peace through reconstruction

8/3/2019 Peace Through Reconstruction

1/18

191919

Copyright 2010 by the Brown Journal of World Affairs

G C has been an adviser to international organizations, governments, and theprivate sector, and her articles have appeared in top economic and political journals. She has has beena participant in USAID bids for reconstruction projects in Afghanistan and Iraq. She is the author ofRebuilding War-Torn States (Oxford Press, 2008).

Peace Through Reconstruction:An Effective Strategy for Afghanistan

G CSenior Research ScholarColumbia University

W A the top of the U.S. foreign affairs agenda?* In hisWest Point speech announcing a new troop surge on 1 December 2009, President

Obama argued that U.S. security is at stake in Afghanistan and Pakistan, an area he

called, the epicenter of the violent extremism practices by Al-Qaeda.1 Following

Taliban attacks in December 2009 and earlier this year, a response to terrorism in the

region has acquired renewed urgency.

Since 2006, the political and security situation in Afghanistan has deteriorated

significantly. e Afghan elections in August 2009 and the large increase in foreign

troops may have deepened the ethnic divisions in Afghanistan and continued to feed

the insurgency.2

In the aftermath of the most serious financial crisis since the Great Depression,

and amid high rates of unemployment, Americans are increasingly wary of the war

and its human cost, politicians are preoccupied with 2010 mid-term elections, and

taxpayers are increasingly concerned about the budgetary cost of the Afghan war that

might reach $100 billion in 2010.3

In February of this year, 6,000 U.S., UK, and Afghan troops launched an air

and land assault on Marjah, the largest Taliban sanctuary inside Afghanistan,as part

of an strategy designed to clear, hold, build and transfer.4 While some success hasbeen reported in clearing the area from Taliban, it is too early to determine whether

the government will be able to hold control of this area and build local governance and

security so that foreign troops can transfer full control to the Afghan security forces.


2/18

G C

196

At the same time, the Afghan economy continues to be underinvested and a large

majority of Afghans have not been able to benefit from better living conditions and

increased security despite the huge military cost of the war and the significant volumes

of aid prevailing since 2001. Aid policies are clearly in disarray and often harmful: notonly have they failed to achieve basic objectives, but, most worrisome, they also have

threatened the legitimacy of the government, facilitating corruption and creating all

types of distortions. e open confrontation between the Obama administration and

the Karzai government is not helping in establishing what needs to be done, who should

do it, and what is the best and most effective way of doing it.

What has gone wrong? Could the current situation have been prevented? What

are the lessons we can apply to Afghanistan and other countries attempting the tran-

sition from war to peace? Is there any hope for Afghanistans future? Will the policy

of muddling through with a military strategy and development on the side make

a difference? Or do we need a comprehensive reconstruction strategy based on the

governments priorities to jumpstart the Afghan economy and reintegrate the Taliban

and other armed groups into society, and productive activities?

In addressing these questions, I will argue that the strategy for peace through

security, which has been the U.S. strategy in Afghanistan since 2007, has clearly failed

in stabilizing the country despite its large human and financial cost and that the recent

civilian surge will be insufficient to make a difference.5 I will argue that a strategy for

peace through reconstruction could be more effective and less costly and should be putin place as soon as possible.6is would require a major change in how donors operate

in the country and a rebalancing of military resources and reconstruction aid.7

For a country like Afghanistan, economic reconstruction should encompass the

rehabilitation or creation of basic health and educational systems and physical infra-

structure, the reversal of environmental degradation, and the control of illegal practices

and activities. It also encompasses the modernization or creation of a basic macro- and

microeconomic institutional policy and regulatory framework to support the effective

utilization of aid, the creation of a viable and stable economy, and the reintegration of

groups affected by the conflict into society and the legal economy.

e experience of the two decades following the end of the cold war gives strong

evidence that economic reconstruction, defined in this broad way, is a sine qua non

for peace and for avoiding long-term aid dependency.8 One welcome development is

President Karzais belated announcement at the London Conference on Afghanistan

in January 2010 that his government is willing to start a process of reintegration and

national reconciliation. National reconciliation is necessary to end tribal, ethnic, and

religious confrontations so that former enemies can live with each other in peace. Indeed,

a process of reintegration of the Taliban and other groups that have been acting outside


3/18

Peacerough Reconstruction

19

the rule of law and the legal economy opens up new opportunities and challenges for

Afghanistan and for the international community going forward.9

WHYIS AFGHANISTANATTHETOPOFTHE AGENDA?

