[Congressional Record Volume 156, Number 113 (Thursday, July 29, 2010)]
[Senate]
[Pages S6521-S6522]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LUGAR (for himself and Mr. Kerry):
  S. 3665. A bill to promote the strengthening of the private sector in 
Pakistan; to the Committee on Foreign Relations.
  Mr. LUGAR. Mr. President, I rise to introduce legislation that will 
lead to the establishment of the Pakistan-American Enterprise Fund on 
behalf of myself and Senator Kerry. The Pakistan-American Enterprise 
Fund bill authorizes the Administration to allocate, from existing 
funds granted under the Enhanced Partnership with Pakistan Act of 2009, 
such sums as required to create the Fund. The mission of the Fund will 
be to help empower Pakistan's private sector to create jobs, which will 
contribute towards achieving long-term social stability and economic 
growth.
  The failed attack that occurred on May 1, 2010 in Times Square 
reinforces the need for our governments to work together to neutralize 
the imminent threats posed by terrorist waiting to strike, while 
simultaneously preventing the cancer of extremism from spreading and 
corrupting local communities in both our countries.
  It was to help undergird such cooperation that President Obama last 
year signed the Kerry-Lugar-Berman Enhanced Partnership with Pakistan 
Act authorizing $7.5 billion over 5 years. This non-military aid 
package is intended to help reverse Pakistan's converging crises of a 
growing al-Qaeda sanctuary, an expanding Taliban insurgency, a failing 
economy and deteriorating human development indicators. These 
conditions were intensifying turmoil and violence in the country, 
helping to incubate extremism and putting in question the security of 
Pakistan's nuclear weapons arsenal, as well as our own domestic 
security.
  In order to directly address Pakistan's troubling economic 
trajectory, the Pakistan-American Enterprise Fund will work with the 
private sector to catalyze indigenous job creation, which will empower 
the people of Pakistan to help themselves. Entrepreneurial innovation 
is the engine that fuels sustainable economic growth and development. 
Pakistan currently enjoys a vibrant private sector, especially among 
small and medium size enterprises, but more must be done to encourage 
business formation and expansion.
  According to the World Bank, small and medium size enterprises, SMEs, 
in

[[Page S6522]]

Pakistan account for nearly 90 percent of all businesses, 80 percent of 
all non-agricultural employees, and 40 percent of annual GDP. If the 
country is to emerge as a commercial partner and regional leader, SMEs 
must receive a strong transfusion of investment capital so that gainful 
employment exists as an alternative to the financial incentives offered 
by radical groups in Pakistan.
  In addition to providing much needed capital to aspiring and 
established Pakistani entrepreneurs, the Fund will provide a vehicle 
through which we might also export the entrepreneurial instincts and 
experience that are widely dispersed, but largely untapped, among US 
financial experts. Sustainable entrepreneurial activity requires a 
combination of financial and intellectual capital. Delivering both of 
these ingredients effectively is essential.
  USAID has demonstrated a limited capacity to deliver this type of 
relevant, usable assistance when needed. Currently under-resourced for 
and over-stretched by the task of rebuilding the infrastructures and 
economies of Iraq, Afghanistan and now Haiti--while simultaneously 
rebuilding the agency itself--USAID's efforts would be enhanced by the 
expertise the Fund could bring to bear.
  The creation of a Fund for Pakistan, like many of its predecessors, 
could couple financial and intellectual capital in a framework that is 
uniquely suited to addressing the financial and technical assistance 
needs in distressed economies like Pakistan. Appointed by the 
president, the Board of Directors, comprised of 4 private citizens of 
the United States and 3 private citizens of Pakistan who serve without 
compensation, will leverage their experience and expertise operating in 
international and emerging markets to oversee the Fund, which will be 
based in Pakistan. In turn, the Board would hire and direct a group of 
American and Pakistani bankers, who would be dispatched, using existing 
funds granted under the Enhanced Partnership with Pakistan Act of 2009, 
to provide technical assistance and traditional financial products, 
like working capital loans and 3 to 5 year cash flow term loans for 
expansion capital, to the private sector.
  While the enterprise fund model is not perfect, it is a tested 
mechanism for promoting economic growth and reinvigorating fledgling 
economies. After the fall of the Berlin Wall, Congress, through 
enactment of the Support for East European Development Act, SEED, and 
the Freedom Support Act, FSA, authorized nearly $1.2 billion for USAID 
to establish ten new investment funds, collectively known as the 
``Enterprise Funds'', throughout Central and Eastern Europe and the 
Former Soviet Union. These funds channeled funding into over 500 
enterprises in 19 countries, leveraged an additional $5 billion in 
private investment capital from outside the U.S. Government, provided 
substantial development capital where supply was limited, created or 
sustained over 260,000 jobs through investment and development 
activities, funded $74 million in technical assistance to strengthen 
the private sector and is expected to recoup 137 percent of the 
original USAID funding.
  Pakistan's economy has shown resilience in the face of many 
challenges since the 1960s. However, today the country stands at a 
crossroads. If Pakistan is to repress extremist voices and emerge as a 
more reliable partner in the 21st century, we must empower the private 
sector to create jobs and contribute towards a sustainable future. The 
creation of the Pakistan-American Enterprise Fund would help to achieve 
this positive outcome. I ask for your support on passage of this bill.
                                 ______