Two recent agreements with 'foreign interests' in which Pakistan was the beneficiary have been posted on the website - not the website of the Pakistani government, as part of a strategy to meet the requirements of transparency and accountability, but as part of a strategy to meet the requirements of transparency and accountability of the foreign interests.
Thus posted on the website is the Stand-by facility agreement with the International Monetary Fund (IMF), as well as the Kerry-Lugar bill and more recently, what is being regarded as "unacceptable" conditions imposed by the Congress on military aid to Pakistan.
There is a commonality between these two much debated agreements: they are both beyond what was originally authorised and agreed between the government of Pakistan and the two signatories. The government argues that as both agreements contain an element of 'augmentation' or 'enhancement', therefore they are a reflection of its capacity to convince foreign interests of our evolving needs and concerns. Its critics argue that the term 'evolving' is misleading, as the government took action only after a sustained campaign in the media was launched, backed by influential pressure groups including the opposition, against some of the clauses of these agreements. Additionally, they point out that the agreements continue to reflect the reluctance of the government to acknowledge that it is suffering from a severe trust-deficit - both within and outside the country. And that its request for 'enhancement' and 'augmentation' was reflective of a serious failure to assess the extent of the trust-deficit. A closer look at the two documents is therefore in order.
First the Augmentation of Access Under the Stand-by Arrangement with the IMF. The augmentation, 3.5 billion dollars over the 7.6 billion dollars agreed between the IMF and the government in November 2008, was vital to balance the government's books. There is ample evidence to suggest that these books have still not been balanced. This is evident from the request made by the government for 'augmentation' of assistance. The request is premised on the failure of the government, as aforementioned, to assess its continued inability to convert pledges into disbursement.
Part of the reason may well be the continuing recession in several countries that pledged assistance to Pakistan. However, a part must also be attributed to the extent of foreign governments 'trust-deficit', with respect to the Zardari administration indicated by the continued delay in converting the 5.2 billion dollar pledges made during the Friends of Democratic Pakistan (FODP) meeting in Tokyo in April 2009 into actual disbursement. The Pakistan government continues to be hopeful that the pledges will be converted into disbursement, at least rhetorically. This may account for the IMF being prevailed upon to release the 'augmentation'. There is also some evidence to suggest that the Obama administration may have played a role in influencing the Fund to augment the assistance in August 2009.
The IMF in its Country Report No 09/265, dated August 2009, states that "the authorities have requested an augmentation of access by 200 percent of the quota. A portion of the augmented access, equivalent to SDR 951.1 million (1.4 billion dollars) or 92 percent of quota, could be used to finance priority-spending until the disbursements of donor support, pledged for 2009/10, are received.' However, once bitten twice shy does not only apply to promises made by President Zardari to the PML (N): thus the IMF website states that "The authorities also request the extension of the arrangement through end-2010." This is politic and may well reflect the government's declining optimism, with respect to the conversion of FODP pledges into disbursements by the end of the next fiscal year.
Be that as it may, it is pertinent to note that Shaukat Tarin, the Finance Minister, recently stated, while addressing the concluding session of a seminar on "Corruption and the Private Sector - causes and Remedies" organised by the Transparency International, that the impasse over the estimated 874 million dollar US grant under the Kerry-Lugar bill would force the government to take measures to bridge this amount. Analysts argue that this shows Tarin's refusal to take cognisance of statements by US officials that not a single penny of the Kerry-Lugar bill is for budgetary support. And Tarin's prescription requires no intricate economic policy thrust or indeed planning; it does not even involve a revisit of budgetary allocations for revenue and expenditure: his prescription is request for more money from the IMF.
The Kerry-Lugar bill, envisaging 1.5 billion dollar civilian assistance for five years, has been approved by the Pakistani Cabinet without calling for a vote in the National Assembly. This, to many, implies that the government did not want to take the chance on a resolution not being passed in the National Assembly supporting the bill in spite of: (i) the addendum to the original bill that Senator Kerry states is legally binding; and (ii) the shot-gun diplomacy of Kerry himself who visited Pakistan in an effort to allay the concerns of those opposed to the language of the bill.
However, since the Senator's departure, it has been revealed that the military assistance package is also going to be attached with conditionalities which include: (i) US assistance will not be diverted to the Indian border as happened during the Musharraf years as acknowledged by Musharraf during his continuing absence from the country; the US administration would have to provide six monthly certification in this regard; (ii) Pakistan continues to wage a war against terrorists which would require accepting the US definition of terrorism, a definition that allows for Indian input, thereby forcing the armed forces to open fronts that are at present not a terrorist threat to this country; and (iii) the status quo must remain with respect to the balance of power in the region, or in other words India must remain the undisputed hegemony in the region.
There are many in Pakistan who consider the military assistance conditions Pakistan specific and wonder why similar conditions have not been imposed on India, as there is ample evidence to suggest that India is engaged in terrorist activities on our soil. The answer is very simple: India does not seek assistance for either civilian or military purposes from the US. And in marked contrast to Pakistan, India represents a substantial market for US products.
The writing on the wall is plain: assistance, be it from donors or multilaterals, will be attached with conditions that would support the objectives of the donor. If the objectives of the donor (US) and the recipient (in this case Pakistan) do not match then our options are limited: (i) refuse to take assistance; this our Finance Minister would oppose; (ii) attempt to change the conditions through lobbying; the government would claim it was successful in this by pointing to the rider on the Kerry-Lugar bill; or (iii) rely on the State Department to issue the certification by invoking the clause that even though Pakistan is not meeting conditions, yet it is in US interests to continue to extend assistance. This was after all the practice of our past governments. The danger in this is that as soon as Pakistan's geo-strategic importance weakens in US eyes, this clause becomes automatically redundant.
Thus grant assistance may not have an element of paying back the sum borrowed, but to maintain that it has no conditions is hardly tenable. President Zardari and his team of economic experts must understand this and restructure economic policies based on home grown strategies that do not rely on foreign assistance, curtail imports other than essential items like oil, and slash expenditure from both development and non-development sectors in an effort to balance the books from domestic sources. If this is achieved, then and only then, will the government be able to forge a foreign policy that is consistent with our interests.