Between October 2001 and June 2007, the United States reimbursed Pakistan approximately $5.56 billion for military operations and other support connected with the war in Afghanistan. The money came through Coalition Support Funds.

In 2008, the US Government Accountability Office examined how these payments were administered. Washington reimbursed Pakistan for eligible military and logistical expenses. The payments entered Pakistan’s government treasury as sovereign funds. Once transferred, the American government had no authority to oversee how Pakistan subsequently used them.

The GAO report raised concerns about verification of reimbursement claims. It did not establish that the entire amount had been misused.

I find another aspect equally important. Pakistan received substantial resources because its cooperation served an international security objective. But what economic value did Pakistan obtain from that relationship, and how much reached ordinary citizens?

The question extends beyond Washington. Pakistan attracted foreign assistance during the Cold War, gained importance after the Soviet invasion of Afghanistan, and entered another security partnership after September 11. China later became central to a major infrastructure relationship. Each arrangement had different purposes. Their value cannot be measured by headline financing figures alone.

The Cold War Bargain

Pakistan’s early leaders faced a difficult security environment after Partition in 1947, including disputes with India over Kashmir. They sought military equipment and international support. The United States wanted partners to contain Soviet influence.

Pakistan joined the Southeast Asia Treaty Organization in 1954 and the Baghdad Pact in 1955, later known as the Central Treaty Organization. American assistance supported military capacity and economic development. Industrial expansion and agricultural improvements during the 1960s produced real gains.

Distribution remained contentious. East Pakistan’s political leaders objected to economic disparities and unequal representation. National growth figures did not settle who controlled resources. The crisis culminated in the 1971 war and Bangladesh’s independence.

The 1965 India-Pakistan war had already exposed another limitation. Washington imposed an arms embargo affecting both countries. Pakistan’s expectation of support against India did not fully match American priorities. Strategic partnerships brought resources, but they also created dependencies.

Afghanistan and the Value of Strategic Cooperation

The Soviet invasion of Afghanistan in December 1979 increased Pakistan’s importance. Under General Zia-ul-Haq, Pakistan helped channel support to Afghan resistance forces. The United States and Saudi Arabia backed the war effort, and Pakistan’s intelligence and security institutions played central roles.

Pakistan hosted millions of Afghan refugees over subsequent decades. The conflict also spread weapons and strengthened militant networks across the region. Several foreign governments and Afghan factions shaped those developments; responsibility cannot be assigned to Pakistan alone.

Security cooperation helped the government meet immediate pressures and raised the institutional importance of the organisations managing it. Development spending followed a different path. Schools required recurring provincial budgets and teachers. Hospitals required management and dependable funding. Foreign security assistance could not automatically provide either.

The Post-9/11 Payments: What the Records Show

After the attacks of September 11, 2001, General Pervez Musharraf’s government cooperated with Washington in counterterrorism operations and logistical support. American financing took several forms: economic assistance, military aid and Coalition Support Fund reimbursements for eligible costs.

These categories must not be merged. A military reimbursement is not a school-building grant, and neither is equivalent to a repayable loan.

The GAO recorded approximately $5.56 billion in reimbursements from October 2001 through June 2007 and identified weaknesses in American verification procedures. Once payments entered Pakistan’s treasury, their subsequent use fell outside US oversight authority. This finding does not establish diversion or improper expenditure.

It does leave a domestic accounting question. How did Pakistan record the funds, and which budgetary decisions governed their allocation? Answering requires Pakistani expenditure records, not assumptions drawn from an American audit.

Pakistan also suffered grave costs: terrorist attacks killed civilians and security personnel, military operations disrupted communities, and displacement damaged livelihoods. Defence against armed groups provided a public benefit. A credible assessment must weigh those security services and losses alongside the financing received.

The Institutions That Shape Economic Benefits

Foreign partners decide how much financing to offer. Pakistani institutions determine much of what happens next. Governments approve budgets, regulators shape competition and tax authorities administer exemptions.

The IMF’s November 2025 Governance and Corruption Diagnostic Assessment, requested by Pakistan, examined weaknesses in fiscal management, market regulation and oversight. It identified corruption vulnerabilities and inconsistent enforcement that can favour well-connected economic actors.

Consider two firms competing for a government contract. Preferential access or discretionary treatment can weaken competition even when the favoured firm delivers useful goods. Special tax treatment can similarly protect profits without improving productivity.

The IMF’s findings do not show that every privilege originated in strategic assistance. That connection requires evidence from individual transactions. They do show why an inflow of external resources cannot, by itself, guarantee broad public gains.

The Military Economy and Oversight

Pakistan’s armed forces have national defence responsibilities amid serious security risks. Defence expenditure therefore serves a public purpose. Military-linked welfare foundations also operate commercial businesses, including manufacturing and financial services.

The Fauji Foundation combines commercial activity with welfare programmes for eligible beneficiaries. Ayesha Siddiqa’s book Military Inc.: Inside Pakistan’s Military Economy examines the links between military institutions, business and political influence. Supporters of such enterprises cite their profits and welfare services. Critics question whether institutional connections can confer advantages over civilian competitors.

