III. Foreign Aid

Since 1952, Pakistan has received substantial amounts of foreign aid, both from the United States and from commonwealth countries under the Colombo plan, for economic development. Other agencies, including the World Bank and the Ford Foundation, have also aided Pakistan's development.

The following table sets forth the amount and nature of the aid extended to Pakistan 1950-55.

Offers of additional aid in the form of technical assistance have been received by Pakistan from Sweden and West Germany, but the outcome is not known.

The Pakistan Government describes the aid as "highly valuable, not only because it helps to provide the finance (and of course foreign exchange), but because it enables quicker import of capital and other developmental goods and brings with it the technical "know-how." 8

Pakistan, 1953-54.

IV. United States Aid

United States aid to Pakistan, indicated in the table on page 701, was first extended in 1951 as a small amount of technical assistance.

As in the case of India, the United States aid was initially administered by the Technical Cooperation Administration under the terms of the act for international development. This put TCA in the position of administering a program with large aspects of economic assistance under legislation designed only for technical assistance, permitting furnishing equipment and supplies only for demonstration purposes, and with an organization geared only for technical assistance programs.

In 1954, the dual character of the program was recognized in the authorization and appropriation and distinction was made between technical assistance and economic assistance. However, relatively large proportions of the funds appropriated for technical assistance have since been used to finance substantial quantities of supplies and equipment. This may illustrate the difficulty in distinguishing between economic and technical aid.

The level of what is termed the technical assistance program in Pakistan, actual or estimated, in round figures is set forth below:

Technical assistance allotment (in millions of dollars). $0.48 $10.6 $12.0 $8.16 $5.3

$10.0

These figures would indicate that the technical assistance program reached a peak in the 1953 fiscal year and thereafter declined. This, however, does not appear to be the case. The general program for Pakistan, as can be seen in the table on page 701, has steadily increased each year. It has, however, always in fact been an integrated program in which technical, economic, and development assistance all have been merged at the country level into a single program, or series of programs. The distinction between these types of aid which appears in the budget presentations after 1953 seems to have been superimposed at an administrative and policy level in order to facilitate the presentation to Congress. The United States program in Pakistan since 1952 has each year included support generally considered to be economic assistance, whether actually identified as such or not.

The program for fiscal year 1955 was illustrated to Congress in the amount of $20 million for development assistance, and the $6.7 million for technical assistance of which $5.3 million was authorized and

appropriated. This would have provided a total new program of $25.3 million for Pakistan in fiscal year 1955.

As the worsening economic (and political) situation became more apparent, the Pakistan Government in June, July, and August 1954, urgently requested additional emergency aid from the United States. The request was not unexpected or unforeseen. FOA witnesses had advised Congress of the possibility of additional aid for Pakistan as carly as May 6, 1954.

In response to the repeated requests of the Government of Pakistan for additional aid, a special FOA mission, headed by Mr. H. J. Heinz II, was dispatched to Pakistan to review the situation first hand. After its study, the mission recommended additional United States aid, above and beyond that already programed or appropriated, to the tune of about $75 million for fiscal year 1955 and also recommended that substantial aid be continued for the 2 succeeding years. The basic economic situation which led to the recommendations of the mission has already been discussed.

In determining the nature of the aid recommended, the Heinz mission carefully reviewed the position of the Pakistan Government with respect to its foreign exchange requirements and resources, placing special emphasis on the availability of United States agricultural surpluses to meet the needs of the overall economy and the development program.

The mission recommended that the $75 million in additional United States aid be in the form of commodities, mostly consumer goods. They prepared a rather detailed estimate of the amount and nature of the commodities recommended as aid, based on the request of the Pakistan Government and their own estimates.

The mission further recommended that the aid be accompanied by certain other actions, both on the part of the Pakistan Government and the United States Government.

With respect to United States action, the Heinz mission recommended among other things that:

(1) Aid be made available as soon as possible;

(2) Counterpart from the aid be used for economic development programs.

With respect to Pakistan, the mission recommended that:

(1) Aid be carefully administered, with full publicity, and in full cooperation with the United States;

(2) The United States be permitted to check the end-use of the aid;

(3) Pakistan make optimum use of its own resources, both domestic and foreign exchange;

(4) More effective means be established by the Government of Pakistan for scheduling and programing economic development; (5) That a United States-Pakistan treaty of commerce, friendship, and navigation be negotiated and other steps taken to encourage private investment.

The principal recommendations of the Heinz mission were apparently bought on the policy level and the expanded aid program was publicly announced October 21, 1954, while the Prime Minister of Pakistan was in Washington.

Following adoption of the Heinz mission report, the United States aid for Pakistan in fiscal year 1955 was as follows:

Fiscal Year 1955 Aid Programs for Pakistan

Emergency flood relief___

Technical assistance__

Economic development assistance (Authorized and appropriated as defense support)‒‒‒‒

Emergency commodity aid (about).

Total

Million

1 $10.5 5.3

220.0

* 76.0

111.8

1 $5 million supplied under Public Law 480 title II and $5.5 million under Public Law 665.

2 Loan.

3 $36 million plus supplied under Public Law 480 ($26 million plus under title I and $10 million under title II), and about $40 million under Public Law 665.

For the sake of convenience the program was generally described as $105 million. It should also be noted that this was only the economic and development assistance program. Military aid was not included. It appears that the nomenclature again shifted at the end of fiscal year 54 and the economic and development assistance program vanished and a defense support program sprang up to take its place.