On 24 June 2009 the U.S. Senate passed the Kerry-Lugar Bill (formally, the proposed ‘Enhanced Partnership with Pakistan Act of 2009’ — a “Bill” is proposed legislation; when approved, it becomes an “Act”). This (the “Engrossed in Senate”) version of the Bill now goes on to be voted on in the House of Representatives. Earlier, on 11 June 2009 the U.S. House of Representatives had passed the companion Berman Bill (formally, the “Pakistan Enduring Assistance and Cooperation Enhancement Act of 2009 or the PEACE Act of 2009”), and sent the (“Reported in House”) version to be voted on by the Senate. The two bills will now be reconciled in a final version – not an easy task, given the serious differences in the two – before being sent to the president for signature.

The proposed Kerry-Lugar Bill (“To authorize appropriations for fiscal years [ending 30 September] 2009 through 2013 to promote an enhanced strategic partnership with Pakistan and its people, and for other purposes”) consists of 10 sections:

1. Short Title
2. Findings
3. Definitions
4. Statement of Policy
5. Authorisation of Funds
6. Limitation on Certain Assistance
7. Sense of Congress on Coalition Support Funds
8. Pakistan-Afghanistan Border Areas Strategy
9. Sense of Congress
10. Term of Years

Sections 1-3 (Short Title, Findings, and Definitions)

Section 2 (Findings) provides a 16-point narrative of U.S.-Pakistan relations in which, notably, Pakistan is called “a major non-NATO ally of the United States” who “has been a valuable partner in the battle against al Qaeda and the Taliban, but much more remains to be accomplished by both nations.” It recounts the loss of lives, and re-asserts that “Multiple intelligence estimates have warned that al Qaeda is actively planning attacks on the U.S. homeland from its safe-haven in Pakistan.”

Section 3 (Definitions) provides, among others, an implicit definition of “insurgency” – in which it is notable that (1) Afghanistan is mentioned (in an Act on Pakistan), (2) the governments of Pakistan and Afghanistan are declared to be “duly constituted” ( a doubtful proposition), and (3) insurgency is defined in a way that classifying Tehrik Taliban Pakistan as an insurgency becomes questionable – and of “terrorism” (notably vague and arbitrary); FATA, NWFP, and the Pak/Af (no longer Af/Pak) border area (the acronym “PABA” may well soon replace “Af-Pak”) are defined:

• (2) COUNTERINSURGENCY- The term ‘counterinsurgency’ means efforts to defeat organized movements that seek to overthrow the duly constituted Governments of Pakistan and Afghanistan through violent means.
• (3) COUNTERTERRORISM- The term ‘counterterrorism’ means efforts to combat al Qaeda and other foreign terrorist organizations that are designated by the Secretary of State in accordance with section 219 of the Immigration and Nationality Act (8 U.S.C. 1189), or other individuals and entities engaged in terrorist activity or support for such activity.
• (6) PAKISTAN-AFGHANISTAN BORDER AREAS- The term ‘Pakistan-Afghanistan border areas’ includes the Pakistan regions known as NWFP, FATA, and parts of Balochistan in which the Taliban or Al Qaeda have traditionally found refuge.

Section 4 (Statement of Policy)

Section 4 (Statement of Policy) declares that it is the policy of the U.S. government to support democracy, good governance, rule of law, economic growth and development, “a sustained, long-term, multifaceted relationship with Pakistan,” sustainable economic development, “peace in the region and harmonious relations between the countries of the region,” anti-terrorist initiatives, counterinsurgency efforts by promoting regional development, people-to-people engagement between the U.S. and Pakistan, and public-private partnerships in Pakistan. The Senate has added a final subsection (not present in the original draft): “(11) to encourage the development of local analytical capacity to measure progress on an integrated basis across the areas of donor country expenditure in Pakistan, and better hold the Government of Pakistan accountable for how the funds are being spent.”

Section 5 (Authorisation of Funds)

The teeth of the Act (its ‘conditionalities’) are in Section 5 (Authorization of Funds). While US$ 1,500 million are “authorised” annually for 5 years beginning fiscal year 2009, the amounts “appropriated” under these authorizations, will be made “available” in two tranches subject to the following conditions (these distinctions have been explained in an earlier post):

1. a first tranche of US$ 750 million, conditional on the submission by the Secretary of State (instead of the President, following amendment by the Senate) of a Pakistan Assistance Strategy Report to the U.S. Congress in the manner, frequency, and format provided by the Act.; and
2. with effect from FY 2010, a second tranche of US$ 750 million, on  (i) the certification to the U.S. Congress (the House and Senate appropriations; and foreign affairs, and relations, committees, respectively) by the President’s Special Representative to Afghanistan and Pakistan (currently, Richard Holbrooke; or in the absence of a Special Representative, by the Secretary of State), that “assistance provided to Pakistan under this Act to date has made or is making substantial progress toward achieving the principal objectives of United States assistance to Pakistan contained in the Pakistan Assistance Strategy Report;” accompanied by (ii) “a memorandum explaining the reasons justifying the certification” (emphasis added).