Afghanistan wields a disproportionately large political weight on the U.S. foreign

policy agenda relative to its tiny economic weight, representing only 0.02 percent of

the world economy. In the past, this was related to the important role Afghans played

as allies and main protagonists in the cold war against the Soviets. In the present, the

countrys political importance is related mainly to its geopolitical and strategic location

at the crossroads of Asia and Europe, and the fact that seven atomic owning nations

are vying with each other in Afghanistan (Pakistan, India, China, Russia, possibly Iran,

the United States, and the United Kingdom).10

Afghanistans privileged position in the U.S. foreign policy agenda is probably

also related to the fact that the country seems to be at the border of a precipice. e

right steps might bring a large part of it out of chaos, but tiny missteps can convert

the whole country into a failed state. As invariably happens, failed states become in-

cubators for terrorism, drug and human trafficking, and other illicit activities. In the

case of Afghanistan, avoiding the political and security destabilization of Pakistan and

preventing a permanent regional sanctuary for Al Qaeda is of utmost importance.e

stakes are high and there is little room for error.

EIGHT YEARSINTOTHEMULTI-PRONGEDTRANSITION

More than two decades of continuous foreign occupation and conflict resulted in the

deaths of well over one million people. A month after the rout of the Taliban in No-

vember 2001, the signature of the Bonn Agreement established the Afghanistan Interim

Authority (AIA).11 Afghanistan embarked on a complex multi-pronged transition:

to pull back from violence and insecurity (the security transition)

to transform a repressive, militaristic theocracy into a society based on demo-

cratic principles, the rule of law, and respect for human rights (the political transi-

tion)

to end tribal and ethnic confrontations and start a process of national recon-

ciliation (the social transition)

to move away from a state-controlled, war-torn economy and engage in eco-

nomic reconstruction (the economic transition).12


4/18

G C

198

It is understandable that such an overwhelming process would necessarily take a

long time. Operation Enduring Freedomas the military intervention in Afghanistan

following 9/11 was calledand the Bush administrations promises to help rebuild

Afghanistan in the tradition of the Marshall Plan, however, created high expectationsamong the Afghan population that security and economic conditions were going to

improve in the short-run. After eight years, Afghans feel disappointed by the lack of

human security: in the southern and eastern parts of the country, security has deterio-

rated sharply and terrorist attacks are on the rise.

Civilians have suffered extensive casualties and the humiliation of having their

homes searched by foreign troops, something that is culturally unbearable to the

Afghan population.13 Even in the more secure areas, security is weak and living stan-

dards have not improved as much as was expected following the Bonn Agreement. At

the same time, disarmed Taliban over the last

few years have not been sufficiently rewarded

with sustainable jobs for giving up their arms,

which has discouraged others from following

the same path.14 Frustrated expectations of

economic conditions and lack of reconciliation have been major factors driving the

country back to conflict.

Lack of productive economic alternatives drove farmers to cultivate poppies

and others to rely on corrupt practices for survival. Despite progress in certain areas,Afghanistan has yet to build an economy in licit activities that can facilitate the reinte-

gration of drug farmers and other war-affected groupsthe most important challenge

of the economic transition.

e media and policymakers have given their utmost attention to the political

transition (particularly the 2009 elections) and military and security issuesand to

the neglect of economic and social concerns, which are equally crucial to national

reconciliation. Failure to give the Taliban, their potential supporters, and those who

have been fighting them a stake in the peace process has been a major reason for the

present dismal security record. A peace dividend in terms of better living conditions

and rewarding jobs is necessary for a durable peace.

