Sep
06

Aid Effectiveness in Afghanistan

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Determining the effectiveness of foreign assistance to Afghanistan is an important task. Aid affects all aspects of the Afghan economy. It funds the counter-narcotics campaigns that strive to end the country’s dependence on opium. It pays for all the new roads and the fledgling railway initiative, which is necessary to transport all the ore extracted by the mining industry. It buys seeds and equipment for farmers and introduces new agricultural techniques. It is used to build schools and subsidizes education for millions of children. It enters the banks to support the currency. It pays the salaries of the National Army and Police, ensuring security. And it makes up the government’s deficit, keeping the country solvent. A recent congressional report has cast into doubt whether or not all that work is completed effectively,, and Jared Nolan has been working to uncover the issues behind the administration of foreign aid.

NOLAN: Let’s start with the numbers. Just figuring out how much foreign assistance is actually entering Afghanistan is a challenge within itself. The money comes from countries all over the world in all different ways and every publication reports a different number. The most comprehensive source I found is the Development Coordination Report, published in 2010 by the Afghan Ministry of Finance. It says that since 2002, the international community has pledged 90 billion dollars of Official Development Assistance to Afghanistan. Of this amount, 69 billion dollars has been committed to various projects and initiatives, but only 57 billion dollars has actually been disbursed to Afghanistan.

If that’s not confusing enough, foreign assistance breaks down into two categories: military assistance, which funds things like the Afghan Security Forces, and economic assistance, which consists of projects like the ones implemented by USAID, the United States Agency for International Development. No single organization reports aid statistics from every international donor for all three stages of aid and both types of assistance, so it’s hard to figure out just how much money is actually entering the country. Just know that every year it is equivalent to over half of Afghanistan’s Gross Domestic Product.

Okay, that was the easy part. Now time to figure out what the aid money does once it enters the country. According to David Kilcullen, founder of Careus Associates, a consulting firm based in Washington D.C. that has counseled NATO forces in Afghanistan, there are more questions than answers.

KILCULLEN: One of them is does foreign assistance work at all, ever. The second one is, does it work in a counterinsurgency environment like Afghanistan. And the third one is, even if it does work, are we actually doing it right.

NOLAN: There is no consensus on any of those questions.

RUTTIG: yes there are some people who say that aid of course is necessary because Afghanistan is one of the most underdeveloped countries in the world and still in conflict and after thirty years

NOLAN: That’s Thomas Ruttig, co-founder and director and senior analyst of the Afghanistan Analyst Network in Kabul.

RUTTIG: and there’s probably the other school of people that say lets call it aid money … is contributing to the crises and particularly fueling the corrupt governance which is predominating in Afghanistan. i would not put myself into any of these schools because i think the reality in Afghanistan shows it is a bit of both.

NOLAN: There are many ways that foreign aid can create more problems than it solves. One of these is that it often increases violence, rather than ends it. A Senate Foreign Relations report from June 2011 notes that 80 percent of USAID’s money is sent to the southeast of the country where Kandahar and Helmand, the country’s most insecure provinces, are located. That’s only a correlation, but there are many mechanisms by which aid causes violence. One of them is the substitution and income effects, which Kilcullen has studied. The theory was introduced by Charles Wolfe of the Rand Corporation in the 60s.

KILCULLEN: he said look if you succeed in bringing a lot of economic development into an area that’s affected by an insurgency, you may or may not have a substitution effect. An effect that causes the population to stop supporting the insurgency and start to supporting the government.

NOLAN: Regardless of whether that effect occurs, there will be an income effect.

KILCULLEN: Everybody in that environment whether they’re on the side of the government or the side of the insurgency and including the insurgents themselves, is gonna have more stuff and have more resources because we’re pumping economic development in that area.

NOLAN: In this way, development assistance can actually strengthen the insurgency. But the potential conflict is not only limited to insurgents. It overflows into other parts of the population when a large amount of aid enters communities, and the locals have to decide where it goes.

KILCULLEN: So you’re creating economic goods that local powerbrokers will get into competition over and the competition will sometimes result in violence.

NOLAN: Matt Millham saw this type of conflict first hand. He is a reporter for Stars and Stripes and earlier this year spent time embedded with the Marines in the Nawa District of Kandahar Province. During his time there he observed the Marines’ meetings with local politicians.

MILLHAM: all the line ministers are constantly trying to build their own little kingdoms they’re trying to make their offices nicer and trying to get more people and more buildings so when money goes to one effort and not another they definitely feel like they’re being left out.

NOLAN: And this feeling persists throughout the population, all the way to the poorest levels of society. While he was there, Millham saw the plight of squatters, living illegally on government land, who the government refused to recognize.