These conditions can be waived by the Secretary of State “if the Secretary determines, and certifies to the appropriate congressional committees, that it is in the national security interests of the United States to provide such waiver” (this has been added by the Senate to the original text of the Act).

It is highly significant that the President of the United States has been formally disengaged from handling the United States’ economic and security relations with Pakistan, in view of Pakistan’s reduced status in the U.S. [see earlier post].

It is clear then that in terms of “available” funds, the much publicised five-year figure of US$ 7,500 million is likely to be lower: (i) by at least US$ 750 million in FY 2009, due to delay in the passage of the Act (the fiscal year ends on 30 September); and (ii) by likely delays in meeting the cumbersome requirements of reporting, certification, ntoficiation, etc. for release of funds.

Also, it is the “Sense of Congress” (intent of law, not law itself) that, “subject to an improving political and economic climate in Pakistan”: (1) the annual appropriation of US$ 1,500 million in “foreign assistance” be provided for a further five years (2014-2018); and that (2) “security-related assistance” should be “maintained at a level that will bring significant gains” in pursuit of the aim “to prevent any Pakistani territory from being used as a base or conduit for terrorist attacks in Pakistan, Afghanistan, India, or elsewhere in the world.” Note the mention of “India” and the repetition of the bogus insinuation that 9/11 (or any other terrorist attack) was planned from Pakistan. To this last clause, the Senate has added that security-related assistance to the Government of Pakistan “should be geared primarily toward bolstering the counter-insurgency capabilities of the Government to effectively defeat the Taliban-backed insurgency and deny popular support to al Qaeda and other foreign terrorist organizations that are based in Pakistan.”

Finally, there are general, and specific, provisions relating to use of funds. In general, the funds can be used for: (1) “just and democratic governance” – to the original list of 7 items, the Senate has added “(viii) the implementation of legal and political reforms in the FATA;” (2) “economic freedom”, and (3) “investments in people, especially women and children” – in the original list of 4 items, the Senate has inserted: “(iv) vocational training for women and access to microfinance for small business establishment and income generation for women” – interestingly, under the provision for “(v) higher education …” in this section, the Bill envisages the creation of an American University in Pakistan, on the pattern of similar universities in the Middle East (see Senator Kerry’s companion report on the Bill); and finally, the Senate has added, (4) “long-term development in regions of Pakistan where internal conflict has caused large-scale displacement..” There are also specific provisions: (1) “Up to $100,000,000 of the [total five-year] funds appropriated … should be used for police reform, equipping, and training”; and (2) Of the funds appropriated each year, up to $45 million can be used to supplement normal funds available for “Operational and Audit Expenses” of U.S. government agencies.

We can turn now to a closer look at the principal conditions, consisting of “reporting” requirements (Pakistan Assistance Strategy Report) and advance “notification” requirements..

Pakistan Assistance Strategy Report

(In what follows, the original text of the proposed Act that was {deleted} by the Senate is shown in red, struck out, in curly brackets; while that added, is in blue.)

Substantively, the key condition is the Pakistan Assistance Strategy Report to be submitted by the State Department. (The tranching, and the certification and supporting memorandum appear to be a bureaucratic device to appease the egos of two powerful officials — and will no doubt be streamlined in due course.)

While the passage of 151 years changes things, this provision of the Kerry-Lugar Bill is reminiscent of the Government of India Act (formally, “An Act for the Better Government of India”) of 1858, under which it was provided that: “LIII. The Secretary of State in Council shall … lay before both Houses of Parliament an account for the financial year …; and such account shall be accompanied by a statement prepared from detailed reports from each Presidency and district in India in such form as shall best exhibit the moral and material progress and condition of India in each such Presidency.” (Emphasis added; the amendment calling for the report was moved by the Earl of Derby on 19 July 1858 — the Earl of Shaftesbury’s proposal specifying details to be provided in the report, as in the Kerry-Lugar Act, was defeated.) Accordingly, a Report on the Moral and Material Progress and Condition of India was dutifully submitted annually, and makes for good reading even today. Unlike the 1858 British Act, the 2009 American Bill provides detailed guidance on the scope and coverage of the required report.

