From Shamim Ahmad Rizvi, 

July 26 - Aug 01, 2004





The US Ambassador Nancy Powel and Pakistan's Secretary for Economic Affair's signed an agreement that has written off 495 million dollar debt owned by Pakistan. With this cancellation the total loan written off comes to $ 1.6 billion as the US had waived of over $ 1 billion last year.

The US Congress has already approved a $ 3 billion aid package spread over 5 years for Pakistan starting from US financial year October 2004. The U.S administration has already outlined $ 701 million for the fiscal year 2005-2005. This amount is slightly more than promised due to additional funding in some key sector.

The loan write off agreement was singed at a time when US Deputy Secretary of State Richard Armitage was in Pakistan and when reports were appearing in the international media about growing pressures from Washington on Pakistan to capture a high value target before presidential elections in the United States of America. Richard Armitage has "publically stated that Pakistan should be a bit more muscular in her drive against terrorism".

The 3 billion dollar aid package was promised by President Bush during his meeting with President Musharraf at Camp David last year. No onward proliferation of nukes and effective monitoring and export controls, vigorous support against terrorism and a functional democracy in Pakistan were the three pre-conditions for the said package to become operational.

According to the Ministry of Finance the proposed package of $ 300 million for Ministry of Finance (FMF) would include: $ 22.15 million for Child Survival and Health Programme Fund; $ 29 million for Development Assistance; $ 300 million for Economic Support Fund (ESF); $300 million for Military Financing (EMF); $ 2 million for International Military Education/Training; $40 million for International Narcotics Control/Law Enforcement; $6 million for NADR (Anti Terror); and $ 1 million for NADR (Export Control/Border Security). The proposed package includes commitment for strengthening security and export control regime of the country, in addition to anti-terror financing.

Next year, the US budget has also earmarked $ 300 million assistance to provide Pakistan US arms. During his last visit to the United States, Shaukat Aziz held talks with Chairman of the Senate Appropriations committee Jim Kolbe, besides meeting officials of the National Security Council and Deputy Secretary of Defense, Paul Wolfowitz.

Pakistan, under the Acquisition and Cross Servicing Agreement (ACSA) with the United States, also receives million of dollars every month, as costs providing logistical support and services, including air based. According to a half yearly review report, the logistical support to payments increased by 83.3 percent during July-December 2003 to total $ 581 million or about $ 97 million a month. Two sides signed the Acquisition and Cross Servicing Agreement (ACSA) in early 2002 to facilitate reciprocal provisions of logistics support and services between the two armed forces, to be used primarily during combined exercising, training, deployments, operations or other cooperative efforts. Items permitted under ACSA include food, water, transportation, POL, communications and medical services and also covers use of facilities, training services, repairs and maintenance etc. in addition to normal billing of fuel, water and communication charges, the government also charges for the facilities, like air bases, storages etc. it offered to US forces in the region. The agreement was mainly concluded to formalize the arrangement of logistical support offered to the US forces in Afghanistan.



US financial assistance and debt relief for Pakistan are totally inadequate in the face of what it has done for Washington. It's established beyond any shadow of doubt and is even acknowledged by the US leadership that Pakistan's role in US war against terror in Afghanistan was crucial and fundamental. The $ 3 billion assistance spread over five years and $ 1.495 billion debt relief is, therefore, just a peanut in comparison to the sacrifices that Pakistan has rendered to help US realize its objectives in Afghanistan. The Pakistan leadership had taken difficult and unpopular decisions and had affected a major shift in its Taliban policy against the public wishes to support the US anti-terror war. It was a major shift in Pakistan's policy, which is being interpreted in some circles as betrayal of Taliban, while ramifications of the war in Afghanistan have destabilized the country. The relief package has, in fact, disappointed the Pakistan masses rather than creating any goodwill for the United States. Interestingly, the US has written off only the concessionnal loans borrowed under the official Development Assistance (ODA) and has opted to keep the burden of costly non-ODA loans carrying about 6.58 percent on weighted average. The written off loans, with weighted average cost of 2.54 percent were repayable in 38 years, while the non-ODA loans are payable in full. The US decision to keep the high cost loans and waive off only softer ones constitutes a glaring contradiction in its declared policy of participation in Pakistan's economic take-off and sustained development. Isn't it ironic that a non-NATO ally and partner in anti-terror war should be cheated so glaringly. It once again substantiates the public perception in Pakistan that US is not a sincere friend. The fact is that Pakistan has not been rewarded appropriately for the sacrifices that it has rendered for the US war on terror. It has long endured acts of terrorism and is still fighting against the militants to make America safer. Yet, Pakistan is being treated shabbily. Why shouldn't Pakistan be also given debt relief on the pattern of Egypt and Jordan during the first Gulf War.