Pakistani Punjab's Rejection of US Aid Hurts the Poor
The Punjab government led by PML's Shahbaz Sharif spurned 20 billion rupees ($232.55 million) in US aid slated for welfare projects in Pakistan's most populous province in the next three years, according to a report in Dawn newspaper. The popular move was motivated by politics to capitalize on a wave of anti-American anger following the US raid that killed Osama Bin Laden in Abbottabad, Pakistan.
While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:
1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.
The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.
The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.
2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.
3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.
Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."
As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States, here is something to ponder:
Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.
Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.
Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).
All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.
Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.
Here are some of my recommendations for Pakistanis to move toward greater self-reliance:
1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.
2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.
3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.
4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.
No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.
Related Links:
Haq's Musings
Can Pakistan Tell US to Take its Aid and Shove it?
Tax Evasion Fosters Foreign Aid Dependence
Aid, Trade, Investments and Remittances
Can Chinese Yuan Replace US Dollar?
Vito Corleone: Godfather Metaphor for Uncle Sam
Can US Aid Remake Pakistan?
South Asia Slipping in Human Development
Pakistan to Terminate IMF Bailout Early
Pakistani Military and Industrialization
While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:
1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.
The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.
The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.
2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.
3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.
Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."
As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States, here is something to ponder:
Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders.
Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.
Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.
Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).
All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.
Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.
Here are some of my recommendations for Pakistanis to move toward greater self-reliance:
1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.
2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.
3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.
4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.
No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.
Related Links:
Haq's Musings
Can Pakistan Tell US to Take its Aid and Shove it?
Tax Evasion Fosters Foreign Aid Dependence
Aid, Trade, Investments and Remittances
Can Chinese Yuan Replace US Dollar?
Vito Corleone: Godfather Metaphor for Uncle Sam
Can US Aid Remake Pakistan?
South Asia Slipping in Human Development
Pakistan to Terminate IMF Bailout Early
Pakistani Military and Industrialization
Comments
Nonstop crises between the United States and Pakistan this year have fueled tensions within the Obama administration over what kind of relationship the two countries should have and who should be in charge of it.
The State Department has long smarted over the preeminence of military and intelligence priorities, which seems to leave diplomacy in a distant third place. The result, diplomats say, is that there is little goodwill to cushion blows such as the U.S. airstrike last month that left two dozen Pakistani soldiers dead along the Afghanistan border.
More than a week after the attack, President Obama called Pakistan’s president on Sunday to say that the deaths were “regrettable,” stopping short of an apology that many in Pakistan have called for.
The airstrike has cast a shadow over a major diplomatic gathering Monday in Bonn, Germany, that the administration hoped would help facilitate plans to wind down the Afghanistan war. Pakistan has said that it will not attend the meeting, which brings together more than 100 countries and international organizations and whose agenda includes regional and Afghan development and peace talks with the Taliban.
Secretary of State Hillary Rodham Clinton, who will lead the U.S. delegation, unsuccessfully appealed for a change of heart in a telephone call Saturday to Pakistani Prime Minister Yousuf Raza Gilani.
The U.S.-Pakistan breach has also set back Obama administration attempts to improve the brittle relationship between Pakistan and Afghanistan. Afghan President Hamid Karzai told Germany’s Der Spiegel magazine on the eve of the Bonn meeting that he thought Kabul’s closest neighbor was trying to sabotage the possibility of peace negotiations.
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Until his retirement in September, Adm. Mike Mullen, who was chairman of the Joint Chiefs of Staff, was the most public face of the bilateral relationship. Mullen’s trips to Pakistan for face-to-face meetings with Pakistan’s army chief, Gen. Ashfaq Kayani, were far more frequent than Clinton’s visits with the civilian authorities.
When an exasperated Mullen publicly accused Pakistan’s military of supporting Afghan insurgent groups in congressional testimony just before leaving office, some State Department officials said they felt blindsided.
On a subsequent visit to Pakistan in October, Clinton insisted on leading a delegation that included CIA Director David H. Petraeus and Mullen’s replacement, Gen. Martin E. Dempsey.
But the State Department’s efforts to assert at least the appearance of control over U.S. policy are regularly undermined by a steady stream of congressional visitors to Pakistan who “all want to visit Kayani,” an administration official said. “They don’t want to talk to their civilian counterparts” in Pakistan’s Parliament, “and they only want to stay a few hours,” the official said.
Retired Maj. Gen. Mahmud Ali Durrani, a former national security adviser to Gilani and Pakistani ambassador to the United States, agreed with that reality and the impression it leaves in Pakistan. “You look at the visitors from Washington,” Durrani said. “They would go and spend time with the president, then most of the serious discussions they had with the army chief.”
