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Wednesday, April 25, 2012

Pakistan: U.S. Foreign Assistance


Susan B. Epstein
Specialist in Foreign Policy

K. Alan Kronstadt
Specialist in South Asian Affairs


The 112th Congress has been focused on measures to reduce the federal budget deficit. This backdrop may influence congressional debate over the third-ranking U.S. aid recipient, Pakistan—a country vital to U.S. national security interests but that some say lacks accountability and even credibility.

Pakistan has been among the leading recipients of U.S. foreign assistance both historically and in recent years. The country arguably is as important to forwarding U.S. security interests as any in the world. Developments in 2011 put immense strains on bilateral relations, making uncertain the future direction of U.S. aid to Pakistan. Disruptions included the May killing of Osama bin Laden in a Pakistani city and a November NATO military raid into Pakistani territory near Afghanistan that inadvertently left 24 Pakistani soldiers dead. For many lawmakers, the core issue remains balancing Pakistan’s strategic importance to the United States with the pervasive and mounting distrust in the U.S.-Pakistan relationship, as well as with budget deficit-reduction pressures.

U.S. assistance to Pakistan has fluctuated considerably over the past 60 years. In the wake of 9/11, however, aid to Pakistan has increased steadily as the Bush and Obama Administrations both characterized Pakistan as a crucial U.S. partner in efforts to combat terrorism and to promote stability in both Afghanistan and South Asia. Since 1948, the United States has pledged more than $30 billion in direct aid, about half for military assistance. Two-thirds of this total was appropriated in the post-9/11 era from FY2002 to FY2011. Many observers question the gains accrued to date, viewing a lack of accountability and reform by the Pakistani government as major obstacles. Moreover, any goodwill generated by U.S. aid is offset by widespread anti- American sentiment among the Pakistani people.

In September 2009, Congress passed the Enhanced Partnership with Pakistan Act of 2009, which became P.L. 111-73. The law authorizes the President to provide $1.5 billion in annual nonmilitary aid to Pakistan from FY2010 through FY2014. It requires annual certification for release of security-related aid; such conditionality is a contentious issue. Congress also established two new funds in 2009—the Pakistan Counterinsurgency Fund (PCF) within the Defense Department appropriations and the Pakistan Counterinsurgency Capability Fund within the State-Foreign Operations Appropriations—to build Pakistan’s counterinsurgency capabilities.

When $1.5 billion in “coalition support fund” military reimbursements are added to economic and military aid totals, the United States provided a total of $4.3 billion for Pakistan for FY2010 alone, making it the second-highest recipient after Afghanistan. In addition to these ongoing programs, in mid-2010 the United States pledged about $700 million in a humanitarian response to extensive flooding in Pakistan.

In an indicator of increased attention to aid oversight, Congress in December 2011 enacted a National Defense Authorization Act for FY2012 (P.L. 112-81) that would withhold 60% of any FY2012 appropriations for PCF unless the Secretary of Defense reports to Congress a strategy for the use of such funds and the metrics for determining their effectiveness, and a strategy to enhance Pakistani efforts to counter improvised explosive devices, among other provisions.

This report will be updated as congressional actions on aid to Pakistan unfold in the 112th Congress. For broader discussion of U.S.-Pakistan relations, see CRS Report R41307, Pakistan:



Date of Report: April 10, 2012
Number of Pages: 47
Order Number: R41856
Price: $29.95

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Tuesday, April 24, 2012

Yemen: Background and U.S. Relations


Jeremy M. Sharp
Specialist in Middle Eastern Affairs

This report provides an overview and analysis of U.S.-Yemeni relations amidst evolving political change in Yemeni leadership, ongoing U.S. counterterrorism operations against Al Qaeda in the Arabian Peninsula (AQAP) operatives at large in Yemen’s hinterlands, and international efforts to bolster the country’s stability despite an array of daunting socio-economic problems. Congress and U.S. policymakers may be concerned with prospects for stabilizing Yemen and establishing strong bilateral relations with future Yemeni leaders.

On November 23, 2011, after eleven months of protests and violence that claimed over 2,000 lives, then President Ali Abdullah Saleh of Yemen signed on to a U.S.-backed, Gulf Cooperation Council (GCC)-brokered transition plan. In line with the plan, Yemen held a presidential election in February 2012 with one consensus candidate on the ballot—former Vice President Abed Rabbo Mansour al Hadi. He received 6.6 million votes and, on February 25, 2012, he was inaugurated before parliament.

