Civilian aid dries up: US refuses to fund Pakistan-American Enterprise Fund

Published: January 5, 2012
The $300 million was intended to finance small and medium enterprises in the private sector.

The $300 million was intended to finance small and medium enterprises in the private sector.


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.

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Reader Comments (10)

  • a Pakistani
    Jan 5, 2012 - 3:44AM

    keep your money to yourselves!Recommend

  • Cautious
    Jan 5, 2012 - 3:49AM

    I can’t think of any reason why the USA taxpayers would want to provide $300 million to setup an equity fund for Pakistan’s small businesses. You spend your days ranting about how bad the American’s are — so suck it up and become self sufficient.


  • Harry Stone
    Jan 5, 2012 - 4:10AM

    Seems the US Congress is trying to send a message to PAK. That message is stop playing the double game you have been playing.

    This is just the start of many funding options that effect PAK that could dry up. Those of the World Bank as well as the Asian Devlopment Bank could also come to an end.


  • wasim
    Jan 5, 2012 - 9:33AM

    As pak being poor country has no right to play double game, this is only justifiable to his master USA. i think USA has underestimated PAK and now is in shock and is rightfully angry as anger towards weaker is always multilplied.


  • antanu g
    Jan 5, 2012 - 1:14PM

    though its not about taxpayers whose money is being spent on wanton misadventures you are right about pakistan becoming self relient. its an opportunity provided to them which is going to backfire on US in the form of waning influence.


  • Hasan
    Jan 5, 2012 - 1:42PM

    There is more need in USA itself to develop jobs and economy. Pak leaders would just squander it anyway, so better wait till Pak has a more credit worthy leadership.


  • Misa
    Jan 5, 2012 - 2:51PM

    @wasim: Pakistan has done what it had to do to protect its security, your argument that it has no right to protect its vital interests because it’s a poor country is ridiculous. Do you think Pakistan is the only one playing double games here? Pakistan didn’t tell the US to invade Afghanistan then botch the whole thing up so badly with its self-defeating policies. The US is NOT rightfully angry because it launched a savage war of aggression motivated only by self-centered imperialist ambitions, it has no right to pretend it is the innocent, aggrieved party here.


  • Iron hand
    Jan 5, 2012 - 3:15PM

    Throwing money at Pakistan solves nothing. Better to spend it on counter-terrorism operations.


  • waseem shah
    Jan 5, 2012 - 4:20PM

    You are absolutely right, I think i tried to make a satire statement on US but it got wrong to you.


  • Misa
    Jan 5, 2012 - 6:45PM

    @wasim: Oh, if that was just a satire then I’m sorry, guess I really did take it wrong.


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