Fixing America’s Aid to Afghanistan and Pakistan

By Jordan Olmstead

December 23, 2014

The US needs a more strategic approach in providing assistance to the two troubled countries. 

Foreign assistance programs are a major component of America’s strategy to build stable states in Afghanistan and Pakistan. Policymakers reason that by improving governance and military capacity in those states, the U.S. can reduce the risk of terrorist organizations like al-Qaeda and the Tehrik-i-Taliban from finding safe haven in ungoverned spaces and planning attacks against the U.S., or threatening Pakistan’s nuclear weapons. However, as NATO’s presence in Afghanistan begins to draw down, the tide of American foreign aid dollars into Afghanistan and Pakistan is receding. According to data provided by the Security Assistance Monitor, a project of the Center for International Policy, the total amount of U.S. military and police aid to South Asia will drop to just below $520 in fiscal year 2015, from a peak of $12.7 billion in 2011. Aid provided to South Asia by USAID under the Foreign Assistance Act is also set to fall from a wartime peak of $6.8 billion in 2010 to $2.4 billion next year.

This precipitous decrease is unsurprising. Critics have charged American aid programs with a myriad of ills, and it is hard for members of Congress to justify pouring billions of dollars into Pakistan and Afghanistan to consolidate gains in an already decided war, especially when a recent Pew poll found that out of 19 options for cutting government spending, “only…reducing foreign aid was supported by more than 40% of Americans.”

While the urge to tighten the aid spigot is tempting, and in some cases quite justified, the allocation decisions reflected above do little to address the problems associated with American assistance programs, and cut promising programs unduly.

It’s first important to note that in general, the prospects for foreign assistance programs yielding substantial improvements in the quality of governance or economic development are generally slim. Critics of aid programs often point to scholarship which finds that American aid programs have had a negligible impact on improving economic growth (here, here) democratization (here, here), and governance in target countries. Dishearteningly, studies suggest that military aid may undermine programs intended to promote economic developmentand democratic institutions.

However, like Tolstoy’s unhappy families, Afghanistan and Pakistan face blowback from American aid program in their own unique ways. In Pakistan, a 2013 report from the Congressional Research Service charged that “many observers question the gains [of aid programs] to date, variously identifying poor planning, lack of…transparency and capacity [and] corruption as major obstacles” to reform.

As a response to allegations of corruption, money wasted on paying the salaries of foreign aid “experts” who often operated with little accountability, and threats to aid workers (especially in the Federally Administered Tribal Areas (FATA) and Khyber Pakhtunkhwa (KP) provinces) the U.S. government moved to channel more aid directly through Pakistani NGOs and government agencies in 2010. Despite this shift in policy, a report issued in 2011 by the Inspectors Generals of USAID, the State Department and the Pentagon found “USAID has not been able to demonstrate measurable progress” in “conducting pre-award assessments of local implementing partners” and establishing “oversight entities to ensure that aid funds are protected from fraud and theft.” This failure was predictable, as much of this aid was sent to dangerous locations where U.S. personnel could not properly monitor their Pakistani partners.

While the ineffectiveness of American aid programs in Pakistan is bad, the risk that they are exacerbating corruption and empowering groups who undermine security and democratic institutions is worse. Without proper controls, the American government has no means to ensure aid money isn’t paid to corrupt government bureaucrats to secure licenses or expedite paperwork. They also have no way of preventing NGOs from paying protection money to militant groups like the Tehrik-i-Taliban.

American military aid to Pakistan also empowers the military at the expense of democratic institutions. This is the continuation of a historical process, according to Aqil Shah in his book The Army and Democracy: Military Politics in Pakistan, Pakistan’s “preparation for…war with India, aided by U.S. Cold War resources, developed and strengthened the military to the detriment of civilian political institutions and thus fostered a sense of superiority and accomplishment in the military,” which motivates their attempts to “stabilize and rationalize” Pakistani politics. As a result, the nearly $350 million Pakistan will receive in military aid in 2015, coupled with the $647 million in arms, will reinforce the resource disparity between the military and civilian government, and undermine the prospects for institutional improvement in Pakistan “by giving the military a disincentive to submit to civilian control,” according to Azeeem Ibrahim of Harvard’s Belfer Center for Science and International Affairs.

There is also the risk that that aid dollars will be funneled to unsavory groups. The Pakistani military, or more specifically the ISI, is well known for funding, or otherwise maintaining relationships with terrorist groups, ranging from the Haqqani network to Lashkar-e-Taiba. Without proper accountability measures, there is no real way to guarantee that none of the money earmarked to support counterinsurgency operations or equipment procurement will end up in their hands. Other states have misused American aid in this manner; a study by Oeindrila Dube of the Center of Global Development found that “links between the military and informal armed militias have led to the use of foreign military resources by illegitimate armed groups,” and as such, donor countries like the U.S. may be “fueling the very groups that military aid is designed to suppress, prolonging conflict and further weakening the state.”

