Spencer Ackerman's been taking a look at how American aid gets delivered to Pakistan and it basically amounts to handing over billions of dollars of cash stuffed into garbage bags. More specifically, "the U.S. gives Musharraf's government about $200 million annually and his military $100 million monthly in the form of direct cash transfers." That's basically untraceable, unaccountable money. Over a billion a year goes direct to the Pakistani military in what CSIS's Rick Barton characterizes as "a sort of a handshake deal between militaries" in which we "we don't have a lot of record-keeping."
Keep that in mind, and then flip back to Joshua Hammer's recent Pakistan article for The Atlantic:
Ayesha Siddiqa, a well-known analyst in Islamabad and the author of Military Inc.: Inside the Pakistani Military Economy, says that the armed forces are major players in real estate, agribusiness, and several other industries. The empire includes banks, cable-TV companies, insurance agencies, sugar refineries, private security firms, schools, airlines, cargo services, and textile factories. The Fauji Foundation, for instance, is a “welfare trust” that is run by the defense ministry and spans 15 business enterprises. It provides cushy jobs for hundreds of retired officers (many retire in their late 40s), pays few taxes, and channels profits into a fund that is intended to benefit retired military personnel. And it is just one of several giant military-run foundations and companies that were set up decades ago and have grown steadily ever since.
The military’s intrusion into commerce is quite visible in Islamabad, if you know what to look for. The logos of the Fauji Foundation and other military-run conglomerates appear on trucks, boxes, and buildings throughout the city. As Hoodbhoy told me, “They own gas companies. They make fertilizer, cement, soap, bottled water. They even make cereals, so when I have breakfast, I can’t get away from them.”
Basically, this money could be going anywhere for any purpose -- it's just a kind of giant bribe to Pakistan's military and political elite (and in a military dictatorship it's not such a key distinction) not something that goes to support particular programs.