Report details how Pakistan's power elite undermines foreign assistance

Islamabad, Aug 29 (IANS) Recent assessments from global media outlets and policy institutions paint a stark picture of Pakistan’s aid landscape — one where billions in international support, intended to bolster humanitarian resilience and economic stability, are routinely diverted by entrenched elites before reaching those in need.

At the heart of this concern is a claim by US economist Steve Hanke; as much as 37 per cent of foreign aid to Pakistan is lost to corruption and elite misappropriation. This figure, supported by years of investigative work from American think tanks, donor audits, and foreign correspondents, raises urgent questions about the sustainability of development partnerships with Islamabad, as noted by Dr. Sakariya Kareem in Asian Lite.

Since 1948, Pakistan has received over $78 billion in US aid, with additional tens of billions from multilateral and European donors. Yet, according to studies from Harvard's Belfer Centre and the Centre for Global Development, the impact has been underwhelming. Aid meant to catalyse progress has instead been absorbed into what researchers describe as “self-serving elite capture.”

Year after year, audits reveal glaring gaps between aid inflows and tangible outcomes. Communities on the frontlines — those facing floods, poverty, and health crises — see little benefit. Investigations by US agencies and European journalists have exposed how aid earmarked for disaster relief, counterterrorism, or economic stimulus is funnelled into opaque systems dominated by military officers, political dynasties, and bureaucratic allies, Dr Kareem pointed out.

One of the most troubling examples lies in US military assistance. According to Belfer Centre field reports, over half of the funds allocated for counterterrorism were spent on irrelevant or untraceable projects. In several cases, hundreds of millions meant for reconstruction vanished into inflated contracts, administrative bloat, or private accounts.

The Pakistani military, consistently identified as a central actor in this ecosystem, commands the largest slice of the national budget — often funded by repurposed foreign aid. Even as tax revenues fell from 13 per cent of GDP in 2018 to just over 9 per cent in 2023, defence spending surged, reflecting a skewed prioritisation of military interests over public welfare.

In response, donor nations have begun to tighten their aid protocols. The US now deploys risk assessment teams and independent auditors, making future aid conditional on improved financial transparency.

European partners have followed suit. Yet, as outlets like Diplomatic Courier and Reuters report, oversight mechanisms have yielded mixed results, with entrenched networks quickly adapting to new controls, the

Asian Lite report highlighted.

The real cost of this dysfunction is borne by Pakistan’s most vulnerable. Aid intended for flood recovery, healthcare, and education trickles down in diluted form, leaving the Human Development Index stagnant and social infrastructure lagging behind regional peers. Foreign experts increasingly doubt that reform is possible without a fundamental shift in Pakistan’s power dynamics.

Moreover, the link between aid diversion and Pakistan’s ballooning external debt is now undeniable. With debt exceeding $125 billion, much of it tied to unproductive aid cycles, donors acknowledge that foreign assistance has failed to foster sustainable growth. Instead, it has fuelled a cycle of extraction, enriching the elite while deepening national dependency.

In essence, the 37 per cent figure is more than a statistic — it's a symbol of systemic failure. Unless Pakistan's leadership confronts the nexus of patronage and personal gain embedded in its aid apparatus, even the most generous international efforts will continue to dissipate, leaving behind disillusionment, debt, and a nation still searching for equitable progress.

--IANS

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