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[Senate Report 111-33]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 85
111th Congress                                                   Report
                                 SENATE
 1st Session                                                     111-33

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             ENHANCED PARTNERSHIP WITH PAKISTAN ACT OF 2009

                                _______
                                

                 June 23, 2009.--Ordered to be printed

                                _______
                                

          Mr. Kerry, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

                         [To accompany S. 962]

    The Committee on Foreign Relations, having had under 
consideration a bill S. 962, to authorize appropriations for 
fiscal years 2009 through 2013 to promote an enhanced strategic 
partnership with Pakistan and its people, and for other 
purposes, reports favorably thereon with amendments and 
recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Committee Action.................................................1
III. Discussion.......................................................2
 IV. Cost Estimate....................................................7
  V. Evaluation of Regulatory Impact.................................10
 VI. Changes in Existing Law.........................................10

                               I. Purpose

    The purpose of this legislation is to authorize 
appropriations for fiscal years 2009 through 2013 to promote an 
enhanced strategic partnership with Pakistan and its people.

                          II. Committee Action

    S. 962 was introduced on May 4, 2009 by Senators Kerry and 
Lugar. At a meeting on June 16, 2009, a Managers' Package of 
amendments was adopted by voice vote. By a roll-call vote of 
16-0, the committee ordered the bill favorably reported. 
Members voting ``aye'' were Sens. Kerry, Lugar, Dodd (by 
proxy), Corker, Boxer (by proxy), Feingold, Menendez, Risch, 
DeMint, Casey, Isaakson, Gillibrand, Cardin, Barrasso (by 
proxy), Shaheen, and Kaufman.

                            III. Discussion

                               A. SUMMARY

    S. 962, the Enhanced Partnership with Pakistan Act of 2009, 
seeks to transform the relationship between the United States 
and Pakistan from a transactional, tactically-driven set of 
short-term exercises in crisis-management, into a deeper, 
broader, long-term strategic engagement. The legislation aims 
to properly balance the relationship between United States and 
Pakistan by acknowledging and supporting the national security 
interests of the United States as well as our economic and 
geopolitical interests. United States economic and military 
assistance for Pakistan enhances our mutual security while 
helping to build economic and political stability in a country 
important in a regional and strategic sense. Economic 
assistance is as critical an element as strengthening the 
capacity of the Pakistan military to counter terrorism, 
especially for projects that provide direct and concrete 
benefit to Pakistani citizens as a whole. The overall level of 
economic assistance authorized would be raised substantially, 
with the bulk of this aid intended for projects such as 
schools, roads, medical clinics, and infrastructure 
development.
    Specifically, the legislation:

   Authorizes $7.5 billion over the next 5 fiscal years ($1.5 
        billion annually) under the Foreign Assistance Act.

   Advocates an additional $7.5 billion over the subsequent 5 
        years, subject to improvements in the political and 
        economic climate in Pakistan.

   Conditions military grant assistance and Foreign Military 
        Financing assistance beginning in 2010, and Foreign 
        Military Sales beginning in 2012, on certification by 
        Secretary of State that Pakistani security forces:

           are making concerted efforts to prevent al Qaeda 
        and associated terrorist groups (including Lashkar-e 
        Taiba and Jaish-e Muhammad) from operating in the 
        territory of Pakistan;

           are making concerted efforts to prevent the Taliban 
        from using the territory of Pakistan as a sanctuary 
        from which to launch attacks within Afghanistan; and

           are not materially interfering in the political or 
        judicial processes of Pakistan.

   Prioritizes assistance for the following general purposes:

           Just and democratic governance;

           Economic development; and

           Investment in people.

   Requires the following reports:

           Secretary of State must within 45 days of passage 
        of the legislation, or September 15, 2009, provide a 
        comprehensive Pakistan Assistance Strategy Report to 
        Congress, that contains specific benchmarks to measure 
        progress on a qualitative basis. The submission of the 
        report is to be preceded by 15 day consultation period 
        for Congress;

           Secretary of State must within 90 days of the 
        submission of the Pakistan Assistance Strategy Report, 
        submit the first of ongoing semi-annual reports to 
        Congress that describe the uses or intended uses and 
        impact of assistance authorized for Pakistan;

           Secretary of State (in consultation with other 
        officials) must develop and provide to Congress a 
        comprehensive strategy for the Afghan-Pakistan border 
        area;

           The Secretary of State, after consultation with the 
        Secretary of Defense and the Director of National 
        Intelligence, must submit an annual report on security 
        forces' progress.

