by Ahmed Rashid
One USAID official who eventually resigned told me:
Volatile, security risk-prone areas never stopped USAID in the past, so what was so different about Afghanistan post 9/11? Nothing—except that DOD did not want us around to see how they were aiding the wrong guys. In Washington our leadership simply lacked the motivation to stand up to DOD. We were too tame, and DOD took advantage of that. We should have established a multiagency, multidisciplinary DART [Disaster Assistance Response Team] team out of the U.S. embassy to coordinate with the other NGOs and aid credible Afghan partners rather than just hand over everything to DOD and contractors. To simply contract out America’s most important humanitarian response since the Marshall Plan was just too much for many of us.11
So USAID farmed out millions of dollars to contractors who often were not even present in Afghanistan. During the war, USAID officials based in Islamabad were ordered to pass money for quick-impact projects to the International Organization for Migration (IOM), a group that works closely with the UN, because IOM supposedly had staff inside Afghanistan. In fact, IOM, which is mandated to deal only with migration issues, had just two staff members in country. Several USAID officials were to resign disillusioned with their organization, disgusted at U.S. policy, and frustrated at their failure to be effective. USAID was eventually to get swept into the State Department and lose what little independence it once had. In keeping with prevailing views in the Republican Party, USAID became a source of funds for Christian fundamentalist NGOs active in the Muslim world—giving them $57 million between 2001 and 2005 out of a total of $390 million distributed to all NGOs. Natsios was later to resign, but even then he did not take a stand against the corruption of USAID’s original purpose by the Bush team.12
The tragedy for Afghanistan was how feasible reconstruction actually could be when the entire Afghan population was supporting it. You did not need to be a rocket scientist to understand that a reconstruction program well coordinated with the UN-led political process would quickly help establish the credibility of the new government. Barnett Rubin and Ashraf Ghani, who were advising the UN and Karzai, were offering extremely sensible advice around the world, such as urging Western governments to set up a central deposit, or trust fund, to collect international donations, which the Afghan government could then draw on, rather than allowing individual donors to set up their own projects and programs, which would duplicate efforts while ignoring expensive infrastructure rebuilding such as roads. Such a trust fund could be run jointly by international organizations and the Afghan transitional government. Rubin, Ghani, and I urged donors to provide funds so that trained and qualified Afghans living in the West—many of whom we knew—could return to Afghanistan quickly and help develop the country.
A trust fund was set up in Tokyo, but few governments were keen on donating to it. Many countries had moribund aid bureaucracies, which took months to identify projects, more months to disburse the money, and then had nobody on the ground to monitor implementation. The United States was blighted with the same problems. At the end of the war it had the following agencies in Afghanistan carrying out quick-impact projects and humanitarian relief, all with their separate budgets and staff: the CIA, DOD, U.S. SOF, the State Department, and USAID. There was no central aid coordinator for the U.S. government’s efforts and zero coordination with the UN, European allies, or the Afghan government. Quick-impact projects became a Washington favorite. These were swift and cheap, such as digging a well, rebuilding a small bridge, or repairing a broken-down school building, and were supposed to convince the population that reconstruction was moving ahead. Instead, such projects invariably helped only the local warlord or commander the CIA was supporting.
Reporter Stephen Kinzer wrote that the path chosen by the United States assured that “Afghanistan would remain in ruins; that warlords would continue to control much of the country; that remnants of the Taliban would re-emerge as a fighting force.”13
All Western donors spoke the jargon of “building capacity” in the fledgling Afghan government. In a failed state such as Afghanistan, capacity would take years of patience and hard work to build. In the meantime, donors undermined their own efforts by funding programs that would benefit the population without consulting the relevant ministry. Thus as donors slowly built up capacity in the education ministry so that it could actually pay teachers around the country or devise a new curriculum, they also funded Western NGOs to build schools without ministry advice or guidance. It was tempting to do it yourself rather than spend years training Afghan officials. As a consequence, a parallel donor bureaucracy developed. Francis Fukuyama highlighted the dilemma: “The contradiction in donor policy is that outside donors want both to increase the local government’s capacity to provide a particular service . . . and to actually provide those services to the end users. The latter objective almost always wins out because of the incentives facing the donors themselves.”14
The Americans, too, wanted the best of both worlds, handing out multimillion-dollar contracts to consultancies in Washington for building capacity in the ministries, while at the same time hiring other consultants to carry out projects to win Afghan hearts and minds—projects that were not part of a broader plan connected to the ministry. Even five years later William Byrd, the architect for the World Bank program for Afghanistan, would lament that “the aid juggernaut is still outside the budget and outside government control—aid does not build government capacity which is what we need.”
