The United States on Saturday made the final decision to cancel another $300 million — or Rs36.9 billion — in aid to Pakistan that had been halted over what the former claims is the latter's failure to take decisive action against militants.
The so-called Coalition Support Funds (CSF) were part of a broader suspension in aid to Pakistan announced by US President Donald Trump at the start of the year when he accused Pakistan of rewarding past assistance with “nothing but lies & deceit.”
In a new blow to deteriorating ties, US Defense Secretary Jim Mattis, who had an opportunity to authorise the said $300 million in CSF funds through this summer — if he saw concrete Pakistani actions to go after insurgents — chose not to do so, despite some US officials having held out the possibility that Islamabad could win back that support if it changed its behaviour.
“Due to a lack of Pakistani decisive actions in support of the South Asia Strategy the remaining $300 (million) was reprogrammed,” Lieutenant Colonel Kone Faulkner, the spokesperson, said, adding that the Pentagon aimed to spend this money on “other urgent priorities” if approved by US Congress.
Faulkner said another $500 million in CSF was stripped by the Congress from Pakistan earlier this year, which brings the total withheld funds to $800 million.
Top US officials to visit Pakistan soon
However, a Pakistani official, speaking on the condition of anonymity, said he was unaware of a formal notification of the US decision on assistance but said one was expected by the end of September.
The disclosure comes ahead of an expected visit by US Secretary of State Mike Pompeo and the top US military officer, General Joseph Dunford, to Islamabad. Mattis told reporters on Tuesday that combating militants would be a “primary part of the discussion”.
The Trump administration has persistently alleged that Pakistan was granting safe haven to insurgents who are waging a 17-year-old war in neighbouring Afghanistan, a charge Pakistan denies.
"The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools," Trump had tweeted at the start of this year.
"They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more," he warned.
Islamabad, however, has maintained that it has indiscriminately carried out operations against all terrorists, including the Haqqani network, and that the proof lay in the Operation Zarb-e-Azb carried out in Waziristan.
Earlier, Inter-Services Public Relations (ISPR) Director-General Major General Asif Ghafoor had talked of how Pakistan never fought for money, but for peace, and that the Army had indiscriminately targeted terrorists at a “heavy cost of blood and treasure”.
Experts on the Afghan conflict, America’s longest war, believe that Washington is piling accusations and making hostile decisions in order to shift the blame of its failure in Kabul on to Pakistan.
They also argue that the alleged militant safe havens in Pakistan have allowed Taliban-linked insurgents in Afghanistan a place to plot deadly strikes and regroup after ground offensives.
Two Pakistani companies sanctioned
On the other hand, the Trump-led government also banned two Pakistani companies over what it claims is their involvement in activities pertaining to nuclear and missile trade.
The two corporations — namely Technology Links Pvt Ltd and Techcare Services FZ — were added to the nuclear and missile-related Entity List of the US Department of Commerce's Export Administration Regulations, a notification issued by the American ministry of trade said, citing their work against the US national security and foreign policy interests.
The Pentagon’s decision showed that the US, which has sought to change Pakistani behaviour, is still increasing pressure on Islamabad's security apparatus.
It also underscored that its South Asian ally, with which relations have been tense, as of late, has yet to deliver the kind of change sought by Washington.
“It is a calibrated, incremental ratcheting up of pressure on Pakistan,” Sameer Lalwani, the co-director of the South Asia program at the Washington-based think tank Stimson Center, said.
Reuters reported in August that the Trump administration has quietly started cutting scores of Pakistani officers from coveted training and educational programs that have been a hallmark of bilateral military relations for more than a decade.
The Pentagon made similar determinations on CSF in the past but this year’s move could get more attention from Islamabad, and its new prime minister, Imran Khan, at a time when its economy is struggling.
Current financial woes
In his victory speech, Khan, who has opposed the US’ open-ended presence in Afghanistan, had said he wanted “mutually beneficial” relations with Washington.
Pakistan has received more than $33 billion in US assistance since 2002, including more than $14 billion in CSF — a US Defense Department program to reimburse allies that have incurred costs in supporting counter-insurgency operations.
Pakistan could again be eligible next year for CSF.
Regardless, the nation's foreign exchange reserves have plummeted over the past year and it will soon decide on whether to seek a bailout from the International Monetary Fund (IMF) or friendly nations such as China.
“They are squeezing them when they know that they’re vulnerable and it is probably a signal about what to expect should Pakistan come to the IMF for a loan,” Lalwani said. The United States has the largest share of votes at the IMF.
On Monday, Finance Minister Asad Umar had said the most pressing challenge Pakistan faced at present was the depleting foreign exchange reserves, noting that "we are facing a $2 billion deficit monthly for the last four months in the foreign exchange account".
Pakistan had loans worth $94 billion, he said, but mentioned that no decision had been taken by the government as to whether to approach the IMF for a bailout package.
Then, on Tuesday, while explaining that consultations on the current economic situation were underway and a final decision would be taken after having the Parliament on board, Umar had said even a decision to approach the IMF was made, "this won't be the first time that Pakistan has gone to the IMF programme.
"We have gone to the programme 12 times previously,” he added.
Three days later, on Friday, Umar informed senators that the amount of borrowing required by the government according to the budget was $9 billion.
“We are trying to address the root cause behind why these loans are required. We need to take steps to manage these requirements and know this will take time. In the meantime, after calculating the minimum gap we will present a finalized plan which should be done in 1-2 weeks.”
Iran and China
According to an Arab newspaper, Pompeo's visit important to Pakistan was in the sense that the US wishes to gain an influential role in the South Asian region. At the same time, the country is being wooed by China.
In this regard, Umar, the finance minister, had said earlier: "Whatever needs to be done will be done by the people of Pakistan. We work with the entire world and have relations.
“There is dialogue in accordance to these relations. What I hear on WhatsApp groups and see on social media is not reality.”
It also remains to be seen whether Pakistan will be able to counter the US in its war against Iran, the Arab publication noted, considering that the finance minister had previously acknowledged that the US sanctions on Iran would impact Pakistan.
“We have to see about [what to do with] the pipeline project. The petroleum minister is working on this.”