Global Policy Forum

Last summer aid workers in Pakistan battled with epic floods that affected 20 million people, destroyed crops and inundated one-fifth of the country. A year later they find themselves in a very different imbroglio: the escalating spy war between the US and Pakistan.

With millions of flood victims still in urgent need of aid, western charities say their efforts are being hit by the fallout from Osama bin Laden's death as the government hunts for CIA spies. Stringent visa regulations and restrictions on movement by the military are causing long delays, increasing costs and affecting the delivery of aid to areas hit by floods and the conflict with the Taliban.

Last month a young American aid worker with Catholic Relief Services was brought to court for visa irregularities, imprisoned for nine days, then deported. British agencies say their staff have fallen under the microscope of Pakistan's spy service, the ISI, with officials visiting field offices and introducing restrictions on travel.

"We've seen gradual restrictions on movement and longer processing time for visas," said a spokesman for the Pakistan Humanitarian Forum, which represents 40 aid groups.

The crackdown started after CIA agent Raymond Davis shot and killed two Pakistanis in Lahore last January, and intensified after the killing of Bin Laden in Abbottabad on 2 May.

Aid workers in Sukkur, a southern city at the heart of flood relief efforts, started to complain of regular visits from intelligence officers and police. In Jacobabad, location of a sensitive airbase, agencies were told that visiting certain areas now required a "no objection certificate" – an official letter of permission.

"The authorities have started paying more attention to who is in the country and what they are doing," said Michael O'Brien of the Red Cross.

Pakistani embassies abroad have also started to restrict access. "It's making things extremely difficult," said Paul Healy of Trocaire, an Irish aid agency. "Before, we could get a visa for a technical expert in one week; now it takes 10."

The greatest impact is in north-western Khyber Pakhtunkhwa province, the source of last year's floods, and where 850,000 civilians have been made homeless by fighting between the army and the Taliban. Aid workers now require permission to visit previously open areas, such as Kohistan and Shangla near the Swat valley. Applications are vetted by the army's 11th Corps, which runs local military operations; the UN says 43 no-objection certificates are outstanding there.

One European aid manager said he had been unable to send staff to his rural project for more than a month because of the restrictions. "We're being bundled in with diplomats and other foreign-service nationals. They need to be educated about who we are – and that is not CIA agents," he said.

"Quite a lot of the population are affected by both floods and conflict," said a British aid worker. "The irony is that they're getting half the help, even though the needs may be twice as great." The aid worker, like several others, spoke on condition of anonymity, fearing discrimination from the authorities.

The National Disaster Management Authority, which oversees disaster relief, said it was issuing travel permits on a priority basis. "We are committed to facilitate aid workers in their pursuit of assisting affected communities," said spokesman Brigadier Sajid Naeem.

Tensions were exacerbated by news that the CIA ran a fake vaccination programme in Abbottabad to identify the occupants of Bin Laden's house. "It's adding fuel to the fire in terms of mistrust," said a senior UN official. "Now the Pakistanis can say 'We were right all along – these NGOs are only doing spy work.' "

Médecins Sans Frontières said the CIA operation was "a dangerous abuse of medical care" that would compromise humanitarian work.

The bureaucracy and spy intrigues coincide with a serious crisis. Some 800,000 families still lack permanent shelter and more than 1 million people require food aid, according to Oxfam. In places the price of bricks has quadrupled, making it impossible for survivors to rebuild their homes. A UN appeal to help families get back on their feet has a $600m (£366m) shortfall.

Then there is the psychological toll. "People are still afraid of the sound of running water," said Suzanna Akasha, a psycho-social expert from the Danish Red Cross. "They have trouble falling asleep, staying asleep."

The monsoons started last week in northern Punjab and, although rainfall is normal so far, last year's devastation left vast numbers vulnerable to hunger and illness. The US says 2 million people will be affected this year, though contingency plans are based on 7 million being affected should the weather deteriorate.

Tensions between US and Pakistani spies continue to bubble. Last week an American convoy entering Peshawar was sent back to Islamabad because, officials said, it lacked the correct paperwork. Peshawar has been largely open to foreigners but the ISI is keen to rein in the activities of a CIA station presumed to operate from the American consulate there.

In Washington, the FBI recently arrested the director of a lobby group focused on Kashmir that they allege is a ISI front; if convicted, he faces up to five years in prison. As the ISI scours Pakistan for undeclared CIA agents, aid workers worry about getting caught in the dragnet. Some accuse the United Nations of not doing enough to push their case with the government. "They're asleep, as in Rip Van Winkle," said one.

A UN official said that some aid workers were "over-reacting". "Certainly the situation has resulted in mistrust," she said. "But they come into the country for a short period, they don't know the system, and they overreact."

Under pressure

The gods have been cruel to Pakistan. The country had barely recovered from the 2005 earthquake which killed 73,000 people when the 2010 floods struck.

The Indus river swelled, wreaking havoc on a huge scale: causing 2,000 deaths and the destruction of 1.5m homes, enough farmland to cover the UK and the displacement of 11 million people.

The crisis continues today. Some districts suffer malnutrition rates on a par with sub-Saharan Africa. In others, child labour has risen by a third as parents struggle to earn a living.

Some children are turning to drugs to combat their traumas. "As always, it's the weakest who suffer most," said Marco Aviotti of the medical charity, Merlin.

Worryingly, the country is ill-prepared for another flood, with a rickety disaster management system. But money is scarce: the government owes $59bn to various agencies, tax collection remains disastrously low, and the economy is dependent on the IMF.