In 2002, after the war ended, the UN and Japan organized a major donors’ conference for Afghanistan in Tokyo. The situation was dire. The Afghan government was barely functioning; the financial system was in total disarray with no banking system and three different currencies in circulation; millions of refugees were preparing to return home; while nearly one million people faced starvation. A preliminary “needs assessment” for the country, written jointly by the UN Development Program, the World Bank, and the Asian Development Bank, estimated that Afghanistan needed $1.7 billion in the first thirty months and $10.0 billion over the first five years. Experts scathingly called the figures “guesstimates.” The European Union estimated the cost of rebuilding for the first five years at $9 to $12 billion, while planning minister Mohammed Mohaqiq insisted the country needed $22 billion in the first decade. In fact, nobody knew how much Afghanistan really required.
With sixty countries participating, Kofi Annan, Hamid Karzai, and Ashraf Ghani—who had left the UN to become de facto finance minister in Kabul—opened the Tokyo conference on January 21-22 with appeals for money.15 Ghani now headed the government’s Afghan Assistance Coordination Authority (AACA), which would coordinate all reconstruction projects. Karzai asked for $300 million in cash to pay salaries six months in arrears for 210,000 civil servants and 25,000 policemen. The government only had $9 million from a UN start-up fund.
At Tokyo, nations pledged $4.5 billion, of which $1.8 billion was earmarked for 2002—still short of what was required.16 The donors concluded that it would take $12.2 billion over five years to “rebuild” Afghanistan. A trust fund was established, but donors did not give it any money. The Afghanistan Interim Authority Fund, to be managed by the Afghan government, UNDP, ADB, and the World Bank, remained an orphan of the aid effort.17 However, the Tokyo meeting generated tremendous euphoria among Afghans, who believed everything was about to change for the better. It also focused international attention on the needs of nation building. What Tokyo failed to do was distinguish between money for humanitarian relief and money to rebuild the infrastructure.
In the next two years most of the funds pledged at Tokyo were to be spent on humanitarian relief rather than real reconstruction projects. No roads were built, no electricity or water was provided to the Afghans. Afghans complained bitterly that there had been no visible reconstruction, while donors would insist they had spent a lot of money. By April 2002, when even the smallest projects stalled for lack of funding, the UN called another meeting, where it was
decided to carve up reconstruction responsibilities. The United States said it would take the lead in building the new army; Britain would take charge of counter-narcotics; Italy would rebuild the justice system; Japan would disarm the militias; while Germany would rebuild the police force.18
NGOs began to arrive in Kabul in large numbers. “There are billions of dollars in the pipeline and armies of expatriates are waiting like some tribal militia to get into Kabul when the weather turns warm,” said a sarcastic Barnett Rubin. When NGOs and news organizations sought to rent the few private houses still standing in Kabul, rents jumped from $400 a month to $4000 and then to $20,000. Afghans would rent their house several times over, pocketing the cash and leaving the multiple tenants to sort out the mess. At the UN guesthouse, which had running water and electricity, senior UN and World Bank officials were sleeping four to a room.
