The following is a transcript of my interview with Nancy Birdsall, President of the Center for Global Development. We discussed the Center's latest report: Beyond Bombs and Bullets: Fixing the U.S. Approach to Development in Pakistan. The Center brought together a wide variety of experts and policy-makers from the U.S. and Pakistan to examine how the $7.5 billion of U.S. aid over five years is being spent - and what the main challenges are.
Tim Lister: Would it be fair to say that the overall tone is somewhat gloomy?
Nancy Birdsall: I would say the overall tone is gloomy about what’s happened so far but there is a possibility that it could get better going forward subject to a lot of serious thinking going on inside the government.
There is potential in Pakistan - it is a democratically elected government; there is an independent judiciary and a free press; there’s a very large, sophisticated urban middle class…I think in some ways it’s ahead of where Egypt is today.
The potential is there but the challenges are enormous in terms of demographics.
Well, the biggest challenge is this youth bulge at a time when the economy is not growing any more. And that’s really a problem for job creation. If you are not able to address politically the need for structural reforms, then a youth bulge can be a very dangerous thing, especially in a country where the sense of frustration and injustice is fuel for religious extremism.
What about the problem of education in Pakistan?
The sad thing about Pakistan is that education has been unattended for two decades now. For every 100 children that start school in Karachi (Pakistan’s biggest city) only one graduates from secondary school.
There have been some changes - in Punjab, reforms have gone quite deep and there’s potential for them elsewhere. In the big cities almost half the children are in private schools, and they are primarily organized and run by women who did manage to get some education a generation ago. That’s a huge change because it shows there’s very active demand. At least now there’s a situation where families want their children to get to school.
As for the U.S. role in Pakistan, what are the problems with the way U.S. aid is planned and delivered?
The USAID program for Pakistan is integrated inside the State Department with the diplomacy and security programs. So it always comes last in a long line of demands. First the focus is on Afghanistan - that maybe gets 80% to 90% of top leaders’ attention. And in Pakistan the focus is on the link to Afghanistan and terrorism. So the security issues have eclipsed clear thinking about the long run.
There’s also a lack of transparency about the way the money is spent - which has led to skepticism and conspiracy theories in Pakistan about what the money is spent on. And the U.S. has to clarify that the goal is not just to disperse money - the goal is to be helpful. The accounting requirements nowadays often make projects impossible.
But in a country where corruption is rife there has to be a balance between getting the money to those who can use it and accounting for the way aid is spent.
Absolutely. Richard Holbrooke (who was President Obama’s special envoy to Pakistan and Afghanistan) introduced a big change in channeling more money through governments and local organizations rather than U.S. contractors. That makes sense but it took about 18 months to 2 years to make a list of some 100 NGOs in Pakistan that were eligible. You wonder whether the balance is right. There has to be a sense of humility - that the U.S. can’t accomplish that much. If the Pakistanis aren’t ready politically, we can’t expect miracles overnight.
Add to that: the devastating floods last year meant that the (Obama) Administration had to take about one-third of its aid money and redirect it to the flood response, so USAID staff on the ground said that it disrupted their whole program.
Given the rising tide of anti-U.S. sentiment in Pakistan, would U.S. aid be more effective if it was delivered anonymously.
I think it would be more effective if it was delivered through multi-lateral institutions. It wouldn’t have the handicaps that USAID suffers from and it would benefit from the experience of local staff. When the U.S. brands a bag of rice or says, “This is the school we built”, it conveys to Pakistanis that the U.S. is doing something your government should be doing.
There is a reasonable idea behind the U.S. program - that more Pakistanis should understand that the U.S. is committed to their long-term prosperity and security. And the way to do that is by helping to make better institutions that will serve them.
How much impact can aid have compared with trade and investment?
In the long-run trade and investment are much more important. For example trade with India could make a huge difference, as could the elimination of quotas and tariffs for Pakistani textile imports to the U.S. and Europe. And these are the things the U.S. is really good at - trade and investment.