WHATHAS GONEWRONGANDWHAT ARETHE LESSONSFOROTHERCOUNTRIES?

e experience of the last two decades, in which multiple countries have emerged from

civil wars or other internal conflicts, provides ample evidence of a number of premises

that are associated with effective reconstruction.ese cases also indicate that the viola-

tion of these key premises often has tragic consequences.15

A peace dividend in terms of better

living conditions and rewarding jobs

is necessary for a durable peace.


5/18


19

In Afghanistan, two of these premises were clearly ignored. e first one is that

economic reconstruction is fundamentally different from development as usual.e

second one is that a simple and flexible institutional and policy framework is key to

eff

ective post-war reconstruction.If anything, reconstruction is a development-plus challenge. Treating it as nor-

mal development has led to inadequate policies and unrealistic expectations. Despite

Afghanistans extreme socio-economic development challenges, policymakers neglected

the need for national reconciliation.

A critical aspect of national reconciliation has proved to be the disarming, demo-

bilization, and effective reintegration (DDR) of former combatants and other war-af-

fected groups into society and into the legal economy.is was clearly not a priority of

the government or of the international community in Afghanistan.16 Lessons from El

Salvador, one of the most successful experiences in keeping the peace and avoiding aid

dependencies following post-war reconstruction, should not have been neglected.17

National reconciliation is indeed a political challenge. In El Salvador, it was the

United Nations that mediated and monitored the peace agreement between the gov-

ernment of El Salvador and the Frente Farabundo Mart para la Liberacin Nacional

(FMLN), the insurgent group. A number of peace-related programs resulting from such

agreement were implemented in the financial framework of the National Reconstruction

Plan (NRP) between 1992 and 1997.e main objective of the NRP was to provide for

the immediate needs of those groups hardest hit by the conflict, the reconstruction ofdamaged infrastructure, and the economic reactivation of the former conflict zones.

ere were two programs within the NRP that were instrumental in creating

stability in El Salvador: (1) the creation of a new civilian police force, separate and

distinct from the armed forces; (2) the arms-for-land program for former combatantss; (2) the arms-for-land program for former combatants

of both sides and for supporters of the FMLN who had occupied land during the warFMLN who had occupied land during the war

years. Given that land tenure and the repressive military forces had been root causes

of the conflict, these two programs were the main vehicle for reintegrating those mostmost

closely involved in the conflict into society and productive activities.involved in the conflict into society and productive activities.involved in the conflict into society and productive activities.in the conflict into society and productive activities.in the conflict into society and productive activities.the conflict into society and productive activities.

To be effective, these programs need to be implemented by applying the ethics

of reconstruction, rather than the ethics of development or equity principle, which

guides all development policies and activities. While the equity principle specifies that

people with the same socio-economic needs should be treated equally in the normal

process of development (with any violation to this principle seen as an aberration),

the ethics of reconstruction refers to the need to give priority treatment to those most

affected by the conflict during the transition to peace, even if there are other groups

with the same socio-economic needs. is is because conflict-affected groups are more

likely to take up arms again if their grievances are not addressed.18


6/18

G C

200

e 2002Afghan National Development Framework(NDF)as its title well il-

lustratesis a development-as-usual framework that rejects the ethics of reconstruction

in favor of the equity principle, or ethics of development. In fact, the NDF notes that,

Given the levels of impoverishment of the population, plans must largely be basedon economic support to communities rather than the targeting of ex-combatants as

a special group. Tensions are best diffused through the creation of equitable income-

generating opportunities.19is, of course, would be ideal in a world in which there

are no financial constraints, which was not at all the Afghan case.

Given the financial impossibility of addressing the needs of the whole popula-

tion, people in general could have nevertheless perceived an immediate peace dividend

from improved security resulting from preferential treatment of those that gave up the

illicit use of arms. Improved security would have eventually facilitated investment and

other activities that could have reactivated the private sector and had an impact on the

population at large.

us, the overall strategy followed in Afghanistan from 2001 to 2003 ignored

the fact that, in the short-run, the challenge of reconstruction in carrying out criti-

cal peace-related programsmost importantly, DDR programsare clearly distinct

from development ones. e programs should have been carried out actively, both at

the national and at the community level.20 Poverty alleviation and complying with the