Many Administration officials have declared that AQAP, the Yemeni-based terrorist organization that has attempted on several occasions to attack the U.S. homeland, is the most lethal of the Al Qaeda affiliates. In recent years, the Administration and Congress have supported an increased U.S. commitment of resources to counterterrorism and stabilization efforts there. Many analysts assert that Yemen is becoming a failed state and safe haven for Al Qaeda operatives and as such should be considered an active theater for U.S. counterterrorism operations. Given Yemen’s contentious political climate and its myriad development challenges, most long-time Yemen watchers suggest that security problems emanating from Yemen may persist in spite of increased U.S. or international efforts to combat them.

For FY2013, the Obama Administration is requesting $72.6 million in State Departmentadministered economic and military aid for Yemen. The Administration ceased outlays of previously appropriated aid for Yemen during the past year due to political unrest there, although the delivery of some aid resumed in September 2011.



Date of Report: April 10, 2012
Number of Pages: 17
Order Number: RL34170Price: $29.95

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Friday, April 20, 2012

Unlawful Internet Gambling Enforcement Act (UIGEA) and Its Implementing Regulations


Brian T. Yeh
Legislative Attorney

Charles Doyle
Senior Specialist in American Public Law


The Unlawful Internet Gambling Enforcement Act (UIGEA) seeks to cut off the flow of revenue to unlawful Internet gambling businesses. It outlaws receipt of checks, credit card charges, electronic funds transfers, and the like by such businesses. It also enlists the assistance of banks, credit card issuers and other payment system participants to help stem the flow of funds to unlawful Internet gambling businesses. To that end, it authorizes the Treasury Department and the Federal Reserve System (the Agencies), in consultation with the Justice Department, to promulgate implementing regulations. The Agencies adopted a final rule implementing the provisions of the UIGEA, 73 Federal Register 69382 (November 18, 2008); the rule was effective January 19, 2009, with a compliance date of June 1, 2010.

The final rule addresses the feasibility of identifying and interdicting the flow of illicit Internet gambling proceeds in five payment systems: card systems, money transmission systems, wire transfer systems, check collection systems, and the Automated Clearing House (ACH) system. It suggests that, except for financial institutions that deal directly with illegal Internet gambling operators, tracking the flow of revenue within the wire transfer, check collection, and ACH systems is not feasible at this point. It therefore exempts them from the regulations’ requirements. It charges those with whom illegal Internet gambling operators may deal directly within those three systems, and participants in the card and money transmission systems, to adopt policies and procedures to enable them to identify the nature of their customers’ business, to employ customer agreements barring tainted transactions, and to establish and maintain remedial steps to deal with tainted transactions when they are identified. The final rule provides non-exclusive examples of reasonably designed policies and procedures to prevent restricted transactions. The Agencies argued that flexible, risk-based due diligence procedures conducted by participants in the payment systems, in establishing and maintaining commercial customer relationships, is the most effective method to prevent or prohibit the restricted transactions.

Some Members of Congress have criticized the current Internet gambling restrictions for being, in their view, ineffective at stopping Internet gambling, an infringement on individual liberty, and a lost opportunity to collect tax revenue, among other things. The 112th Congress has held several hearings concerning Internet gambling and related issues, and several bills have been introduced that would allow for lawful, government-regulated Internet gambling activities. The legislation includes H.R. 1174 (Internet Gambling Regulation, Consumer Protection, and Enforcement Act), which would establish a licensing program administered by the U.S. Treasury Secretary under which Internet gambling companies may legitimately operate and accept bets or wagers from individuals located in the United States; H.R. 2230 (Internet Gambling Regulation and Tax Enforcement Act of 2011), which would establish a licensing fee regime within the Internal Revenue Code for Internet gambling operators; and H.R. 2366 (Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2011), which would create an office within the U.S. Department of Commerce responsible for overseeing qualified state agencies that issue licenses to persons seeking to operate an Internet poker facility.

Several state legislatures are also considering measures that would legalize, license, and tax Internet gambling within their borders, taking advantage of a UIGEA provision that exempts intrastate Internet gambling from its applicable scope. A recent change in the U.S. Department of Justice’s position regarding the federal Wire Act that now interprets that statute as prohibiting sports betting only (and not interstate transmission of other types of gambling) has also helped encourage state initiatives to legalize intrastate, and possibly even interstate, online gambling.



