Foreign Aid

Banking on disaster: Pakistan officials accused of diverting funds from earthquake aid

(Aug. 23) Behind Pakistan’s calls for aid funds to deal with the fallout from devastating floods are allegations that previous aid funds were diverted for other uses, writes Brady Yauch.

As deadly floods continue to disrupt the lives of Pakistan’s hapless flood-afflicted millions, the county’s government is defending itself from allegations that during the last humanitarian crisis—the Kashmir earthquake in 2005—corrupt officials diverted hundreds of millions of dollars in foreign aid to other unidentified government expenditures. Donors are now thinking twice about handing over millions more to a country where, says one critic, the “weakness of the state has reached extraordinary levels.”

According to a recent report in the Daily Telegraph, senior officials in Pakistan say schools, hospitals, houses and roads that were supposed to be built with aid money from foreign governments and aid agencies after the deadly 2005 earthquake have yet to be completed—more than five years later. In total, donors gave £3.5 billion ($5.4 billion) to help rebuild battered infrastructure in the worst hit regions.

Pakistani officials recently admitted that more than £300 million ($467-million) of the aid given by donors has not been handed over to Earthquake Reconstruction and Rehabilitation Authority (ERRA)—set up after the disaster to lead reconstruction efforts. Instead, the report says, it’s been siphoned off into government coffers for other undetermined programs.

According to the Telegraph report, directors at ERRA were told in March of last year that 12 billion Pakistan Rupees ($140 million) was being diverted from their budget to other government projects.

“When we have the money we will pay you,” said one frustrated senior official, adding “all the money was given by Western governments, but they (Pakistani officials) said ‘we have so many other problems.'”

And then in June of this year, staff at ERRA were told their 2010-2011 budget of 43 billion Pakistan Rupees ($500 million) had been slashed to just 10 billion Rupees.

The frontline results of the missing earthquake aid are disheartening. In the town of Balakot—where as many as 5,000 of its 25,000 people were killed in the earthquake—thousands of families were promised that their entire town would be rebuilt, just six miles down the road, as the current location of their town sat on a dangerous fault line. But to date, not a single new road or building has been completed.

The Telegraph said when its reporters visited the “new town” they saw that “mechanical diggers stood rusting and security guards said there had been no work on the site for more than a year.” Officials have admitted that contractors have not been paid since April and were owed around $35 million.

Minutes from an ERRA meeting earlier this month show the agency has decided there would be “no further work on all on-going projects.” And an internal letter dated August 6th says that because of a “rationalization exercise” several offices will be shut and assets auctioned. The group’s staff is expected to be cut from 8000 to 300.

Pakistan’s finance secretary Salman Siddiq denies that any foreign aid money has been diverted.

With this year’s growing flood crisis, foreign donors were initially slow to hand aid money over to the Pakistani government. According to some reports, Pakistan is suffering from an “image crisis.” Filipe Ribeiro, Medecins sans Frontieres director-general, highlighted the “bad press” surrounding Pakistan as a reason for the slow flow of aid funds.

The trickle of aid in Pakistan is in stark contrast to the billions that quickly flowed into Haiti in January after the country suffered a major earthquake.

According to the opposition leader, Nawaz Sharif, even Pakistanis’ are suspicious of government corruption and are reluctant to donate funds for their fellow countrymen through government channels, saying, “even people in this country are not giving generously into this flood fund because they’re not too sure the money will be spent honestly.”

He also said the country should “stand on its own two feet.” He believes Pakistan has the necessary resources to rebuild infrastructure and homes destroyed in the floods—adding that it’s time for the country to take responsibility for the welfare of its people.

Their distrust of the government is unsurprising. According to one report, the weakness of the state is startling—with fewer than 5% of Pakistanis paying any tax, the government is unable to provide schools and medical care for millions of its citizens.

Accusations that the Pakistani government has diverted 2005 earthquake aid monies for other uses have dogged the government for years. In 2006, on the one-year anniversary of the earthquake, hundreds of survivors took the streets and staged and anti-graft protest, accusing reconstruction officials of corruption.

At the time, the international aid organization Oxfam claimed reconstruction was being hampered by, “administrative bottlenecks and corruption.”

Meanwhile, Pakistan’s Federal Minister for Finance and Revenues, Shaukat Tareen pointed out last year that if leaders fixed the nation’s broken tax system, it would not be forced to accept foreign aid from Western countries.

Transparency International currently ranks Pakistan 139 out of 180 on its annual corruption perception index (CPI).

Foreign Policy Magazine also recently placed Pakistan 10th on its list of failed states.

Brady Yauch, Probe International, August 23, 2010

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