US-Pakistan relations are in a mess. When Raymond Davis, a US Embassy employee, allegedly shot dead two men on a motorbike in Lahore on 26 January, he precipitated a major crisis. Despite threats from US Congressmen to cut aid to Pakistan unless Davis is released, the Pakistani government will find it difficult to bow to pressure, knowing full well that there will be a swift and bloody reaction if Davis is allowed to leave the country.
Davis should never have been armed - it is illegal in Pakistan and has already been the source of previous tensions between the two countries - and his apparent crime was compounded when another US Embassy vehicle ran over and killed a bystander while responding to a call for help from Davis. Since then, the widow of one of the dead men has also committed suicide. Further problems have been caused by the failure of US officials to offer a clear explanation of what Davis was doing in Pakistan.
Will the US go ahead with its threat to cut its aid budget? That is not certain, but a recent report on USAID's programme in Pakistan makes it clear that there are serious problems in that quarter too. The Quarterly Progress and Oversight Report on the Civilian Assistance Program in Pakistan, as of December 31, 2010, which is a joint publication of the State Department, Department of Defense and USAID, makes for sobering reading. Despite a $1.5bn annual budget, USAID "has not committed to a set of performance indicators to measure the success of its programs as traditionally required for proper project management". Not has the US Embassy in Islamabad identified any indicators by which to measure the success of the development strategy.
Various inspection offices have been set up in Pakistan to guard against inefficiency and corruption, but research from specific projects suggest waste and inefficiency is widespread.
For example, during the last quarter of last year, the USAID inspectors completed four audits, including performance audits of two livelihood development projects in FATA designed to counter the growing threat from militants. The audits found that little progress had been achieved, partly due to lack of security, but mainly because of a lack of baseline data and inadequate oversight. Costs of three-quarters of a million dollars have been identified as ineligible.
In another project, USAID broke off relations with the partner - the US-based Academy for Educational Development - after investigations revealed "fraud stemming from false statements and claims, failure to perform in accordance with the terms of the agreement, and violation of statutory or regulatory provisions contained in the agreement." AED's president, chief executive and four other senior executives have been forced to leave the organisation. (Note: they have not been prosecuted).
The report says USAID's work has been disrupted by Wikileaks - which revealed private diplomatic thinking (mostly negative) about Pakistan - and by the death of Ambassador Richard Holbrooke, the US Special Representative for Afghanistan and Pakistan.
There is some very useful material in this report, which breaks down the aid budget for the last three years into categories. This we find that $40 million has been spent on road construction in FATA and $82.9 million on "Border Security (Aviation), while only $8.5 million has been spent on counter-narcotics. There is also a good breakdown of how $570 million was spent providing humanitarian assistance after the devastating floods of last summer that displaced over 20 million people.
There are also many details of various high-profile aid projects, including roads, schools, water and electricity infrastructure. However, as the report notes: "One year after the launch of the civilian assistance strategy in Pakistan, USAID has not been able to demonstrate measurable progress."