The Failure of Foreign Aid - Pakistan 'in extremis'

The Washington Post (5.28.12) has reported on another example of the total dysfunction of Pakistan.  Power outages are responsible for 20 hours of blackouts per day, threaten the few fragments of stability which remain.:

This month, Pakistan tumbled into sovereign default for the first time in its history because the government failed to reimburse millions to independent power providers — more proof that, after years of mismanagement and neglect, the nation’s energy sector is in extremis.

A long-running Islamist insurgency has carved 2 percent from the nation’s GDP  whereas rotating daily blackouts — referred to here as “load shedding” — have resulted in a 4 percent loss.

The shutdowns paralyze commerce, stoke inflation and unemployment, and further enrage a restive populace. Load shedding averages five to 10 hours a day in some urban areas and more than double that in rural ones.

The energy crisis, however, is only one very visible symptom of an inefficient, corrupt, and venal government.  Pakistan is an increasingly lawless, anarchic, failed state, and has progressively deteriorated since Partition in 1947.  Why has Pakistan become one of the world’s scariest states, close behind North Korea and Iran – a state with no political stability, no ability or will to govern, a rapidly deteriorating economy, and a nuclear capacity?

The Brookings Institution has written a Working Paper on Patterns of Conflict in Pakistan (2011) and in its Executive Summary, cites some of the principal reasons:

Pakistan’s political instability today is in large measure due to the struggle between three major actors—the civilian wing of the state, the military, and the Islamists. Partition from British India and the migration that followed led to mobilization based on identity, a power structure that was eventually dominated by the military, and the weakening of democratic institutions and principles. Partition also led to an imbalance of power between Pakistan and India, which continues to shape internal Pakistani politics. Other regional developments, such as the Kashmir dispute with India, further partitioning of the state in 1971, the wars in Afghanistan, and the recent U.S.-led war on terror, have also affected Pakistan’s internal dynamics.

The military constrained the authority of the constitutional state by assuming an informal but substantive role as the supreme political agent and influencing state policies and strategy. The state’s authority has also been threatened by the Islamic establishment which has, since the founding of the state, pressured the state to establish sharia, or Islamic law. Islamic militant discourse and strategy emerged during the wars in Afghanistan in the 1980s and 1990s and has since intensified.

While it is true that Jinnah’s Pakistan was a country largely ruled by tribal factions and ethnic loyalties, India was a country equally divided by language, ethnic identity, and religion.  However the British administration of India, ruling by proxy in the former princely states, was able to establish a rule of law, a government bureaucracy, and civic institutions which provided the basic infrastructure for democratic self rule.  Although the famous Mutiny of 1857 is often recalled as a national revolt against the British, it was nothing like the resistance in Pakistan:

As the British sought to expand their empire into the northwest frontier, they clashed with the Pashtun tribes that held lands extending from the western boundary of the Punjab plains into the kingdom of Afghanistan. The Pashtuns strongly resisted British invasions into their territories. After suffering many casualties, the British finally admitted they could not conquer the Pashtuns and in 1893 negotiated an agreement with the king of Afghanistan to delineate a border. . However, the Pashtuns refused to be subjugated under British colonial rule. The British compromised by creating the North-West Frontier Province, as a loosely administered territory where the Pashtuns would not be subject to colonial laws.

This localized resistance became more consolidated when the idea of Islamic nationalism gained currency.  Resistance to British rule was not only a matter of national sovereignty, it was a question of religion and religious values:

In the 1880s the British initiated political reforms that allowed the formation of political parties and local government. The Indian National Congress was created in 1885 to advocate for Indian autonomy from British rule. Many Muslims believed the organization focused on Hindu interests, however, and in 1906 Muslims formed the Muslim League to represent their interests. Muslims demanded, and were granted, separate electorates in the Government of India Act of 1909. This guaranteed Muslims representation in the national and provincial legislative councils, although the authority of these legislative councils was severely limited under the British colonial government.

The concept of an autonomous Muslim state was publicly proposed during the Allahabad session of the Muslim League in 1930 by the leading Muslim poet-philosopher in South Asia, Mohammad Iqbal. He envisioned a system in which areas that had Muslim majorities would constitute an autonomous state within India. During the next decade, this concept evolved into the demand for the partition of India into separate Muslim and Hindu nations, known as the Two Nations Theory.

The British were more easily able to establish a modern secular rule in India than in Pakistan, and to build a productive economy.  The textile industry begun under the British was a valuable resource to supplement the industrial capacities of England in the processing of American cotton, and it has thrived to this day.  The physical infrastructure to provide the foundation for industry, exploitation of natural resources, and proxy rule was more easily established in India because of a more forgiving geography than that of Pakistan where large areas of what are now the Northwest Frontier Province, Baluchistan, the Northern Areas and the Federally Administered Tribal Areas – accounting for almost half of Pakistan’s territory - were difficult to access. 

