12 November 2007

U.S. Aid to Musharraf is Largely Untraceable Cash Transfers

11/09/07 "TPMmuckraker" -- -- After Pervez Musharraf declared martial law this weekend, Condoleezza Rice vowed to review U.S. assistance to Pakistan, one of the largest foreign recipients of American aid. Musharraf, of course, has been a crucial American ally since the start of the Afghanistan war in 2001, and the U.S. has rewarded him ever since with over $10 billion in civilian and (mostly) military largesse. But, perhaps unsure whether Musharraf's days might in fact be numbered, Rice contended that the explosion of money to Islamabad over the past seven years was "not to Musharraf, but to a Pakistan you could argue was making significant strides on a number of fronts."

In fact, however, a considerable amount of the money the U.S. gives to Pakistan is administered not through U.S. agencies or joint U.S.-Pakistani programs. Instead, the U.S. gives Musharraf's government about $200 million annually and his military $100 million monthly in the form of direct cash transfers. Once that money leaves the U.S. Treasury, Musharraf can do with it whatever he wants. He needs only promise in a secret annual meeting that he'll use it to invest in the Pakistani people. And whatever happens as the result of Rice's review, few Pakistan watchers expect the cash transfers to end.

About $10.58 billion has gone to Pakistan since 9/11. That puts Pakistan in an elite category of U.S. foreign-aid recipients: only Israel, Egypt and Jordan get more or comparable U.S. funding. (That's only in the unclassified budget: the covert-operations budget surely includes millions more, according to knowledgeable observers.) While Israel and Egypt get more money, Pakistan and Jordan are the only countries that get U.S. cash from four major funding streams: development assistance, security assistance, "budget support" and Coalition Support Funds. Pakistan, however, gets most of its U.S. assistance from Coalition Support Funds and from budget support. And it's those two funding streams that have minimal accountability at best.

The "budget support" package is the lion's share of U.S. economic assistance to Pakistan -- and it's not spent in conjunction with any U.S. agency. "It's a cash transfer," says Lisa Curtis, a South Asia analyst at the Heritage Foundation who used to work on the South Asia desk at the State Department and for Sen. Richard Lugar (R-ID). "That goes directly to the Pakistani treasury." It totalled around $200 million each year until earlier this year, when Rep. John Tierney (D-MA) plucked $75 million of out of it and put it in an education fund for USAID to administer. In theory, budget support is supposed to free up the treasuries of the four countries that receive it for investing in their national infrastructure. But in practice, recipients can do with it whatever they like. "The notion is it gives them greater flexibility on how to use the money," explains Craig Cohen, vice president of the Center for Strategic and International Studies. "The trade-off is accountability."

In Pakistan's case, the only oversight is an annual agreement, known as the Shared Objectives statement, whereby top State Department and Treasury Department officials receive from Musharraf deputies -- usually Prime Minister Shawkat Aziz -- an explanation of how Musharraf intends to spend the money. The agreement is reached entirely in secret. "A good question is what are the objectives we're basing this budget support on," Cohen says.

Accountability also suffers in the Coalition Support Funds. According to Rick Barton of CSIS, who spearheaded perhaps the most comprehensive report on the murky world of U.S.-Pakistan ties, Pakistan has gotten over $6 billion in Coalition Support Funds since 9/11, with disbursements rising to total about $100 million a month. This, too, is a direct cash transfer. "The Coalition Support funding is basically a sort of a handshake deal between militaries," Barton says. "We don't have good sense where it goes. ... we don't ask a lot of questions, and we don't have a lot of record-keeping. "

Only about ten percent of the $10.58 billion since 9/11 has gone toward development aid and humanitarian assistance, according to the CSIS report -- even after Pakistan suffered a devastating earthquake in October 2005. "Close to 90 percent goes to the military-led government," Barton says. "Some of it is directly into the military, and the other pieces go into the Musharraf government."

In Pakistan, the military runs not just the government, but major sections of the economy as well. Joshua Hammer recently reported for The Atlantic that the Pakistani military owns large stakes in the country's "banks, cable-TV companies, insurance agencies, sugar refineries, private security firms, schools, airlines, cargo services, and textile factories." Mainlining largely untraceable money into the Pakistani treasury helps this system perpetuate itself -- even as widespread public discontent, from both moderates and radicals, boils over. It also sends the signal that the U.S. prefers to have relations with Pervez Musharraf rather than the Pakistani people.

"The whole orientation of policy and assistance provided since 9/11 is that he's the indispensable leader," says Cohen. "And the money runs through the central government and that leader."-(ICHouse)

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Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

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Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.