July 12, 2011: A large chunk (over a fifth) of the $20 billion the U.S. has given to Pakistan since September 11, 2001 has been stolen. Now the U.S. is holding back nearly a billion dollars in aid. The $800 million being withheld is largely for "reimbursements" for what the Pakistani military has spent to fight terror groups. Audits have revealed that this is where much of the theft takes place. So holding back this money will do the least harm to the Pakistani military effort (such as it is) and the most damage to the corrupt officers who steal American aid. Pakistani politicians are already upset that the $3 billion in American aid for the next year is mainly going to the military, and comes with strings (cut corruption, tax the rich, who often pay nothing at all). The U.S. is the largest aid donor, but all this pressure to attack Islamic radicals and stop diverting aid to private use is annoying to Pakistani officials. Ironically, when accused of corruption, Pakistanis react by denouncing Americans for attacking Pakistani honor. Meanwhile, Pakistani officials insist that negotiations continue with the United States. What is not said that these talks are basically about how much the U.S. will allow to be stolen, in return for how much effort Pakistani will actually, or pretend, to make against Islamic terror groups.
Pakistan's rulers are not concerned about how well they can run the country, but with how thoroughly they can plunder it. For example, Pakistan's government budget for next year has been set at $29.1 billion. A third of this is borrowed or gifts from foreign nations (mainly the U.S.). The government has always had a hard time raising money, especially since less than two percent of the population pays taxes, and the wealthiest individuals tend to avoid taxes altogether. Officially, the military only gets 20 percent of this, but in practice the generals control over half the budget. It's been that way for a long time.
Pakistan is the second largest recipient of American foreign aid, but about a third of the annual aid is not being spent because no one honest enough to handle the aid can be found in Pakistan. Other foreign donors have the same problem. Some Pakistani officials admit that there are problems with corruption, but most deny that this is a problem. Opinion surveys have, for decades, shown that most Pakistanis consider corruption (both in the government, and in general) a major problem. The international community also considers Pakistan among the most corrupt nations on the planet, and also a major supporter of Islamic terrorism. So Pakistanis are getting little international support in their effort to push back against these American anti-corruption efforts.
Pakistani troops and police continue fighting Islamic radicals in the tribal territories and, increasingly in Karachi. This is Pakistan's largest city, with eight percent of the nation's population (14 million people) and producer of a quarter of the GDP. Starting in January, when there were nearly 200 deaths from political and religious violence, the fighting has continued. Massive police efforts reduced the violence for a while, but the political and terrorist gangs kept at it. Police have now been ordered to "shoot on sight" any of the armed men responsible for turning many Karachi neighborhoods into combat zones. While the violence is mainly driven by political parties seeking to establish control over parts of the city, Islamic radicals are heavily involved. The Taliban has established a presence among the two million Pushtuns in the city. Many of those killed have been Pushtuns, partly because the locals are hostile to Pushtun groups gaining more power, and partly because many Pushtun groups are fighting each other. But a lot of the violence is the result of the Taliban trying to prevent the police from stopping the Pushtun radicals establishing safe havens in Karachi. Meanwhile, the Pakistani Army stays out of the traditional Taliban sanctuaries in North Waziristan and Baluchistan. American officials openly claim that new al Qaeda leader, Ayman al Zawahiri, is hiding out in one of these sanctuaries. Pakistani casualties from counter-terror operations run about 500 a week, which is usually 3-4 times as many as suffered in India (which has six times as many people.)
Pakistani politicians continue to openly condemn the U.S. UAV attacks in the tribal territories (mainly in North Waziristan), but continue to quietly support these operations. The government has, for decades, portrayed the United States as an enemy of Pakistan, and has to keep that in mind when making public statements. But in reality, the Pakistani government still supports the successful American campaign to find and kill terrorist leaders (especially the ones responsible for attacks inside Pakistan.) Officially, Pakistan is all for eliminating Islamic terrorism. In reality, many government officials continue to support the terrorists, in many ways.
The U.S. believes that al Qaeda is badly hurt, and close to extinction. This became clear recently when Osama bin Laden's captured email was examined and revealed an effort to rename al Qaeda as part of an effort to revive the battered terrorist organization. The U.S. also wants more international effort against other Islamic terror groups, especially the Taliban (both Afghan and Pakistani branches) and the many Islamic terror groups sponsored by Pakistan, for attacks on India. The U.S. isn't getting much cooperation from Pakistan in this area, because captured terrorists keep implicating Pakistan as the new Terrorism Central.
For the second time in 12 hours, an American UAV fired missiles at terrorists in North Waziristan, killing about 25 people altogether. The U.S. has managed to maintain its informant and intelligence networks in North Waziristan, despite Pakistani efforts to find and arrest or kill Pakistanis working for the CIA (to find terrorists.)
The Indian war against Maoist rebels is having its ups and downs. In many states, particularly West Bengal, the Maoists have suffered heavy losses, and are less frequently encountered. But in one of the Maoist bastions, Chhattisgarh state, the communist rebels got a boost from a recent (July 5th) Supreme Court ruling that government supported anti-Maoists militias are illegal and must be disbanded or redirected at less violent tasks (like crowd and traffic control). The government supplies weapons and some training to these volunteers, and police coordinate anti-Maoist operations with the militias. Some (about 4,000) of the volunteers get more training and a small salary to act as part-time police officers. But the Supreme Court judges declared that only people who had gone through full police training could act as police. The government of Chhattisgarh has been ordered to take back all weapons provided to these volunteers, and cease using them to fight Maoists. The communist rebels often prey on these rural villagers, who had earlier formed their own militias for self-protection. These are also considered illegal.
July 10, 2011: In response to Pakistani moves to expel American military trainers and intelligence operatives, the has held up $800 million in aid. The U.S. has already been delaying several billion dollars in payments for Pakistani expenses, because auditors have found massive fraud. This was not unexpected, but had rarely been documented so well. The U.S. has increasingly insisted on being able to carefully audit how American aid was being spent (or stolen). Pakistani officials resisted this for a long time, and continue to do so, but the Americans refused to back down.
July 9, 2011: More coverage of Pakistani corruption, and collusion with Islamic terror groups, in major American news outlets, drew a response from the Pakistani military. Senior officers described the American news reports as a direct attack on the Pakistani security forces. Pakistani journalists who have produced similar stories recently have been threatened, arrested or, in at least one case, murdered.
July 8, 2011: Pakistani nuclear weapons scientist Abdul Qadeer Khan, who has largely escaped punishment for selling nuclear secrets, was long accused of selling detailed plans for a nuclear weapon to North Korea. Now Khan has revealed a 1998 letter from a North Korean official that discusses the deal. Khan says that North Korea paid $3.5 million for nuclear weapons technology in the late 1990s. Previously, the only proof has been the similarities in the first nuclear weapons tested by Pakistan (in 1999) and North Korea (in 2006). Both of these bombs were only partially successful (they “fizzled” instead of exploding). North Korea later denied any dealings with Khan. But this revelation caused alarm in the West, where it provided more evidence that it might be possible for Islamic terrorists to obtain Pakistani nukes, if the terrorists could scrape together enough cash.