The Double Game-The unintended consequences of American funding in Pakistan

t’s the end of the Second World War, and the United States is deciding what to do about two immense, poor, densely populated countries in Asia. America chooses one of the countries, becoming its benefactor. Over the decades, it pours billions of dollars into that country’s economy, training and equipping its military and its intelligence services. The stated goal is to create a reliable ally with strong institutions and a modern, vigorous democracy. The other country, meanwhile, is spurned because it forges alliances with America’s enemies.

The country not chosen was India, which “tilted” toward the Soviet Union during the Cold War. Pakistan became America’s protégé, firmly supporting its fight to contain Communism. The benefits that Pakistan accrued from this relationship were quickly apparent: in the nineteen-sixties, its economy was an exemplar. India, by contrast, was a byword for basket case. Fifty years then went by. What was the result of this social experiment?

India has become the state that we tried to create in Pakistan. It is a rising economic star, militarily powerful and democratic, and it shares American interests. Pakistan, however, is one of the most anti-American countries in the world, and a covert sponsor of terrorism. Politically and economically, it verges on being a failed state. And, despite Pakistani avowals to the contrary, America’s worst enemy, Osama bin Laden, had been hiding there for years—in strikingly comfortable circumstances—before U.S. commandos finally tracked him down and killed him, on May 2nd.

American aid is hardly the only factor that led these two countries to such disparate outcomes. But, at this pivotal moment, it would be a mistake not to examine the degree to which U.S. dollars have undermined our strategic relationship with Pakistan—and created monstrous contradictions within Pakistan itself.

American money began flowing into Pakistan in 1954, when a mutual defense agreement was signed. During the next decade, nearly two and a half billion dollars in economic assistance, and seven hundred million in military aid, went to Pakistan. After the 1965 Pakistan-India war began, the U.S. essentially withdrew aid to both countries. Gradually, U.S. economic aid was restored, but the Pakistani military was kept on probation.

Those civilian-aid programs were largely successful. Christine Fair, a specialist on South Asia at the Center for Peace and Security Studies, at Georgetown University, notes that the original model for economic assistance was “demand driven”—local groups or governments proposed projects and applied for grants. Aid usually came in the form of matching funds, so that grantees had a stake in the projects. Moreover, American specialists presided over the disbursement of these funds and served as managers. “That was effective,” Fair says. “But we haven’t done it for decades.”

Then, in 1979, U.S. intelligence discovered that Pakistan was secretly building a uranium-enrichment facility in response to India’s nuclear-weapons program. That April, the military dictator of Pakistan, General Mohammed Zia-ul-Haq, hanged the civilian President he had expelled from office, Zulfikar Ali Bhutto; he then cancelled elections. U.S. aid came to a halt. At the same time, Zia began giving support to an Islamist organization, Jamaat-e-Islami, the forerunner of many more radical groups to come. In November, a mob of Jamaat followers, inflamed by a rumor that the U.S. and Israel were behind an attack on the Grand Mosque, in Mecca, burned the U.S. Embassy in Islamabad to the ground, killing two Americans and two Pakistani employees. The American romance with Pakistan was over, but the marriage was just about to begin.

The very next month, the Soviet Union invaded Afghanistan. President Jimmy Carter, in a panic, offered Zia four hundred million dollars in economic and military aid. Zia rejected the offer, calling it “peanuts”—the term often arises in Pakistani critiques of American aid, but it must have rankled the peanut farmer in the White House. Zia was smart to hold out. Under Carter’s successor, Ronald Reagan, U.S. aid nearly quintupled: about three billion dollars in economic assistance and two billion in military aid. The Reagan Administration also provided three billion dollars to Afghan jihadis. These funds went through the sticky hands of the Inter-Services Intelligence directorate, the spy branch of the Pakistani Army. Starting in 1987, the I.S.I. was headed by General Hamid Gul, a cunning and bitterly anti-American figure. The I.S.I. became so glutted with power and money that it formed a “state within a state,” in the words of Benazir Bhutto, who became Pakistan’s Prime Minister in 1988. She eventually fired Gul, fearing that he was engineering a coup.

Milton Bearden, a former C.I.A. station chief in Pakistan, once described Gul to me as having a “rococo” personality. In 2004, I visited Gul—a short man with a rigid, military posture and raptor-like features—at his villa in Rawalpindi. He proudly asked his servant to bring me an orange from his private grove. I asked Gul why, during the Afghan jihad, he had favored Gulbuddin Hekmatyar, one of the seven warlords who had been designated to receive American assistance in the fight against the Soviets. Hekmatyar was the most brutal member of the group, but, crucially, he was a Pashtun, like Gul. As I ate the orange, Gul offered a more principled rationale for his choice: “I went to each of the seven, you see, and I asked them, ‘I know you are the strongest, but who is No. 2?’ ” He formed a tight, smug smile. “They all said Hekmatyar.”

Later, Gul helped oversee the creation of the Taliban, reportedly using mainly Saudi money. The I.S.I. openly supported the Taliban until September 11, 2001. Since then, the Pakistani government has disavowed the group, but it is widely believed that it still provides Taliban leaders with safe harbor in Quetta, where they stage jihad against Western forces in Afghanistan.