Why U.S. Suspended Military Aid? |
| Written by Katherine J. Bunnage • Special Features • July 2011 |
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This recent directive from the Obama Administration - though rationalized as a consequence of Pakistan’s lackadaisical attitude – this suspension of aid comes at a fortuitous time for the U.S. Trickled with an apocalyptic prospect of defaulting on debt, looming countrywide foreclosures, and a rising Social Security and Medicare cost; U.S. needs to first take care of its own by combating problems such as unemployment, governmental debt and the need to raise the debt ceiling. According to a New York Times article published on July 9, the Obama administration is withholding about $800 million in military aid and equipment to Pakistan. This move is an effort by the Obama administration to punish Pakistan “…for expelling American military trainers and to press its army to fight militants more effectively.” Currently, the U.S. gives Pakistan $2 billion annually in military aid. Losing the $800 million, or over one-third of what Pakistan receives annually, will affect the nation in the following areas: around $300 million would have served as repayment to Pakistan for sending out more than 100,000 soldiers along the Afghan border to fight terrorism and hundreds of millions of dollars would have went towards helping to train Pakistani soldiers and military equipment. As of today, the United States has a national debt of $14.3 trillion. Here is a sobering fact: the U.S. national debt “…is larger than the total economies of China, the United Kingdom, and Australia combined.” In 2008, the International Monetary Fund estimated that the total gross domestic product of these three nations was $10.89 trillion. This massive debt has forced the U.S. to keep borrowing from Congress. Congress currently has the debt ceiling set at $14.294 trillion which is a substantial amount. Unfortunately, the United States government was only $25 million short of this amount in mid May. After this happened, Treasury Secretary Tim Geithner told Congress that he could keep the U.S. out of default until early August by deferring investments in federal retirement funds. Once again, Geithner also pushed for Congress to increase “…the country's legal borrowing limit soon ‘to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens.’” However, Congress is refusing to shift from their decision not to increase the debt ceiling. Many Republicans and some Democrats say the only way they will consider raising the debt ceiling is if Congress and President Barack Obama consent to considerable spending cuts and additional tactics to control debt. The August 2 deadline for the U.S. to evade a default is quickly approaching and the government is working hard to come to an agreement with Congress. President Obama met with congressional leaders on July 10 “…to break a partisan impasse over reducing the budget deficit and increasing the government’s $14.3 trillion debt limit.” Christine Lagarde, head of the International Monetary Fund, was on ABC’s “This Week with Christiane Amanpour” on July 10 and stated that not agreeing on lifting the U.S. debt ceiling will endanger worldwide economic constancy and that she expects an agreement because she doesn’t think that the U.S. will default. Lagarde said that a default “would be a real shock” to the world’s biggest economy. If a default happened, interest rates would jump causing “stock markets [to take] a huge hit [which would have] real nasty consequences, not just for the United States, but for the entire global economy, because the U.S. is such a big player and matters so much for other countries.” Yes, withholding money for military aid to Pakistan may lead to even more tense relations but that is a risk that the United States must be willing to take to avoid a default. The decision is a good move by President Obama since the U.S. can use the $800 million to start lowering their massive debt and have less of a need to ask Congress to raise the debt ceiling. Further reading: http://www.nytimes.com/2011/07/10/world/asia/10intel.html?pagewanted=2&hp  Katherine J. Bunnage has worked in the financial services industry for years. She studied political science at UCLA and now writes on international affairs for the LA Times, Boston Chronicle, and the Christian Science Monitor to name a few. Comments (0)
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