Tax Payer Money at Work

Preliminary Observations on the Use and Oversight of U.S. Coalition Support Funds Provided to Pakistan

According to U.S. embassy officials in Islamabad and unclassified U.S. intelligence documents, since 2002, al Qaeda and the Taliban have used Pakistan's Federally Administered Tribal Areas (FATA) and the border region to attack Pakistani, Afghan, U.S. and coalition troops; plan and train for attacks against U.S. interests; destabilize Pakistan; and spread radical Islamist ideologies that threaten U.S. interests. Since October 2001, the United States has provided Pakistan with over $10 billion for military, economic, and development activities in support of the critical U.S. national security goals of destroying terrorist threats and closing terrorist safe havens. A major component of this effort has been U.S. Coalition Support Funds (CSF) reimbursed to Pakistan. The purpose of CSF is to reimburse coalition countries for logistical and military support provided to United States military operations in the global war on terror. In Pakistan, reimbursements through CSF are intended to enable the government of Pakistan to attack terrorist networks in the FATA and stabilize the border areas. It is structured as a reimbursement mechanism in which the U.S. Department of Defense (Defense) policy is to validate that support was provided, costs were incurred, and these costs were incremental to normal Pakistani military operations. We were asked to assess how CSF reimbursements have been used to meet U.S. goals in Pakistan, and what controls exist to ensure that reimbursements are for legitimate claims.

For the period covering October 2001 through June 2007, the United States reimbursed Pakistan about $5.56 billion in CSF for military operations in FATA and other support in the war on terror. CSF reimbursement funds are paid directly into the Pakistani government treasury and become sovereign funds. Once they become sovereign funds, the U.S. government has no oversight authority over these funds. In response to a Defense Inspector General review conducted in 2003, DOD implemented additional guidance to improve oversight of the CSF reimbursed to Pakistan. Moreover, in 2007, the Office of the Defense Representative to Pakistan (ODRP) began playing a larger role in overseeing CSF reimbursement claims. In performing oversight, ODRP reviews the Pakistani claims and indicates that to the best of their knowledge military support was provided and expenses were actually incurred. U.S. Central Command (CENTCOM) then validates that Pakistani operations listed were essential to support U.S. military operations in the theater. The claims are sent to the Office of the Under Secretary of Defense for Comptroller, who (1) performs a macro-level review comparing the cost to similar operations, and (2) assesses whether the cost categories are reasonable, selected subcategories are reasonable compared to U.S. costs, and costs are consistent with previous claims. In addition, both the Undersecretary of Defense for Policy and the State Department verify that the reimbursement is consistent with the U.S. government's National Security Strategy and that the CSF payment does not adversely impact the balance of power in the region. In recent months, Defense has disallowed or deferred a significantly greater amount of CSF reimbursement claims from Pakistan.

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