US aid and the issue of sovereignty:
a debate of no cosequence

A key element of the current aid package is its modalities with ambiguous and controversial concept.  Widespread criticism emerged that the reforms suggested by the donors will not be implemented in the interest of the poor as the underlying policy of reporting

mechanism is unsound
By Dr. Noor Fatima

The aid through Kerry Lugar law (KLL) has not so far been able to “win hearts and minds” of the people generally and there is a great deal of controversy. Popular acceptance of the aid is not only seen as vital for minimising the security risks for aid workers and to assure a political will and ownership of the aid for efficient implementation of underlying development programmes. The anti-sentiments of the aid can essentially be evaluated and translated into certain assumptions: whether development aid leads to better quality of life and does the benefit reaches the poor or not. So the point that concerns everyone generally is what are the relative costs and risks of these aid carry – from the recipients point of view. The underlying problem is a missing link of aid with state building and state security. Internationally it is assumed that if the state could adhere to deliver public goods such as security, development, social security and infrastructure. But this assumption is de-linked with historical construct of aid related affairs. What is commonly associated with modern statehood is, its liberal policies, effective revenue collection and its distribution system. On the basis that it is largely driven by specific political and economic interests of donors as well as particular recipient government the scepticism starts to mount.

A key element of the current aid packages is its modalities with ambiguous and controversial concept. A widespread criticism emerged that the reforms suggested by the donors will not be implemented in the interest of the poor as underlying policy of reporting mechanism is unsound. Further concern is on conditions that could impinge the economic sovereignty of the country which need review. Another concern is that Pakistan’s past history as US ally must be considered while giving the devil its due as the offered financial assistance does not correspond to the cost of losses, in material, human loss and political risk which the country is facing. Therefore, the concern is that the assistance at least should reflect some aspects of the compensation in the right direction and for the right purposes. Following this rationale, the indispensability and primacy of development priorities cannot be denied. At present this element is perceived in dark clouds as monitoring and reporting mechanism is a greater concern.

The perception prevailed however on the other side, about aid to Pakistan is that it is two-way bargain and not simply an act of altruism. They also expect some evaluation in return for U.S. aid as per envisaged goals and objectives, as a part of the aid is for combating domestic extremism. As per the KLL, present US aid package amounting to $7.5 billion in total is principally for democratic, economic and social development of the country. And if the progress is corresponding to the stated goals and on the assurance of non-state actors, the successful completion will help certification by the US in the 2014, Pakistan will qualify for another package of aid amounting to $ 7.5 billion until 2018. 

One must be mindful that Development aid poses a series of complex challenges and security. The thing which is not being realised is that if the U.S and Pakistan has to build a strong partnership as all weather’s friend then the ground political realities must be kept on priority. This partnership will be difficult if the perception of US dictation in financial assistance is implicit or explicit in assistance. Since 9/11 the security agenda had a major influence on aid policy as a whole and the more striking effects were on the tilted disbursement of aid towards counterterrorism which proved greatest challenge for Pakistan. Till the time the perceptions are changed it will be very difficult for any government to accept the US influence through aid as it is seen as coercion. American policy makers’ have to think about peoples sensitivity on US aid program. Therefore, overestimation of aid influence has to be evaluated. Nevertheless, the researchers and academia have long examined the effect of development aid on growth, but have produced little consensus that aid has positively contributed to Pakistan’s development particularly since 1990s.

Does all this means that we do not need any financial assistance? Let us not forget that KLL is also assistance like promised aid from friends of Pakistan or any other bilateral or multilateral assistance. A fast reaction on conditionality which is even not fully discussed in press, would lead just to criticism for the sake of criticism. The bill has clear statement of US policy objectives in Pakistan, including promoting “democracy, good governance, rule of law, economic growth and development” along with “a sustained, long-term, multifaceted relationship” between the United States and Pakistan. As per Finance Minister, “Pakistan may have to seek an additional $847 million from the International Monetary Fund (IMF) if the proposed US aid under the controversial bill does not come through”. Since in our budget for 2009-10, the provision of expected US grant of $ 874 million was for the new fiscal year that began 01 July 09 but that is not yet materialised therefore, gap has to be bridged by other sources and for that Pakistan will have to approach IMF for converting the $874 million into a loan under the Standby Arrangements. The issue what hinders the popular approval of this bill in Pakistan is that it lead to the sentiments of compromising ‘sovereignty’. The conflict between aid and sovereignty is not surprising in such discourses and state sovereignty cannot simply be ignored. Such sentiments have a positive impact also, state sovereignty itself is an important component of self reliance and sustainable development, which otherwise also is an objective of aid. Recognising the problem, in a recent statement Kerry said “the US has no intention to impede Pakistan’s sovereignty through the Bill (now turned into law), about which various Pakistani political parties have expressed concern”.

Actually, the donors aid is not simply a resource transfer or charity action but use of these resources made them obliged for certain duties positive and negative. Positive is the monitoring of the resource and matching the positive through control mechanism, and the negative one results in not to fund the same projects again. Therefore, positive and negative duties of the aid donors imply conditions as well as apprehension for development assistance and create sovereignty issues as presently we are facing. But there are two views on that too. Where is the sovereignty issue – is it in its implementation and US demand of their self monitoring? Pakistan’s history with aid-packages is not that clear and straightforward. Corruption has always travelled the same path as the aid implementation in Pakistan. Therefore, there is need to analyse the detailed conditions of the lengthy bill whether infect it has interventionist clauses which impinge our sovereignty?

Actually respect of state sovereignty is not based on the right of sovereignty but merit on the principal of non-intervention policy for international political stable system so the point is, are sovereignty question relevant in the present aid debate? Is there any external compulsion to accept aid? What causes coercion in the prevailing condition? Whether the binding implementation of the various conditions in its true letter and spirit of the aid is the responsibility of recipient country or the donor country?

A country is free to enter into international contract of aid or loan but this argument also falls short, here the state is facing challenges of positive duties to improve the economic conditions of the country and welfare of its citizens and negative that it has to depend on tied aid. But, if no aid then what is the alternative? In this sense the country is not free to opt, so has to accept the tied aid with condition but again the question is, whether the conditions impinging the sovereignty has been examined properly or not. The examination of all the conditions must be done before it gets too far. If the message is that aid should be given without conditionality, then it would imply that aid would continue regardless of the behaviour of the recipient country and the condition less aid is not the possibility whether it is through structural adjustment, World Bank, IMF or any other assistance. All donor agencies, countries require to evaluate whether funds are properly distributed and is that unconditional aid would unlikely to accomplish its objective of promoting sustainable development. Taking this analogy does not mean total reversal in our policies; one state can influence the policy of another state but only with the mechanism of equality and donor use of conditionality should be in the proportion of the merit of the recipient government.

Nevertheless, one can also argue that U.S. authorities were also not initially aware of this rigorous reaction even on the language of the bill, which is considered as offensive, and there could be chance of reassess the situation and resultantly John Kerry held a joint press statement with Pakistan foreign minister clarifying that “any interpretation of this act which suggests that the United States does not fully recognise and respect the sovereignty of Pakistan would be directly contrary to congressional intent.” With this clarification of the writer of the bill, one need to examine the whole situation once and for all.

This assistance will give a good opportunity for sustainable development and promote security and stability not only in Pakistan but in the region, provided resources are distributed as intended with the clarity that the binding of the conditions of the aid is not violated.