NGOs press U.S. government on Pakistan aid package

By Sue Pleming

WASHINGTON (Reuters) - The $1.5 billion a year U.S. aid package proposed for Pakistan has raised hackles among many U.S. aid groups who worry that channeling big amounts of money through the country's fragile government will backfire.

U.S.-based groups with projects in Pakistan have met several times in recent weeks with Obama administration officials to voice concern over the handling of the five-year package, which will be tackled differently from previous aid.

"We have highlighted the risk of running large amounts of money through the government of Pakistan and that this would end up biting them," said one aid group executive.

Aside from worries U.S. funds are more likely to be lost to corruption if distributed through the government, there are also fears U.S.-based groups working in Pakistan will lose some of their own funding in favor of local NGOs and civil society groups.

A senior U.S. official, who declined to be named or quoted directly without government clearance, said there was a plan to move away from so-called big-box contracts favored by the Bush administration, which were often handled by big U.S. firms.

The official also said some contracts are likely to be cut, and so far one has been scrapped of the 40 or so U.S.-funded projects in Pakistan -- a water project run by a consortium called QED.

Questions are also being raised by some officials inside the Obama administration and last month a senior U.S. Agency for International Development economist wrote his opinions in a seldom-used "dissent channel" at the State Department.

The economist complained of "contradictory" objectives for the Pakistan program and said few Pakistani firms and nongovernmental organizations could meet the stringent financial management and audit requirements for U.S. funding.