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US claws back some of Pakistan aid grant.

Karachi: Much of the $3.4 billion (Dh12.5 billion) aid which Pakistan has received under the Kerry-Lugar Act as financial assistance for its role in fighting war on terror have gone back to the United States due to "smartly laid-out terms" by the donor nation, according to a former finance ministry official.

The Act, named after Senator Richard Lugar and John Kerry, now the US Secretary of State, was approved in 2009 for compensating Islamabad for its role in fighting militants and to make up for economic losses incurred due to it.

The Act allowed a $1.5 billion annual grant to Pakistan over the period of five years ending 2014.

The break-up of the US aid shows that it provided $1.09 billion to help support emergency flood response and disaster relief in 2010. The US then had sent marines and a large fleet of Chinook helicopters and other equipment to carry rescue and relief work.

However, critics say, Washington took back a major chunk of funds as a fee for operating forces, contractors and other organisations.

"The cash component left for Pakistani disposal was much less than the US disbursed for the flood relief," Saqib Sheerani, a former official of the Pakistani finance ministry told Gulf News.

Sheerani said that 50 to 60 per cent of the amount was paid to the American contractors, individuals, for the Chinook operations and the food and other relief goods they provided.

He also said that the grant could have reaped better benefits for both the donor and the recipient, had it been carved out prudently.

For the crucial energy sector, the US released $196 million in past three years as the country was in dire straits due to severe energy crisis.

The breakup of the US grant also emphasised on adding 900 megawatts of power by the end of this year.

"For our own resources we raised about Rs100 billion [Dh3.7 billion] annually for the energy sector budget," said Sheerani, who heads Macroeconomic Insight, a private consultancy.

The US aid of $196 million which came in three years is equivalent to Rs20 billion.

Meanwhile, the US ambassador to Islamabad on Tuesday while inaugurating a power project in Tarbela reiterated that his country was committed in providing assistance to Pakistan's energy need.

Talking to media, Richard Olson said that the US is supporting a proposed gas pipeline from Turkmenistan -- that could be extended to India. While supporting the gas pipeline project from the Central Asia, Olson passively showed his resentment to the similar project Pakistan has signed with Iran recently.

However, another economist said that each and every dollar coming into Pakistani economy is valued higher because of the eroding foreign exchange reserves.

"Every dollar we get in grant adds up to our much-needed foreign exchange reserves and thus the American aid is of good help," said Dr Qaiser Bengali, a former government advisor on economic planning.

However he cautioned that: "Most of the time our preparations, feasibility, calculations are erroneous thus the projects are rejected by the donors."

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Publication:Gulf News (United Arab Emirates)
Geographic Code:9PAKI
Date:Mar 9, 2013
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