ISLAMABAD - The US should hold back much of its $7.5 billion aid package to Pakistan until it reforms dysfunctional policies related to energy, taxes and other areas, according to a new report that criticizes the American aids focus in a country beset by corruption, poverty and militancy. The report by the Washington-based Center for Global Development is the culmination of months of research and interviews with aid and other experts in Pakistan and the US. Titled Beyond Bullets and Bombs: Fixing the US Approach to Development in Pakistan, it also calls for focusing more on trade by giving Pakistani exports easier entry to US markets. US financial assistance to Pakistan has come under renewed scrutiny since the May 2 raid that killed Osama bin Laden in Pakistans northwest and further damaged already uneasy Islamabad-Washington relations. According to the report, the US Agency for International Development spent $275 million in 2009 and $676 million in 2010, the first year covered by the $7.5 billion package, which was approved in 2009. Although the report largely supports long-term financial assistance to Pakistan, it notes that in certain sectors, spending the money now will do nothing more than provide superficial fixes that keep Pakistani leaders from having to make politically difficult decisions. For instance, barely 2 per cent of Pakistanis pay income tax, and yet the ruling party cannot push through tax reforms. The country also suffers from severe electricity shortages, but it has been unable to reform its energy sector. Its tariffs and subsidies are still in place despite decades of pleas from international donors and lenders. To the extent that Pakistani leaders expect and assume disbursement of aid, it makes sense for them to push for that money rather than to work with their political rivals to move on key reforms, the report said. We believe that the pure act of delaying disbursement in certain sectors will benefit both the Pakistani reform process and the ultimate effectiveness of U.S. aid, it says. The report acknowledges the difficulties of running an aid program in an insecure country where corruption is endemic, poverty is rampant, democratic institutions are weak and basic government services such as education and health care have long taken a back seat to military expenditures. But it is critical of how the US has approached the challenge. The aid mission lacks clear goals and some goals overlap with security and political aims that should be kept separate from the development mission, the report says. The US AID mission is understaffed, and many of its workers stay for just one year and dont have solid relationships with Pakistani counterparts, the report says. It also says too many people are in charge, both in Islamabad and Washington, with no clear lines of authority. Some of the reports top recommendations are not about aid, but trade. The authors urge Congress and the White House to extend duty-free, quota-free access to US markets for all Pakistani exports from all of Pakistan for at least the next five years.