Aid and the unravelling of Pakistan

Although Newsweek is not a quality publication, for a change, it gives an analyses which is half right. The effect of Aid on Pakistan has been crippling. It is like a lot of people I know who are waiting for their parents to die so that they can come into a big inheritance and not have to do any work.

For a long time the Pakistanis did not invest any money in their country but kept their money in foreign banks abroad. The so called black market was bigger than the official white market. Large commissions on the purchase of arms and aeroplanes were received outside the country and then brought inside to invest in Real Estate.

During Musharraf's eight years there were no investments made in infrastructure, Industry or any thing other then what was already in the pipeline like Port Qasim. The FX reserves grew only because of Aid or Remittances brought in by the fact that Pakistan was not regarded as a Pariah nation by the West. Valuable assets of the Govt. were sold at throw away prices.

For 60 years Pakistan has built up a tradition of begging bowl in hand. They shamelessley queue uo for hand outs and then live a life of luxury for the few. There are no colleges, Universities or any other investment in the future that will break this viscious cycle.

The only thing that promises to break it is to cut off all relationship with the USA, the main Tenant that occupies Pakistan's allegiance by paying it "rent". The only people who want to do this is the Islamic Parties. The refusal to take aid also means that Pakistan will be forced to stand up on it's own feet. This is what we teach our children to do but this is not the legacy that we are leaving behind for the youth of Pakistan.

This is the part that Newsweek misses out on. The logical conclusion is not that the US has no choice but to support Musharraf. The logical choice for the US is to stop corrupting a nation who has stood by it for sixty years. It is not Democracy that Pakistan needs, it is more schools, more jobs, more infrastructure, more energy, more Industrial Investment, more participation of it's people in it's own governance. Musharraf stands for none of this. The US stands for none of this. Do the Islamic parties stand for any of this? Probably not but cutting Pakistan from the US and it's agents may be a good start.

Khusro




Aid And The Unraveling Of Pakistan
By Devesh Kapur and Arvind Subramanian NEWSWEEK
Jan 21, 2008 Issue Updated: 12:37 p.m. ET Jan 12, 2008

Democracy suffered a string of setbacks in 2007, many thanks to oil. Gushing oil revenues helped Vladimir Putin consolidate authoritarian rule in Russia, Hugo Chávez expand populism in Venezuela and Mahmoud Ahmadinejad confront the West. All the while, an analogous force was at work in Pakistan. For more than 50 years, Pakistan has reaped its own unearned manna, which has filled its coffers and kept its fragile state afloat. In this case, however, the money didn't come from the ground, but from massive military and other forms of aid, largely from the United States, China and Saudi Arabia. Yet while the source may be different, the impact of all this cash on Pakistan has been just as destructive as oil wealth elsewhere: bloating the military and creating a culture of violent instability, in which assassinations like that of Benazir Bhutto are sadly inevitable.
It's impossible to understand Pakistan's current woes without examining the massive volume of aid it's amassed over the past half century—and that aid's deeply corrosive effects. Since its inception, Pakistan has strived desperately to counterbalance India, cultivating ties with any state willing to help it. This has never been hard: in the 1950s, Washington contributed generously in exchange for Pakistan's anti-Soviet military stance. Then, beginning in the 1960s, China, which also saw India as an enemy, came calling. Still more money flowed in from rich Middle Eastern governments, especially Saudi Arabia's.
The 1980s brought the Afghan war against the Soviets, with Pakistan as the main conduit for supplies and support to the mujahedin; the United States alone chipped in $5.3 billion during this period. The CIA and Saudi intelligence also poured money and sophisticated technology into Pakistan's ISI, or Inter-Services Intelligence agency, helping turn it into the most notorious and destabilizing actor in the country. Altogether, Pakistan accumulated a whopping $58 billion in foreign aid between 1950 and 1999, allowing it to become one of the biggest military spenders in the world. After 9/11, Washington's generosity redoubled; it's since given Pakistan more than $10 billion in assistance.

The consequences have been devastating, for reasons similar to those at work in the so-called natural-resource curse. Extensive research shows that when governments luck into unearned cash (which economists call "rents") from oil or other resources, the healthy links that bind them to their citizens are often severed. Freed from relying much on taxes, governments spend the money arbitrarily. Citizens, left untaxed, feel less motivation to monitor things carefully. The result is corruption, misrule and a host of other ills.
Rents paid for natural resources are bad enough. But "strategic rents"—earned by a country for its role in the foreign policies of other states—are even more damaging. Military aid by definition entrenches the militaries that get it, making them less responsive to civilian control. Pakistan's military has grown enormously powerful over the years, resistant to democratic checks and highly entrenched in every aspect of the country's commercial, civil and political life. From banking to insurance, cereals to cinnamon, the military's presence and influence can be felt everywhere. Strategic rents have also helped radicalize Pakistan, since some of the Saudi aid money for jihad in Afghanistan has gone instead to fund extremist madrassas in Pakistan itself.
Strategic rents are also susceptible to manipulation. Gen. Pervez Musharraf, for example, has consistently avoided foreign criticism and kept the money coming by arguing, essentially, that while he may be imperfect, the alternative—the Islamists—is far worse. To support this case, Pakistan's leaders have resorted to trickery at times. For example, according to the Pakistani journalist Ahmed Rashid, prior to last year's confrontation at the Islamabad Red Mosque, the government stood by idly as militants poured into the compound—though it could have easily flushed them out in the early days—in order to highlight the Islamic "threat" Pakistan supposedly faced, and the need for more aid.
Can Pakistan escape this vicious cycle? An obvious solution would be to divert some military aid to civil society and to tie other aid to specific objectives such as counterterrorism. Yet this obviously is very unlikely to work. It would require the Pakistani Army to comply, and why should it? After all, the generals know that even if Washington cuts them off, China and Arab states will pick up the slack.

What, then, should Washington do? Given the deadly combination of nuclear weapons and rabid jihadist groups in Pakistan, the United States can't simply stop supporting Musharraf and his generals. But backing them as the lesser of evils would also be a mistake. Unquestioning military aid has stunted the growth of civic institutions. Pakistan's mullahs and its military are also more closely linked than is widely appreciated. The West's top goal must thus be to get the military out of Pakistan's politics and economy. This won't be easy, and it won't solve all the country's problems. But it's the best hope in a bad situation, and Pakistan's only shot at real stability.
Kapur is director of the Center for the Advanced Study of India at the University of Pennsylvania. Subramanian is senior fellow at the Peterson Institute for International Economics in Washington, D.C.
© 2008 Newsweek, Inc.