Change in Pak-US relations after 9/11
Pakistan’s relationship with the US changed in a big way after the September 11 attacks (9/11). Until then, because the US and Pakistan have different strategic goals, their relationship could at best be called a “partnership of convenience.” But President George W. Bush’s “either with us or against us” threat on November 6, 2001, and President Pervez Musharraf’s quick “yes” under pressure made it into a forced marriage. The US asked Pakistan to work with the US-led coalition against the Taliban government and Al-Qaeda in Afghanistan, and Pakistan agreed. Pakistan thought that it would get help with its money problems as a “dowry.”
Within a few days, the US gave a total of $673 million in grants as part of a plan to help. It also changed the terms of a $379 million debt and made it possible for the US Agency for International Development (US AID) to restart its office in Pakistan after being closed for seven years. In August 2002, the US changed how it would pay Pakistan its $ 3 billion loan. This was made up of $2.3 billion in official development aid, which had to be paid back over 38 years, and $700 million in non-official development aid, which had to be paid back over 23 years. Japan, Britain, and other countries in Europe did the same.
This also made it possible for Pakistan’s foreign debt to be rescheduled in a way that was good for the country, and aid packages were sent to help fight poverty and help refugees. The IMF gave Pakistan a loan of $1.3 billion to help it fight poverty and make up for the damage the war in Afghanistan has done to its economy. After the Poverty Reduction Growth Facility, there was a rearrangement by the Paris Club. Few countries, like Poland, Jordan, Egypt, and Yugoslavia, were able to do what Pakistan did in the Paris Club. Its total debt, which was about $12.5 billion, was reset to be paid off over 38 years for the concessional part and 23 years for the non-concessional part, with 15 and 5 years of grace, respectively. To get an idea of how much of a relief this is, just think about how nearly half of this debt was set to be paid off in the next 5–6 years.
Pakistan agreed to work with the US-led alliance against the Taliban government in Afghanistan and the Al-Qaeda group
Pakistan named one of the US’s most important non-NATO allies
Both the Asian Development Bank and the World Bank decided to give about $1.5 billion through their “concessional windows” to help with the reforms over the next few years. Pakistan was able to get better access for its goods to markets in Europe, which would mean a nett gain of $400 million per year. The US said that they would do something similar. In February 2002, the White House said that it wanted to work with Congress to give Pakistan more help, especially in the areas of debt relief, greater trade, educational reform, and cooperation in defence and security. Before the end of 2003, President Bush agreed to give Pakistan a break on its debt of up to $1 billion. Around the same time, US help said it would give Pakistan $50 million a year in help, and by 2004, that amount would go up to $80 million. In August 2002, it decided to give Pakistan a grant of $100 million to help pay for educational programmes there over the next five years. Pakistan is one of the two countries where the US AID Mission Chief said, “We will have much stronger programmes.” The other country is Afghanistan.
Sources outside of the government say that Pakistan’s economy had a “solid macroeconomic recovery (within)… five years.” Given Pakistan’s low level of growth, the long-term outlook was still uncertain, but the medium-term outlook for creating jobs and reducing poverty was the best it had been in more than a decade. Since 2001, the amount of people living in poverty has gone down by 10%, and Islamabad has slowly increased spending on development, including a 52% real increase in the budget for development in FY07, which was a step that needed to be taken to fix the underdevelopment of its social sector as a whole. The fiscal imbalance seemed to be manageable. It was caused by chronically low tax collections and increased spending, such as the costs of rebuilding after the earthquake in October 2005.. In 2004 and 2006, the growth of GDP stayed between 6 and 8 percent. This was due to growth in the industry and service sectors. The biggest threat to the economy was still inflation, which jumped to more than 9% in 2005 and then went down to 7.9% in 2006. The central bank tried to keep growth going by making money tighter and raising interest rates in 2006. The steady money that workers sent home from abroad ($10.95 billion in 2005) helped the country’s foreign exchange savings.
In the defence area, too, steps were taken to get cooperation going again. In July 2002, the US said it would sell six cargo planes to Pakistan. This would be the first big military sale between the two countries since 1990. Six planes, equipment, services, and training sites were part of the $75 million deal. “The proposed sale will (improve) the United States’ foreign policy and national security,” the Pentagon said in defence of the move. Pakistan would be able to help the US-led military operation against the Taliban and Osama bin Laden’s Al Qaeda network more if it had these planes.
Within five years, the wheel went all the way around, bringing back memories of how things were during the height of the Afghan Jehad. Pakistan was named one of the US’s most important non-NATO allies. The Defence Security Cooperation Agency told Congress on June 28, 2006, that it planned to give Pakistan a $5.1 billion Foreign Military Sales package to update the F-16s, which were the best fighters in the PAF. The US company Lockheed Martin was given a $ 144 million deal to start making 18 F-16C/Ds for Pakistan. The project was supposed to be finished by November 2010. Conformal fuel tanks, helmet-mounted cueing systems, Link 16 data links, and electronic warfare tools were all part of the package. 500 Raytheon AIM-120C5, 200 AIM-9M Sidewinder air-to-air missiles, and 2,100 precision-guided bombs were part of a $650 million deal for weapons.
In December 2006, Pakistan Air Force and Tusas Aerospace Industries of Turkey signed an agreement to update up to 32 F-16A/Bs. Also, the Pentagon told Congress that it might sell three P-3 planes with airborne early warning systems (AWACS) worth $855 million to Pakistan. “Pakistan plans to use the planes with the E-2C Hawkeye Airborne Early Warning System for its naval forces,” says the Pentagon. Pakistan would be better able to stop terrorists and drug dealers from entering or leaving the country with the help of the updated planes.
Pakistan did get more money and better weapons because of the gift. But in exchange, it had to help the US-led International Security Assistance Force (ISAF) fight the Taliban and Al-Qaida in Afghanistan without any conditions. It did this, which more than made up for what it lost.