Current State of Pak-US Relations

Importance of Pak-US ties

1. Economic Relations

The United States is Pakistan’s largest bilateral trading partner. In FY 2015 (July 2014 – June 2015), Pakistan’s total exports were estimated at $24.59 billion and imports at $41.43 billion. During this period, an amount of $18.72 billion was remitted to Pakistan by the overseas Pakistanis working in various countries and among them 14.4% were only from the US. It is estimated that at least 700,000 members of the Pakistani diaspora reside in the United States. In FY 2015, the United States accounted for approximately 16% of Pakistan’s exports, the second largest market behind the European Union, and $1.20 billion of its imports. Bilateral trade between the United States and Pakistan exceeded $5.1 billion in FY 2015. The United States is also one of the top sources of foreign direct investment to Pakistan, with $209 million in FY 2015. Pakistan has taken steps over the years to liberalize its trade and investment regimes, either unilaterally or in the context of commitments made with the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank. It is relatively open to foreign investment, but its ranking in the World Bank’s Doing Business Index remains low, largely due to energy, security, and governance challenges. In May 2014, following Prime Minister Nawaz Sharif’s visit to Washington, the US and Pakistan established a Joint Action Plan to expand bilateral trade and investment over five years. In March 2015, the United States and Pakistan organized the third US-Pakistan business opportunities conference, headlined by US Secretary of Commerce Penny Priztker and Pakistan’s Finance Minister Ishaq Dar in Islamabad. Major US investments are concentrated in fast-moving consumer goods, construction, chemicals, energy, transportation, and communications.

2. Civilian Assistance

The US Congress passed the Enhanced Partnership with Pakistan Act (often referred to as “Kerry-Lugar-Berman,” or “KLB,” after its co-sponsors) in October 2009 in order to demonstrate the US long-term commitment to cooperation with the Pakistani people and their civilian institutions. Since the passage of KLB, the US government has committed over $5 billion in civilian assistance to Pakistan, and also over $1 billion in emergency humanitarian assistance for disasters like the 2010 floods.

US civilian assistance to Pakistan facilitates cooperation fostering a more stable, democratic, and prosperous Pakistan and region, which is in the interest of both countries. It is focused on five priority areas: energy; economic growth, including agriculture; community stabilization of underdeveloped areas vulnerable to violent extremism; education; and health. These priorities were determined in consultation with the government of Pakistan. The US implements programs with Pakistani partners, including the government of Pakistan, civil society, and private sector actors, to increase local capacity and promote sustainability of efforts. To date, US contributions have added over 1,600 megawatts to Pakistan’s electricity grid through infrastructure upgrades, rehabilitation, and policy consultation; led to the launch of the Pakistan Private Investment Initiative (PPII), which will provide seed funding to small- and medium-sized enterprises in Pakistan; built or reconstructed roughly 1,000 schools; and funded about 1,100 kilometers of roads in the Federally Administered Tribal Areas (FATA) and Khyber Pakhtunkhwa. In January 2015 the US pledged $250 million to help Pakistan facilitate the relief, reconstruction, and return of FATA communities displaced by counterterrorism operations.

3. Security Assistance

US security assistance to Pakistan is focused on strengthening the counterterrorism (CT) and counterinsurgency (COIN) capabilities of the Pakistan security forces, and promoting closer security ties and interoperability with the United States. US security assistance has directly supported Pakistan’s CT operations in the FATA. Foreign Military Financing (FMF) ($265 million in FY 2015) promotes the development of Pakistan’s long-term COIN/CT capabilities, particularly in FATA, and improves Pakistan’s ability to participate in maritime security operations and counter-maritime piracy. International Military Education and Training (IMET) assistance to Pakistan ($5 million in FY 2015) enhances the professionalism of Pakistan’s military and strengthens long-term military relationships between Pakistan and the United States.

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