The “Megabus” and Pakistan: An Odd Sort of Holiday Gift

The question of whether and how much aid Pakistan will receive has been a hotly contested issue in Congress this year, with some members having called for civilian assistance (authorized under the Kerry-Lugar-Berman legislation) to be cut altogether. With the recent release of the “megabus” spending bill, we are a step closer to knowing what the U.S. aid program in Pakistan will look like for the 2012 Fiscal Year.  It’s long and rather dull in parts, but the bill contains important language that will shape the U.S.-Pakistan development program in significant ways. Here are the key takeaways:

1. First, the bill neither stipulates a “floor” nor a “ceiling” on U.S. civilian assistance to Pakistan in FY2012.  It allows the Obama administration to allocate as much (or as little) of the total foreign assistance appropriation towards Pakistan as it wants (although the final spend plan will need the explicit approval of the Appropriations Committee). So despite all the noise about cutting off “the ally from hell,” the administration still might get the $1.37 billion it originally requested for Pakistan in FY2012.
2. Although there are no limits on the amount of civilian assistance to Pakistan, the bill does impose restrictions on whether the money can be used. Before a single penny can be spent in Pakistan, the State Department must provide certification that Pakistan is a) cooperating with the United States on counter-terrorism efforts; b) not supporting terrorist activities against U.S. forces in Afghanistan; c) dismantling networks that manufacture and disseminate bomb-making material; d) preventing the proliferation of nuclear material e) issuing visas to U.S. officials in a timely manner; and f) allowing humanitarian organizations access to victims of internal conflict. As my former colleague Wren Elhai has argued, attaching security conditions to civilian assistance is a bad idea, and violates the spirit of Kerry-Lugar-Berman. However, this laundry list of demands is effectively rendered meaningless, since the Secretary of State can waive the certification “if it is in the national security interests of the United States.” Given that the above list will be almost impossible to certify, it seems likely to be waived.
3. In addition to adding waive-able restrictions on civilian assistance to Pakistan, the appropriations bill requires that the State Department put forward a spend plan for economic assistance to Pakistan that includes “achievable and sustainable goals, benchmarks for measuring progress, and expected results regarding furthering development in Pakistan.” Additionally, it requires that the administration report on the progress against these goals every six months. This might strike some as congressional micro-managing, or unwelcome meddling in State’s affairs, but it does raise the question of why such a goal-oriented spend plan is not already in use by the State Department (or USAID) [I am happy to be corrected by administration friends if it is]. This revised requirement falls very nicely in line with recommendations made in CGD’s recent report, which recommended that the administration agree with the government of Pakistan on four or five specific and measurable development goals (progress on which might or might not be supported by U.S. funds) along the lines set out in this note by Wren Elhai and Nancy Birdsall.  If the administration does not have a clear set of development objectives, and is not currently “measuring what matters” to achieve them, Congress is probably right to request Secretary Clinton begin doing so.
4. A final key takeaway from the new bill was the removal of any reference to the establishment of a Pakistani-American Enterprise Fund. That piece of possible legislation was originally introduced by Senators Kerry and Lugar in mid-2010, and was included in the Senate Appropriation Committee’s draft foreign operations bill (though not in the House version).  Enterprise funds have been used to promote economic growth through investment in transition and developing economies since the mid-1990s, particularly in Eastern Europe.  Since Pakistan’s banking system currently has little incentive to provide financing to small and medium enterprises (SMEs), a fund that lends to and supports SMEs seems like a good idea. It’s something Pakistan needs, and it’s something the US can do reasonably well.  Elsewhere, the megabus authorized new enterprise funds for Jordan, Egypt and Tunisia—but eliminated any reference to setting up a fund in Pakistan. The decision to remove Pakistan from this list is curious because Congress gave no explanation for why three countries made it through while the fourth was cut.  Perhaps Congress just didn’t want to put the word Pakistan into any new authorizing legislation this year?

The decision not to cap spending on Pakistan, coupled with the removal of the Pakistani-American enterprise fund, suggests a profound uncertainty in Congress over aid to Pakistan this year – which has become a political hot potato. Members of the appropriations committee do not want to vote for aid to Pakistan (hence the removal of the enterprise fund authorization), but they are unwilling to actually vote against it either. In the meantime, Pakistanis continue to wonder where all the Kerry-Lugar-Berman money went.So how much civilian assistance will be directed to Pakistan this year?  The short answer: it’s still unclear.  Congress has not placed a cap on spending in Pakistan, but the appropriations committee could still substantially hold up the administration’s budget for foreign operations during the negotiations around individual spend plans for FY2012.  So it may be months before we know for sure how much civilian aid Pakistan will be getting.