Millennium Development Goals(MDGs), are indeed long-term objectives, particularly

in a country as poor as Afghanistan.21ere cannot be development without peace.erefore, the objective of peace and

reconciliation should always prevail over that of developmentif the two ever clash as

they often do, particularly with regard to budgetary allocations. Because of the extra

burden of peace-related projects, optimal economic policies are not always possible or

desirable during reconstruction; this is what makes reconstruction so different from

normal development.22

e Ministry of Finance and the multilateral and bilateral institutions ignored

the premise that a simple and flexible institutional and policy framework is essential to

effective reconstruction. Instead, they decided to set up a complex and rigid framework

that included the independence of the central bank and a no overdraft rule for budget

financing.23ese policies could be best practice for countries in the normal process

of development, but certainly not for a country like Afghanistan, where the scarcity

of human resources and technical capabilities is widespread. e central bank inde-

pendence and the no-overdraft rule ultimately deprived the country of anyflexibility

through deficit financing to carry out critical peace-related activities. Such flexibility

could have had some inflationary impact in the short-run but it could have saved the

peace process.24


7/18


20

e Afghan framework has not only lacked flexibility, but it has also proved to be

much too complex for a country that lacks human resources and technical capabilities.

Civil servants, politicians, parliamentarians, and others have taken advantage of such

complexities to carry out all kinds of opaque and corrupt practices.

AIDISINDISARRAYANDOFTENHARMFUL

Although aid-related problems are by no means restricted to Afghanistan, the govern-

ments large reliance on aid flows brought some of these problems to the forefront. Even

more than in other places, aid to Afghanistan needs to become more effective and its

delivery more accountableboth at the national and international levels.

Aid in general has clearly failed to support reconstruction in Afghanistan. In

fact, it has created serious distortions: the main sources of growth relate directly to the

bubble created by huge volumes of humanitarian aid and by the large presence of the

international community and foreign troops in the country. Like all bubbles, this one

is not sustainable. Growth is also related indirectly to the illicit drug economy. Neither

source of growth offers much hope for genuine economic development and will never

allow the country to stand on its own feet.

Such growth has also resulted in large price and wage distortions that have discour-

aged investment and work. It has deprived the civil service of needed expertise since

professionals and other skilled-people often prefer to work as drivers, interpreters, andsecretaries in higher-paying international agencies and NGOs. is affects not only

the present government capacity to provide services, but it also affects the current and

future productive capacity of the country since people are not using their skills and

will lose them over time.

e Karzai government has failed to establish legitimacy as a result of its inability

to provide effective security, justice, human rights protection, and basic services to the

population, sine que non for establishing legitimacy. ere are basically three reasons

for this. First, donors channel about 75 percent of aid outside government control,

allowing them to set their own priorities and utilize their own people and goods. Sec-

ond, the government has been unable to raise tax revenue to reasonable levels, in large

part because a number of warlords in border provinces control customs revenue that

they are not inclined to share with the government.25ird, with the support of the

International Monetary Fund (IMF) and the World Bank, Afghanistan established a

business as usual macroeconomic and legal and regulatory framework that does not

allow it to engage in deficit financing by printing money.

Furthermore, rather than building national capacity of government employees so

that they can perform their basic functions and promote local entrepreneurship in the


8/18

G C

202

private sectorto increase local production of goods and services aid to Afghanistan

has largely relied on donors contractors for services and goods produced by their own

companies back homewhat is known as tied aid. At the same time, donors pro-

curement, including that of U.S. and NATO forces, is done internationally, providinglittle incentive for local production or the creation of local jobs.

