A history of dependence

Foreign aid and international development assistance have been the most contested notions in the current discourse on international development. In the post-cold war period, the Bretton Woods institutions – the IMF and World Bank – have come under scathing criticism with confessions of failures from leading experts like former World Bank president Joseph Stiglitz and the capitalists like George Soros and Al Gore.

The cumulative anger against the failures of these institutions of international aid has a history of creating economic and political turmoil in the developing world. It has resulted in uproar and serious resentment in Africa, various parts of Asia and, most visibly, in South America.

There is considerable literature and case studies available to substantiate the claims of these failures. For instance, the IMF’s actions during the Argentine financial crisis of 2001 triggered Hugo Chávez’s rise to power in Venezuela. He was welcomed by all dissenting forces across the world. The anti-people aid strictures imposed by World Bank and the IMF in Bolivia provided the groundwork for Evo Morales to emerge as the neo-socialist president.

The humiliating lending and recovery terms put forth through eight structural adjustment loans to Zimbabwe and $8 billion set aside for foreign aid during the 1980s and the 1990s forced Robert Mugabe to put strictures on civil liberties and placed democracy in an austerity drive. In the Middle East alone, $154 billion were disbursed as foreign aid between 1980 and 2001, 45 structural adjustment loans were provided and ‘expert’ advice produced zero per capita GDP growth that helped create a breeding ground for Islamic fundamentalism. Pakistan also suffered heavily in the 1990s due to the structural adjustment programmes that resulted in an increase in poverty by eight percent, with an increased income disparity between the rich and the poor.

International development aid agencies have played a pivotal role in shaping the socioeconomic and political landscape of Pakistan. It is, therefore, important for the citizens of this country that the critical aspects of long-term reliance on these agencies are explored and understood. In order to ensure economic growth and social development and safeguard national security concerns, Pakistan has been an aid-dependent country since its independence in 1947.

According to the aggregate estimates from multiple sources, the gross disbursement of overseas development assistance to Pakistan between 1960 and 2002 stood at $73.1 billion from both bilateral and multilateral sources. Pakistan received most of this development assistance – 30 percent in the form of bilateral aid – from the US, the largest single bilateral donor thus far. This huge volume of development assistance resulted in a short-term and exotically defined development and security policy narrative that was in line with America’s strategic and ideological objectives of the cold war in the region. 

Pakistan entered many military and strategic pacts with the US, including Seato and Cento in the 1950s and the 1960s. Behind this strategic alliance, there was political optimism among the political and military leadership to reap continued benefits through geopolitical support as well as financial and military assistance from the US.

The US reciprocated to this optimism as a long-term ally to thwart potential expansionism from the Soviet Union. American aid to Pakistan during the 1960s played a significant part in numerous development projects, food support initiatives, humanitarian assistance through USAID and other bilateral aid arrangements.

This assistance was well-received by the people of Pakistan, partly because foreign aid was also invested in basic public services. By 1964, the overall development aid and assistance to Pakistan was around five percent of its GDP, which arguably played a pivotal role in fuelling industrialisation, economic growth and social development. During this era of unrestrained development aid, the GDP growth rate rose to seven percent per annum. However, the flow of foreign aid and development assistance declined sharply in 1965 because of the Pak-India war over Kashmir and could not fully recover until the rise of General Zia.

With the Soviet invasion of Afghanistan in 1979, Pakistan saw another era of unrestricted military and development foreign aid from the US. Pakistan became the frontline state in the region to fight against the Soviet’s westward expansion through Afghanistan. As the frontline state, Pakistan became the battleground of competing ideologies, with its support of Islamic fundamentalists to fight the Red Army in Afghanistan. The mujahideen worked as proxies and mercenaries of the anti-Soviet bloc in the Afghan war and received complete logistical, material and financial support that was channelled through the Pakistani military and its intelligence network.

Reliance on international development aid has not only been limited to its economic impact; it also has ideological, political and social implications. These implications became fully pronounced in the 1980s during the dictatorial regime of General Zia when Pakistan received the most foreign aid as part of the Soviet containment policy. Pakistan played the role of a proxy state in the region to fight the American war against communist expansion.

With the exit of the Americans and the Russians from Afghanistan, the trained and armed jihadis found new venues to fight holy wars. The mujahideen and jihadis took upon themselves the task to purify what they believed was a sacrilegious Pakistani society. To them, all citizens other than their brand of jihadi Islam were heretics and were bound to be killed. Sectarian violence erupted across the country and, under the garb of a jihad, cartels of arm and drug dealers thrived to sponsor the holy war. In 1988, an army of jihadis invaded Gilgit-Baltistan, killing hundreds of Shias and setting their villages on fire. This led to a new wave of sectarian violence in the region.    

All money transactions and arms supply to the mujahideen were carried out through clandestine networks that were created to operate across the porous Pak-Afghan border. These clandestine networks transformed into the arms and drug mafias that started to sponsor jihadi groups to protect their lucrative businesses. Pakistan was also provided huge funds for the rehabilitation of Afghan refugees and the development of physical and communications infrastructure. Nonetheless, America’s image in Pakistan deteriorated from the 1980s because of the distrust among Pakistanis following the former’s failure to come to its assistance during the 1971 war with India and support its jihadi groups. 

Development assistance to Pakistan plummeted from $452 million in 1989 to only one percent of this amount in 1998 owing to the nuclear tests. The unrestricted foreign aid prior to 2001 could not put Pakistan on a path of sustainable economic growth and poverty alleviation. With the end of the cold war and the collapse of the Soviet Union, the American objectives to contain communist expansion were met with strategic support of Pakistan. Foreign aid associated with the Afghan war strengthened the praetorian state in Pakistan while it did very little for its citizens. 

Foreign aid that came to Pakistan until 1980 was development-sensitive, producing some positive impacts for the poor people. But from the 1980s onwards, aid was only provided for strengthening the military apparatus.  Since 2001, Pakistan has been receiving $2 billion on average from the West on an annual basis despite the creation of new opportunities due to CPEC.

Reliance on foreign aid has never helped Pakistan grow into a developed and prosperous country. It is development partnership rather than foreign aid that can help Pakistan reap the benefits of CPEC. Our political psyche of seeking aid and development assistance is rooted in a long history of dependence. It must be altered now if we are truly committed to our people who have never gained from the billions of dollars that we have received through foreign aid. Our governance system must ensure that the people of Pakistan are the priority when it comes to development. It calls for nothing less than a democracy.

 

The writer is a freelance columnist based in Islamabad.

Email: ahnihal@yahoo.com