US Officials See Waste in Billions Sent to Pakistan

December 24, 2007
By David Rohde, Carlotta Gall, Eric Schmitt and David E. Sanger

After the United States has spent more than $5 billion in a largely failed effort to bolster the Pakistani military effort against Al Qaeda and the Taliban, some American officials now acknowledge that there were too few controls over the money. The strategy to improve the Pakistani military, they said, needs to be completely revamped.

In interviews in Islamabad and Washington, Bush administration and military officials said they believed that much of the American money was not making its way to frontline Pakistani units. Money has been diverted to help finance weapons systems designed to counter India, not Al Qaeda or the Taliban, the officials said, adding that the United States has paid tens of millions of dollars in inflated Pakistani reimbursement claims for fuel, ammunition and other costs.

"I personally believe there is exaggeration and inflation," said a senior American military official who has reviewed the program, referring to Pakistani requests for reimbursement. "Then, I point back to the United States and say we didn't have to give them money this way."

Pakistani officials say they are incensed at what they see as American ingratitude for Pakistani counterterrorism efforts that have left about 1,000 Pakistani soldiers and police officers dead. They deny that any overcharging has occurred.

The $5 billion was provided through a program known as Coalition Support Funds, which reimburses Pakistan for conducting military operations to fight terrorism. Under a separate program, Pakistan receives $300 million per year in traditional American military financing that pays for equipment and training.

Civilian opponents of President Pervez Musharraf say he used the reimbursements to prop up his government. One European diplomat in Islamabad said the United States should have been more cautious with its aid.

"I wonder if the Americans have not been taken for a ride," said the diplomat, who spoke on condition of anonymity.

Lawmakers in Washington voted Thursday to put restrictions on the $300 million in military financing, and withheld $50 million of that money until Secretary of State Condoleezza Rice certifies that Islamabad has been restoring democratic rights since Mr. Musharraf lifted a state of emergency on Dec. 16. The measure had little effect on the far larger Coalition Support Funds reimbursements.

While it was a modest first step, any new conditions in aid could have a major effect on relations between the United States and Pakistan. Pakistan's military relies on Washington for roughly a quarter of its entire $4 billion budget.

In interviews, American and Pakistani officials acknowledged that they had never agreed on the strategic goals that should drive how the money was spent, or how the Pakistanis would prove that they were performing up to American expectations.

After Six Years, a Plan

Early last week, six years after President Bush first began pouring billions of dollars into Pakistan's military after the attacks of Sept. 11, 2001, the Pentagon completed a review that produced a classified plan to help the Pakistani military build an effective counterinsurgency force.

The plan, which now goes to the United States Embassy in Islamabad to carry out, seeks to focus American military aid toward specific equipment and training for Pakistani forces operating in the Federally Administered Tribal Areas where Qaeda leaders and local militants hold sway.

For their part, Pakistani officials angrily accused the United States of refusing to sell Pakistan the advanced helicopters, reconnaissance aircraft, radios and night-vision equipment it needs.

"There have been many aspects of equipment that we've been keen on getting," said Maj. Gen. Waheed Arshad, the Pakistani military's chief spokesman. "There have been many delays which have hampered this war against extremists."

United States military officials said the American military was so overstretched in Iraq and Afghanistan that it had no advanced helicopters to give to Pakistan. American law also restricts the export of sophisticated drones, night-vision goggles and other equipment for security reasons.

There is at least one area of agreement. Both sides say the reimbursements have failed substantially to increase the ability of Pakistani forces to mount comprehensive counterinsurgency operations.

Today, with several billion more in aid scheduled for the coming years, American officials estimate it will take at least three to five years to train and equip large numbers of army and Frontier Corps units, a paramilitary force now battling militants.

"I don't forecast any noticeable impact," a Defense Department official said. "It's pretty bleak."

The program's failures appear to be a sweeping setback for the administration as it approaches its final year in office. American intelligence officials say they believe that Mr. Bush is likely to leave office in January 2009 with the Qaeda leader Osama bin Laden still at large.

"We haven't had a good lead on his exact whereabouts in two years," another senior American military official lamented recently.

Al Qaeda More Active

This spring, American intelligence officials said the Qaeda leaders hiding in Pakistan's tribal areas had reconstituted their command structure and become increasingly active. Backed by Al Qaeda, pro-Taliban militants have expanded their influence from the remote border regions into the more populated parts of Pakistan this year and mounted a record number of suicide bombings in Pakistan and Afghanistan.

The Coalition Support Funds program was intended to prevent that from happening. Under the program, Pakistani military officials submit bills and are paid for supplies, wear and tear on equipment and other costs, as well as for the American use of three Pakistani air bases, according to American officials.

The United States since 2001 has deposited more than $5 billion in reimbursements into the Pakistani government's general budget account, the largest single portion of some $10 billion in aid to Islamabad in that time. Also included in that larger amount is $1.9 billion in security assistance, which Pakistan has used in part to buy new radios for troops, night-vision goggles and refurbished Cobra attack helicopters.

Pakistani officials say the Coalition Support Funds money goes into the national treasury to repay the government for money already spent on 100,000 troops deployed in the tribal areas. But American military officials say the funds do not reach the men who need it. That is especially the case for helicopter maintenance and poorly equipped Frontier Corps units.

