Dealing with American Threats

Vagaries of Consciousness

Our inherent shortcomings are the real barrier between aid and self-reliance

There is a great deal of clamoring about Pakistan’s response to American threats. A strand of thought (‘The Chickens have come home to roost: Rashed Rahman, BR 9-1-2018) believes that Pakistan’s economy is too dependent on the external financing (which is under Washington’s influence) and hence defiance is not an option. Seek reconciliation is the recommended strategy. Furthermore, the title suggests that what we are facing is the harvest we sowed earlier. Another strand of thought (Unaided Foreign PoIicy – I: Andleeb Abbas BR: 8-1-2018) has also characterized our foreign policy as primarily ‘aid driven’. From Zia to Musharraf, it is alleged, Pakistan agreed to be part of someone’s else’s war ‘out of greed and fear’ for the sake of dollars. The third strand suggests that ‘the cessation of US assistance should not have a material impact on Pakistan’s economy as the level had already fallen substantially’. He, however, cautions that things could be troublesome if Pakistan seeks another IMF program, which would put difficult conditions to meet. (Pakistan-US Economic Relations: Dr. Hafiz Pasha BR:9-1-2018)

There are three important observations we would like to make on the above views, especially about the first two strands of thought. First, while we do not propose a defiant posture toward the US, but we must be clear that Pakistan is no more dependent on external finance than any other normal open economy. The days, during the Cold War, when we received assistance from the Western countries, through the Paris-based Aid-to-Pakistan-Consortium, came to an end nearly 3 decades ago, when these flows were completely halted after our nuclear tests in May 1998. Since then, Pakistan has lived mostly on its own economic strengths. The last favor we sought from the Paris Club was a rescheduling of our debts in 2001, based on applicable rules, in the aftermath of nuclear-related sanctions. After the Pressler Amendment went into effect, there was no military or economic cooperation between the US and Pakistan. But we passed that period with grit and kept pursuing our objectives, despite the US’s opposition and sanctions. In fact, we even accepted wheat against the withheld F-16, and that too at a hugely inflated transportation cost. We only sought assistance from the multilateral agencies, such as IMF, World Bank and Asian Development Bank, for which we are eligible because of our membership of these organizations. Without denying the role of international politics on the Boards of such institutions, Pakistan has always adopted reforms needed to secure IFIs’ assistance, or responsibly executed projects for which such assistance was provided.

Second, it may be noted that US military assistance is invariably coupled with economic assistance. Since the time of President Zia-ul-Haq, Pakistan has never sought any economic assistance from the US. Military assistance was indeed sought, but it was to achieve joint objectives, arising from the Soviet occupation of Afghanistan (though our resistance started even without waiting for the US to join). After 9/11, Pakistan again did not seek any economic assistance from the US, and yet we agreed to provide the US critical logistical support, over-flying facility and bases for military operations. It was entirely at the US initiative that a host of sanctions to which Pakistan was subject, including those due to a military government and suspension of democracy, were lifted and a budget support of $600 million was provided, entirely at the US’s own motion. Subsequent economic assistance was used to retire the debt we owed to the US from the days of the previous Afghan War.

After 9/11, Pakistan again did not seek any economic assistance from the US, and yet we agreed to provide the US critical logistical support, over-flying facility and bases for military operations

When in 2003, US President Bush announced a grant assistance package (unlike the Reagan package that had a large component of loans) of $3 billion for a five-year period, evenly split between economic and military assistance, President Musharraf was unhappy, as he wanted almost all assistance to go into social sectors, especially higher education, but he was told that the package has to be taken as approved. The next big package was the Kerry-Lugar Assistance. That again was entirely driven by the US’s own desires to remain engaged in Pakistan. Curiously, except for the $600 million in 2001 and $400 million in 2002-2003, which directly benefited the budget of the government, a significantly large portion of remaining economic assistance was outside the budget, meaning the US authorities fundamentally decided the spending plans with nominal consultations with Pakistan authorities.

One can justifiably ask if the economic assistance was never sought why was it taken. The answer is simple. The US is a much bigger power in the equation and its goodwill is valued. Despite all disappointments of the past, we feel that we are nearer to the US in so many ways than to any other country and would always prefer to be mutually respectful friends than insolent foes. Refusal would be offensive, indecent and may sour the relationship.

In the aftermath of 9/11, to provide security around the 2500 km Afghan border area, Pakistan and the US entered into an agreement called Al-Meezan (later translated as Coalition Support Fund (CSF)) whereby Pakistan’s Armed Forces provided a variety of support services including supply of fuels, transport and other articles of use to the US and Coalition forces having cost implications. The agreement stipulated that the US would reimburse these costs to Pakistan. As noted by Dr. Hafiz Pasha, this and other security related assistance was nearly two-thirds of the $33 billion that finds mention in President Trump’s tweet. For the other one-third we have already stated both its significance as well as the manner in which it was spent.

The upshot of our submissions is that the US assistance to Pakistan (military or economic other than CSF) was not in the nature of contractual obligations that bound Pakistan to take stipulated actions. Unfortunately, detractors of Pak-US relations invariably malign the equation as if Pakistan had entered into a service agreement with the US and has failed to perform. This is sheer propaganda and malicious presentation of facts on the ground. A great deal of what Pakistan did in this war alongside the US, it thought it was doing for its own good. On several occasions, cabinet members requested President Musharraf to seek specific favors from the US, but he refused saying what he was doing was in the best interest of Pakistan. Indeed, he went overboard to such an extent that one of his top generals blamed him for giving facilities to Americans without consulting or even informing his closest military colleagues. Generals Kiyani and Sharif also did what they thought was in the best interest of Pakistan.

Finally, Dr. Pasha has rightly cautioned that going for a Fund program would add to the country’s difficulties. But here we would like to underline that more than the US threat, the IMF at its own would place harsh conditions for the failures are of own making. We have mercilessly pushed back all the achievements the government had made in the first three years. Nearly doubling of the fiscal deficit and loss of significant amount of precious reserves are not the works of our detractors, but our own. Here lies the vulnerability of Pakistan that has dodged us for the last three decades. Repeatedly, we have pushed the country to crisis due to myopia that plagues our policy makers. It is not dependency, it is inconsistency of actions and our inability to remain on course. Fiscal indiscipline (revenues shortfall and overspending) is at the core of our malaise. Unless we stop thinking that government can spend as much as it likes, self-reliance would remain a distant dream.

Pakistan is a sovereign country and has the necessary capability to defend its sovereignty and territorial integrity. We never want to defy the US, but we were never engaged with them as a beggar, for greed or fear. With all the regard that we can muster we want to be friends. But there is no compromise on our dignity and honor, which must be respected. Furthermore, we are capable enough to define our own threats and challenges and prepare to face them.