July 15, 2019
Pakistan-U.S. Relations
Overview
longer be silent about Pakistan’s safe havens for terrorist
Since 2001, U.S. policy has broadly been to assist the
organizations, the Taliban, and other groups that pose a
creation of a more stable, democratic, and prosperous
threat to the region and beyond.” According to a December
Pakistan that actively combats religious militancy.
2018 Pentagon report, “Cross-border cooperation between
Congress has taken keen interest in U.S. relations with
Afghanistan and Pakistan is essential” and the border region
Pakistan, especially as related to counterterrorism and U.S.
“remains a sanctuary for various groups.” Islamabad
foreign assistance. A key U.S. ally in combatting terrorism
warned that U.S. sanctions are counterproductive. In
after 9/11, Pakistan had been a leading recipient of U.S.
December 2018, President Trump sent a letter to Prime
assistance, receiving more than $30 billion in aid and
Minister Khan requesting Islamabad’s assistance in
military reimbursements since 2001.
facilitating U.S. talks with the Taliban. In March 2019 the
outgoing commander of the U.S. Central Command told
U.S. officials say vital U.S. interests are at stake in Pakistan
Congress, “We’ve seen Pakistan play a more helpful role in
related to terrorism, Afghanistan, nuclear proliferation,
helping to bring Taliban representatives into negotiations.”
India, democratization and human rights, and economic
development. In January 2019, the U.S. Director of
Figure 1. U.S. Aid Appropriations for and Military
National Intelligence told a Senate panel of “Pakistan’s
Reimbursements to Pakistan, FY2001-FY2020
recalcitrance in dealing with militant groups,” and predicted
(in millions of dol ars)
Pakistan will continue to threaten U.S. interests “by
deploying new nuclear weapons capabilities, maintaining
its ties to militants, restricting counterterrorism cooperation,
and drawing closer to China.”
Pakistan is a haven for numerous Islamist extremist and
terrorist groups, and successive Pakistani governments are
widely believed to have tolerated and even supported some
of these as proxies in Islamabad’s historical conflicts with
its neighbors. The 2011 revelation that Al Qaeda leader
Osama bin Laden had enjoyed years-long refuge in Pakistan
led to intensive U.S. government scrutiny of the bilateral
relationship, and sparked congressional questioning of the
wisdom of providing significant aid to a nation that may not