MILLHAM: as long as they’re there and until they come up with a solution those people are disenfranchised. not eligible for aid, government wont let marines spend money there. so they’re stuck on the outskirts so there’s definitely a feeling there that government isn’t offering anything to them, marines aren’t, there’s probably a tension there.

NOLAN: Another problem that foreign aid has to deal with is wastefulness. With so much money involved, it’s hard to imagine all of it actually being used effectively. Ahmed Rashid, Pakistani journalist and writer and author of the bestseller Descent into Chaos, has been especially critical of aid administration.

RASHID: there’s a whole saga of bad management by the U.S. for the kind of money that’s flooded into the country. bad management, corruption, wastage, repeating projects, carrying out projects that are overpriced and overbilled and i don’t see that result got better.

NOLAN: Wastage is something that Ruttig has also encountered.

RUTTIG: I mean the U.S. military very often calls the amount which is spent or measures it by something which they call the burn rate and sometimes the money is really burnt as seen in food for work programs. And I’ve seen food for work programs and road construction where people are shoveling dust on almost non-existent roads and sometimes paving it a little bit for the next rain.

NOLAN: Kilcullen has seen it too.

KILCULLEN: For example right now across Afghanistan different agencies of various kinds are paying people to do things like cleaning trash up and clearing weeds out of the canals and tidying up the production areas in farms and so on. For the last 5000 years, if you’re a farmer in Afghanistan you clean your own goddamn canal.

NOLAN: When organizations use foreign aid to supplement villagers’ incomes by monetizing elements of the rural economy, it can have a huge distorting effect on the community. Millham recognized this happening when he was in Afghanistan.

MILLHAM: in Nawa because there was so much money flowing in there it definitely did create this culture of dependence, this is also what the marines were telling me, people just got to the point where they were just waiting for the marines to hand out more money.

NOLAN: Clearly, this is not the way to do development. It’s unsustainable because the international community will not always be there to support Afghanistan. There is an alternative, however, that everyone seemed to agree on:

NOLAN: Here’s Greg Howell, from USAID.
HOWELL: our focus is obviously on capacity building within the afghan government. we have a goal for 50 percent of those funds to be on-budget or within the afghan government

NOLAN: and Ahmed Rashid.
RASHID: aid needs to be channeled much more through the government.

NOLAN: and David Kilcullen.
KILCULLEN: we need to do as much on budget as we possibly can.

NOLAN: and Thomas Ruttig.
RUTTIG: of course a lot of what gets in there for reconstruction needs to go through the government

NOLAN: and Matt Millham.
MILLHAM: if you can get it to a point where it appears that the afghan government itself is the one handing out the money and the one coordinating this money and they actually are, then really that’s where you want to get to.

NOLAN:The advantage to channeling money “on-budget” is really quite simple. The government itself can coordinate all the projects to prevent replication, and can avoid all the contractors that are notorious for wasteful spending. Plus, there is the benefit of capacity building.  The Afghan government needs to take control over its own country, especially now that the international presence is drawing down, and handling foreign assistance and organizing development is a major step. Also, it ensures that the projects that have been implemented successfully are sustainable. In other words, that all the roads and schools and hospitals that have been constructed won’t go into disuse and disrepair in five or ten years because the government does not know how to maintain them.

But not so fast. The Afghan government is not ready to handle all this money.

RUTTIG: First there’s a lot of figures that which ministries of the afghan government are able to spend the development budget which are allocated to them. then very often you find out there are ministries who spend between zero and fifty percent of that and there are only a small number of ministries which are above the fifty percent level so that’s a problem. So there is absorption capacity problem definitely in Afghanistan.

NOLAN: So it may be a while before the government can handle all that money, but USAID is still trying. Howell, the Deputy Director of the USAID Afghanistan Office of Economic Growth, says his organization is working more closely with the Afghan government now.

HOWELL: The first step is basically to look at the financial systems of the various ministries, which we are working with to ensure they have the ability to utilize these funds effectively. That is progressing.

NOLAN: And by no means has all the money been wasted. Howell listed a number of initiatives that have gained success, including in the microfinance area, the telecommunications sector, and the marble industry. There is a pattern emerging for successful development, described by Kilcullen.

KILCULLEN: What I think we can say though is that the sorts of development assistance that tend to do better in a place like Afghanistan are things that focus on the village level or the district level. That focus on the improvement of traditional agriculture, basic infrastructure, energy particularly electricity access at the village level, and then things that have to do with institutionalizing government.

NOLAN: Next week I’ll examine a project that follows those guidelines. It is administered by the Afghan government and it’s called the National Solidarity Program, which has been hailed as the most successful development initiative in Afghanistan.

For War News Radio, I’m Jared Nolan.

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