“In my view,” he said, “there is one and only one issue” between Pakistan and the United States, “and that is counterterrorism. And that is in the lap of the security establishment. So that, in itself, is a problem.”
http://www.washingtonpost.com/world/national-security/us-breach-with-pakistan-shows-imbalance-between-diplomatic-security-goals/2011/12/03/gIQAd2DsTO_story_1.html
..The KPK governor, the UAE Ambassador and other diplomats cut a special cake. The national anthems of the two countries were also played on the occasion.
Paying tribute to the armed forces for their role in the rehabilitation of Swat and thanking the UAE government for its generous assistance, Kausar hoped that the both countries would improve trade, diplomatic, and cultural ties.
Major General Zahir Shah, Commander of the GOC 45th Engineers Division of the Pakistani Armed Forces, said 124 projects have been implemented by the Programme in Swat and the tribal areas, thanks to the strength of the UAE- Pak relations. He added that the achievements will further develop the local educational and health sector to contribute positively in overall national development.
Pakistani people expressed their gratitude toward the President His Highness Sheikh Khalifa bin Zayed Al Nahyan for the UAE humanitarian programme and assistance projects to Pakistan.
UAE will support water supply projects in Khyber Pakhtunkhwa region, Bajaur district and South Waziristan district of the country for supplying clean drinking water to the villages and urban residential areas.
The regions hit by war and natural calamities would see better water supply through 26 projects supported by the UAE authorities.
The Programme comes within the framework of the good efforts by the UAE to help Arab and Islamic countries as one of the leading donors in the field of humanitarian aid and international development around the world.
The UAE and Pakistan maintain long-standing and close friendly relations since the founding of UAE by late Sheikh Zayed bin Sultan Al Nahyan. It has been an integral part of the UAE leadership's vision to support Pakistan. UAE does not only provide support to Pakistan in the times of crises i.e. natural calamities, earthquakes and floods but also work towards maintaining Pakistan's comprehensive security, stability, economic progress and prosperity.
In line with a recently signed Memorandum of Understanding (MoU) between the two countries UAE will execute a comprehensive development plan costing an estimated amount of US$110 million to create job opportunities and develop flood-hit areas of Pakistan.
Addressing the launching ceremony, Abdullah Al Ghafli, Director of the Project, said the UAE had played a significant role in mobilising international humanitarian cooperation in support of the Pakistani brethren based on strategic and humanitarian considerations enshrined in 'our foreign policy'.
According to him, the UAE aid aims to help the Pakistani people survive calamities they face and its government to address and overcome economic woes in order to achieve sustainable development.
'Built on an integrated field study on Khyber Pakhtunkhwa Region and Tribal Areas near Waziristan, the assistance programme will be implemented in coordination with the Pakistan Army Command and other relevant government bodies,' he added.
The project calls for building and rebuilding of a number of hospitals and health clinics, establishing a new nursing institute, commissioning of water purification, water resources management stations, and extending drinking water networks. Two devastated bridges will be rehabilitated and new roads will be built by the Khalifa bin Zayed Charity Foundation.
According to Bank’s Country Partnership Strategy Progress Report, a mid term review and implementation assessment, the Bank has responded flexibly in the face of the tremendous challenges Pakistan has gone through over the past year or so.
World Bank Country Director for Pakistan Rachid Benmessaoud said they will continue strong support to Pakistan while keeping a keen eye on implementation to ensure that these efforts translate into real results on the ground.
The progress report says the overall focus of the Bank’s strategy- to help Pakistan’s economy get back onto the path of high, sustained growth –remains valid and consistent with the overall priorities of the government of Pakistan as articulated in its New Framework for Growth Strategy. Also, the Bank support will remain centred on the original pillars of the CPS- the economic governance, human development and social protection; infrastructure and security and conflict risk reduction.
The Bank engagement over FY 12-14 is projected at up to $ 4 billion in new International Development Association (IDA) credits and International Bank for Reconstruction and Development loans. This will be supplemented by a robust programme under the Multi donors trust fund (MDTF) with initial commitment of $ 140 million and IFC support projected at $ 1.5 billion.
http://www.pakistantoday.com.pk/2012/02/wb-to-provide-5-5b-to-pakistan-in-3-years/
..$80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative
Crowding-out of the private sector from credit channels due to reckless government borrowing has provided a unique public relations opportunity to the US. The US has said it will offer loans ranging from $500,000 to $5 million to small and medium sized business in Pakistan, to help the latter expand and create jobs.
In total, $80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative, will go towards providing cheaper financing and equity to small and medium enterprises (SMEs) in Pakistan.
“The United States Agency for International Development (USAID) will provide up to $24 million for an equity fund, and fund managers will be required to match the requested funding to take the size of each equity fund to at least $45 million,” said Theodore Heisler, the project manager and senior economic growth advisor to USAID.