Because many donors channel a large part of their aid through their own little

projects based on their own agendas and priorities rather than those of the government,

aid policies have led to a fragmented rather than an integrated approach. An integrated

approach based on national priorities is essential for effective reconstruction.e Neth-

erlands, for example, rightly advocates

channeling support through national

Afghan programs.26 The fragmented

approach of other donors, however, has

led to unsustainable projects and has

facilitated corruption. Parallel aid systems need to be eliminated as soon as feasible.27

With so much aid circulating in the economy outside government control, it

is not surprising that impoverished low-level staff and even their superiors charge

bribes as much as they can to expatriates and others trying to carry out projects in

the country.28 But corruption and other inefficiencies are not by any means restricted

to Afghan officials. e U.S. Government Accountability Office (GAO), the Special

Inspector General for Afghanistan Reconstruction (SIGAR) numerous press reports,and serious academics have reported a number of horror stories showing the inefficien-

cies, lack of accountability, nepotism, and corruption among foreign contractors, the

United Nations, the World Bank, the U.S. government, and other international actors

in Afghanistan.29

Aid in Afghanistan is also associated with an unusual amount of waste, in part

because of the large number of stakeholders in the process. e number of reports by

different UN bodies, international financial institutions (IFIs), other multilateral and

regional organizations, bilateral development bodies, think tanks, NGOs, and the

governments of Afghanistan, the United States, and others is not only huge but also

largely repetitive and incredibly expensive.30 A recent New York Timesarticle mentioned

that it costs the United Nations an average of $2,473 per page to create every single

document that the organization produces in its six official languages, a charge that was

not refuted by the organization.31

Furthermore, overhead charges by the different stakeholders accounts for a large

percentage of the aid allocated to particular projects. Ashraf Ghani and Clare Lockhart

report that, from 2002 to 2004, while Ghani was Minister of Finance, the Afghan

government and citizens continuously and publicly requested disclosure of the manage-

It is not surprising that impoverished low-

level staff and even their superiors charge

bribes as much as they can to expatriates.


9/18


20

ment of funds provided by the UN agencies and the outcomes they had achieved.e

UN agencies refused to comply with the request. Estimates were that up to 70 percent

of this fund had been spent on the international costsfor international salaries, white

Land Cruisers, satellite communications, and specially chartered airlinesto set up aUN agency presence.32is use of foreign aid is particularly puzzling to the Afghan

people, the majority of whom live on less than one dollar a day.33

Visits by donors and other aid-providers to the country, including heads of UN

agencies and NGOs, often tax the capacity of the few government officials that speak

the language to receive them. Furthermore, Afghan policymakers often have to make

plans without knowing what kind of assistance they can count on.is is partly because

the information on all the aid channeled outside the government is often scant, and

partly because of the fact that donors often pledge money at one forum that they had

already pledged somewhere else, or they fail to disburse what they have pledged.

Last, but not least, a serious problem with aid in Afghanistan is the exorbitant

humanitarian aid and little reconstruction aid provided. Humanitarian or charity

aid in the form of food, shelter, potable water, medical care, and refugee resettlement

is indeed important to save lives and provide minimum levels of consumption in the

short-run. Food aid, for example, is popular in donors countries since their farmers

can see their production and prices for their products rise. However, if extended for too

long, food aid creates price and wage distortions, which discourage local production

and result in aid dependency in the receiving country. It should therefore be stoppedas soon as feasible.

On the other hand, economic or reconstruction aid is targeted at increasing

investment, rather than consumption. Its economic impact will depend on how pro-

ductively it is invested. is type of aid in Afghanistan has been mostly allocated to

and has had an impact on improving health and education systems, and on developing

basic infrastructure. Nadiri reports that some of the notable achievements with this

type of aid include the enrollment of 6.5 million children in primary and secondary

education, the establishment of a basic package of health services that covers 85 percent

of the population and 12,200 km of roads that have been newly built or rehabilitated,

including a national road network.34

As Nadiri has also pointed out, reconstruction aid has been insufficient in creating

the power, water, and irrigation systems that are key to recovering agricultural produc-

tion and food security. It has also failed to create a dynamic private sector by target-

ing investment in small and medium-sized enterprises. Investment in the agriculture

and business sectors is key to generating the large number of jobs required to absorb

Afghanistans large and rapidly growing labor force and its armed groups that need to

be reintegrated into the economy once they agree to give up arms.