have the intention or capacity to be an effective partner.
Source: CRS calculations based on U.S. government data.
The Trump Administration has taken a harder line on
Domestic Politics
Pakistan than its predecessors, sharply cutting assistance
Elections to seat Pakistan’s 15th National Assembly (NA,
and suspending security-related aid. The United States
the lower house of its bicameral legislature) and the
continues to press for “decisive and irreversible action”
country’s four provincial assemblies took place in July
against “externally-focused militant groups and UN-
2018, marking the country’s second-ever democratic
designated terrorist organizations operating from its
transfer of power. The relatively young Pakistan Tehreek-e-
territory.” Pending such action, security assistance will
Insaf (PTI or Movement for Justice) party swept a large
remain suspended.
plurality of NA seats, and party founder and leader Imran
Khan became prime minister. Many analysts contended that
During a September 2018 visit to Islamabad amidst talk of a
Pakistan’s security services covertly manipulated the
“reset” of bilateral ties, Secretary of State Michael Pompeo
country’s domestic politics before and during the election to
expressed hope that the United States can find common
favor Khan. The PTI-led government has been criticized for
ground with Pakistan’s new leadership (Prime Minister
unsteadiness and an inability to defy Pakistan’s military or
Imran Khan took office in August 2018), but mutual
to resolve the country’s fiscal crisis. Pakistan also faces a
distrust is seen to be pervasive in the relationship and
new and unprecedented protest movement among its ethnic
American leverage is much reduced.
Pashtun minority. The Pashtun Tahafuz Movement (PTM)
campaigns against extrajudicial killings and enforced
Trump Administration Strategy and Policy
disappearances; some PTM leaders have been arrested.
President Trump’s South Asia strategy, unveiled in 2017,
emphasized the threats posed by Islamist militancy in the
Afghanistan-Pakistan region, contending that, “We can no
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Pakistan-U.S. Relations
Economy and Fiscal Crisis
high-level peace negotiations pending decisive Pakistani
Pakistan remains a poor country with high rates of inflation
action against anti-India militants inside Pakistan.
and unemployment, and sometimes acute food, water, and
energy shortages. The economy’s growth has been solid in
Domestic Militancy and Terrorism Financing
recent years, but is well below that needed to keep pace
Numerous indigenous terrorist groups operate on or from
with population growth. A 3.3% expansion in the fiscal
Pakistani territory, many designated as Foreign Terrorist
year ending June 2019 was a decrease from 5.8% the
Organizations under U.S. law. Incidents of domestic
previous year. Trade with the United States reached a
terrorism are much decreased since the Pakistan Army
record $6.6 billion in 2018, but foreign investment remains
launched major operations in 2014. However, some
weak. Corruption is a major obstacle to Pakistan’s
externally-oriented terrorist groups such as Lashkar-e-Taiba
economic development, and the country has one of the
continue to operate, by some accounts supported by state
lowest tax-to-GDP ratios in the world.
elements. Al Qaeda and Islamic State networks are also
present in Pakistan.
The United States is Pakistan’s largest export destination,
while China is Pakistan’s largest import partner. Despite
Terrorist financing networks in Pakistan have come under
security and macroeconomic concerns, Pakistan can be an
scrutiny. In early 2018, the United States joined Britain in
attractive market for U.S. firms due to favorable
urging other members of the Paris-based Financial Action
demographics, English language skills, low labor costs, and
Task Force (FATF) to return Pakistan to its list of countries
natural resources; however, trade and investment barriers
found to be insufficiently combating money laundering and
limit the ability of U.S. companies to enter the market.
terrorism financing, where it had been from 2012 to 2015.
In mid-2018, FATF formally added Pakistan to this “Gray
For more than a year Pakistan’s government has teetered on
List.” Islamabad has until the end of September 2019 to
the edge of a debt and balance of payments crisis. China,
demonstrate compliance with the FATF action plan in order
Saudi Arabia, and the United Arab Emirates have each
to avoid falling onto a “Black List” of “non-cooperative
provided multi-billion-dollar loans but in May 2019, the
countries” that would damage Pakistan’s standing
government was forced to arrange a three-year, $6 billion
internationally and abrogate the most recent IMF package.
bailout from the International Monetary Fund (IMF),
adding to the $5.8 billion Pakistan already owed to that
Human Rights Issues
body. This is Pakistan’s 13th such loan in 30 years and will
Pakistan has been accused of numerous reported human
require what the IMF calls “very stringent measures” on
rights abuses, some of them perpetrated and/or sanctioned
structural economic reform and expansion of the tax base.
by the state. According to the State Department, the most
serious of these problems have been extrajudicial and
China and CPEC
targeted killings, disappearances, torture, lack of rule of
Pakistan and China have enjoyed what both call an “all-
law, and sectarian violence. Watchdog groups often rank
weather friendship” for more than four decades. Beijing is
Pakistan among the world’s most dangerous countries for
Pakistan’s primary arms supplier, and Chinese investments,
journalists and women. The State Department contends that
companies, and workers are increasingly present in
Pakistan’s constitution and other laws and policies
Pakistan. China built a major new port at Gwadar, Pakistan,
officially restrict religious freedom and, in practice, the
and is working to connect that to the western Chinese
government enforces many of these restrictions. In
province of Xinjiang. These and other infrastructure and
December 2018, the State Department downgraded
energy initiatives are part of the China-Pakistan Economic
Pakistan to the status of “Country of Particular Concern”
Corridor (CPEC) formally launched in 2014 and entailing
under the 1998 International Religious Freedom Act.
as much as $60 billion worth of Chinese investment in
Pakistan. This makes Pakistan the “flagship” of Beijing’s
U.S. Foreign Assistance and Security Aid
Belt and Road Initiative. The Trump Administration has
Suspension
noted Pakistan’s growing debt to China and expressed
Since 2007 Congress has imposed both broader and more
opposition to any bailout that would go to reducing such
stringent conditions on all non-humanitarian aid transfers,
debt. Pakistan’s Finance Ministry denies that IMF funds
as well as military reimbursements, to Pakistan. From 2008
would be used to repay Chinese debt, and it is seeking to
to 2016, U.S. Presidents exercised authorities to waive
renegotiate aspects of CPEC to reduce long-term debt.
those conditions in the interests of national security, even as
annual aid and reimbursement levels steadily decline from
Pakistan-India Relations
an FY2010 peak total of about $4.5 billion. In mid-2017,
Pakistan’s continued conflict and rivalry with India is
the Administration announced that it would “pause”
unabated, with attendant international fears about the
disbursement of $255 million in Foreign Military Financing
possibility of war between two nuclear-armed powers. In
(FMF) and announced a broader security aid suspension in
February 2019, a suicide bombing in the Kashmir Valley
January 2018. According to the State Department, about
killed 40 Indian paramilitary troops and was blamed on a
$790 million in unobligated FMF dating back to FY2001 is
Pakistan-based terrorist group. A retaliatory Indian airstrike
affected. Pakistani politicians and analysts of all stripes
on Pakistani territory and a brief air battle elicited new
decried what they perceived as an effort to scapegoat their
concerns about escalation, but the crisis ended without
country for U.S. policy failures in Afghanistan. The
further major conflict. Still, Pakistan seeks to raise the issue
Administration’s FY2020 budget request for assistance to
of Kashmiri rights internationally, while India rejects any
Pakistan totals about $70 million, including $48 million for
economic and development aid.
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Pakistan-U.S. Relations

IF11270
K. Alan Kronstadt, Specialist in South Asian Affairs


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https://crsreports.congress.gov | IF11270 · VERSION 1 · NEW

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