In short, while India under the British gradually developed the physical, civic, legal, and administrative structures and processes to enable it to become a functional democratic nation in 1947; Pakistan remained largely inchoate, divided, separatist, and religiously fundamental.

It is not surprising that military rule has dominated Pakistan since independence.  As in Latin America after Bolivar, the military was the only truly developed, efficient, and strong institution.  It was conservative and intolerant of any instability which could threaten the country’s – and its own – existence.  Nevertheless, through successive military governments, the civic institutions long a feature of the Indian landscape never developed.

The Pakistani military, like many such establishments in the world, used its competition with India as an excuse to expand its capacity and capabilities at the expense of civil society.  Funds which could have been used for development were diverted to arms and ammunition.

As the second half of the Twentieth Century wore on, each of these Pakistani institutions became more prominent and more developed, especially Islamic fundamentalism and the military.  Because Pakistan had been created as a religious state, ruling elites had everything to gain by encouraging this national identity and did nothing to stop its radicalization.  During the Cold War, Pakistan was the principal client state of the United States which had an open-spigot policy to foreign aid.  Dollars poured into the country with no accountability required.  Pakistan became powerful militarily and poor economically, and the United States didn’t cared as long as it sided with the West.

Recent events are not surprising given the sorry history of the country.  The competition with India is a major cause of the turmoil in Afghanistan, with Pakistan still so afraid of Indian hegemony that it will back the Taliban if they will keep India out.  Not surprisingly, increasing religious fundamentalism and secular dysfunction has led to the familiar inter-sect conflicts between Sunni, Shia, and their own sub-divisions. 

What is so incredible is that the United States government still pours billions of dollars of ‘aid’ into Pakistan.  Only now, after Pakistan has shown itself to be – not surprisingly – an unfaithful and unreliable ally, is Congress beginning to take a closer look at the money spent:

“Pakistan is like a black hole for American aid,” Rep. Gary L. Ackerman (D-N.Y.) said during a House Foreign Affairs subcommittee hearing this month. “Our tax dollars go in. Our diplomats go in, sometimes. Our aid professionals go in, sometimes. Our hopes go in. Our prayers go in. Nothing good ever comes out.”

During the past decade, he added, “we have sunk $24 billion in foreign assistance into Pakistan. It’s hard to fathom how so much money can buy so little.”

Returning to the issue of the article, energy, US investment has been large, but with no discernible results:

Even with U.S. and other donor money, the problem is monumental. Pakistani power stations are running at 20 to 25 percent capacity, experts say; transmission lines are rickety and failing.

The government’s energy-sector debt, caused by subsidies and uncollected bills, is estimated at $4.4 billion. Pakistan defaulted on obligations of nearly $500 million to a group of nine independent utility companies that are supposed to be guaranteed payments. The default, which stems from a complex arrangement involving energy producers and distributors and the state oil company, could lead to a downgrade in the country’s credit rating.

Always ready for a no-strings-attached handout, Pakistan has the audacity to claim that what is needed is more US largesse:

USAID’s $112 million contribution this year for energy does not impress Yusuf [head of an energy consortium in Pakistan]. “In relation to the quantum of the problem, it is actually peanuts,” he said. “If you want to see positive results, there has to be a bigger commitment.”

Once again, US foreign policy is mired in an outdated concept – that foreign assistance can buy influence and have an impact on economic development.  The case of Pakistan has shown that after billions of dollars in foreign assistance, the country is not only not a friend of America, it is inimical to it and its objectives.  The US will never realize the corrupting nature of its dollars, and that aid in many, if not most cases, not only never works but often produces just the opposite result to that for which it was planned.

Secondly, the US foreign policy establishment seems to categorically refuse to look at the lessons of history.  It should be clear to anyone with even a cursory understanding of Pakistan’s dismal trajectory since 1947 and before, that it was a failed state in the making.  Everything the US has done since 1947 has contributed to this failure and dysfunction.

This is not to deny by any means the persistent venality and corruption of Pakistani governments; and the tendency of most governments, particularly relatively new ones, is to consolidate power, to rule selfishly and not well.  However there were many times when Pakistan could have taken another turn, but it has determinedly refused, starting with the recalcitrance and obdurate pigheadedness of Jinnah.  Mountbatten and Nehru pleaded incessantly with him and warned him of the perils of an Islamic state and the savagery of the Partition to come.  He was as deaf and dumb as a stone to these pleas.

Pakistan is a worst-case scenario for foreign assistance.  Everything that is wrong with foreign aid is exaggerated 1000 times in Pakistan.  Everything bad that could happen did happen; and yet we stay.

The lesson of Pakistan in 2012 is for all dysfunctional and failing states to develop a nuclear capacity, for it is the only thing that keeps the dollar spigot open and flowing.  Whether the US will give the finger to Pakistan and take its chances with a  Cold War-type nuclear standoff in the region; or continue to slavishly and ignorantly pad the bank accounts of the generals is still an open question. 

Pakistan is our worst nightmare.