“Aid as Religion” and CGD’s Pakistan Report

This is a joint post with Milan Vaishnav and Danny Cutherell.In a recent blog post, Pakistani economist Anjum Altaf lambasted our recent report on the US development approach to Pakistan, “More Money, More Problems,” for not being sufficiently skeptical of the US development program, especially the US aid program, in Pakistan. Dr. Altaf criticized our 2011 report too. You can review last year’s discussion here.His criticism comes as a pleasant surprise, since here in Washington we’ve been accused of being too critical of US efforts. In an era of grade inflation, many inside government felt our report card of US progress in Pakistan was unduly harsh. Facing pushback from both sides, perhaps this is a sign we have done something right?His central critique of our recent report is that it does not question the assumption that foreign aid – and particularly aid provided by the United States – can solve Pakistan’s problems. That is odd because in our report we are very clear that aid will not solve Pakistan’s problems. Dr. Altaf exclusively quotes from an op-ed we published in the Pakistan daily, Dawn, so do we wonder if he has actually read our report (We hope so!).The title of Dr. Altaf’s post is “Aid as Religion,” and he accuses us, in essence, of operating as zealots employed by the Church of Blind Faith in Foreign Assistance. He apparently has not read my “Seven Deadly Sins: Reflections on Donor Failings,” (published in a book edited by Chief Aid Heretic William Easterly) which would be grounds for ex-communication from said church; or our critique (with Adeel Malik) of the World Bank’s lending to Pakistan’s social sectors in the 1990s.Dr. Altaf compares our exhortations to the governments of the US and Pakistan on development issues to that of a cleric encouraging the faithful to pray harder, despite a lack of evidence for divine intervention. His riposte includes too many points for us to address individually here, so perhaps its best for us to simply and clearly re-state the core messages of our recent report, which we did not have the luxury of summarizing in our recent op-ed:

• It is in America’s own long-term interests to live in a world in which Pakistan is better able to grow economically, meet its citizens’ basic needs, and reduce domestic conflict, insecurity, and instability. Fundamentally, this requires the establishment of a more capable and effective democratic Pakistani state.

• This transformation, if it is to occur, must be led by Pakistanis—inside government as well as outside. US government officials and aid bureaucracy staff  should discard the notion that Kerry-Lugar-Berman (KLB)—or any other donor intervention—is going to be transformational in a fundamental sense; at best, it can catalyze modest progress. And external assistance, as we have pointed out in both of our reports, must be grounded in three principles: humility, clarity of mission, and patience.

• Three years into KLB, it is clear that the United States has a comparative “disadvantage” in managing aid programs in Pakistan. History and superpower status aside, the United States faces severe bureaucratic and internal hurdles planning and executing development projects in Pakistan—and throughout the developing world (but especially in countries where America’s security and development interests are in friction).

• Given US government failures in concept, strategy and execution (not to mention reform failures on the part of the government of Pakistan), which we detail in the report, the United States needs to change course in Pakistan. It could start by taking five concrete steps:

1. Signal its commitment to a serious dialogue on development with the government of Pakistan on the country’s practical and technical development challenges. This should proceed in a manner entirely independent of future aid spending.
2. Recognize that “more money” has led to “more problems” in the US development approach. KLB’s plan for the US to spend $7.5 billion in 5 years was too ambitious, both for Pakistan (where reform is a bigger constraint to progress than lack of money) and for the US development machinery. The US should reduce expected annual aid while signaling its long-term commitment to Pakistan’s development hopes by extending the KLB timeframe from 5 to 10 years.
3. Acknowledge that the US cannot play a productive role directly addressing all of Pakistan’s core development challenges. It is simply better in some areas than others. Furthermore, many of America’s core strengths reside on the “non-aid” side of the house: these include trade (increasing market access) and private investment (such as encouraging private sector investment through agencies like OPIC).
4. On aid, the US should separate the “financing” and “delivery” of assistance. This means in areas where the US lacks core competency, it should either co-finance with other donors with a track record of success and channel more funds through multilateral channels. These are ideas that Dr. Altaf himself proposed in his critique of our report last year.
5. Irrespective of the approach the US adopts, it must be more transparent and less focused on getting credit for its actions. Transparency matters in two areas: clarifying what exactly it is doing in Pakistan; and publicizing performance metrics of projects and the overall program. Are we blinded by our unquestioning faith in US foreign assistance to do good in Pakistan? We think the report speaks for itself.

Are we blinded by our unquestioning faith in US foreign assistance to do good in Pakistan? We think the report speaks for itself.