Section 5(b)(1)(A) of the Bill requires that “none of the amounts appropriated may be made available after the date of the enactment of this Act for assistance to Pakistan unless the Pakistan Assistance Strategy Report has been submitted to the appropriate congressional committees in accordance with subsection (j);” where subsection [5](j) states that: “Pakistan Assistance Strategy Report- Not later than {30} 45 days after the date of enactment of this Act, or September 15, 2009, whichever date comes later, the {President} Secretary of State shall submit to the appropriate congressional committees a report describing United States policy and strategy with respect to assistance to Pakistan. The report shall include–

(1) a description of the principal objectives of United States assistance to Pakistan to be provided under this Act;

(2) the amounts of funds authorized to be appropriated under subsection (a) proposed to be allocated to programs or projects designed to achieve each of the purposes of assistance listed in subsection (f);

(3) a description of the specific projects and programs for which amounts authorized to be appropriated pursuant to subsection (a) are proposed to be allocated;

(4) a list of criteria and benchmarks to be used to measure the effectiveness of projects described under subsection (f), including a systematic, qualitative, and where possible, quantitative basis for assessing whether desired outcomes are achieved and a timeline for completion of each project and program;

(5) a description of the role to be played by Pakistani national, regional, and local officials and members of Pakistani civil society and local private sector, civic, religious, and tribal leaders in helping to identify and implement programs and projects for which assistance is to be provided under this Act, and of consultations with such {officials} representatives in developing the strategy;

(6) a description of all amounts made available for assistance to Pakistan during fiscal year 2009 prior to submission of the report, including a description of each project or program for which funds were made available and the amounts allocated to each such program or project;

(7) a description of the steps taken, or to be taken, to ensure assistance provided under this Act is not awarded to individuals or entities affiliated with terrorist organizations; and

(8) a projection of the levels of assistance to be provided to Pakistan under this Act, broken down into the following categories as described in the annual ‘Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance’ [FY09 Report pdf]:

(A) Civil liberties.
(B) Political rights.
(C) Voice and accountability.
(D) Government effectiveness.
(E) Rule of law.
(F) Control of corruption.
(G) Immunization rates.
(H) Public expenditure on health.
(I) Girls’ primary education completion rate.
(J) Public expenditure on primary education.
(K) Natural resource management.
(L) Business start-up.
(M) Land rights and access.
(N) Trade policy.
(O) Regulatory quality.
(P) Inflation control.
(Q) Fiscal policy.

Explanatory Note: The Millennium Challenge Account (MCA) is a bilateral development fund announced by the Bush administration in 2002 and created in 2004 under which conditional financial assistance is provided by the United States to its small, quasi-colonial dependencies. (The map below shows participants in the Program; United States as donor is in green, red countries have active compacts, blue countries have active threshold compacts, purple countries are in negotiations for either, light green has had compact funding suspended, and yellow countries have negotiated threshold agreements and are negotiating for full compacts.)

The ‘Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account [MCA] Assistance’ for fiscal year 2009 [pdf] classifies these criteria as follows:

Borrowing countries are evaluated on these criteria by third party organisations, as follows (for details, see : pdf):

• Freedom House: civil liberties, and political rights.
• World Bank Institute: voice and accountability, government effectiveness, rule of law, and control of corruption; also regulation quality.
• World Health Organisation: immunisation rate, and public expenditure on health.
• United Nations Educational, Scientific and Cultural Organisation (UNESCO): girls’ primary education completion rate, and public expenditure on primary education (UNESCO & national sources).
• The Columbia Center for International Earth Science Information Network (CIESIN) and the Yale Center for Environmental Law and Policy (YCLEP): natural resource management.
• IMF (World Economic Outlook database): inflation rate, and fiscal policy (national sources, cross checked with IMF (WEO database).
• Heritage Foundation: trade policy.
• International Fund for Agricultural Development (IFAD) / International Finance Corporation (IFC): land rights and access index.
• International Finance Corporation (IFC): business start-up

Based on these criteria and procedures borrowing countries, like school children, receive an annual scorecard – for example, the scorecard for Honduras (where the U.S. has recently engineered a coup d’état to oust a duly elected, but left leaning president) is shown below [source: pdf]:

Although the proposed Kerry-Lugar Act asks only that the funds provided to Pakistan be “broken down into” the MCA categories, this is clearly the thin end of the wedge that would soon open up questions of effectiveness of the “aid” provided, calling for Pakistan to be rated annually on the MCA scorecard shown above, by the 10 multilateral and bilateral – including the 2 notoriously right wing organizations, Freedom House and Heritage Foundation – organisations, whose demands on officials would severely impair the quality of governance. The Act lays the foundations of a degree of micro-management of the governance of Pakistan that not only far exceeds anything experienced under the much criticised and highly unpopular IMF programmes but is certain to be self-defeating.

