America, Britain and the rest of the West must pay Pakistan for fighting their war which has cost Pakistan $34.5 Billion since 2001
THE manager of one of the classier hotels in Pakistan’s beautiful Swat Valley sounds wistful on the phone. His hotel has been closed for months, he says, but he looks forward to extending a welcome in happier times. Over 4,000 tourists visited Swat in 2007, drawn by its Alpine scenery and Buddhist archaeology. But the trade has dried up this year. Visitors are deterred by the Taliban encamped in the region and the mortar fire meant to oust them.
The damage to Pakistan’s tourist industry, which brought in $276m in 2007, is one example of the price the country is paying for the war on terror. On November 14th the finance ministry announced its estimate of the full bill: $8.5 billion for this fiscal year, which ends in June 2009, and a staggering $34.5 billion since 2001.
This includes the direct cost of mobilising the army, which is now waging fierce battles against militants in Pakistan’s border regions. It also covers a long tally of indirect burdens, from the cost of accommodating displaced people to the higher insurance premiums charged on sea-freight. Such calculations are notoriously hit-and-miss. But the decision to publicise them now is a reliable index of the government’s mounting frustration.
Pakistan is running out of cash. On November 15th, the IMF said it would ask its board to lend Pakistan $7.6 billion over 23 months. Pakistan hopes friendly governments will add their financial support. So far it has won warm words but no hard cash, other than, the government says, the promise of a $500m loan from China.
The government feels it is asking not for charity but for recompense. Even trips to Dubai, where it met the IMF, are an additional cost it has to bear because terrorists blew up the Marriott Hotel in Islamabad, deterring foreign officials from visiting. The money it is requesting is not a bail-out, says Ashfaque Khan of Pakistan’s finance ministry. No sir. We are paying for our war, which is also your war.
That war’s ledger has two sides, of course. Pakistan received over $10 billion in foreign aid from 2001 to 2006, according to the OECD, a quarter of it from America and Britain. America has also provided $8.9 billion in military help in the past seven years. It has paid for the food, clothing and housing for some 100,000 Pakistani troops in regions like Swat. It also reimburses Pakistan for the use of its seaports and airstrips. (Mr Khan complains that reimbursement arrives only after detailed scrutiny and a seven-to-eight month delay.)
In July Joseph Biden, America’s next vice-president, proposed a tripling of non-military aid to Pakistan to $7.5 billion over five years. He wants to go beyond a transactional relationship, whereby America provides aid in exchange for services. That sounds nice. But the Pakistanis feel that some outstanding transactions have yet to be settled in full.
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