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Q+A-Pakistan's 'Friends' concerned over reconstruction

by (c) Copyright Thomson Reuters 2010. Click For Restrictions. http://about.reuters.com/fulllegal.asp | Thomson Reuters Foundation
Friday, 15 October 2010 08:10 GMT

KARACHI, Oct 15 (Reuters) - Pakistan&${esc.hash}39;s devastating August floods caused ${esc.dollar}9.7 billion in damages to infrastructure, farms and homes, an Asian Development Bank (ADB) official said on Thursday.

Agriculture and the transport and communications sectors were hit hardest by one of Pakistan&${esc.hash}39;s worst natural disasters.

A Friends of Democratic Pakistan gathering in Brussels on Friday is discussing reconstruction challenges for Pakistan and what those countries can do to help.

No formal pledges are likely, but all sides are expected to stress the need for a strategy to help the country rebuild after one of the worst national disasters in its history, according to the ADB which, with the World Bank, conducted a survey of flood damage and needs.

Here are some questions and answers on what is likely to be a difficult course ahead for Pakistan. WHAT DOES PAKISTAN&${esc.hash}39;S GOVERNMENT NEED TO DO TO GET ENOUGH AID?

Reform, accountability and transparency

Donors have long called on Pakistan to implement fiscal reforms such as broadening its tax base, ending subsidies and fighting corruption. Tax reform is one of the most pressing.

Secretary of State Hillary Clinton said in Brussels that the international community could only do so much if Pakistan continues to collect so little in taxes from its elite.

Pakistan has one of the world&${esc.hash}39;s lowest ratios of taxes to gross domestic product, at about 10 percent.

Showing that it&${esc.hash}39;s serious about reform and willing to work with the international community is also key.

Last month, the World Bank said that accountability and transparency will be of "paramount importance" to attract donor funding and the government must ensure transparency.

Juan Miranda, the ADB&${esc.hash}39;s director-general for Central and West Asia, said donors and lenders would like Pakistan to engage outside experts to prepare paperwork, handle contracts and sign agreements with monitoring by lending agencies, the Pakistani daily newspaper Dawn reported on Friday.

The lack of accountability has hurt past aid efforts. At the FODP meeting in Tokyo in April last year, some ${esc.dollar}5.7 billion was pledged. Only a fraction has arrived. Analysts said the main issue is the government&${esc.hash}39;s credibility in using the funds.

WHAT COULD HAPPEN IF FLOOD VICTIMS DON&${esc.hash}39;T GET AID SOON?

Nothing good. Winter is coming. Millions of Pakistanis are still homeless and living in unheated tent cities. While warnings of social unrest have yet to materialise, people are becoming desperate.

There will be huge demands for food and heating oil. Thousands of farms have been wiped out so there are no jobs for people to return to. The risk of widespread disease still exists.

All this adds up to the possibility of more instability and strain on Pakistan&${esc.hash}39;s civilian government. Any more turmoil could threaten the government and the unpopular President Asif Ali Zardari.

WHY IS THE WEST SO CONCERNED ABOUT STABILITY IN PAKISTAN?

Pakistan&${esc.hash}39;s allies and the United States believe any political crisis in nuclear-armed Pakistan would distract Islamabad&${esc.hash}39;s attention from its efforts to crush militants who are fighting an insurgency on the both sides of the border.

Washington has invested billions to build Pakistan&${esc.hash}39;s capacity to fight militants and carry out social sector development in Pakistan&${esc.hash}39;s lawless regions on the Afghan border in a bid to clear them of militancy.

So if Pakistan is unable to manage billions of dollars of financial support needed for reconstruction, the resulting instability could imperil the United States&${esc.hash}39; war efforts next door in Afghanistan. (Reporting by Sahar Ahmed; Writing by Chris Allbritton, editing by Jonathan Thatcher)

(For more Reuters coverage of Pakistan, see: http://www.reuters.com/places/pakistan)

Our Standards: The Thomson Reuters Trust Principles.

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