10/18

G C

204

A STRATEGYFORPEACE THROUGH RECONSTRUCTION

A strategy for peace through reconstruction involves nothing less than changing the

political economy of the country. Job creation will not be possible without the reactiva-tion of investment, production, and exportswhich in turn requires an adequate policy

and institutional framework. With the right kind of incentives and support, it should

be possible for the international community to help the Afghan government to turn

the entrepreneurial spirit of the Afghans away from producing drugs and using arms

to lawful production of cotton, wheat, fruits, lavender, woodlots, and textiles.35

Reintegration of rogue groups into licit employment requires the creation of a

dynamic economy able to produce a large number of jobs, both in the public and private

sectors. rough the 2002 National Development Framework, subsequent documents

discussed at donors meetings since 2004, and theAfghanistan National Development

Strategyfor 20082013, the government has clearly set up its priorities. Given these

priorities and President Karzais announced intention to start a process of reintegra-

tion and reconciliation, the international community should focus on facilitating

financing and technical assistance as well as providing preferential market access for

Afghan products in the Organization for Economic Co-Operation and Development

(OECD) markets.

e replacement of the illicit economy requires a new strategy with viable op-

tions but the idea should not be to reinvent the wheel. In the same way that the aidmodel based on foreign experts and contractors outside government control has proved

wasteful, inefficient, and corrupt, there are government and private sector models

that have proved efficient in the Afghan context and should be expanded and emu-

lated. Among the former there are two examples of programs that can be emulated:

the National Solidarity Plan, in which block grants are provided to villages across the

country empowering communities to decide by consensus on priority reconstruction

and development projects; and the National Telecoms Program based on a transparency

licensing and regulatory framework.36

Among the latter, the Global Partnership for Afghanistan, a U.S.-based NGO that

uses trained local staffand has allowed 10,000 families across 10 provinces and 400

villages to revive and expand nurseries, orchards, vineyards and woodlots, is another

model to be emulated.37

If donors want to do good in Afghanistan, they should channel reconstruction aid

through the government budgetfor example, through theAfghanistan Reconstruction

Trust Fund(ARTF) administered by the World Bankto enable the government to

provide subsidies or other incentives (such as price support programs) and to provide

necessary technical assistance and training to a group of Afghans, so that they can in


11/18


20

turn train other Afghans at the local level. In addition, the World Bank will need to

find ways to accelerate the process of disbursement, which has been too cumbersome

and slow up to now.

Earmarked funding, together with technical assistance and preferential treatmentfor Afghan products in OECD markets, would allow the government of Afghanistan

to achieve its goals. To facilitate international support, these goals could be included in

a five-pronged economic reconstruction strategy. Such strategy would create economic

dynamism and inclusion through the short-run reactivation of investment, production,

and trade. Although Afghanistan has a unitary type of government where decisions

are primarily made by the central government, it is also a large and diverse country.

Hence, any strategy would have to be adapted to local circumstances to ensure local

ownership and support.38

THE FIVE-PRONGED STRATEGY:

1. Promoting investment in national and local infrastructure by national and

international companies: is investment is particularly necessary to reactivate agri-

culture and to promote other private sector investment. Afghan entrepreneurs should

be encouraged to participate in bidding projects for the construction of infrastructure,

alone or in joint ventures. Different forms of public-private partnerships (PPP), per-

haps with the participation of the Asian Development Bank or other internationalor regional companies or banks, need to be explored to share financing and different

types of risk.

Afghanistan could attract foreign direct investment to build infrastructure such as

dams and power, or to exploit the oil, gas, and other minerals and metals that geological

surveys have shown could be promising investments.39 In this regard, the government

needs to negotiate agreements based on a fair allocation of natural resources and a

commitment on the part of investors to employ local labor and respect the environ-

ment.e microeconomic foundationincluding an adequate institutional, legal, and

regulatory frameworkneeds to be in place to ensure that the investments will not be

a source of new conflicts.40

With the right kind of joint regional infrastructure, Afghanistans location would

allow the country to become once again a strategic corridor for trade in goods, services,

and oil between Central Asia and South Asia, and between the Middle East and China.