Neither position resolves the question for every enterprise. Fair examination requires evidence about land allocation, procurement, tax treatment, financing and public disclosure. A military association alone does not prove unlawful privilege; a welfare objective does not eliminate the need for oversight.

Civilian business groups and state-owned enterprises deserve comparable scrutiny. The common issue is whether economic actors face comparable rules.

China and the Promise of Connectivity

The China-Pakistan Economic Corridor uses Pakistan’s location to connect western China with the Arabian Sea. Transport and power investments address real constraints on Pakistan’s economy.

But projects differ in ownership and financing. Government borrowing, private investment and long-term power-purchase obligations cannot all be described as money received by the state. Roads may reduce transport costs while carrying fiscal obligations. Additional power generation may improve supply while creating payment pressures.

A meaningful assessment needs project-level accounts, operating results and evidence of lasting employment. Announced investment totals are not proof of economic return. Geography offers an opportunity; domestic policy and commercial performance determine how much value is realised.

What Happened to Public Welfare?

Pakistan’s economic history includes substantial improvements. The World Bank’s September 2025 Poverty, Equity and Resilience Assessment reported that poverty measured against Pakistan’s national poverty line fell from 64.3% in 2001–02 to 21.9% in 2018–19. Rising non-agricultural labour income played a major role.

The improvement matters. It prevents us from describing decades of economic change as uniformly unsuccessful. But much employment remained insecure, and the World Bank found that poverty began rising again in 2020 amid the pandemic and later shocks. Inflation and the 2022 floods increased pressure on households.

Foreign assistance may have supported economic stability. The poverty figures alone cannot establish how much it contributed. Nor can they establish that foreign assistance caused subsequent reversals.

The welfare test is durability. Can a household withstand unemployment? Can parents secure dependable schooling? Does an illness force a family to borrow? Public services and productive employment help determine whether growth survives the next shock.

Taxation and the Domestic State

Foreign financing can ease an immediate shortage of foreign exchange. Schools and hospitals, however, need recurring funds regardless of another government’s strategic priorities.

Pakistan’s tax system has struggled with narrow coverage, uneven enforcement and preferential arrangements. A salaried worker whose income tax is deducted at source faces a different administrative system from economic actors whose earnings are harder to document.

Reform should not simply increase the burden on already visible taxpayers. It must address exemptions and compliance while improving the services citizens receive.

The federal structure matters. Provinces carry major education and healthcare responsibilities, while federal policy shapes revenue and macroeconomic conditions. Poor coordination can weaken public services even when more money is available.

The Costs of Security

Comparing defence expenditure with school budgets can reveal competing priorities, but it cannot settle what spending level is appropriate. Pakistan faces external threats and internal violence that carry serious economic costs. Protecting transport routes and communities supports economic activity.

The relevant questions concern effectiveness and opportunity cost. What does each programme achieve, and could public resources be used more productively elsewhere? Civilian subsidies and inefficient state-owned enterprises warrant the same scrutiny as security spending.

Public accountability should make these comparisons possible without treating scrutiny as hostility toward national defence.

Another IMF Agreement, Another Test

On October 7, 2026, Pakistan and the IMF reached a staff-level agreement on reviews under the Extended Fund Facility and Resilience and Sustainability Facility. Subject to Executive Board approval, it could make approximately $1.21 billion available. A staff-level agreement is not an approved disbursement.

Pakistan’s continued need for external financing does not prove that earlier partnerships failed. It shows that stabilisation remains a recurring challenge. External support may create breathing room, but domestic reforms determine whether the country becomes less vulnerable to the next foreign-exchange shortage.

Measuring What Pakistan Gains

Foreign-policy success is often reported through high-level visits and investment announcements. These may matter, but they are not complete measures of economic performance.

For major agreements, the government should disclose financial terms and public obligations as far as legitimate security and commercial confidentiality permit. Grants must be distinguished from loans, reimbursements and private investments. Construction jobs should be distinguished from sustained employment, and announced projects from completed ones.

The objective is not to reduce diplomacy to a balance sheet. It is to establish what each relationship achieved and who benefited.

Pakistan’s Unfinished Strategic Question

Pakistan’s position has repeatedly attracted powerful partners. The Cold War brought Western assistance. Afghanistan increased its security importance. The post-9/11 relationship produced substantial financing alongside severe human costs. China’s partnership brought further infrastructure opportunities.

Domestic outcomes were mixed. Poverty fell substantially before shocks reversed part of the progress. The IMF’s 2025 diagnostic identifies institutional vulnerabilities that can concentrate economic advantages, but it does not provide a complete historical accounting of who benefited most from Pakistan’s strategic position.

I would begin that investigation with the financial records. The Coalition Support Funds case shows why. Billions entered Pakistan’s treasury through a strategic arrangement. American auditors examined claim verification, but the domestic use of sovereign funds requires Pakistani expenditure evidence.

The same standard should apply to other partnerships. Strategic importance is a diplomatic asset. Turning it into lasting household security depends on the decisions of institutions at home.

Pakistan has demonstrated its importance to other countries many times. What remains less clearly documented is how much of that importance has been converted into lasting economic security for its own people.