KERRY LUGAR BILL WHAT

WE PAID & WHAT WE ARE

BEING OFFERED

By

SYED HAROON HAIDER GILANI

09th October, 2009

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Kerry Lugar bill, the latest US Aid offered to Pakistan, tripling the previous amount
to 1.5 billion US Dollars, is the hottest issue today in mainstream media and politics
in Pakistan. Everyone is busy to criticize or support it now days in Pakistan; even
Parliamentarians have been seriously and violently discussing it in National
Assembly. Before I move forward to present my views, I want to spend some time on
the history of American Aid to Pakistan.

After the emergence of Pakistan, we have shown our alliance to western or capitalist
block and being in need of financial support to establish its infrastructure, run its
affairs and meet its needs, M.A. Jinnah has asked for financial support of around 2
billion dollars to America which was approved only 15 million dollar in total due to
lack of interest in Pakistan by the United States of America.

According to the Center for American Progress, "From 1953 to 1961, Pakistan has
received 2 billion dollars a quarter in the form of military assistance. The Indo-
Pakistani wars of 1965 and 1971 led to the suspension of much of this assistance.
Additional cuts were made again in 1979 following Pakistan’s construction of a
uranium enrichment facility.

The Soviet occupation of Afghanistan throughout the 1980s led the Reagan ad-
ministration to reengage with Pakistan. In 1981, the United States negotiated a 5-
year, $3.2 billion aid package. As the Soviet Union began to withdraw its troops from
Afghanistan in the late 1980s, however, the United States again reduced assistance."

It is obvious now that whenever Pakistan has tried to empower its military against
India, US has always placed hurdles by curbing the financial aid. After the 9/11,
Pakistan was threatened to become the frontline Ally in so called Global War on
Terrorism, which caused heavy damages to its political, social, economical and
military elements. This pressure was narrated by Former President of Pakistan, Army
Chief President Pervez Musharraf of Pakistan that after the September 11 attacks, the
United States threatened to bomb his country if it did not cooperate with America's
campaign against the Taliban in Afghanistan.

Due to the alliance with US in so called war, Pakistan has suffered;

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The consequences later triggered a war in North – West Pakistan which resulted;

 2,473 soldiers and policemen killed.

 235+ tribesmen killed

 857+ soldiers and policemen captured (558 released)

 Over 3.44 million civilians displaced

 5,291 civilians killed,

 30 foreigners killed including 11 Frenchmen, 10 Americans, 4 Chinese, 1

Czech, 1 Dane, 1 Pole, 1 Turk and 1 Vietnamese.

Financial costs of Pakistan for its participation in Global War on Terror

- Various government and non-governmental organisations, commercial and

industrial chambers and experts have prepared reports about socio-economic
costs of Pakistan's fight against terrorism during the past five years. According
to the Pak-US Business Council report (2009), Pakistan is the prime victim of
Afghanistan's instability, and its economy has so far suffered directly or
indirectly a huge loss of 35 billion dollars.

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- Pakistan suffered loss of Rs 2080 billion in 'War on Terror' from 2004-05 to
2008-09, Pakistan's Finance Ministry said in a recently released document.
'The estimated cost of the 'War on Terror' to Pakistan was around Rs 484
billion during FY 2007/08.

- Country's economy suffered around $10 billion losses due to war on terror
during 2008-09 fiscal, said Dr Hafiz Pasha, Chairman Penal of Economists of
the Planning Commission. The losses to the economy for war on terror were
multi-dimensional, hurting investment, exports, economic activity, revenue
and adding more people into the poverty. The estimated cost borne by the
country was $10 billion, which included direct cost as well as indirect cost.

- Real growth for the fiscal year ending last month is officially estimated at
around 2 per cent, well below the official target of 5.5 per cent. With more
than a third of Pakistanis living in poverty and an annual population growth of
2 per cent, such an economic growth figure is tantamount to a recession. The
industrial sector was particularly hard-hit, contracting by 3.3 per cent.

- Pakistan's participation in the anti-terrorism campaign had led to massive

unemployment in the affected regions, which had ultimately increased rural
poverty too. It had reached 37.5 percent from 23.9 percent in 2007-08.

- In a well-researched report, former senior Vice-President of Lahore Chamber

of Commerce and Industry (LCCI) Sohail Lashari of SOZO parks said that the
Swat war had displaced two million residents, increased unemployment
manifold, discontinued education of youth, badly damaged infrastructure,
finished tourism - the main source of income generation of the area - sparked
violence in other parts of the country, and stopped supply of essential raw
materials from Swat like marble, gem and jewellery and furniture industries,
besides fresh fruits, vegetables and other hilly food items to other parts of the
country.

- Frequent bombings, deteriorating law and order situation and displacement of

the local population, had taken a toll on the socio-economic fabric of the
country, especially the embattled Northern areas. Due to deteriorating law and
order situation and high political risk, the World Bank had blocked lending for
two key loans, of at least 834 million dollars, market-based loans, which might
increase serious economic problems for the country.

- Since the start of the anti-terror campaign, an overall sense of uncertainty has
prevailed in the country and it is at its peak in NWFP and Fata. It has
contributed to capital flight and slowed down economic activities, making
foreign investors jittery.

- The foreign direct investment (FDI) has been adversely affected by the
ongoing anti-terrorism campaign in Fata and other areas of the NWFP.
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 Pakistan's participation in the international campaign has led to an excessive
increase in the country's credit risk, due to which recently, the World Bank has
lowered our credit rating.

- The business activity in NWFP was at its lowest ebbs and the Sarhad Chamber
of Commerce and Industry (SCCI) had requested government to declare the
province a war-affected zone. The SCCI chief said 3,500 industrial units were
functioning in the province in 1995, while the number had shrunk to 600 in
2009, and that the terrorist activities had halted commercial activities.

- A Harvard study (December 2008) states that higher levels of terrorism risk
are associated with lower levels of net FDI and Pakistan is not any exemption.
In an integrated world economy, where investors are able to diversify their
investments, terrorism may induce large movements of capital across
countries.

- According to the statistics of State Bank of Pakistan (SBP), net foreign

investment has declined by 13 percent during the first seven months of the
current fiscal year, mainly due to massive outflow from portfolio investment
due to of poor law and order situation and political instability in the country.

- Net foreign investment has registered a decline of some 324 million dollars
during the first seven months (July-January) of 2009 fiscal year. Massive
outflow of 25.058 million dollars of foreign portfolio investment from the
country's equity market was witnessed during the week ended on January 10,
2009. According to National Clearing Company of Pakistan Limited (NCCPL)
data, the cumulative outflow of this mode of investment had increased to
49.557 million dollars from January 1 to date.

- The foreign portfolio investment has been witnessing a declining trend since
the beginning of 2008, as a cumulative figure of this mode of investment has
recorded negative 432.458 million dollars from January 1, 2008 to January 9,
2009.

The End