change. Therefore, development remedies for this context need to be extraordinary and not cut and paste solutions. Having said that, the KLB needs an immediate rollout. The delay will take away its cutting edge and further diminish the dwindling credibility of the US.

Published in the Express Tribune, May 21st, 2010.