Heisler said that co-investment was essential in bringing the size of each fund to a level where it can cover operating expenses. The US intends to create at least three funds, but is, as yet, noncommittal to the total number. US authorities are on the lookout for good fund managers, and the availability of quality managers will determine the numbers of the funds, officials have said. During the last fiscal year, the federal government borrowed Rs1.77 trillion to finance the budget deficit. The State Bank of Pakistan has already warned that due to increasing government borrowing, there is little credit available for the private sector to grow.
“Having access to finances is a challenge for SMEs, as there is little equity and debt available for the sector,” said Heisler. “The longer term goal is to help expand the market for private equity investment and provide money that is not available through banks and other international lending agencies,” he added. He said the real job growth potential lies in the SME sector, as the corporate and public sectors cannot create unlimited jobs.
Heisler said each fund will have a 10-12 year lifespan. Individual investment sizes will range from $500,000 to $5 million, but could vary depending upon requirements. The initiative has been modelled on the Polish American Enterprise Fund, which was started with $140 million and has now grown to a multi-billion dollar fund.
Heisler said the US is looking to create a private equity industry in line with global standards, as there is hardly any private equity investment fund in Pakistan. He said the other purpose was fetching foreign investment through co-investment, as investment in Pakistan is dwindling.
The US is currently looking for fund managers who have a successful history, and Heisler said that both local and international fund managers have expressed interest in the project.
To a question whether Pakistani fund managers have expressed reluctance due to doubts over long-term commitment issues with the US, the US embassy replied “we believe there will be substantial interest from local, regional and international investors”.
It further said that “the US government designed the Pakistan Private Investment Initiative after a year of research and consultations with numerous stakeholders, including the Pakistani private sector and regulatory authorities.” It added that USAID will structure the funding to ensure that it is sustainable.
http://tribune.com.pk/story/442469/credit-crunch-as-banks-turn-their-backs-on-private-sector-us-steps-in/
https://reliefweb.int/report/pakistan/241m-usaid-schemes-underway-sindh-says-murad
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It may be noted that since 2011, USAID in partnership with the provincial government has been implementing the SBEP for $165 million, including $10 million the Sindh government share. Through this partnership the SBEP improves the quality and access to education for children in Sindh by increasing and sustaining student enrollment at the primary, middle, and secondary school levels. The program is being implemented in seven districts of Northern Sindh and five towns of Karachi.
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He elaborated that major Components of SBEP include building of 106 new schools with1400 classrooms in flood-affected and other areas. Improvement of reading and numeracy skills of 750,000 children over five years, engaging up to 400 communities in the construction, operation and maintenance of schools over five years and establish effective public/private partnerships to manage these schools and ensure enrollment of at least 100,000 girls.
Syed Murad Ali Shah said that major targets of the programme are to increase knowledge and professional skills of 25,000 primary school teachers, particularly in Reading and Mathematics. “It also aimed at providing non-formal educational opportunities to 100,000 out-of-school children to enable 50,000 to transit to formal schools,” he said and added there is a target to provide capacity building opportunities to 500 government officials to implement the Sindh Government Education Reforms, increase availability of adequate health care facilities for children and train 500 government district offices/supervisors, teachers, head-teachers in developing, implementing and monitoring of Early Grade Reading Assessment (EGRA) and Early Grade Maths Assessment (EGMA).
Chairman P&D Mohammad Waseem said that so far, there have been considerable milestones achieved by SBEP that include site assessment of 875 schools completed. This assessment is helping to logically select schools for construction. Till now 33 government schools are under construction at Khairpur, Sukkur and Larkana districts. 37 SBEP targeted schools are notified as campus schools with 76 schools being consolidated and merged under government consolidation policy.
He added that the Private land owners have donated their personal land in Larkana, Sukkur and Khairpur to School Education Department for reconstruction of schools. 238 early grade teachers (Master Trainers) are trained in Reading and Mathematics Teaching Skills to further train 3,000 teachers and a comprehensive study is done by SRP to develop supplementary reading material to create a culture of reading within target schools.
Mr Wsim said that partnership with Rotary International established to equip Science and Computer Labs in hub schools and to provide reading and mathematics materials to 1,100 school libraries.
Municipal Services delivery Programme (MSDP): This programme has been launched with USAID grant of $66 million in which provincial government’s share stands at Rs926.55 million. The programme is aimed at improving and upgrading municipal services/infrastructure in six cities of the Norther Sindh. They are Jacobabad, Qambar, Shahdadkot, KN Shah, Mehar and Johi. Presently, the programme is in progress in Jacobabad and after its successful completion it would be started in other cities.
USAID has invested $10 million in establishing JIMS and expanded access to quality health care services for the residents of Jacobabad- Sindh and Balochistan. JIMS is a 133 beds hospital which offers outpatient treatment, emergency and diagnostic facilities as well as specialized services in mother and childhood center, intensive care unit and surgical facilities.