   Urges accountability and transparent reporting of Coalition 
        Support Funds.

   Urges a reorientation of engagement towards the Pakistani 
        people rather than merely towards the Pakistani 
        government (civilian or military)

    The significant increase in assistance authorized by this 
legislation is intended to broaden and deepen non-military 
programs across a country of some 176 million people, where 
less than 50 percent of the population can read and write and 
whose Global Hunger Index ranking is nearly on par with that of 
North Korea. The legislation highlights the essential economic 
assistance pillar to achieve mutual goals of improved human 
security through basic services, education, economic 
opportunity, political participation and human rights. The 
legislation contains Sense of Congress language urging that 
security-related assistance be provided in close coordination 
with the Government of Pakistan, designed to improve the 
Government's capabilities in areas of mutual concern, and 
maintained at a level that will bring significant gains in 
counterterrorism, counterinsurgency, and regional harmony. The 
legislation does not preclude an increase or a decrease in the 
level of security-related aid. Any use of funds contained in 
this legislation for the purpose of augmenting Pakistan's 
nuclear weapons program would be directly contrary to 
Congressional intent.
    The legislation mandates that funds appropriated or 
otherwise made available to carry out section 5 shall be 
utilized to the maximum extent possible as direct expenditures 
for economic and development projects and programs.

                    B. ANALYSIS OF SELECTED SECTIONS

Section 5.--Use of Funds

    In light of the large increase in assistance authorized by 
this legislation, the committee attaches great importance to 
ensuring that the assistance authorized will be spent 
effectively and efficiently. The legislation contains a number 
of provisions designed to promote this objective.

   Before any money authorized by the legislation may be 
        spent, the legislation requires the Administration to 
        develop and provide to the Congress an assistance 
        strategy, setting out the objectives to be achieved 
        with the assistance, the programs and projects the 
        Administration intends to implement to achieve these 
        objectives, and the criteria that the Administration 
        will use to measure the effectiveness of the 
        assistance. The Administration must consult with the 
        Congress on its proposed strategy, including the 
        criteria and benchmarks that will be used to assess the 
        effectiveness of the assistance, 15 days before 
        obligating any assistance authorized under the 
        legislation.

   Once money begins to flow, the legislation requires that 
        the Administration report every six months on how the 
        money is spent and what impact it is having, measured 
        with reference to the criteria the Administration 
        establishes in its strategy report.

   Before the Administration may spend more than half of the 
        $1.5 billion authorized in any fiscal year, the 
        legislation requires that it certify that the 
        assistance provided to date has made or is making 
        substantial progress toward the principal objectives of 
        assistance contained in the Administration's strategy 
        report, subject to a waiver that may be exercised to 
        permit assistance in the national security interests of 
        the United States.

   The legislation permits up to $30 million annually to be 
        made available to the Inspectors General of the 
        Department of State, the United States Agency for 
        International Development and other relevant Agencies 
        to provide audits and program reviews of projects 
        funded pursuant to this section. These funds are in 
        addition to other funds already available to these 
        offices in their regular budgets. The committee has 
        provided these additional resources because it believes 
        that the significant growth of assistance contemplated 
        by this Act warrants close oversight by Inspectors 
        General. In providing these funds, the committee also 
        attaches importance to developing the capacities of the 
        existing Inspector General offices in federal agencies 
        to oversee major assistance programs, rather than 
        seeking to create ad hoc oversight mechanisms.

   The legislation also requires the Comptroller General to 
        submit a report annually on the implementation of the 
        Administration's assistance strategy, including any GAO 
        recommendations for improving efficiency or 
        effectiveness.

    The legislation also provides that up to $10 million 
annually may be used for administrative expenses of Federal 
departments and agencies in connection with the provision of 
assistance authorized by this section. These funds are intended 
to supplement, not replace, existing funds authorized and 
appropriated for such purposes. It is the intent of this 
legislation that this provision provides important flexibility 
to the U.S. Agency for International Development, which has a 
limited overall budget for operational expenses. Given the 
magnitude of the assistance and the critical nature of the 
purpose of such funds, the committee expects that the Agency 
will, however, endeavor to keep administrative expenses to a 
minimum.
    The legislation provides that certain reporting 
requirements linked to the use of authorized assistance funds 
will sunset on September 30, 2013, the end of the last fiscal 
year for which funds are authorized in the bill. The committee 
intends that in the event additional assistance is authorized 
for fiscal years after 2013, as is specifically contemplated by 
Section 5(d) of the bill, appropriate extensions of these 
reporting requirements will accompany the authorization for 
such additional assistance.