International donors were helped considerably by the fact that they were dealing with Ashraf Ghani, fifty-eight, who was to play a critical role in the next few years. In exile, Ghani had been dreaming about reconstructing his country, and now he had the chance. He had left Afghanistan in the 1970s to study at Beirut University, where his contemporary was the fellow Afghan and future American diplomat Zalmay Khalilzad. After the Soviet invasion of his country, Ghani taught at American universities, before joining the World Bank in 1991 as its senior anthropologist. Ghani had arrived in Kabul as an adviser to Brahimi, but then left the UN to head the country’s reconstruction effort. In June, the Loya Jirga would appoint him finance minister.
Ghani was one of the most brilliant Afghans of his generation and the most capable minister in the cabinet. He worked twenty hours a day in order to reorganize the Finance Ministry, introduce a new currency, and establish a new tax system. He encouraged educated Afghans to return home and help him, and persuaded wealthy Afghans abroad to provide investment. Ghani’s office resembled a scene from the California gold rush, as it was always flooded with tribal elders, ministers, Western executives, delegations from foreign aid agencies, Afghan expatriates in sharp suits, and assorted gold diggers waiting to see him. He would give ten-minute appointments to all comers, while his son Tarek, an undergraduate at Stanford University, took notes and became his doorkeeper.
His energy was all the more remarkable considering his poor health. He had lost a large part of his stomach to cancer, and his immune system was destroyed. He could not eat a full meal, so every hour he could be seen nibbling tiny portions of food. He did not know how long he had to live and that gave him fierce urgency and determination and lent a kind of ruthlessness to everything he did. Arthur Helton, of the Council on Foreign Relations in New York, described Ghani as “a one man aid coordination agency . . . who has gained a reputation for ruffling feathers,” while Robert Finn later said, “He is very smart, with a short temper, which is a dangerous combination—but he got things done and fought with Karzai to get them done.”19
I had known Ghani for twenty years and he never allowed anyone to come too close, remaining aloof. Many of his contemporaries read this as arrogance. Unfortunately, his explosions of bad temper and displays of arrogance with fellow Afghans and Westerners were all too frequent and soon made him a loathed figure in the Afghan cabinet. Nobody wanted to work with him. He had few friends, and as other ministers asserted themselves, they turned on Ghani, accusing him of monopolizing all decision making. The complaints about him eventually forced Karzai to let him resign in December 2004. Brahimi, who had remained Ghani’s supporter throughout, told him that he had resigned without a single minister willing to defend him.
What he achieved, though, was astounding. He built up the Finance Ministry from nothing. There had been no power or phone lines, no Internet, and no experienced staff. He hired the Chicago law firm Baker and McKenzie as consultants to help him run the AACA and asked Transparency International for help in creating mechanisms to prevent corruption. He hired the British firm Crown Agents to procure goods for the government so that donors would be satisfied that there was no corruption, and BearingPoint to provide a financial management system. Within a few months Ghani had fifty foreign advisers trying to reestablish the various departments of finance and trade while reorganizing other economic-related ministries and the central bank. Two advisers, Clare Lockhart, who had worked with Ghani at the World Bank, and an Australian economist, Michael Carnahan, who became his budget adviser, remained with him constantly.
Ghani was clear about what he wanted to do: “We want to build an efficient and transparent administration that is accountable and responsive to its citizens. We do not want the government as producer and manager of the economy, but rather as a regulator of the private sector and promoter of the entrepreneurial energies of our people.”20
However, there was soon criticism by Afghans that Ghani was hiring too many foreign consultants at too high a price, with some of them charging up to fifteen hundred dollars a day. Ghani set about trying to raise taxes to demonstrate to the donors that the government was determined to become self-sufficient. He introduced an income tax for wealthy Afghans and a tax on rented accommodation and the import of luxury goods. Most Afghans had never paid taxes, and there was resistance. Lessons from other failed states trying to develop a taxation system were not encouraging. None had managed to collect tax revenues amounting to as little as 10 percent of national income.
