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A procession of Obama administration economic experts have visited Islamabad, the capital, in recent weeks to try to ensure both that the money will not be wasted by the government and that it will be more effective in winning the good will of a public increasingly hostile to the United States, according to officials involved with the project.
As American lawmakers move toward passage of the aid legislation, the administration knows it must get quick results from the increased assistance or face potential Congressional cutbacks down the road in a program envisioned to cost $1.5 billion every year for the next five years.
“We’re struggling over how much cash to give to the government,” said a senior American official involved in the planning, who declined to be named according to diplomatic custom.
The overhaul of American assistance, led by the State Department, comes amid increased urgency about an economic crisis that is intensifying social unrest in Pakistan, and about the willingness of the government there to sustain its fight against a raging insurgency in the northwest. It follows an assessment within the Obama administration that the amount of nonmilitary aid to the country in the past few years was inadequate and favored American contractors rather than Pakistani recipients, according to several of the American officials involved.
American officials say the main goals of the new assistance will be to shore up the crumbling Pakistani state by building infrastructure like roads and power plants, and to improve the standing of the United States with the Pakistani people.
In return, the Obama administration expects Pakistan to keep up the fight against Islamic militants, though there are worries that the effort will turn out to be a short-term spurt overtaken by Pakistan’s preoccupation with its archrival, India.
President Asif Ali Zardari has insisted that Pakistan cannot afford to continue its fight against terrorism without substantial American help, a number that he has sometimes put in the tens of billions of dollars. Mr. Zardari is scheduled to meet President Obama in New York this week, and assistance is expected to be a major topic.
American officials said the need to assist the Pakistani economy directly became alarmingly clear when recent power shortages across the country contributed to Pakistan’s first year of negative industrial growth. There were widespread complaints here, including by Finance Minister Shaukat Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators.
Another impetus came last week when 19 women were killed in a stampede for free flour in Karachi, even though Pakistan had a bumper wheat crop this year.
After a recent visit to Islamabad, the deputy secretary for management and resources at the State Department, Jacob J. Lew, expressed anxiety about how to ensure that the aid money was spent properly, saying he was concerned that “the money needed to go to the purposes for which it was intended.”
“We had to choose a method of funding that was most likely to produce results efficiently and effectively,” he said Sept. 11 at a briefing at the State Department.
Mr. Lew’s suggestions of inappropriate spending by the Pakistanis caused such a furor among government officials that the American ambassador, Anne W. Patterson, issued an unusual public statement on Wednesday intended to reassure the Pakistanis that the United States was “not depriving the Pakistani government any degree of direct funding as a result of lack of confidence or trust.”
Part of the Obama administration’s approach is to expand nonmilitary aid to Pakistan, after years in which almost all American assistance to the country was intended to help the military fight Al Qaeda and the Taliban. But some American officials said the Pakistani Army was diverting the money toward programs aimed at deterring India instead. A searing report by the Government Accountability Office last year said the Bush administration had relied too heavily on the Pakistani military to achieve its counterterrorism goals, and had paid too little attention to economic assistance.
Money intended to help civilians during the Bush years was generally delivered by American contractors who administered programs like training provincial government officials.
Mr. Tarin, the Pakistani finance minister, said in an interview that the private contractors absorbed up to 45 percent of the assistance in past years.
He said he understood, based on past American experiences in Pakistan, that the United States had concerns about “transparency.” He told the officials from Washington that they should work with the Pakistani government and develop “joint oversight which both of us trust.”
“I said, ‘Your interests are mine,’ ” Mr. Tarin said of his meetings. “Aid should be delivered through transparent platforms with maximum impact on the ground.”
The United States should invest in developing vast coal reserves in the province of Sindh, and in hydroelectric, wind and solar power to bolster Pakistan’s energy supply, he said.
The administration’s special envoy for Pakistan and Afghanistan, Richard L. Holbrooke, has appointed Robin L. Raphel, an experienced American diplomat, to oversee the planning of the new aid programs. Mr. Holbrooke has also sent David Lipton, a senior member of the National Economic Council, to Islamabad twice to look at ways to fix the Pakistani economy.
One key factor in trying to find more effective ways to deliver aid to Pakistan is a recognition that big projects are likely to win more Pakistani friends because they are more visible, American and Pakistani officials said.
“It was not only an assistance issue but a public image issue, too,” the senior American official said. “People talk about the Chinese nuclear reactors and the Japanese.” The United States was searching for a “signature contract,” the official said.
One road project under consideration in the troubled North-West Frontier Province would help in both improving security and gaining friends, a senior Pakistani official said. The $25 million project is designed to repair and expand the ring road around Peshawar, the capital of the province, they said.
The road has cratered because of heavy use by trucks hauling supplies for the NATO forces in Afghanistan from the port of Karachi through Peshawar and over the border to Afghanistan. The repairs would ease the transit of those goods, and possibly make them less vulnerable to attack by Taliban militants.
At the same time, it is hoped that the people of Peshawar who drive trucks, pedicabs, even donkey carts on the road would appreciate the American effort.
A prominent Pakistani economist, Ashfaque H. Khan, who served until recently as a senior figure in the Finance Ministry, said he had warned visiting American officials about the difficulties of plowing large amounts of American assistance into government programs without proper oversight, particularly in the power sector.
As increased American aid money pours into Pakistan, a permanent committee of American and Pakistani officials should be formed, Mr. Khan said. The members should meet every two months to review the American-financed projects, he said.
“There are ways you can minimize the risk of corruption by close coordination between the two sides,” he said.
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