Subsection (F)(1)(A).--Just and Democratic Governance

    Pakistan has experienced a series of governance swings 
between military and civilian rule and punctuated by coups and 
emergency decrees. Democratic governance with independent 
government institutions have been limited in time and impact. 
United States assistance authorized by this Act is intended to 
provide support for good governance by helping to build the 
capacity of independent, fair, and capable institutions of 
government such as the judiciary and parliament. This Act 
intends that up to $100 million annually of the authorized 
funds be used for police reform, equipping, and training.

Subsection (F)(1)(B).--Economic Freedom

    Pakistan ranks 136 out of 171 in the Human Development 
Index (HDI) and despite GDP growth exceeding 6 percent in 
recent years, is currently in the midst of a financial crisis 
associated with the global economic recession. Nearly 25 
percent fall below the poverty line, and population growth 
rates are exceeding the economic capacity to sustain poverty 
reduction and development gains made since the turn of the 
century. United States assistance authorized in this Act is 
intended to provide additional support, considering the 
magnitude of international assistance for the same purposes, to 
sustain strong economic growth. Rural and agricultural 
development are key elements of Pakistan's overall economic 
progress and such programs should include support for micro-
finance, small and medium-sized infrastructure projects as well 
as effective energy and water developments. A key priority for 
United States assistance should be the strengthening of cross-
border trade and appropriate economic development, especially 
along the border regions with Afghanistan.

Subsection (F)(1)(C).--Investments in People

                    PRIMARY AND SECONDARY EDUCATION

    One of the most critical long-term investments in any 
society is that made in the education of its children. Pakistan 
has significant areas of potential in building a comprehensive 
public education system. Nationally, the literacy rate is less 
than 50 percent, but women's literacy is less than 37 percent. 
In some areas of the country women's literacy is no more than 3 
percent. In authorizing assistance for broad-based public 
primary and secondary education and vocational training for 
both boys and girls, the Act highlights concern for the lack of 
modern educational opportunities and the significant gender 
disparity in school enrollment in Pakistan. The Act intends 
that assistance facilitate access to education for all children 
in Pakistan, and especially for young women and girls, in order 
to raise literacy rates and decrease drop-out rates. Implicit 
in the rationale of the Act is an understanding that the 
provision of school meals can promote school enrollment and 
increasing academic performance, and programs to provide school 
meals would be in keeping with the intent of the Act.

                            HIGHER EDUCATION

    If successful, United States assistance will help drive 
demand for higher education in Pakistan. The existing system of 
tertiary education is inadequate to the current demand for 
civil servants, entrepreneurs, doctors, teachers and 
professionals of all kinds, and will only continue to fall 
short given rapid rates of growth. With a population exceeding 
175 million, of which 38 percent are younger than 15, and an 
annual population growth rate exceeding 2 percent, Pakistan's 
development will require more vocational schools, colleges and 
universities. Since 2003 USAID has supported the revitalization 
of the well-respected 145-year-old Forman Christian College in 
Lahore, after 30 years of neglect as a nationalized 
institution. This chartered university provides a much-valued 
American style four year baccalaureate program, as well as 
Master's degrees, as a non-sectarian, co-educational 
institution for over 4,000 students. It has garnered the 
support of the Higher Education Commission of Pakistan and 
which has indicated its intent to rapidly expand access to 
higher education. Assistance under this Act is intended to 
continue to enable and expand programs and institutions of 
higher education such as FCC.

                          AMERICAN UNIVERSITY

    Whereas scholarship and fellowship programs are an 
important part of United States assistance and positively 
impact relations between our people, it is cost-effective to 
develop local capacity in American-style higher education in 
order to broaden cultural understanding. There is a long and 
remarkable history of American schools and universities around 
the world. Universities that emulate American curricula such as 
in Beirut, Lebanon and Cairo, Egypt, have been successfully 
drawing talented students and producing leaders in government, 
business, science and education. They have produced leaders 
such as Salam Fayyad, the Palestinian Prime Minister; Ali Al-
Naimi, Saudi Arabian Minister of Petroleum; Dr. Ashraf Ghani, 
former Afghan Finance Minister and World Bank official; and 
former United States Ambassador to the United Nations Zalmay 
Khalilzad. It is intended that assistance under this Act be 
used to explore the opportunity to establish an American 
University in Pakistan.

