Afghanistan Analysts Network – English

Economy, Development, Environment

What the US Senate’s report on Afghanistan does and doesn’t say

Martine van Bijlert 8 min

Last week the US Senate’s Committee on Foreign Relations released its evaluation of US foreign assistance to Afghanistan. The report received a lot of attention, mainly as a result of the power and urgency of its message: that much of US assistance is expensive, unsustainable and based on shaky premises. These issues warrant all the media coverage they have received. But, at the same time, the report was also somewhat disappointing, AAN’s Martine van Bijlert explains why.

The report is an interesting read (find the full document here). The authors obviously talked to sensible people who spoke frankly. They incorporated information available in the public domain and picked quotable details that would catch the attention. but the two years of research and travel that went into the report did not really result in new information or analysis. The report includes many powerful examples and quotes, but they are all taken from other sources and the analysis and conclusion by the authors tend to be couched in the most careful of terms. And in many instances the authors seem undecided on the implications of the information they have gathered.

For instance, the report challenges the current COIN doctrine, and rightly so, but despite the evidence presented of an immensely skewed distribution of aid and the destabilizing effect of its large volume, the conclusion is rather tentative:

‘The administration is pursuing an assistance strategy based on counterinsurgency theories that deserve careful, ongoing scrutiny to see if they yield intended results.’ And: ‘Our stabilisation strategy assumes that short-term aid promotes stability in counterinsurgency operations and “wins hearts and minds”(…) These assumptions may not be correct. (…) More analysis is needed before we continue investing a significant amount of our aid in conflict zones.’

That does not really reflect a great sense of urgency. The authors further believe that the administration can be more effective in how it spends its money (but they stop short of saying that it needs to do so), by making sure that projects are necessary, achievable, and sustainable. But at the same time they have fully bought into the basic premise of treating foreign assistance as a national security matter, and they do not challenge the continued spending of large amounts of money per se. On the issue of why foreign assistance to Afghanistan matters:

‘The administration’s fiscal year 2010 request for Afghanistan includes roughly $3.2 billion in foreign aid. This funding level reflects the pivotal role the State Department and USAID are expected to play to help consolidate our military gains and ensure a successful transition. (…) We support the President’s FY 2012 request and recognize the value of foreign assistance in achieving our national security objectives.’

But there must be a case to be made for a foreign assistance policy that is seen as a matter of importance in its own right, committed to targeted, long-term and sustainable development interventions. But it is precisely the tendency to link aid to national security objectives that encourages short-term, expensive policies that are often ill-designed to make a difference in the lives of Afghans.

The more implicit message of the report – that now is the time to rethink the size and nature of US foreign assistance for Afghanistan – is not as well developed as would have been useful. The authors, sensibly, suggest that the US may want to down-size, rather than further expand, its civilian footprint in terms of the number of people in-country. They focus mainly on the issue of budget constraints and the immense costs involved in having US civilians in Afghanistan, while being silent on the actual impact of the so-called ‘civilian surge’. But the issue is not only that diplomats and aid workers tend to be extremely expensive, particularly under the current security regimes. (*) More importantly, it is questionable whether the large numbers of additional civilians, stationed at the Embassy or in PRTs and DSTs (Provincial Reconstruction Teams and District Support Teams), have actually contributed to better-designed, better-informed and more effectively implemented assistance.

One of the reasons for the civilian surge was that it aimed, in a limited way, to address the growing imbalance between the military and the civilian part of the US mission. So the increase in personnel and spending is often put forward – also in the Senate’s report – as proof that the US effort only ‘began in earnest in 2009’, when the civilian effort was properly resourced. But as the authors, and many others, have rightly observed, success should not be measured by the inputs and the amount of money spent.

The fact that funding ebbs and flows – and lately it has mainly flowed – is based on internal political narratives, has resulted in many of the ills that are discussed in the Senate’s report: an enormous pressure to spend money quickly (including the infamous fixation on ‘burn rates’), a heavy reliance on advisers and contractors without much oversight, little attention to building governance and implementation structures that are durable and transferable, and a huge imbalance between external money flows and local economic dynamics.

The recommendations in the report are in principle sound: reduce pressures to spend money quickly (for instance by creating a trust fund or having multiyear funding) and only implement projects that can be sustained by Afghans. But they are unlikely to have much effect if some of the more fundamental dynamics do not change: the focus on aid as an auxiliary to the military strategy (with the assumption that as the troops are drawn down, civilians will have to absorb missions currently performed by the military), the inability of donor agencies to disburse aid in increments that are suited to local needs and implementing capacity, and the tendency to measure engagement and impact in terms of money spent.

The part of the report that received by far the most attention, in the media and across the Twitter universe, was the section describing the possible consequences of ‘a precipitous withdrawal of international support’. These sentences were repeated over and over without much question or scrutiny:

‘According to the World Bank, an estimated 97 percent of Afghanistan’s gross domestic product (GDP) is derived from spending related to the international military and donor community presence. Afghanistan could suffer a severe economic depression when foreign troops leave in 2014 unless the proper planning begins now.’

The quote was one of the main reasons why I was keen to get the full report (and frustrated when Afghan internet proved excruciatingly slow and the report unusually heavy): I wanted to see the basis and details of this figure, how it was calculated and what it meant, and to understand how it related to other known figures. There was none.

