The Pakistan flood, economic damage and the truth about foreign aid

6 September 2010.  World to Win News Service.

The immediate loss of life due to the continuing flooding in Pakistan is tragedy enough, but the long-term impact may cause even greater disaster.

The devastated fields long the Indus and other rivers, some still under  water and others waterlogged and filled with mud and stones, constitute Pakistan’s agricultural heartland and the foundation of its economy. This season’s maize, cotton, rice and wheat, the main crops, as well as mango, banana and citrus fruits, have been lost. Worse, tens of millions of people have lost their future livelihoods, some for at least one or two seasons and others forever.

The Indus Valley stretches along approximately 650 kilometres in Sindh province, where it represents about 85 percent of the land under cultivation. People like Nizam Nathio, who had 10 acres of land and now lives in a refugee camp in Sukkur, lost all their cultivated land in the flood. “All my resources are gone and the next crop will be harvested in six months,” he says. “Will my family eat mud till then to survive?” Hakeem Kalhoro, a resident of the Naushero Feroz district, had a farm with 50 buffaloes. Now he has only one left. The floodwater has taken the rest. ”I used to sell 500 litres of milk a day, now I’m living on handouts.” (BBC Website, 19 August 2010)

Now Sindh is being hit by fresh flooding.  It is raining again, and previously contained flood lakes have broken through.

Pakistani officials say that about 3.6 million hectares of crops have been washed away, much of that in Sindh and Punjab provinces, and 1.2 million livestock killed, including ploughing animals. The World Bank estimates that crops worth $1 billion have been ruined. The UN World Food Programme says that almost ten million people are already short of food. Little clean water is available.

There is fear the number of people facing what these agencies call “food insecurity”  will mount and the whole country will face a massive food shortage and inflated prices in the coming years. Shortages of agricultural raw materials may also undermine textile and apparel manufacture, the country’s two main export sectors, and the food processing industry. In terms of this broader impact, no region in Pakistan remains untouched by the flood.

Millions of people no longer have a home to live in or land to till. As thousands more take up residence in the already overcrowded camps, hundreds of thousands of displaced people have moved to urban centres in Punjab and Sindh. Many are already making their way towards Karachi and Hyderabad. The people taking refuge in the camps were mostly tenant farmers. Many of them may become wage workers, at best, because they have little or nothing to go back to in their native villages, and some will not be allowed to go back.

At least one in ten of the country’s 166 million people have been directly affected, or even one in eight according to other estimates. Further, if there is much reconstruction, with the kind of projects and programme the capitalists of the world’s dominant imperialist countries have in mind, rural life and the whole national economy may become more dependent on the needs of world capitalism.

Apart from the devastating damage to crops and the impact of that on the whole economy, there has been extensive damage to the country’s infrastructure. It is estimated that nearly one million houses have been washed away or seriously damaged. Hundreds of kilometres of roads and jeep tracks and dozens of bridges have been destroyed in northern parts of Khyber Pakhtunkhwa (KP) province. The province has also lost a major irrigation dam, and another dam has been damaged.

The authorities immediately worked out the damages in the provinces in terms of money. The KP provincial authorities say that $2 billion is needed for immediate relief and the restoration of essential infrastructure. Meanwhile the government of Punjab province says it will need $1.3 billion for immediate relief and short-term rehabilitation of roads, dykes, the electricity network and the irrigation system. Analysts have said it will take many billions of dollars for Pakistan to recover from the damage caused by the flooding.

Where is all this money going to come from?  Pakistan already receives a large amount of aid and loans from the U.S. and other Western imperialist countries. In 2009, the United States spent some $7.5 billion on strategic, military and development projects in Pakistan. Pakistani government officials are used to collecting cash and getting credit from their imperialist sponsors.

When the floods overwhelmed Pakistan, its president Asif Ali Zardari was on a trip to Europe. He saw no point to go back home to lead emergency efforts. Instead, he preferred to continue his tour with the aim of getting foreign aid. Pakistan’s foreign minister, finance minister and other officials lost no time in launching similar efforts. The U.S. became the biggest donor, contributing more than  $150 million. The UK contributed almost  $100 million, Germany $32 million and the EU overall more than  $180 million. In total, the United Nations managed to get emergency relief funds from various countries totalling about $525 million.

There have also been various endeavours to provide long term aid for the reconstruction of Pakistan’s economy and infrastructure. For example on 2 September, Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), announced that “the Fund will provide around U.S. $450 million in immediate emergency financing to Pakistan to help the country manage the aftermath of the massive and devastating floods that have hit the country.” (IMF press release)

It was also reported that the World Bank, another international financial institution that coordinates the imperialists’ financial policies, raised its contribution to the flood-ravaged country to $1 billion from the originally pledged $900 million.

Some reality about foreign aid

There is a common belief that the donations raised or given by foreign states do not get through to the people who are in desperate need, and will not be spent on reconstruction either, because of a corrupt government. This is true to a large extent. In another words, there is a lot of dishonesty about the so-called aid to the victims of natural disasters.

In Birmingham, UK, a group of people of Pakistani origin decided to form their own charity and directly transfer the donations they raise to those in need, and give a transparent accounting on the Internet. They explained that they had decided on this course of action when they learned that only 25 percent of the donation they collected after the 2005 earthquake disaster in Pakistan actually found its way to that country. The other 75 percent was spent on the international aid bureaucracy and transport. There is no doubt that Mr 10 Percent (as people call President Zardari) and other corrupt elements are waiting to rake off what they consider their share.