Section 7.--Coalition Support Funds

    Coalition Support Funds provide essential support for 
military operations of the Government of Pakistan to protect 
U.S. and allied logistic operations in support of Operation 
Enduring Freedom. Such resources are of such a magnitude that 
the process must be transparent and the monitoring must provide 
the highest degree of assurance that the program is properly 
being used for the purposes intended. This section includes a 
provision that the Secretary of Defense should submit to 
Congress a semi-annual report on the use of Coalition Support 
Funds.

                             C. CONCLUSION

    A premise for this plan is a simple thought-exercise: 
Following the earthquake in Kashmir in 2005, the United States 
devoted nearly $1 billion to relief efforts, and reaped a 
greater reward in popular support than any amount of public 
diplomacy could generate. The sight of American servicemen and 
women saving the lives of Pakistani citizens was worth many 
times the cost of operating the Chinook helicopters. For a 
brief period, America was challenging the terrorists in a true 
battle of hearts and minds--and winning. S. 962 seeks to 
sustain such a relationship and thereby materially and clearly 
demonstrate the true friendship of the American people for the 
Pakistani people without waiting for a natural (or man-made) 
disaster to compel a response.

                            V. Cost Estimate

    In accordance with Rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the committee provides this 
estimate of the costs of this legislation prepared by the 
Congressional Budget Office.

                            United States Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 19, 2009.

Hon. John F. Kerry,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 962, the Enhanced 
Partnership With Pakistan Act of 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John Chin.
          Sincerely,
                                       Douglas W. Elmendorf

                                ------                                

               Congressional Budget Office Cost Estimate

                                                     June 19, 2009.

                                 S. 962

             Enhanced Partnership With Pakistan Act of 2009

  AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN RELATIONS ON 
                             JUNE 16, 2009

                                SUMMARY

    S. 962 would authorize the appropriation of up to $1.5 
billion a year over the 2009-2013 period--a total of up to $7.5 
billion over five years--for nonsecurity assistance to 
Pakistan. CBO estimates that implementing S. 962 would cost 
about $4.8 billion over the 2010-2014 period, assuming 
appropriation of the authorized amounts. Enacting the bill 
would not affect direct spending or revenues.
    S. 962 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    S. 962 could impose a private-sector mandate, as defined in 
UMRA, on exporters of major defense equipment. If the Secretary 
of State does not certify that the security forces of Pakistan 
have met certain security standards by 2012 or does not waive 
the requirement for such certification, the bill would prohibit 
the export of major defense equipment to Pakistan. CBO cannot 
determine whether the cost of the mandate, if imposed, would 
exceed the annual threshold established in UMRA for private-
sector mandates ($139 million in 2009, adjusted annually for 
inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of S. 962 is shown in the 
following table. The costs of this legislation fall within 
budget function 150 (international affairs).

                           Changes in Spending Subject to Appropriation Due to S. 962*
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                       2010      2011      2012      2013      2014    2010-2014
----------------------------------------------------------------------------------------------------------------
Authorization Level................................    1,500     1,500     1,500     1,500         0      6,000
Estimated Outlays..................................      301       858     1,150     1,355     1,151      4,815
----------------------------------------------------------------------------------------------------------------
*In addition, S. 962 would authorize the appropriation of up to $1.5 billion for nonsecurity assistance to
  Pakistan in 2009. However, the Congress has already appropriated amounts for nonsecurity assistance to
  Pakistan for fiscal year 2009, enacted in the Omnibus Appropriations Act, 2009 (Public Law 111-8) on March 11,
  2009. Additional appropriations for such assistance for fiscal year 2009 will be provided by the Supplemental
  Appropriations Act, 2009 (H.R. 2346), which was cleared by the Congress on June 18, 2009. CBO assumes there
  would be no additional funding for assistance to Pakistan for this year.

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that the bill will be 
enacted near the end of fiscal year 2009, that the authorized 
amounts will be appropriated each fiscal year over the 2010-
2014 period, and that outlays will follow historical spending 
patterns for existing programs.