During a recent visit to the border, an American official found members of the Frontier Corps "standing there in the snow in sandals," according to the official. Several were wearing World War I-era pith helmets and carrying barely functional Kalashnikov rifles with just 10 rounds of ammunition apiece.

"It is not making its way, for certain, we know, to the broader part of the armed forces which is carrying out the brunt of their operations on the border," the senior American military official said.

Members of Congress also express growing frustration with the Coalition Support Funds program.

"The situation in the tribal areas seems to be getting worse, not better, and that's despite a billion dollars in aid," said Senator Jack Reed, a Rhode Island Democrat on the Armed Services Committee who visited Pakistan in fall 2006. "Just pouring the money in and asking them to do this is not producing the results that we need."

Complaints Over Support

The most glaring example of the Coalition Support Funds program's failure is helicopter maintenance, according to both Pakistani and American officials. In an interview with The New York Times last month, Mr. Musharraf complained specifically that a lack of American spare parts and assistance had handicapped the country's 20 refurbished Vietnam-era Cobra attack helicopters provided by the United States.

"Ten days back, of 20 Cobra helicopters, we have only one that was serviceable," he said. "We need more support."

In interviews, American military officials scoffed at the statement. They said the United States had provided $8 million worth of Cobra parts in the past six months and would provide $4 million to $6 million in parts next year.

In addition, Washington reimbursed Pakistan $55 million for helicopter operation and maintenance costs for an eight-month period in 2007, American officials said. The United States later found out that the army received only $25 million from the Pakistani government for operations and maintenance of their entire national helicopter fleet for the whole of 2007.

American officials said they suspected that Pakistan had been overcharging for helicopter maintenance. Yet at the same time, maintenance of Pakistani helicopters is not being performed.

"Come March or April," one official said, "I fully expect catastrophic failure of a large part of their helicopter fleet."

For years, how money from the Coalition Support Funds was disbursed to the Pakistani government was veiled in secrecy. The size and scope of the payments to Pakistan was held so closely that one senior American military officer in Afghanistan said that he did not know that the administration was spending $1 billion a year until he attended a meeting in Islamabad in 2006.

"I was astounded," said the officer, who would not speak for attribution because he now holds another senior military post. "On one side of the border we were paying a billion to get very little done. On the other side of the border - the Afghan side - we were scrambling to find the funds to train an army that actually wanted to get something done."

But by mid-2007, the $1 billion-a-year figure became public, largely because of the objections of some military officials and defense experts who said that during an ill-fated peace treaty between the military and militants in the tribal areas in 2005 and 2006, the money kept flowing. Pakistan continued to submit receipts for reimbursement, even though Pakistani troops had stopped fighting.

Even then, however, American officials said there was little effort to rethink the purposes of the aid, or impose stricter controls.

Defense Department officials in the United States Embassy in Islamabad check the claims and ensure the receipts are well substantiated, officials said. The Pentagon's comptroller and State Department then also certify the claims.

Dov Zakheim, who served as the Pentagon's top financial officer until 2004 and helped set up the program in late 2001, said in a telephone interview that while he was at the department, the military carefully checked whether Pakistan carried out the operations it claimed and typically approved only 80 to 90 percent of each invoice.

But by July 2006, the Pentagon comptroller and Central Command were concerned enough about insufficient accountability to dispatch a team to Pakistan to lay out new requirements for more detailed invoices, a Pentagon spokesman said.

And by that fall, senior military officials at the embassy in Islamabad were telling visiting American lawmakers that the support fund program needed to be revamped to pay for specific objectives.

Inflated Invoices

Today, American officials say they believe that some of the invoices are inflated by as much as 30 percent.

"The claims that they submit are probably in some cases exaggerated and the amounts inflated," said the senior American military official who had reviewed the program. "When it comes to reimbursement for the cost of food, bunker material, barbed wire fences, those are much more susceptible to inflation."

Even the efforts to send Pakistan the refurbished Cobra helicopters, for instance, have cost more than expected and have fallen behind schedule. Pakistani forces have received only 12 of the 20 aircraft promised, and have been dissatisfied with the quality of them, a senior Pentagon official said.

One retired Pakistani military official said the American system of paying reimbursements did not allow for any forward planning. He expressed irritation that the Americans offered help, but not advanced American attack helicopters and drones, which are vital for counterinsurgency in the inaccessible tribal areas.

Praising Pakistan's new army chief, Gen. Ashfaq Parvez Kayani, who took command after Mr. Musharraf resigned as the head of the army last month, American military officials called for a complete restructuring of American military aid to Pakistan. They said that the United States should supply the same amount of overall military assistance to Pakistan, but also require that it be supplied under traditional military aid programs with tighter controls.

But they fear that members of Congress will react to the troubled reimbursement program by slashing military aid to Pakistan.

"It's not all or nothing," the senior American military official said. "You need to regulate and manage it for more benefit both to Pakistan and the United States."

David Rohde and Carlotta Gall reported from Islamabad, and Eric Schmitt and David E. Sanger from Washington.

http://www.spiegel.de/international/world/0,1518,525216,00.html

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