(CNN) -- The United States provides Pakistan with $1.5 billion in aid annually, but this ambitious program lacks transparency, has muddled goals and is hampered by conflicting instructions from Washington.
Those are some of the conclusions of a study from the Center for Global Development, a Washington-based group. The report paints a somber and at times alarming picture of the situation in Pakistan.
By 2030, Pakistan will have the fourth-largest population in the world, but the millions of young Pakistanis who enter the workforce every year are poorly prepared to compete. For every 100 students who start school in Karachi, only one graduates from secondary school. Power cuts and water shortages are common.
"The prospects for a positive outcome in Pakistan seem bleak....but there are reasons to believe Pakistan can turn the corner," the report says.
"The overall tone is gloomy about what's happened so far but there is a possibility that it could get better going forward, subject to a lot of serious thinking going on inside the government," says Nancy Birdsall, president of the Center and formerly a senior executive at the World Bank.
"There is potential in Pakistan -- it is a democratically elected government, there is an independent judiciary and a free press, there's a very large sophisticated urban middle class."
But the Center's report says U.S. aid to Pakistan "cannot yet boast a coherent set of focused development priorities," with the main development agency -- the U.S. Agency for International Development (USAID) -- neither empowered nor equipped to succeed.
"When Pakistan is addressed, security dominates," the report says. "Trade, investment and aid lose out." And trade could play a much greater role if import quotas and duties for Pakistani textiles and other products were reduced. The trouble is U.S. investment in Pakistan has declined sharply as instability there has grown.
But the report also acknowledges that U.S. aid faces another huge obstacle: the rising tide of anti-Americanism in Pakistan.
Despite the stated goal of the multi-year aid program to "demonstrate the true friendship of the American people," anti-American sentiment has only worsened in the past two years. In an opinion piece for CNN.com this week, former Pakistani leader Pervez Musharraf argues that "there is an acute deficit of trust and confidence between the United States and Pakistan at all levels of government, the military and intelligence."
Security issues mean that the movements of staff involved with U.S. aid programs are restricted and they are typically stationed in Pakistan for just one year. The report argues that is nowhere long enough to establish meaningful relationships with Pakistani partners.
The Center's report also says there's a disconnect between Washington's expectations and what can be done on the ground.
"Congress and the administration demand local ownership, rigorous oversight and speedy results," it says. But that's not possible in a country where corruption is rife and government institutions weak.
There's also too much emphasis on how much money is being spent, rather than its impact. "For a strategy intended to promote long-term development, this is a terrible metric of success," the report says.
"USAID needs to be liberated from the pressures from Capitol Hill, the White House, the State Department," Birdsall told CNN. "USAID is not responsible for the overall strategy; it's seen as an implementing agency. So where does the strategy come from? We don't know. The strategy seems to be changing over the last year and a half."
Too often, the report says, aid for Pakistan is also seen in terms of a regional approach that includes Afghanistan. But the needs of the two countries are entirely different.
The Center says USAID should be put in charge of planning and delivering a development strategy in Pakistan, with staff that are dedicated to the country for five-year assignments. There should be greater efforts to recruit talented local staff and give them real responsibility, and much more transparency about what's being spent and where. And the U.S. should support and engage with Pakistan's reformers.
But the report also acknowledges that ultimately U.S. aid to Pakistan can play a modest role at best, given prevailing economic and social conditions. Regional changes can make a much greater difference.
"Cross-border Indo-Pakistani trade has more potential to spur economic growth in Pakistan that practically any intervention in the U.S. arsenal," the report says.