Date of Report: April 10, 2012
Number of Pages: 19
Order Number: RS22749
Price: $29.95

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Kuwait: Security, Reform, and U.S. Policy


Kenneth Katzman
Specialist in Middle Eastern Affairs

Kuwait has been pivotal to two decades of U.S. efforts to end a strategic threat posed by Iraq. Because of its location and close cooperation with the United States, Kuwait is central to U.S. efforts to remain engaged in the northern Persian Gulf region following the completion of the withdrawal of U.S. forces from Iraq at the end of 2011. Kuwait’s relations with the post-Saddam government in Iraq have been hampered by long-standing territorial, economic, and political issues unresolved from the 1990 Iraqi invasion of Kuwait, but those issues are being progressively solved or narrowed. Kuwait is increasingly suspicious of Iranian intentions in the Gulf, which aligns Kuwait with U.S. efforts to contain Iranian power in the Gulf and prevent Iran from exerting undue influence in post-withdrawal Iraq. Still, Kuwait maintains relatively normal economic and political relations with Iran so as not to provoke Iran to try to empower pro-Iranian elements in Kuwait.

Kuwait’s ruling elites have been in a power struggle for nearly six years, but Kuwait has not faced the mass popular unrest that other governments throughout the Middle East have faced in 2011- 2012. The disputes in Kuwait have taken the form of infighting between oppositionists in the elected National Assembly and the ruling Al Sabah family, primarily over the political and economic dominance of the Al Sabah. These disputes have produced four constitutional dissolutions of the National Assembly and new elections since 2006, the latest of which were held on February 2, 2012. The elections produced a body that is generally adversarial to the government and has strong Islamist influence.

Despite the infighting, and in contrast with Arab countries that have seen major political unrest and change in 2011-12, demonstrations in Kuwait by opposition groups over official corruption, security force brutality, citizenship eligibility, and other issues have been relatively small since early 2011. Kuwait is a relatively wealthy society where most citizens apparently do not want to risk their economic well-being to bring about the downfall of Al Sabah rule. Opposition demands are generally limited to the formation of a constitutional monarchy in which the Assembly names a prime minister. The government’s use of financial largesse—budgets loaded with subsidies and salary increases— as well as some repressive measures, including beatings and imprisonments, have contributed to keeping the unrest relatively limited.

On other regional issues, in part because of its leadership turmoil, Kuwait tends to defer to consensus positions within the Gulf Cooperation Council; this deference is evident in Kuwait’s stances on the Israel-Palestinian dispute as well as on the uprisings in Yemen and Syria. On the uprising in Bahrain, in March 2011, Kuwait joined a Gulf Cooperation Council intervention on the side of the government, but unlike Saudi Arabia and UAE, Kuwait sent naval and not ground forces.



Date of Report: April 11, 2012
Number of Pages: 26
Order Number: RS21513
Price: $29.95

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Bahrain: Reform, Security, and U.S. Policy


Kenneth Katzman
Specialist in Middle Eastern Affairs

The uprising that began in Bahrain on February 14, 2011, following the revolt that overthrew Egypt’s President Hosni Mubarak three days earlier, began a political crisis that defies easy resolution. The unrest demonstrates that the grievances of the Shiite majority over the distribution of power and economic opportunities were not satisfied by the efforts during 1999-2010 to increase the role of the Shiite majority in governance. Bahraini Shiites say they demand a constitutional monarchy in which an elected parliament produces the government, but the Sunni minority believes the Shiites want nothing less than outright rule.

In March 2011, Bahrain’s government rejected U.S. advice by inviting direct security assistance from other Gulf Cooperation Council countries, declaring a state of emergency, forcefully suppressing demonstrations, and arresting dissident leaders and pro-opposition health care workers. Although the state of emergency ended on June 1, 2011, the continued imprisonment of dissidents contributed to the resulting failure of a “national dialogue,” held in July 2011, to reach agreement on more than just a few political reform recommendations. Hopes for resolution were raised by a pivotal report by a government-appointed “Independent Commission of Inquiry” (BICI) on the unrest, released November 23, 2011, which was critical of the government’s actions against the unrest as well as the opposition’s responses to government proposals early in the crisis. The government asserts it has implemented many of the BICI recommendations—an assertion largely corroborated on March 20, 2012, by a national commission appointed to oversee implementation—and says it will institute the remainder. However, stalemate on major political reforms has contributed to the continuation of significant demonstrations and dashed hopes that a complete solution is in sight.

