If the quantity of aid and the ways it is delivered are the super-neglected subject when it comes to discussing Afghanistan strategy, aid to Pakistan is the ++neglected subject.
I have just run into Calin Trenkov-Wermuth' brief overview of EU aid to Pakistan and his recommendation of more non-military assistance to the country. At first, it is easy to sympathise with Trenkov-Wermuth' statements. It is tempting to be critical of the EU for not doing enough on something that is nominally important to it. Quote:
"EU officials have allocated € 52 million in non-military aid for Pakistan for 2009, approximately the same amount as for Paraguay. For the period of 2009-2013, the figure stands at € 435 million, which is in stark contrast to the US’s recent tripling of its non-military aid to US$ 1.5 billion per year over the next five years."
However, what Pakistan really needs is, in fact, not so easy to determine. In this sense it does not matter why the EU is not giving more. Freely given aid as unconditioned wealth could be as uncertain a benefit as an abundance of natural resources can be in you-name-which-country. The latter effect is mentioned in the literature as the "resource curse" sometimes - unconditioned aid can also be a curse, as it is (logically) claimed, for instance in this article.
Currently, aid is given to Pakistan in even more peculiar circumstances than in other contexts - a good overview of these circumstances you may read here. Costs of the war on terrorism are "reimbursed" (not in a direct sense), even in times when peace agreements with the Taliban are in force. Security assistance, supposedly with concerns about instability in Pakistan, is given so Pakistan can buy weapons systems of use against India, and not against the TTP. Budget support is given generously. At the same time, even a discussion of attaching conditions to aid is harshly criticised in Pakistani politics, so one needs to beware of seeming to be imposing anything on Pakistani leaders. Meanwhile, corruption may divert a significant amount of money given as development assistance even, which recently prompted much official Washington head-scratching.
Perhaps the most amazing feature of assistance to Pakistan is all the money covertly transferred to the country for various purposes. On page 12 of Azeem Ibrahim's study, to which I have already linked above, you find a remarkable figure: "Some analysts have suggested that these covert payments may have exceeded $10 billion until 2007." If the anonymously mentioned sources are reliable, and the $10 billion figure is at least near the actual amount of "covert funds" disbursed, it can compete for a decent ranking with the other most-amazing sort of figures I have run into so far, covering the region.
Thus increasing EU assistance, while others, including for example Australia (over 2009-2010 they are putting in $120 million), are also increasing theirs, can certainly act as a perverse incentive in all sorts of ways (brinksmanship and corruption included, obviously) - while one also contributes to decreasing accountability through creating a "multiple-principals-over-agents" sort of situation (the perils of which are touched upon in this study, for example).
At the same time, one should not forget that quite a lot goes wrong with aid in Afghanistan, too. I was saddened to hear this understandably downbeat assessment of Canada's efforts in Kandahar by experienced correspondent Graeme Smith. He observes: "But how many roads are built in rural Afghanistan these days without paying bribes to local insurgents? How many villagers in Kandahar would get polio vaccinations without permission from the Taliban? Making the country better doesn't necessarily require fighting the insurgents – in many cases, it requires working with them."
These are clever remarks and they do make one wonder. According to the ink blot theory of counterinsurgency of which I have written a lot here since 2007 (already in 2007), one would spend money in well-secured areas (the ink blots), try to aggressively promote an expansion of the "ink blots" with both carrots and sticks to the populace concerned in adjacent areas, and at the same time harass insurgents in outlying areas lest the insurgents should have their own ink blots. This is a simple theory, yet a clever one. Even though not all of it can be operationalised in the Afghanistan context. But much that could be, isn't, either.
Precious time is spent arguing about weak governance and its lacking legitimacy in Afghanistan. Paradoxically, at the same time, however, insurgency-affected areas are being paid an insurgency premium of sorts, much of which lands in the Taliban's coffers. This undermines the legitimacy of the government where it would be in a position to do more for locals, while it reinforces the Taliban's legitimacy in areas where they are strong or on the rise (at the same time as it is part of what finances their fight). Avoiding this perverse interaction is not altogether possible - it is a necessary trade-off for sustaining operations in many areas in the country. But sometimes it is done just by default.