Clinton pumps millions into Pakistan to secure public support

Washington hopes $500m aid will win over its ally's sceptical public in the war in Afghanistan.

ISLAMABAD // Hillary Clinton, the US secretary of state, crowned four months of strategic dialogue with Pakistan by announcing yesterday funding for public projects that Washington hopes will reduce suspicions that many Pakistanis hold about its strategic intentions in South Asia. "We know there is some questioning, even suspicion, about what the US is doing today and I can only respond by saying that very clearly we have a commitment that is much broader and deeper than it has ever been," she said in a joint news conference with Shah Mehmood Qureshi, the Pakistani foreign minister. The project-specific economic aid announced by Mrs Clinton sought to address water and power shortages, improve access to health care, increase income from agriculture, and create opportunities for businesses. The projects are worth US$500 million (Dh1.84bn) and are part of a much larger aid package announced last year. "We know that there is a perception held by too many Pakistanis that America's commitment to them begins and ends with security," Mrs Clinton said. "These aren't one-time expenditures; they are long-term investments in Pakistan's future." The news conference was held before Mrs Clinton and Mr Qureshi held their second round of talks since a bilateral "strategic dialogue" was launched in March. No mention was made of the two countries' differences over the war in Afghanistan and militancy within Pakistan, with Mr Qureshi emphasising "a transformational phase in our bilateral relations". The projects are the first major initiative under a five-year civilian aid package for Pakistan worth $7.5bn, approved by the US Congress last year, and were identified as priorities during talks between 13 working groups formed by the two governments. Dams and other projects designed to improve management, access and storage of water have been given priority at the direct request of the Pakistani government, said Richard Holbrooke, the US special representative to Afghanistan and Pakistan. They include funding for the completion of the Gomal Zam dam in the South Waziristan tribal region, the headquarters of the Tehrik-i-Taliban Pakistan (TTP) militant organisation until it was routed in a massive military operation over the summer of 2009. Mr Qureshi said the US funding would help sway Pakistani public opinion "when the people of Pakistan see that their lives have changed". But Pakistani officials have also repeatedly voiced their disappointment with the slow pace and scale of aid coming in from the United States and other donor countries, which together make up the Friends of Democratic Pakistan forum. At a meeting in Islamabad on Saturday with officials of the forum, Mr Qureshi put the cumulative nine-year cost to Pakistan of fighting militancy at $43bn, which includes assumed losses of foreign investment and exports. Pakistan's economy has been in crisis since the December 2007 assassination of Benazir Bhutto, a former two-time prime minister. A subsequent flight of foreign exchange has caused a 42-per-cent slide in the value of the Pakistani rupee against the US dollar since 2007. Pakistan had to obtain an $11bn emergency loan from the International Monetary Fund to avert economic collapse, but as a result was forced to withdraw subsidies that, along with more expensive fuel imports, caused food commodity prices to double and electricity bills to rise 66 per cent in the 18 months leading to last April when the government last raised power rates. Repayment of Pakistan's foreign debt and the mounting cost of anti-militant operations have drastically reduced spending on development since July 2009, and economic growth has, in real terms, ground to a halt. The average per capita income of Pakistanis has stagnated at about $1,000 per year and Pakistan's planning commission estimates that more than 40 per cent of Pakistanis now live below the poverty line, one-third more than before the Bhutto assassination. The UN World Food Programme said this month that half of Pakistanis are food insecure, meaning long-term consumption did not meet the recommended minimum daily calorie intake, 10 per cent higher than in 2003. The Pakistani government has struggled to deal with the crisis and has struggled to meet the targets set by the IMF. It had reported a budget deficit of 5.1 per cent for the financial year ending in June, but has since revised the figure to 6.2 per cent. Yousaf Raza Gilani, the Pakistani prime minister, on Sunday told Mrs Clinton that delays in direct US compensation for Pakistan's anti-militant operations in the tribal regions had placed further pressure on the exchequer and could "affect" their execution. Pakistan's economic challenges were addressed yesterday by Mrs Clinton, who said, after announcing the new projects: "Now you face some hard choices, such as the meaningful tax reforms that are needed to put Pakistan on the path to long-term economic progress." A further $1bn in US funding for civilian projects in Pakistan has been approved for 2010 and awaits allocation. However, further disbursals to Pakistan would be subject to tough scrutiny because of concerns about corruption. John Kerry, chairman of the Senate foreign relations committee, on May 25 wrote to Mr Holbrooke to warn him that embezzlement of aid could lead to the collapse of political support, both in the United States and Pakistan, for the aid to Pakistan programme. [e-mail]