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US, Japan pledge $1billion each to help stabilise Pakistan

world Updated: Apr 17, 2009 08:35 IST
AFP
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The US and Japan pledged $1 billion each to help Pakistan battle extremist violence and bolster its economy, kicking off an international donors conference on Friday for the critical US ally in the war on terror.

"Without stability in Pakistan, there is no stability in Afghanistan either," Japan's Prime Minister Taro Aso said in a speech opening the one-day donors conference in Tokyo.

"Stability in border areas is a key and I want to stress that the international community supports comprehensive strategies by the two nations." Aso announced on Thursday that Japan would provide up to $1 billion in aid to support Pakistan's economic reforms and its fight against terrorism, while the US issued a statement on Friday that it will chip in $1 billion.

Both countries will make their contributions over the next two years, and neither represented a dramatic change in their current pattern of donations.

Pakistani President Asif Ali Zardari went to the conference hoping for as much as $6 billion in pledges, but the meeting's Japanese hosts have said they expect the figure to be closer to $4 billion.

"There is an appetite. There is a desire to help Pakistan," Zardari said. "But I feared, I still fear, that the understanding of the danger what Pakistan faces still does not register fully in the minds of the world."

"If we lose, you lose," he added. "If we lose, the world loses."

Japan has stressed that the conference will try not to get too involved in issues that are more closely associated with Afghanistan, but has noted a growing awareness that the two often overlap and can be hard to deal with separately.

"Presidential elections in August in Afghanistan should be carried out smoothly, freely and fairly. This is vital for stability in Afghanistan, and the international community needs to support it," Aso said. "Japan supports the elections and will give assistance, including paying the salaries for 80,000 Afghan police for a half year."

The conference, supported by the World Bank, is being attended by about 25 backers, including the United States, China and Saudi Arabia. A full tally of pledges is expected to be announced at the end of the meeting.

Japan's announcement of $1 billion over two years was in line with its current level of aid, it provided Pakistan with 48 billion yen ($480 million) in development assistance in 2008.

The US contribution was seen as a down payment that will go toward Washington's previously announced plans to give Pakistan $1.5 billion in aid each year for the next five years.

Separately, a $7.6 billion bailout has been granted by the International Monetary Fund to avert the country's most recent balance-of-payments crisis. As part of the IMF deal, Pakistan has been asked to reduce its fiscal deficit and to tighten its monetary policy. Pakistan's leaders have said they do not want the international community to "micromanage" its economy.

But the central bank forecast this month that economic growth for the year through June will slump to between 2.5 per cent and 3.5 per cent, far below the 5.5 per cent the government has projected, and too slow to create enough jobs for its fast-growing population of about 170 million people.

In response, the government has had to slash its development budget but is resisting calls to tax the narrow landowning elite that dominates its politics. Industry is also hampered by severe power shortages that are not expected to ease until next year at the earliest.

Economic improvement in Pakistan is seen as a key not only to preventing the expansion of poverty, but also to slowing the growth of terrorism, which depends on the poor to fill its ranks.

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