Notification Requirements

In addition to the reporting requirement (covered above), the Act requires:

1. The President to notify the appropriate congressional committees at least 15 days before providing any budget support to Pakistan, together with a description of the purpose and conditions attached to such support.
2. The Secretary of State [substituted for the President, by the Senate] to provide, within 90 days of the submission of the Pakistan Assistance Strategy Report, and every 6 months thereafter, a semi-annual report to the appropriate congressional committees describing the assistance provided under this section, according to detailed requirements specified in the Act (concerned mainly with preventing misuse of funds). Notably, the Senate has reduced the reporting threshold from $250,000 to $100,000 for the list of recipients of funds (with the provision, “which may be included in a classified annex, if necessary to avoid a security risk, and a justification for the classification,” no doubt to cover bribes, and other covert payments). The Senate has also added a section asking for an accounting of assistance provided, broken down into the Millennium Challenge categories (described above).
3. The Comptroller General of the United States, Government Accountability Office (GAO), to submit within one year of the submission of the Pakistan Assistance Strategy Report, and annually thereafter, a report [the GAO report] to the appropriate congressional committees, containing (1) a review of, and comments addressing, the Pakistan Assistance Strategy Report; and (2) recommendations on improving the efficiency and effectiveness of U.S. efforts to meet the objectives of this Act.
4. The Senate has also added an advance consultation requirement, namely, that at least 15 days before “obligating any assistance” the President shall consult the appropriate congressional committees on the strategy in the Pakistan Assistance Strategy Report, including criteria and benchmarks to be used to measure the effectiveness of projects funded.

Sections 6-10 (Limitations, Coalition Support Funds, Afghanistan-Pakistan Border Areas, Sense of Congress, and Term of Years

Under Section 6 (Limitation on Certain Assistance), to be eligible for certain military assistance (beginning FY 2010) and arms transfers (beginning FY 2012), the Secretary of State, after consultation with the Secretary of Defence and the Director of National Intelligence, is required to certify and submit a (classified or unclassified) annual progress report to the appropriate congressional committees, “that the security forces of Pakistan– (1) are making concerted efforts to prevent al Qaeda and associated terrorist groups, including Lashkar-e-Taiba and Jaish-e-Mohammed, from operating in the territory of Pakistan; (2) are making concerted efforts to prevent the Taliban and associated militant groups from using the territory of Pakistan as a sanctuary from which to launch attacks within Afghanistan; and (3) are not materially interfering in the political or judicial processes of Pakistan.” The wording of the last clause should be noted. Again, with 15 days prior notice to Congress, the Secretary of State may waive the certification requirement if it is in “the national security interests of the United States.” Finally, the Secretary of State must “establish detailed, specific requirements and metrics” for evaluating the progress to be reported in the annual report.

Under Section 7 (Sense of Congress on Coalition Support Funds), the Secretary of Defense is required to submit a (classified or unclassified) semi-annual report to Congress on the use of Coalition Support Funds, which responds to the concerns expressed the June 2008 report of the U.S. Government Accountability Office (GAO-08-806) [pdf].

Under Section 8 (Pakistan-Afghanistan Border Areas), the Secretary of State, in consultation with the Secretary of Defense, the Director of National Intelligence, and other government officials, is required to (1) develop a comprehensive, cross-border counterterrorism and counterinsurgency strategy, that includes all elements of national power–diplomatic, military, intelligence, development assistance, humanitarian, law enforcement support, and strategic communications and information technology; and (2) within 90 days of the enactment of this Act, submit to the appropriate congressional committees a detailed description of this comprehensive strategy, along with proposed timelines and budgets for implementation.

Under Section 9 (Sense of Congress), the United States is enjoined to (1) recognize Pakistan’s quest for good governance and the rule of law under the elected government in 2008 and 2009; (2) seize this strategic opportunity in the interests of Pakistan as well as in the national security interests of the United States to expand its engagement with the Government and people of Pakistan; (3) continue to build a responsible and reciprocal security relationship, and to further strengthen and enable the position of Pakistan as a major non-NATO ally; (4) seek ways to strengthen our countries’ mutual understanding, through personnel exchanges and support for the establishment of institutions of higher learning with international accreditation; and added by the Senate: “(5) explore means to consult with and utilize the relevant expertise and skills of the Pakistani-American community” (on which we have commented in an earlier post).

Under a new Section 10 (Term of Years), added by the Senate, with the exception of provisions relating to (i) the certificate and memorandum required from the President’s Special Representative to Afghanistan and Pakistan [§ 5(b)(1)(B)], (ii) the Pakistan Assistance Strategy Report [§ 5(j)], (iii) the notification requirements for budget support, and the semi-annual report, [§ 5(k)], and (iv) the Government Accountability Office Report [§ 5(l)], this Act is to remain in force after September 30, 2013.

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