Pakistan stops billing US for ‘war on terror’ costs

Deterioration in ties since bin Laden killing has had monetary consequences.

ISLAMABAD:

The US Navy Seals raid on May 2, when Osama bin Laden was found and killed on Pakistani soil, cost Pakistan in terms of pride and reputation. It has also proved costly in terms of finance.

Since the operation in Abbottabad, the Pakistani military has stopped sending reimbursement claims to Washington for expenses incurred in the ‘war on terror’.

The decision is likely to put additional burden on the resource-strained budget. Pakistan used to claim between $100 million and $140 million per month from the US. This brings the unclaimed amount to at least $600 million over the past six months, provided activities are going on at the same pace.

After becoming a front-line state, Pakistan had claimed expenses under the Coalition Support Fund (CSF) from Washington.

As ties deteriorated, the US started using the CSF as a negotiating tool, either delaying or rejecting some of the claims to put more pressure on the economically-beleaguered Pakistani government.

The US had started rejecting 35-40% of the claimed amount prior to the raid, officials told The Express Tribune. In the initial years of the war, the US would disburse the entire amount, though this had gradually crept up to 5-10% over the past few years.

Till December 2010 the US had disbursed $8.6 billion to Pakistan, against $12 billion in claims, said a government functionary. The last tranche of the CSF was released in December 2010, that cleared up to June 2010 claims, he added.

The government will have to take a decision on whether to reflect the rejected amount as outstanding – or write it off. It seems that the authorities have compromised on $900 million worth of claims, as they put the outstanding figure at $2.5 billion. (Bearing in mind the $12 billion billed amount, the outstanding amount comes to $3.4 billion.)

The federal government had initially estimated it would receive $1.4 billion this year, but now the figure has been revised to $800 million, officials added. “It is not aid. Rather, these are the expenditures that we have already incurred and it is our own money,” a source said.

Pakistan has also raised the issue of mark-up costs on the withheld amount with US authorities, they added.  The officials said that Pakistan has added $800 million in balance of payments calculations and any shortfall will increase the deficit on external payments and receipts.

They added that the US has processed half of this amount, but is waiting for the final nod from the deputy secretary of defence. After he gives clearance, the Department of Defence will notify the cleared amount to Congress, which has 15 days to either clear or block the amount. It earlier blocked $800 million from the CSF after the killing of Osama bin Laden.

The officials said that during the first five months of the current fiscal year the military has spent Rs187 billion, which is 38% of the allocated annual defence budget of Rs495.2 billion.

Published in The Express Tribune, December 20^th, 2011.