Feb 23 - Mar 01, 2009

President Asif Ali Zardari has reportedly asked the US for urgent economic assistance to shore up Pakistan's crumbling economy during his recent meeting with US special envoy Richard Holbrook. The Obama administration is spearheading congressional effort for three-fold expansion in economic assistance to Pakistan under the proposal, which was introduced in the Senate last summer by then-Senator Joseph R. Biden Jr and co-sponsored by then-Senator Barack Obama.

The bill, now known as the Enhanced Partnership with Pakistan Act, would authorize $1.5 billion annually in socio-economic assistance for the South Asian country for ten years. The move is part of the Obama administration's new strategy which treats Afghanistan and Pakistan as a single theatre of war but also seeks to deepen and expand its relationship with Pakistan.

The 10-year aid package also proposes to condition US military assistance with the South Asian country's performance in the war against terror, authorizing the US administration to stop the aid if it finds that Islamabad was not doing enough to fight terrorism. The US officials are not happy over a Pakistani court decision to release nuclear scientist Abdul Qadeer Khan, the alleged nuclear proliferators, after five years under house arrest.

After Dr. Khan's release, some US lawmakers are pressing for stricter conditions on military funding to Pakistan. U.S. had provided Pakistan more than $10 billion since the Sept. 11, 2001, attacks. "Congress will take this into account as we review and create legislation on U.S.-Pakistan relations and the circumstances under which U.S. assistance is provided to Islamabad," quoted Bloomberg Horward Berman, the California Democrat who chairs the House Foreign Affairs Committee, as saying.

"Aid from the Obama administration to Pakistan should come without strings attached", quoted the Financial Times (FT) Husain Haqqani, Pakistan's ambassador to the US as saying. "Assistance that is conditional is never good." Haqqani reportedly equivocated, "There is no bullet that has been invented that Pakistan can be given to shoot at the terrorists that cannot be used in case there is a war with India."

Under the new US strategy, Pakistan is considered as key regional country to the US-led war on terror for stability in Afghanistan, which has been wracked by growing Taliban insurgency. The country has served as the major supply route for the international missions assigned in the Afghanistan since late 2001. "No strategy for Afghanistan can succeed without Pakistan," reported Reuter citing US Vice President Joe Biden as saying. "We must all strengthen our cooperation with the people and government of Pakistan, help them stabilize the Tribal Areas and promote economic development and opportunity throughout the country."

The creation of economic opportunities for local people in the impoverished areas in both countries would greatly aid the struggle against al Qaeda, according to US Congressman Chris Van Hollen, who recently visited Pakistan and Afghanistan as part of a congressional delegation. Hollen is the chief proponent of legislation on Reconstruction Opportunity Zones (ROZs), the preferential trade initiative that would allow duty-free export of products from designated areas of Afghanistan and Pakistan to the American market.

The ROZs proposed by the US administration are aimed at creating employment opportunities in the tribal areas as a strategy for fighting terrorism. The goods produced in RoZs are to be exported to the US at zero tariffs. Islamabad hopes to get at least Rs10 billion for this project from the US, which had agreed to accept duty free imports of items manufactured in backward areas to be designated as ROZs. Under the proposed legislation regarding the ROZs, the US has imposed no production cap unlike the African Growth Opportunity Act (AGOA). The proposed law for establishment of the ROZs in Pakistan and Afghanistan will authorize the US President to give Pakistan the go-ahead for duty free exports from ROZs.

USA is generally a low tariff market with average duty on manufactured goods at 3.9 per cent. Although Pakistan has been a leading partner of the US in the war against terrorism, but it falls fairly low in the list of US trade partners in terms of trade in goods and services. The share of exports from the South Asian country to the US market remained stagnant at around 0.21 per cent during the past four years. 50 percent of Pakistan's current export of $3.46 billion would be granted duty free access in United States. The RoZs can initiate fast-track industrial development in tribal areas.

An additional military assistance worth $2.64 billion has also been proposed by the Pentagon for Pakistan to shift its focus from a potential conflict with India to its fight in its northwest province against the Taliban and al-Qaeda extremists posing a threat to coalition forces in Afghanistan. The additional security assistance will ensure that the South Asian country has the tools and resources to perform more effectively in its counterinsurgency role and allow for a significantly greater Pentagon's role in training and equipping Pakistani forces.

Pakistan may be the single greatest challenge for the next American president, according to a report titled 'The Next Chapter' by an independent bipartisan think tank of US experts on Pakistan. US intelligence experts believe that the next major terrorist attack against the US will originate in Pakistan. The report supports the proposed Biden-Lugar legislation committing $1.5 billion annual non-military spending for Pakistan. "Such assistance must be performance-based and must be accompanied by rigorous oversight and accountability," the report says. It supports enhanced access to Pakistani textiles and early legislation on ROZs in the country's northwestern tribal areas.

The destabilization of nuclear armed Pakistan would allow the militants access to weapons of mass destruction, according to a recent Pentagon report. Amid growing concern about the stability of Pakistan, the report calls for putting renewed focus by the US government on ensuring that Pakistan's nuclear weapons remain under its government's control. The report recommends a broader effort to train and equip Pakistani security forces to conduct counter-insurgency operations in the tribal areas. The country's nuclear weapons are the main cause of concern for US President Barack Obama and his military chiefs who have vowed not to allow its destabilization.

Some American military officials have already been apprehensive about use of money for the purpose of war on terror. They have been pointing fingers at former Musharraf administration for using the American money for other purposes, as it was not reaching the frontline Pakistani counterterrorism units. The US media has largely been a critic of the Bush administration for spending $10 billion during past five years without accountability to bolster the Pakistani military effort against terrorists.