The Obama Administration has not called for a change of the Al Khalifa regime and has to some extent concurred with the Bahrain government view that Iran is likely to take advantage of the Bahrain unrest, but the Administration has criticized the regime’s use of force against protesters and urged further political reform. The U.S. position on Bahrain has been criticized by those who believe the United States is downplaying regime abuses because the U.S. security relationship with the Al Khalifa regime is critical to U.S. efforts to contain Iran and secure the Persian Gulf more broadly. In exchange for a tacit security guarantee against Iran or other aggressors, Bahrain has provided key support for U.S. interests by hosting U.S. naval headquarters for the Gulf for over 60 years and by providing facilities and small numbers of personnel for U.S. war efforts in Iraq and Afghanistan. U.S. officials are concerned that the instability in Bahrain could render U.S. use of the naval headquarters facilities untenable, but there are no evident moves to relocate it. Beyond the naval facility, the United States signed a formal defense pact with Bahrain in 1991 and has designated Bahrain as a “major non-NATO ally,” entitling it to sales of sophisticated U.S. weapons systems. Partly to address criticism from human rights and some Members of Congress, the Administration has put on hold a significant proposed sale of armored vehicles and anti-tank weapons. Consumed by its own crisis, Bahrain has joined with but deferred to other GCC powers in initiatives to resolve uprisings in Libya, Syria, and Yemen.

Fueling Shiite unrest is the fact that Bahrain, having largely run out of crude oil reserves, is poorer than most of the other Persian Gulf monarchies. The country has tried to compensate through diversification, particularly with banking and some manufacturing. In September 2004, the United States and Bahrain signed a free trade agreement (FTA); legislation implementing it was signed January 11, 2006 (P.L. 109-169). The unrest in 2011 has further strained Bahrain’s economy.



Date of Report: April 13, 2012
Number of Pages: 35
Order Number: 95-1013
Price: $29.95

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Tuesday, April 17, 2012

Afghanistan: Politics, Elections, and Government Performance


Kenneth Katzman
Specialist in Middle Eastern Affairs

Building capacity and limiting corruption at all levels of Afghan governance are crucial to the success of a planned transition from U.S.-led NATO forces to Afghan security leadership. 
         The capacity of the formal Afghan governing structure has increased significantly since the Taliban regime fell in late 2001, but many positions at the local level are unfilled. 
         Nepotism and political considerations in hiring are entrenched in Afghan culture and limit development of a competent bureaucracy, as does widespread illiteracy. 
         President Hamid Karzai has accepted U.S. help to build emerging anti-corruption institutions, but these same institutions have sometimes caused a Karzai backlash when they have targeted his allies or relatives. 
         International efforts to curb fraud in two successive elections (for president in 2009 and parliament in 2010) largely failed. 
         Even though the formal governing structure remains weak, Karzai’s critics assert that he seeks to concentrate power in his office through vast powers of appointment at all levels. Reflecting these broader suspicions, Karzai has publicly and repeatedly denied assertions by opposing faction leaders that he wants to stay in office beyond the 2014 expiration of his second term. 
There is concern among many observers that U.S. efforts to help build Afghan governance, democracy, civil society, and rule of law could founder as the United States and its partners seek to wind down, wholly or in large part, their involvement in Afghanistan by the end of 2014. Some argue that the informal power structure is a more important factor in governance than the formal power structure. Karzai has turned this power structure to his advantage by relying on the loyalty of several close, ethnic Pashtun allies, while seeking to divide the minority ethnic and political faction leaders that generally oppose him. Some non-Pashtun faction leaders oppose Karzai on the grounds that he is too willing to make concessions to insurgent leaders in search of a settlement. There are fears that a reintegration of the Taliban into Afghan politics will further set back progress in human rights and the rights of women, and boost ethnic Pashtuns at the expense of the other minorities. Still, momentum for talks with the Taliban appeared to increase in early 2012 with U.S., Afghan, and Taliban agreement for the Taliban to open a political office in Qatar and revelations by Karzai that his representatives have had meetings with Taliban representatives.

Broader issues of human rights often vary depending on the security environment in particular regions, although some trends prevail nationwide. The State Department and outside human rights reports on Afghanistan attribute many of the human rights abuses in Afghanistan to overall lack of security and to traditional conservative attitudes still prevalent. Women have made substantial gains in government and the private sector since the fall of the Taliban, but many organizations report substantial backsliding, particularly in areas where the insurgency operates. Traditional attitudes also contribute to the judicial and political system’s continued toleration of child marriages, imprisonment of women who flee domestic violence, judgments against converts from Islam to Christianity, and curbs on the sale of alcohol and Western-oriented programming in the Afghan media. See also CRS Report RL30588, Afghanistan: Post-Taliban Governance, Security, and U.S. Policy; CRS Report R40747, United Nations Assistance Mission in Afghanistan: Background and Policy Issues; and CRS Report R41484, Afghanistan: U.S. Rule of Law and Justice Sector Assistance.



Date of Report:
March 30, 2012
Number of Pages:
66
Order Number: R
S21922
Price: $29.95

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