Worse yet, it is unclear where the figure comes from. The World Bank staff in Kabul is rather puzzled by it; they are unaware of its origin or the thinking behind it. I have never seen it, or anything similar, quoted by anyone from the World Bank – whether publicly or in private. The footnote suggests that it may have been lifted from a policy memo by transition focal point Ashraf Ghani (who of course had a point to make: please do not transition too soon and too hurriedly). The inclusion of a dramatic figure like that, without context or explanation, and apparently no fact-checking, is problematic.

More importantly however, even if there was a solid underlying calculation (and I would really like to see it), it still does not tell you how the economy works. It does not tell you where the incoming money goes; who benefits from it and how much; how much of it will disappear and from which sectors of the economy once it stops; and what the consequences will be. Afghanistan may well suffer an economic depression once the international presence draws down, but what does that mean?

Will it mainly affect the macro-economic growth targets, while largely leaving those alone who rely on subsistence farming, social networks and occasional labour? Or conversely, will the upper layer continue to do rather well, while those parts of the population who have already struggled through decades of destitution – including the last one – are sent into deep poverty? Will the struggle over declining resources push the country into greater violence or will the growing class of well-connected businessmen try to ensure a certain stability (so they can redirect their various businesses – fuel, transport, protection, import/export – and maintain a market for their consumer goods)? Economic depression has many faces. They all carry different risks and require different interventions to mitigate the worst consequences.

There is little clarity on how the billions of dollars that are spent on Afghanistan affect the local economy. Much of the budgeted aid money ends up with international contractors. A large part of that tends to be spent on out-of-country procurement, international personnel costs (salaries, security, travel, training, per diems) and other costs such as administration fees or cost-plus arrangements. This money never arrives in Afghanistan, apart from some local spending by the in-country staff.

On the other hand, when money does get substantially spent, through local contracting or sub-contracting, the amounts involved tend to be grotesquely out of sync with the actual local procurement and construction costs. The profits are mainly distributed among a limited group of people, as much of the contracting sector is monopolised by those with close relations to senior government officials and key staff members in Embassies or PRTs. On the other hand, the practice of subcontracting and the hiring of local labour (if the project really happens) often does mean that there is a certain ‘trickle across’ effect in areas where substantial project funds are spent (or wasted).

The authors of the report seem somewhat reassured by declarations from USAID and the State Department that they ‘are very engaged in anticipating both the impact of the US troop withdrawal on the Afghan economy, and on the US civilian resources.’ But given the lack of understanding – among everyone involved – of how the Afghan economy has been shaped and skewed by this ‘tidal wave’ of international aid and contracting, and how it may or may not recover when the money dries up, it is unlikely that at this stage these plans are well-suited to how Afghanistan may develop. It is clear that it is not only the counterinsurgency assumptions and strategies that need some serious scrutiny.***

Finally, an aside. The section on the National Solidarity Program (NSP) quotes anthropologist Thomas Barfield and argues a by now familiar point of view: that imposing governance from the centre has never been effective in Afghanistan and that the goal should be to strengthen ‘local traditions of governance’ (which is an often used mystification of ‘tradition’). What follows however points in a very different direction. There is a quote from President Karzai, sensibly warning against ‘delivering resources through hundreds of isolated projects’ and calling for the concentration of efforts on a limited number of national programs, and then there is a description of why NSP works:

‘the government apex role is strong but simple, execution is outsourced to the communities, disbursements are transparent, standardized, and streamlined, and there is strong monitoring and evaluation with expatriate help’.

This obviously does not constitute a ‘return to traditional forms of governance’, and nor should it. Where NSP works (which is not everywhere), it is because it is an innovative program that started small (it has its roots in a community fora program, that was initiated by UN Habitat in Mazar, Kabul and Bamyan in the late 1990s), was thoughtfully designed and was allowed to evolve, based on an understanding of the realities on the ground – NOT because it was based on some superficial understanding of Afghan history and traditions. Afghanistan is clearly an evolving society and it is a mistake to base policies on some stylized version of so-called traditional practices.

* The full report can be found here. A useful overview of the key points can be found here.

** The report quotes estimates by US Embassy officials that each US civilian costs around half a million dollar (presumably annually; this is not including security costs, which are likely to be at least as high and probably much higher). There are currently around 1,300 civilians on the ground, working for State or USAID. Their number is expected to peak at roughly 1,450 in mid-2014, while funding will already have been declining for years. (A US soldier is believed to cost around a full million per year.)

The report is a little more critical about the effect of the large number of equally expensive advisers that are added to the government institutions at will (State Department and USAID are currently spending around $1.25 billion, which includes the funding of an estimated 260 civilian advisors), but the mere recommendation that such advisers should be more closely monitored and only used when making progress, is unlikely to have much of an impact. Advisers are often added for other reasons than pure technical neccessity, and often function as a kind of liaison officer, an inroad into a Ministry, a source of information, or simply to demonstrate that efforts are being made – and money spent – to ‘capacity-build’.

*** The World Bank, and others, are currently engaged in ongoing analytical work on the scope and potential consequences of the economic impact from military withdrawal and decline of aid (which will be largely negative, but there are likely to be positive side effects as well).




Martine van Bijlert

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