The aid situation in Afghanistan is even more daunting. Afghanistan was one of the poorest countries on Earth before American invaded in 2001, and the American military had to build modern institutions largely from scratch. Unsurprisingly, a country with such nascent institutions has had difficulties properly managing aid inflows that amount to 65 percent of its budget. A 2011 audit found that none of Afghanistan’s 16 government ministries could be trusted to manage American aid.

The Customs Department provides an instructive case. According to The New York Times, the international community spent $290 million in an effort to expedite the customs process. On first pass, their effort was successful. Processing times have dropped and revenue has soared 20-fold. However, “the system loses more than half of what it gains” because Afghanistan loses at least half of customs revenue to corruption. In effect, the U.S. aid money helped corrupt officials become more efficient. When considered concurrently with other failed initiatives, it becomes clear how pouring cash into the eighth most corrupt country on Earth will not improve their institutions, and indeed, aid initiatives that exacerbate corruption undermine trust in government, which undermines the Obama Administration’s goal of building a “credible” regime in Afghanistan.

So, you might wonder, if the current net effect of American aid to Pakistan is negative, what is my gripe with the current downward trend in American aid to those countries?

The answer begins with credibility. Building credibility is key for both countries. Militant groups like the Taliban (both the Pakistani and Afghan variants) rely on lingering dissatisfaction with the central government. However, the current U.S. strategy maintains high levels of military aid (including indirect provisions of aid through arms sales) which empowers the military to lord over what Dr. Christine Fair calls a “hollow state” in her book Fighting Until the End: The Pakistan Army’s Way of War. In this scenario, a well equipped, powerful military fights a forever war against militant groups whose existence is predicated on dissatisfaction with a corrupt, inept civilian government.

The current U.S. aid paradigm plays into this dynamic by reducing aid overall, but maintaining sizeable aid transfers to the Afghan and Pakistani militaries. This fails to address the underlying issue of poor governance. Improving governance is imperative, yet U.S. aid programs in Afghanistan and Pakistan have failed to do this.

An ideal aid program would be guided by four key principles: targeted, conditional, tiered and post hoc. First, targeted. Empirically, most aid programs fail to improve governance or democracy in the target country. However, recent research suggests that there is one exception: According to a study by Steven Finkel of the University of Pittsburgh, USAID programs targeted specifically at improving Democracy and Governance funding exert a “significant…impact on democratic outcomes,” as measured by the two leading indices for measuring democracy. The majority of non-military aid the U.S. government plans to spend in the two countries falls under this category (here, here), which is promising. While some of this money will inevitably be swallowed up by corruption, if the net effect of democracy and governance aid is an improvement of political institutions, the long-run benefits will be well worth it, if the U.S. can cut down on corruption and misappropriation of funds through the next two steps.

Second, the U.S. needs a stronger conditionality policy that holds funds if the Pakistani government implements policies that undermines governance. As noted earlier, military aid negates the positive effects of foreign aid, by empowering the military to pursue policies that undermine good governance, amongst other things. While the Kerry-Lugar Bill that governs American aid to Pakistan nominally makes the disbursement of aid to Pakistan contingent on a variety of factors, including pursuing militant groups like the Haqqani network that attack American troops in Afghanistan, the State Department at Department of Defense have the authority to issue “waivers” on national security grounds, which they did in 2012. Such waivers should not be authorized in the future; helping the Pakistani military make gains on the battlefield is for naught if it continues to pursue policies that give different, equally lethal militant groups a pass. The presence of militant groups, whatever their stripe, undermines the Pakistani government’s monopoly of force and its credibility, in turn jeopardizing the long-term viability of the Pakistani state. Conditionality clauses should be added that punish the Pakistani and Afghan governments if they do not implement U.S. guidelines on protecting aid funds from misuse.

Third, aid should be tiered. If the Pakistani and Afghan governments can make improvements on governance indices, like Transparency International’s Corruption Perceptions Index, they should be rewarded with funding for economic development and infrastructure projects, as such initiatives are more likely to succeed in an environment with less corruption. This could be a “carrot” that incentivizes government officials to undertake on anti-corruption initiatives with more zeal.

Finally, military aid should be given post hoc whenever possible. This is one way the U.S. could try and ensure that funds allocated for contributing to the improvement of the two country’s security environment actually go to specific operations (like Pakistan’s current offensive in North Waziristan) that forward those goals, instead of more questionable endeavors.

Ultimately, the task of creating credible, representative and secure states in Afghanistan and Pakistan belongs to Afghans and Pakistanis. However, the U.S. can play a role in this process if it adopts a more strategic approach to providing assistance to the two countries.

Jordan Olmstead is a freelance writer and Research Affiliate at the Southwest Initiative for the Study of Middle Eastern Conflict. His research focuses on institution building by sub-national groups in South Asia. You can reach him at jchandlerolmstead@gmail.comand follow him on Twitter @jcolmstead1.