Coalition Support Fund: Alternatives for refund of war on terror bills

Options to be discussed today at a meeting between the finance minister and visiting US official.

ISLAMABAD:

While political forces wrestle over terms of reengagement with the United States, Islamabad and Washington have covered some ground, through backdoor channels, to resolve the issue of reimbursement of outstanding military expenses.

Washington has agreed in principle to a proposal, put forward by Pakistan’s military, to abandon voucher-based calculation of Coalition Support Fund (CSF) and adopt a more transparent and internationally-recognised formula, sources told The Express Tribune.

The US has also agreed to release roughly $400 million before June, provided Pakistan’s parliament approves a resolution protecting interests of both sides, they added.

Options on the table

The joint staff headquarters has asked the US to pay either the equivalent of United Nations peacekeeping forces mechanism – $1,400 per soldier per day – or an amount matching international standards.

The compensation is proposed to be calculated on the basis of the number of soldiers deployed on western borders or fighting against militants in the tribal regions, currently, estimated to be around 140,000.

Sources, however, said it is unlikely that the US would pay $1,400 per soldier per day and there is a possibility it will accept the second option.

The CSF disbursements will be one of the main agenda items in a scheduled meeting between Finance Minister Dr Abdul Hafeez Shaikh and visiting Deputy US Secretary of State Thomas Nides on Wednesday (today), confirmed a senior official of the finance ministry.

The official said that the ultimate resolution of the CSF issue depends upon parliament’s decision to reopen Nato supply lines, and the delay in that decision “has limited finance ministry’s bargaining options.”

Chronic issue

The CSF disbursements have been a thorny issue between the finance ministry and the State Department. So far, Pakistan has billed $3.4 billion in claims, of which the US has rejected $900 million by arguing that the military has charged high rates.

The US has also withheld releases of the reconciled amount since a CIA contractor Raymond Davis killed two Pakistanis in Lahore.

Since May last year, when the US killed Osama Bin Laden in Abbottabad, Islamabad has also stopped claiming CSF reimbursements.

For the current fiscal year, the finance ministry estimated to receive $1.4 billion and delay in the disbursements is likely to widen the budget deficit.

Sources said the new options have been proposed due to dispute over reimbursements claimed through vouchers. If accepted, the new proposal will not be applicable on former claims though, they added.

Besides discussing outstanding financial issues, Islamabad would also like to listen what the US will offer against proposals already discussed with them, said finance ministry official while commenting on the agenda of the Wednesday meeting.

The delay in finalisation of parliamentary recommendations “will influence our available options,” he added.

Published in The Express Tribune, April 4^th, 2012.