The Trump administration has proposed $344 million in financial assistance to Pakistan including $100 million in foreign military funding, a massive $190 million reduction in grant as compared to the 2016 fiscal.
Last year, the US assistance to Pakistan under the State Department budget was USD 534 million, which included USD 225 million towards foreign military funding.
In all, the State Department has proposed a massive USD 190 million reductions in its financial assistance to Pakistan as compared with the 2016 fiscal. The current 2017 fiscal would end on September 30 this year.
The Trump administration has slashed its foreign military financing (FMF) to Pakistan from $255 million to $100 million for the 2018 fiscal, but has kept its options open whether it would be a grant or should be converted into a loan, according to a US official.
“While we may use FMF to leverage loans for some countries, we will still maintain the flexibility to use it as grant assistance where needed,” a State Department spokesman told sources, when asked about the budget proposal of $100 million in foreign military funding to Pakistan.
“This budget focuses on bilateral FMF assistance requested for Israel ($3.1 billion), Egypt ($1.3 billion), Jordan ($350 million), and Pakistan ($100 million),” the spokesman said on Tuesday.
On Monday, the White House said that FMF to Israel and Egypt would continue to be in the form of grant while for Pakistan it would be a loan but a final decision would be taken by the state department.
“The Foreign Military Funding or FMF for Pakistan would be provided in the form of a loan guarantee,” said Mick Mulvaney, Director of the Office of Management of Budget in the White House. Responding to questions, Mulvaney said the Trump administration has proposed to convert its FMF programme to many countries from aid to financial loan. Pakistan is one of those countries.
“This is one of the options that the administration had explored in its internal deliberations, but the request itself does not make that determination,” the White House later clarified indicating it might revert to the original financial grant to Pakistan to sell military hardware if need be.
“Whether the funding is provided through grants, or as a subsidy for a guaranteed loan, is an option the state department can exercise to ensure our foreign assistance best supports our national interests,” the White House said.
“Our argument was instead of giving somebody $100 million, we can give them a smaller number worth of loan guarantees and they can actually buy more stuff. We did not change it for Israel. We did not change it for Egypt,” said Mulvaney.
The Trump administration’s proposal that the military grants may be converted to loans wherever appropriate, is an idea that could be detrimental to American interests according to many commentators. The proposed system will require partner countries to buy American weaponry with the loans before paying the money back to America.
If implemented, the new system could drive many countries to America’s rivals such as China and Russia for military hardware and the State Department bureaucracy is opposed to it.
However, Lt Gen Vincent Stewart, Director, Defense Intelligence Agency told members of the Senate Armed Services Committee during a Congressional hearing on worldwide threats, said, ”Pakistan hold in reserve terrorist organisations so that if Afghanistan leans towards India, they will no longer be supportive of an idea of a stable and secure Afghanistan that could undermine Pakistan interest”.
“Pakistan views Afghanistan or desires for Afghanistan some of the same things we want: a safe, secure, stable Afghanistan. One addition, one that does not have heavy Indian influence in Afghanistan,” he said.
“They view all of the challenges through the lens of an Indian threat to the state of Pakistan,” Stewart explained, adding, “We’ve got to convince Pakistan that … it is not in their interest to continue to host of Haqqani network, that we ought to be working together to go after those 20 terrorist organisations that undermine not just Afghanistan, not just Pakistan, but all of the region.”
Stewart also informed lawmakers that “India has sought and continues to move to isolate Pakistan diplomatically and is considering punitive options to raise the cost to Islamabad for its alleged support to cross- border terrorism,” while telling them that ”continued threat of high level terror attacks in India, violence in Kashmir and bilateral diplomatic recriminations will further strain India-Pakistan ties in 2017.
The White House move, being resisted by the State Department, calls for military aid to Pakistan being reduced from $ 265 million in 2018 to $ 100 million in 2018, in a total assistance of $344 million.
This is drastic fall from the time the country belonged to the ”billion dollar club” that includes Israel and Egypt, among the biggest recipients of US aid.
Aid to the latter two is not affected in the latest cuts, but the White House budget director Mick Mulvaney identified Pakistan as one of the countries for whom grants will be converted to loans.
The US scaling down on aids also comes on the heels of a perceived humiliation of Pakistan at the US-Islam summit in Riyadh that left many Pakistani commentators shrieking that the country’s ”sacrifices” in the war on terror and its self-proclaimed primacy in the Muslim world were not being recognized.
Many commentators are outraged that Trump specifically identified India among the victims of terror attacks and did not mention Pakistan, although the U.S President did mention broadly that most victims of terror were Muslims and Muslim nations.
The perceived slight, which included the US forsaking bilateral meeting with Pakistan even though Trump met with leaders of Afghanistan and Bangladesh, has caused a great deal of heartburn in the Pakistani media circle, even as Washington has begun to talk more openly about Pakistan’s backing of terror groups and the need to take punitive action.
A recent study, authored jointly by former envoy Hussain Haqqani and Lisa Curtis of the Heritage Foundation, also suggested stopping US assistance to Pakistan, particularly to its defence establishment, to force Islamabad to follow US policy guidelines.
Earlier this week, Congressman Ted Poe, Chairman of the House Subcommittee on Terrorism, introduced a bill in the House of Representatives, seeking to get Pakistan declared a state sponsor of terrorism.
Such proposals were, however, strongly disputed by the US defence establishment. In January, Lt Gen John Nicholson, who commands US and Nato forces in Afghanistan, told a congressional panel that Washington should try to ‘enlist’ Pakistan for defeating terrorists in Afghanistan.
He also told the US Senate Armed Services Committee Pakistan’s military operations in Fata were “critical to defeating insurgency”.
However, after Afghanistan, Pakistan continues to be the second largest aid recipient of the US in South Asia.