Trump, USAID and Funding for Pakistan

By Anjum Altaf

The election of Donald Trump has generated much uncertainty. In Pakistan, among other things, concern has been expressed that USAID funding might be affected by the transition. The concern stems from a delay by the incoming administration in meeting the aid agency to discuss the continuity of future disbursements.

The reason for the concern is that USAID disburses millions of dollars in Pakistan every year through NGOs and any disruption of the pipeline would affect their sustainability, the livelihood of thousands of their employees, and the welfare of the intended beneficiaries.

This much is easy to grasp. At the same time, however, analysts have highlighted other, conflicting, dimensions of the assistance. These question the objectives and the consequences of the funding. They suggest that the primary purpose of the aid is to promote US influence in recipient countries, that aid-based development is not sustainable, and that national pride is dented by continued dependence – references to the begging-bowl syndrome abound.

There is thus an obvious dilemma to consider: Which aspect is more important and ought to influence national policy regarding bilateral assistance in general and USAID in particular, the latter because the US has the most obvious security interests in the region? In theory, most analysts prefer development that is financed from local resources with a concomitant winding down of external assistance. In practice, however, they resign themselves to continuation of the status quo. They claim there is no alternative because Pakistan’s population does not wish to pay taxes and believes in getting something for nothing.

Is this claim fair to the population of Pakistan and does it provide a plausible explanation of the present predicament? Start with the fact that the distribution of income and wealth is highly skewed in Pakistan – it can’t be very different from India where the 57 richest individuals are reported to hold as much wealth as the poorest 70 percent of the population. Clearly, any move to tighten the tax net would also impact those at the top of the wealth pyramid many of whom are networked in the ruling establishment. Is it realistic to expect the wealthiest to voluntarily tax themselves? Would they move the country to a model of self-reliance in which they would have to contribute their share or would they rather continue the dependence on external money from which they have something to gain by way of rents and nothing to lose?

At the same time, is it correct to say that the population does not pay taxes when it is burdened with all kinds of indirect withholdings? Taxes are withheld from everyone who uses a mobile phone, has a bank account, or owns a motorcycle including those whose incomes are below the minimum taxable limit. The injustice is compounded because many of them do not even know how to reclaim the withholdings. Equitable and progressive taxation from above is avoided while oppressive and regressive extortion from below is promoted much as what one would expect from an abuse of power.

The bottom line is that the existing arrangement of development assistance persists because it is in the interest of all the key players – the donor country that uses aid to buy influence, the establishment that does not want to tax itself, the foreign consultants and contractors who feed off inflated charges, and the NGOs that flourish on easy money for which the donors do not demand accountability – the circle thereby completing itself. Each one of these players is happy with the outcome and least bothered by the begging-bowl syndrome that gnaws away at the pride of analysts.

Such is the eagerness to make the good times last that a blind eye is turned to easily available evidence pertaining to the result of billions of dollars of assistance received over the past decades. Major recipients like public health and education are in a state of shambles and people continue to die from lack of access to clean water and sanitation. What is there to show for the thousands of teachers and health workers that have been trained again and again, each training costing millions of dollars?

Why in the face of such clear evidence are the decisionmakers not clamoring for change in the model of development? Is it because all the key parties involved are benefiting while those who will have to pay the future liabilities have no say in the matter?

The only way this gravy train can come to a halt is if President Trump does one of the bizarre things people expect of him. It might well happen in Africa but it is more likely he will be convinced to appreciate what the money is buying in return in a high-stake zone like Pakistan. At most, he will demand a higher price from the establishment which the latter would accept as the new reality.

This opinion appeared in Dawn on January 25, 2016 and is reproduced here with permission of the author. The writer’s evaluation of foreign assistance can be accessed at https://thesouthasianidea.wordpress.com/#Foreign

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