Ghani riled Western donors by insisting that the government, rather than the donors, set priorities for development. ”Government ownership is critical to the establishment of a prosperous, secure Afghanistan,” he told a meeting of Western donors in Kabul on February 26, 2002. “We are fully committed to seeking partnership in this long-term process, but we must demand that it be a partnership of equals,” he added. He also fought a losing battle with Western agencies to prevent educated Afghans from leaving the government. “Within six months of starting my job as finance minister, my best people had been stolen by international aid organizations who could offer them forty to a hundred times the salary we could,” he said.21 While civil servants earned an average of fifty dollars a month, Afghan drivers working for Western NGOs or the UN earned up to one thousand.
The lack of coordination meant that there was often an overlap in what the donors funded, as many of them wanted to fund the same high-profile projects. USAID, Britain’s Department for International Development (DFID), the European Union, and the World Bank all hired separate contractors to modernize the collection of customs revenues on Afghanistan’s borders. Donors duplicated efforts to revamp Karzai’s office or fund women’s and children’s health projects and they spent far too much on foreign consultants.
In Geneva in July 2002, donors met for the first international assessment of aid to Afghanistan. The UN reported a shortfall of $397 million, which donors had pledged at Tokyo but failed to deliver. Humanitarian agencies reported such large shortfalls from donor countries that some were forced to close their programs. Nigel Fisher, the deputy head of the UN Assistance Mission in Afghanistan (UNAMA), described the situation as “fragile,” adding that “failure to invest in Afghanistan at this critical juncture could help to fulfill our worst fears for the integrity, the economic development and the unity of Afghanistan.” The UN said that money for reconstructing roads and power plants would be unavailable until the following year. Karzai’s demands for urgent road building had met with no response. In these difficult conditions, Ghani prepared Afghanistan’s first budget in a decade, which for 2002-2003 amounted to just $460 million. It had to be funded by donors, yet by July, three months into the budget, Ghani had received only one tenth of the money.
The government was as broke as it had been in January. At Karzai’s urgent request Pakistan flew in $10 million in cash in suitcases to pay salaries. UN agencies were so lacking in funds that they could not provide for the 1.3 million refugees who had returned home in the first six months of 2002—three times more than had been expected. In November an assessment given to the UN General As
sembly stated that out of $2.1 billion pledged for the current year, only $1.5 billion had been disbursed—a massive shortfall.22 A year later, in November 2003, the Center on International Cooperation, in New York, estimated that only $110.0 million worth of reconstruction projects had actually been completed, out of a total aid disbursement of $2.9 billion. In the critical first year, when Afghan expectations were so high, the lack of leadership shown by the Bush administration was the crucial component in this shortfall, as it ignored Afghanistan and prepared for the invasion of Iraq.
It was self-evident that large investments by donors in the early years of a military intervention in a failed state pay off large dividends in the long term—something the United States and the international community had failed to foresee in Afghanistan. The United States think tank RAND calculated that a minimum investment of $100 per capita is needed to stabilize a country coming out of conflict. But, while Bosnia received $679 per capita, Kosovo $526, and East Timor $233, Afghanistan received only $57 per capita in the first two years after 2001.23 “In manpower and money this was the least resourced American nation-building effort in our history, ” said James Dobbins, who had joined RAND.24
Nevertheless, the first year did yield some wildly successful programs. On March 23, 2002, millions of Afghan children attended school for the first time in many years as a result of a “Back-to-School” program organized by UNICEF and USAID, for an initial cost of just $50 million. Laura Bush, the American First Lady, took a keen interest in the program. Education in Afghanistan had been destroyed under the Taliban. In 1979, 54 percent of boys and only 2 percent of girls attended primary school. Under the Taliban regime, education had been decimated and girls were not allowed to study at all. So when 4,600 schools opened across the country and began classes, there was visible excitement among parents and children. I had seen girls pack their school bags three months earlier, in anticipation of going back to school. Tents were erected where there were no buildings, and ISAF provided troops and helicopters to deliver eight million textbooks to the remotest regions and supplies to fifty-two thousand teachers. “It is the largest educational program in UNICEF history and the first time that we have started nationwide primary education,” said Eric Laroche from UNICEF.