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It's really too bad that David Rohde, Carlotta Gall, Eric Schmitt, and David Sanger did all this reporting only for The New York Times to bury their story in a Christmas Eve edition of the paper that few people will read. At any rate, we learned back in November that our aid to Pakistan was basically big bundles of unaccountable cash, more like bribes to Pervez Musharraf and other top officials than aid as such. The Times team went looking after where it went and the answer turns out to be: not where it was supposed to:

In interviews in Islamabad and Washington, Bush administration and military officials said they believed that much of the American money was not making its way to frontline Pakistani units. Money has been diverted to help finance weapons systems designed to counter India, not Al Qaeda or the Taliban, the officials said, adding that the United States has paid tens of millions of dollars in inflated Pakistani reimbursement claims for fuel, ammunition and other costs.

Along with various things about the need for oversight, etc., I think this underscores the point that we've underinvested in diplomatic efforts to try to reduce India-Pakistan tensions. Pakistan's sense of beseigement vis-a-vis its largest neighbor is like an acid that keeps eating away at our efforts to convince them to prioritize a fight against radical groups. And understandably so -- as long as Pakistan is adjacent to a larger, richer, nuclear-armed hostile country that fact is going to be the defense establishment's top priority. It's obviously not something we can wish away with a magic wand, but it's worth putting some effort into since the payoff would be very large and absent progress on that front it's hard for any incentive package to be cleverly-designed enough to really work.