Where Did the Money Go? Oversight Lacking in Aid to Pakistan

The Government Accountability Office released a report Wednesday that details troubling lapses in the oversight of U.S. Coalition Support Funds to Pakistan, funding provided to the government of Pakistan as reimbursement for its counterterrorism activities. While the report’s findings are cause for concern, they only scratch the surface of a deeply flawed assistance program to Pakistan.

Background on the Coalition Support Funds

After the attacks of September 11, the Pakistani Army deployed into the Federally Administered Tribal Areas near the border with Afghanistan at the request of the United States to support Operation Enduring Freedom in Afghanistan. The Pakistani Army had limited capability to maintain such a high level of military activity, prompting the United States to create the Coalition Support Funds, or CSF, as a mechanism to reimburse Pakistan and other nations for costs incurred in support of the so-called “global war on terror.”

The program is only intended to cover incremental costs—those above and beyond normal military spending. Typical categories of reimbursement include strategic air and sea lift for deployment and expenditures for base operations support. Since the program’s inception, Pakistan has received $5.56 billion of the total $6.88 billion disbursed by the CSF, a full 81 percent of CSF funds.

Almost six years and billions of dollars later, Pakistan’s tribal region remains a safe haven for Al Qaeda and Taliban forces conducting cross-border attacks on U.S. and coalition troops in Afghanistan. Attacks have increased by 40 percent in eastern Afghanistan, across the border from Pakistan, from a year ago. The tribal areas are seen as the most likely source for the next terrorist attack against America.

Oversight Problems

This week’s GAO report describes glaring failures in the CSF oversight system, which extends across numerous government agencies and Congress. During the oversight process, Pakistan’s claims are examined to ensure the military actually incurred the expense in support of U.S. military operations in the “war on terror,” and that they are consistent with U.S. national security goals. The report found that “for a large number of claims [the Department of] Defense did not obtain sufficient documentation from Pakistan to verify that claimed costs were incremental, actually incurred, or correctly calculated,” as required by their own CSF guidelines.

The report highlights a period between January 2004 and June 2007 in which the United States paid over $2 billion in reimbursement claims to Pakistan without obtaining information enabling a third party to recalculate the costs. Specific examples of oversight failure include the following:

  • More than $200 million paid for Pakistan’s air defense radar, despite the fact the terrorists fighting the Pakistani Army had no air attack capability
  • Approximately $30 million paid for army road construction and $15 million for bunker construction without evidence that the roads and bunkers had been built
  • More than $1.5 million paid in inflated costs for damage to Navy vehicles not used in combat

The report states that as of May 2008, the Department of Defense had not developed formal guidance delineating how and to what degree Defense officials in Pakistan should attempt to verify Pakistani military support and expenses.

Deeper Issues

Even if the DoD were to fully implement the GAO report’s recommendations and clean up the CSF oversight process, more serious concerns persist. U.S. oversight of the CSF money is severely limited in the first place by the fact that reimbursements are paid directly into the Pakistani government treasury and become sovereign funds, hiding them from U.S. oversight.

According to a New York Times article, administration and military officials have said they believe that much of the U.S. money hasn’t reached frontline Pakistani units and has instead been diverted to finance weapons systems designed to counter India, not Al Qaeda or the Taliban. Estimates by some western military officials put the portion of illegitimately spent funds at 70 percent.

In one instance of misappropriation the army received just $25 million for helicopter maintenance and operations for all of 2007 for their entire national helicopter fleet, out of $55 million intended for that purpose for an 8-month period. In another, Pakistan received around $80 million a month in 2006 and 2007 for military operations during ceasefires with pro-Taliban tribal elders along the border, in which troops had returned to their barracks.

Military officials have emphasized the program’s extensive oversight, but these allegations, in combination with the recent GAO report, make it hard to describe the CSF mechanism as anything but a blank check to Pakistan’s military. The Pakistani people also appear not to appreciate this type of help. A recent public opinion poll found that over half of Pakistanis hold the United States responsible for recent violence in Pakistan.

The problems with CSF are symptomatic of the short-term outlook and lack of strategic planning that have plagued the Bush administration’s foreign policy decisions. A previous GAO report found that there was no comprehensive plan for meeting U.S. security goals in FATA, and American and Pakistani officials have acknowledged that they never agreed on strategic goals to drive how the CSF money should be spent, or how the Pakistanis would prove that they were performing up to American expectations. What’s more, some seven years after the CSF’s inception, it is still being funded via emergency appropriations bills, not the regular defense budget. The CSF program appears to be merely a quick fix to a funding shortfall, rather than a robust plan to address an ongoing threat.

The current situation in Pakistan represents a difficult challenge. While an urgent security threat exists, the United States has limited options in curtailing the threat. The Pakistani people are deeply suspicious of U.S. intentions and intervention, while the territory in which the militants operate is largely outside of Pakistani control.

It is clear that the United States needs to change how it provides assistance to Pakistan. Aid must be broadened beyond Pakistan’s military. The United States must ensure that funding it gives to Pakistan’s military is utilized for the right purposes. As long as American taxpayers are footing the bill for Pakistani military operations, Pakistan’s military must be under the guidance of an outcome-driven approach based on mutual strategic interests. After-the-fact reimbursements with flawed and limited oversight are clearly not in America’s interest.