Daily Times

The September 11 attacks (9/11) brought a significant qualitative change in Pakistan’s equation with the US. Till then, the Pak-US relations, with mismatched strategic objectives, could at best be described as a partnership of convenience. But the irate President George W. Bush’s daunting proposal of 6 November 2001 – “either with us or against us” – and the helpless President Pervez Musharraf’s instant nod under duress turned it into a forced marriage. The US demanded and Pakistan acquiesced to cooperate with the US-led coalition against the Taliban regime and the Al-Qaeda outfit in Afghanistan, with alleviation of its financial woes as the presumed dowry.

Within days, the US offered an assistance package, totalling $673 million, all in the form of a grant. It also rescheduled a $379 million debt and allowed US Agency for International Development (US AID) to reopen its office in Pakistan after a 7-year closure. In August 2002, the US rescheduled its $ 3 billion debt to Pakistan. This included $2.3 billion as official development assistance, repayable over 38 years and $700 million as non-official development assistance to be repayable over 23 years. Japan, Britain and other European countries followed suit.

This also cleared the way for a favourable rescheduling of Pakistan’s external debt and provided aid packages to assist with poverty alleviation and refugees. The IMF approved a $1.3 billion loan to help Pakistan fight poverty and offset the economic impact of the war in Afghanistan. The Poverty Reduction Growth Facility was followed by the Paris Club rescheduling. Pakistan achieved in Paris Club what few others, such as Poland, Jordan, Egypt and Yugoslavia, were able to achieve. Its entire stock of debt of about $12.5 billion was rescheduled for 38 years for concessional component and 23 years of non-concessional component, with a grace period of 15 and 5 years respectively. To gauge the relief implicit in this exercise, one only needs to note that nearly 50 percent of this debt was due for payment in the next 5-6 years.

Pakistan acquiesced to cooperate with the US-led coalition against the Taliban regime and the Al-Qaeda outfit in Afghanistan

Both Asian Development Bank and World Bank agreed to provide funding of about $1.5 billion through their concessional windows to support the reform efforts in the medium term.

Pakistan succeeded in securing better access for its exports in European markets, which would translate into a net gain of $400 million per annum. A similar exercise was promised by the US.

In February 2002, the White House announced its intention to work with Congress to increase assistance to Pakistan, particularly in areas related to debt relief, increased trade, educational reform and defence and security cooperation. President Bush agreed to offer Pakistan up to $ 1 billion in debt relief before the end of 2003. US AID announced around the same time that it will give Pakistan $50 million in aid annually, which would be raised to $80 million by 2004. In August 2002, it agreed to provide a grant of $ 100 million to Pakistan to support the country’s educational programmes over the next five years. US AID Mission Chief declared that Pakistan was one of the two countries, where the Agency “will have much more robust programmes – Afghanistan, being the other country”.

According to independent sources, Pakistan’s economy registered “solid macroeconomic recovery (within) … five years…. While long-term prospects remain(ed) uncertain, given Pakistan’s low level of development, medium-term prospects for job creation and poverty reduction (were) the best in more than a decade. Poverty levels (had) decreased by 10 percent since 2001, and Islamabad (had) steadily raised development spending in recent years, including a 52 percent real increase in the budget allocation for development in FY07, a necessary step toward reversing the broad underdevelopment of its social sector. The fiscal deficit – the result of chronically low tax collection and increased spending, including reconstruction costs from the October 2005 earthquake – appear(ed) manageable …. GDP growth, spurred by gains in the industrial and service sectors, remained in the 6-8 percent range in 2004-06. Inflation remain(ed) the biggest threat to the economy, jumping to more than nine percent in 2005 before easing to 7.9 percent in 2006. The central bank (pursued) tighter monetary policy — raising interest rates in 2006 — while trying to preserve growth. Foreign exchange reserves ($10.95 billion in 2005) (were) bolstered by steady worker remittances.”

Similarly, steps were taken to resuscitate cooperation in the field of defence. In July 2002, the US announced its plans to sell six cargo planes to Pakistan in the first major military sale since 1990. The $75 million deal included six planes, associated equipment, services and training facilities. Defending the decision, the Pentagon said: “The proposed sale will (augment) the foreign policy and national security of the United States”. The said aircraft would enhance Pakistan’s capability to support US-led military offensive against the Taliban and Osama bin Laden’s Al Qaeda network.

Within five years, the wheel came full circle, reminiscent of the level of relationship at the peak of the Afghan Jehad. Pakistan was declared a major non-NATO ally of US. On June 28, 2006, the Defence Security Cooperation Agency notified the Congress of its intention to provide Pakistan with a $5.1 billion Foreign Military Sales package to upgrade the F-16s that served as the PAF’s top of the line fighters. The Lockheed Martin Corporation of US received a $ 144 million contract to begin production of 18 F-16C/Ds for Pakistan. The work on the project was to be completed by November 2010. The package included conformal fuel tanks, helmet-mounted cueing systems, Link 16 data-links and electronic-warfare equipment. An associated $ 650 million weapons’ deal included 500 Raytheon AIM-120C5, 200 AIM-9M Sidewinder air-to-air missiles and 2,100 precision-guided bombs.

In December 2006, Turkey’s Tusas Aerospace Industries signed a Memorandum of Understanding with Pakistan Air Force to modernise up to 32 F-16A/Bs. Besides, the Pentagon notified the Congress of a possible sale to Pakistan of three P-3 aircraft with airborne early warning systems (AWACS), to the value of $855 million. According to the Pentagon, “Pakistan intends to use the aircraft with the E-2C Hawkeye Airborne Early Warning System for its naval forces…. The refurbished aircraft would boost Pakistan’s ability to guard its shores and borders against the movement of terrorists and drug traffickers.”

The dowry did boost Pakistan economically and militarily. But, in return, it had to extend undefined cooperation to the US-led International Security Assistance Force (ISAF) against the Taliban and the Al-Qaida in Afghanistan unconditionally, which it did and more than offset what it got.

To Be Continued

The writer is a former diplomat, based in Canberra, and can be reached at khizar_niazi@hotmail.com.