But this is only one aspect of  what’s wrong with the aid donated to this and other ravaged countries. The donor countries, usually the richer imperialist countries, pretend that despite their economic problems – and now the financial crisis – they are ready to generously sacrifice to help out victims of natural disasters. But the lion’s share is given with the condition that it be spent on contracts with firms from the donor countries. A significant portion of what remains goes to people on the payrolls of donor country institutions.

This has become such common knowledge that even some mainstream media acknowledge it. “The donors also rarely point out that quite a lot of what they ‘give’ goes straight into their own citizens’ bank accounts in the form of salaries for aid consultants or contract payments to manufacturers of 4×4 vehicles.” (BBC Website, 18 August 2010)

However this is not the only or main problem. What is worse is that even if all the money were to go for aid, there are big doubts that these donations would do even a little to help the people get out of hell. In most if not all cases, this aid harms the national interests of the target country and its people.

Nowadays natural disasters have become a kind of new business for the rich countries. They like to put on a show about  their good will, while behind the scenes they consider such aid an investment to buy deeper dependency of the dominated countries and increase the exploitation of their resources and people. Those who give a larger amount hope to buy more influence. Unlike what the imperialists claim in public, such aid is not a burden on the dominant countries. On the contrary it is an opportunity to invest under what they consider favourable conditions, to reconstruct that country in the way they want. That is why the U.S., the head of the imperialists, has the power and the right to invest more. After that comes the UK, which has historically had a big influence in Pakistan and South Asia.

There are also international financial institutions such as the IMF and World Bank that coordinate the competition and cooperation among the main imperialists powers.

There is a long and ugly history behind such aid from the rich countries that became particularly important after the Second World War. And there have been countless articles and research papers on the harmful effects of such aid to the people, although these exposures have been done from different perspectives and even with different goals in mind.

In fact the financial and food aid provided by the rich countries between the 1960s and ’80s helped many African countries to fall deeper into poverty.  In many African, Asian and Latin American countries, there arose a big bureaucracy, along with other associated strata, that created a social base for this form of dependency, and consequently for imperialist domination in those countries. Pakistan was formed in 1949 and from the beginning was a strategic asset in the Cold War. The formation of a powerful bureaucracy in that country was a clear goal of Western policies during this period.

This imperialist approach towards Pakistan continues today because of the country’s strategic role in the region and particularly in the Afghanistan war. However, changes in the world situation since the collapse of the Soviet bloc, certain limitations in the structural form of third world states and the rise of discontent within the poor countries have led the imperialists to modify their form of aid disbursement.

The imperialists still act through direct contract with the governments but they have also given the IMF and World Bank a bigger role, and have created new channels –

NGOs and charity organisations – in order to achieve their interests. The destruction of a part of a country due to natural disaster provides the opportunity for the imperialists to readjust the country’s economic and political structure in a way that is consistent with the needs of world capitalism.

The IMF and World Bank, which are brokers for the Western imperialists, always tie their aid and loans to a string of conditions in the interests of the imperialist system. Since they believe that the earth could not exist without world capitalism, they don’t always hide this fact. Speaking of recent IMF emergency aid to Pakistan,  IMF head Strauss-Kahn said, “Our dialogue with Pakistan on the current Stand-By Arrangement is progressing and the authorities have expressed their intention to implement measures for the completion of the fifth review of the program later this year. We will stay in close contact as these efforts proceed. Completion of the fifth review will allow the Fund to disburse an additional $1.7 billion, bringing total IMF disbursements (including emergency assistance) to $2.2 billion in the second half of 2010.” This was confirmed by Abdul Hafeez Shaikh, Pakistan′s Finance Minister, who said, “Pakistan remains committed to the reform efforts that will put public finances on a sustainable basis and lay the foundations for growth.”  (IMF press release, 2 September 2010)

We will not discuss the details of these measures and conditions, but for the IMF “reform” is often a code word for austerity measures that reduce government spending, including subsides for people’s most basic needs such as bread and fuel, as well as other measures that facilitate more profitable imperialist investments and intervention in the economy of the country. As for “growth”, Pakistan’s economy grew at a comparatively high rate for much of the decade, and look where that has brought the country. Some elements of that growth (the forestry industry’s stripping of the forests around the upper reaches of the Indus, for example) actually contributed to the catastrophic damage caused by the flooding

For its part, the Pakistani government has no choice but to accept these conditions, because for all of its existence it has been dependent on foreign aid. Its army, the most powerful institution in the county, has been pumped up by billions of dollars in U.S. military aid. The IMF emergency assistance to Pakistan comes “on top of the $7.3 billion provided under the current Stand-By Arrangement, in place since November 2008”. (RTT News, 3 September 2010) And such a government has no choice but to increasingly rely on foreign funds in order to be able to function at all.

The result is more dependency, more selling out the country and, for many people, more poverty. So not only did the Pakistani government fail to take measures to protect the people or at least reduce the harm to their lives, but also, after that, more than ever it is feeding the country and the people to the wolves.

– end item-


An extra zero crept into the figure for the length of Pakistan’s Indus River stated in the ATWTNS packet for 30 August 2010. It is almost 3,200 kilometres long.

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