NGOs press U.S. on Pakistan aid package

By Sue Pleming

WASHINGTON (Reuters) - The $1.5 billion a year U.S. aid package proposed for Pakistan has raised hackles among many U.S. aid groups who worry that channeling big amounts of money through the country's fragile government will backfire.

U.S.-based groups with projects in Pakistan have met several times in recent weeks with Obama administration officials to voice concern over the handling of the five-year package, which will be tackled differently from previous aid.

"We have highlighted the risk of running large amounts of money through the government of Pakistan and that this would end up biting them," said one aid group executive.

Aside from worries U.S. funds are more likely to be lost to corruption if distributed through the government, there are also fears U.S.-based groups working in Pakistan will lose some of their own funding in favor of local NGOs and civil society groups.

A senior U.S. official, who declined to be named or quoted directly without government clearance, said there was a plan to move away from so-called big-box contracts favored by the Bush administration, which were often handled by big U.S. firms.

The official also said some contracts are likely to be cut, and so far one has been scrapped of the 40 or so U.S.-funded projects in Pakistan -- a water project run by a consortium called QED.

Questions are also being raised by some officials inside the Obama administration and last month a senior U.S. Agency for International Development economist wrote his opinions in a seldom-used "dissent channel" at the State Department.

The economist complained of "contradictory" objectives for the Pakistan program and said few Pakistani firms and nongovernmental organizations could meet the stringent financial management and audit requirements for U.S. funding.

But the senior U.S. official involved in the aid plan said accounting firms were being hired in Pakistan to "certify" ministries to ensure they were competent to handle the money and other safeguards would be in place in local NGOs.

OBAMA SIGNED

President Barack Obama signed the aid bill last month with the intent of funding a range of projects, from energy and schools to water management, roads and the judicial system.

The goal is to use aid to fight extremism but the aid plan, which still has to be appropriated by Congress, met an unexpected firestorm in Pakistan where questions of sovereignty were raised and the country's military opposed some conditions attached to the funds.

The State Department's aid coordinator for Pakistan, Robin Raphel, has nearly finished a review of current U.S.-funded projects there -- amounting to about $400 million a year -- and is drawing up a list of how new money should be spent.

Raphel is expected in Washington next week to answer questions from Congress as well as administration officials about the planned mix of aid and what safeguards will be used to meet legal requirements for U.S. taxpayer funds.

U.S. NGOs declined to publicly criticize the Obama administration but several have voiced frustration over what appeared to be a lack of coherence in the U.S. approach and fears money would not reach the right places.