Assistance to Pakistan

    Section 5 would authorize the appropriation of up to $1.5 
billion a year over the 2009-2013 period for assistance 
programs in Pakistan and would require the administration to 
prepare semi-annual reports on the implementation of those 
programs. In general, those funds would be used for projects 
intended to benefit the people of Pakistan, including those 
that promote democratic governance, economic development, civil 
society, and recovery from internal conflict. In addition, of 
the amounts authorized for a fiscal year, up to $10 million 
could be used to administer those programs, up to $30 million 
could be used to audit those programs, and up to $5 million 
could be used to establish a Chief of Mission Fund that would 
address urgent humanitarian needs.
    CBO expects that the $1.5 billion authorized to be 
appropriated for 2009 would not be provided. The Congress has 
already appropriated amounts for nonsecurity assistance to 
Pakistan for 2009, enacted in the Omnibus Appropriations Act, 
2009 (Public Law 111-8) on March 11, 2009. Additional 
appropriations for such assistance for 2009 will be provided by 
the Supplemental Appropriations Act, 2009 (H.R. 2346), which 
was cleared by the Congress on June 18, 2009. In total, those 
appropriations provide approximately $1.3 billion for 
nonsecurity assistance to Pakistan in 2009. CBO assumes there 
would be no additional funding for assistance to Pakistan for 
this year. Assuming appropriation of the amounts authorized for 
2010 through 2014, CBO estimates that implementing this 
provision would cost about $4.8 billion over that period.

Limitations on Nonsecurity Assistance

    The bill would limit the availability of amounts authorized 
to be appropriated in section 5 unless the Secretary of State 
submits to the appropriate congressional committees a report 
describing U.S. policy and strategy with respect to assistance 
to Pakistan. In addition, the bill would limit the availability 
to half of the amounts authorized to be appropriated each year 
unless the President's Special Representative to Afghanistan 
and Pakistan certifies that assistance provided under the Act 
is helping Pakistan make substantial progress toward achieving 
the objectives contained in the Pakistan Assistance Strategy 
Report mentioned above. The bill would allow the Secretary of 
State to waive that certification requirement in the interests 
of national security. CBO expects that the Secretary would 
exercise the waiver authority if the President's Special 
Representative were unable to make the necessary certification, 
and thus, implementing that provision would have no significant 
effect on spending subject to appropriation.

Limitations on Security Assistance

    Section 6 would limit certain military assistance after 
2009 and arms transfers after 2011 to Pakistan unless the 
Secretary of State certifies that Pakistani security forces are 
not materially interfering in their country's judicial or 
political processes and that they are making concerted efforts 
to prevent terrorist and militant groups from operating in 
Pakistan or using it as a sanctuary. The bill would allow the 
Secretary to waive those certification requirements in the 
interests of national security. CBO expects that the Secretary 
would exercise the waiver authority if she were unable to make 
the necessary certification, and thus, implementing that 
section would have no significant effect on spending subject to 
appropriation.

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    S. 962 contains no intergovernmental mandates as defined in 
UMRA and would not affect the budgets of state, local, or 
tribal governments.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    S. 962 could impose a private-sector mandate, as defined in 
UMRA, on exporters of major defense equipment to Pakistan if 
the Secretary of State does not certify that the security 
forces of Pakistan have met certain security standards by 
fiscal year 2012. If the Secretary does not issue such 
certification, the bill would prohibit the necessary licenses 
and programs for private entities to export major defense 
equipment to Pakistan. However, the bill would allow the 
Secretary of State to waive the prohibition of exports of major 
defense equipment if the Secretary determines it is important 
to the national security interests of the United States to 
provide such waiver. CBO expects that the Secretary would 
exercise such a waiver. In the event that such exports are 
prohibited, the cost to comply with the mandate would be the 
foregone net income attributed to the sale of major defense 
equipment to Pakistan. According to industry experts and the 
Defense Security Cooperation Agency, the value of major defense 
equipment exported to Pakistan has varied from hundreds of 
millions of dollars per year to billions of dollars per year. 
Because of uncertainty about the future income from such sales, 
CBO cannot determine whether the cost of the mandate, if 
imposed, would exceed the annual threshold established in UMRA 
for private-sector mandates ($139 million in 2009, adjusted 
annually for inflation).

Estimate prepared by:

    Federal Costs: John Chin.
    Impact on State, Local, and Tribal Governments: Burke 
Doherty.
    Impact on the Private Sector: Jacob Kuipers.

Estimate approved by:

    Theresa Gullo, Deputy Assistant Director for Budget 
Analysis.

                   V. Evaluation of Regulatory Impact

    Pursuant to Rule XXVI, paragraph 11(b) of the Standing 
Rules of the Senate, the committee has determined that there is 
no regulatory impact as a result of this legislation.

                      VI. Changes in Existing Law

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, the committee notes that no 
changes to existing law are made by this bill.

                                  
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