New BIC report: Strategic Lending on the Frontlines examines intent of post-9/11 aid to Pakistan
8 March 2005
Did increased IMF and US bilateral aid to Pakistan after the September 11th attacks constitute "strategic lending," rewarding a client state for support in the War on Terrorism? And if so, what is the mechanism by which strategic aid is disbursed given today’s global development architecture? This paper sets out to answer these questions by using Pakistan as a case study.
The Bank Information Center (BIC) is pleased to announce the release of its latest report:
When the International Monetary Fund announced in early December 2001 that it had approved a $1.3 billion long term concessional loan for Pakistan, it led many to denounce this as a return of "strategic lending" whereby the US, as the Fund’s largest shareholder, was rewarding a client state for support in the War on Terrorism. These accusations gained further traction when analysts considered the increased US bilateral aid, and other economic incentives, to Pakistan in the weeks after the September 11, 2001 attacks in New York and Washington, D.C.
Did these loans and grants all constitute "strategic lending"? And if so, what is the mechanism by which strategic aid is disbursed given today’s global development architecture? This paper sets out to answer these two questions by using Pakistan as a case study.
The paper argues that while there is little doubt that bilateral US aid to Pakistan after 9/11 has been strategic in both its intent and in practice, it would be too simplistic to argue that multilateral aid to Pakistan (from the IMF, the World Bank and the Asian Development Bank) since 9/11 has had the same motivation. It is critical to examine the linkages between bilateral and multilateral aid in the post-9/11 context. Further, the paper notes that strategic aid has consistently failed the poor in Pakistan.
Read more on BIC's Afghanistan Project Web page
Printed copies of this report may be requested from info@bicusa.org