As Ghani notes, Afghanistan is at the center of three billion potential consumers in

China, India, the Gulf, and Europe.41

2. Providing subsidies, price support, loans, and technical assistance to local

agricultural producers for the supply of the domestic and foreign markets: Both


12/18

G C

206

the United States and the European Union assist their farmers through subsidies and

price support programs, loans, and other incentives. If donors channeled aid through

the government budget, the government could provide these incentives to farmers as

a way to lure them away from poppy production. Given the current low prices foropium, this seems like an ideal time to pursue this objective. United Nations Office of

Drugs and Crime (UNODC)Afghanistan Opium Survey 2009reports that the income

per hectare produced has fallen from $12,700 in 2003 to $3,560 in 2009. Because of

changes in prices, the income from opium now triples that from wheat, while in 2003

it was 27 times larger.

3. Promoting local entrepreneurship through investment in micro- and small-sized

enterprises (MSEs) for the domestic market: Such investment could be facilitated

by the provision of credit at low cost, technical and marketing support, and by the

creation of a simple tax and regulatory framework for MSEs.

4. Providing subsidies to local enterprises, large and small, to hire and train targeted

groups, and produce for the domestic market, and to local construction companies

for building houses, commercial buildings and government infrastructure: is

would facilitate reintegration efforts and would ensure that trained people acquire skills

for which there is demand in the local market.42

5. Promoting special reconstruction zones for domestic and foreign companies to

produce goods and services exclusively for exports: ese zones could offer investors

preferential tax treatment and the right kind of security and infrastructure that would

be difficult to provide in larger areas, at least initially.ese zones could produce low-

skilled textile and food manufacturing utilizing both local and foreign inputs, or they

could be used to produce vegetables and flowers for neighboring countries.

OECD and other countries could offer preferential trade arrangements for goods

produced at the reconstruction zones. ese zones could also be used to provide logistics

and transportation services so as to make Afghanistan a trade hub connecting Asia, the

Middle East, and Europe. In this regard, ongoing plans for the Development of the

Kabul Metropolitan Area, also known as New Kabul City or Dehsabz, are a welcome

development that opens a number of possibilities for large foreign and domestic invest-

ment. is area, 70 km in radius from the Kabul City Center, contemplates housing

and urban facilities development, land use for the intensive production of vegetables,

fruits, and flowers, and important infrastructure including energy, electricity, roads,

water supply, green parks for recreation, and industrial parks for labor-intensive produc-


13/18


20

tion. is project is also a good model of partnership between a major donor, Japan,

and the Dehsabz City Development Authority (DCDA) in support of governments

priorities.

Given the prominence of Afghanistan in the U.S. foreign aff

airs agenda, andthe harmful impact of aid flowing outside, and often in clash with, governments

priorities, there is a need for the international community to support an integrated,

Afghan-led strategy that could help Afghanistan stand on its own two feet. e five-

pronged general strategy presented aboveor any similar one producing and adding

value to fruits, vegetables, minerals, metals, services, infrastructure or anything else that

Afghans can and want to producewould allow the country to fulfill its goals and

aspirations. By creating dynamism, rather than mere growth, and economic and social

inclusion through job creation, such strategy could help create a functioning and licit

economy. It would be a way of establishing the legitimacy of the Afghan government

and decreasing the large levels of corruption that make good governance so difficult in

the present context. It would also be a way of establishing a true partnership between

Afghanistan and the donor community.

NOTES

* e author is particularly grateful to M. Ishaq Nadiri for many useful discussions on the issue ofreconstruction in Afghanistan. I am indebted to him, Herman Schaper, and Roger Myerson for com-

ments on an earlier draft and to theJournalEditors for their queries and suggestions. Errors, of course,remain my own.

1. In his speech, President Obama emphasized both past attacks and future threats, It is from herethat we were attacked on 9/11, and it is from here that new attacks are being plotted as I speak. is isno idle danger; no hypothetical threat. In the last few months alone, we have apprehended extremistswithin our borders who were sent here from the border region of Afghanistan and Pakistan to commitnew acts of terror.

2. For a brief history of Afghanistan, the Pashtun and other tribes, and the Taliban see Adam Ritscher, ABrief History of Afghanistan, (http://www.afghangovernment.com/briefhistory.htm); Ruhullah Khapalwakand David Rohde, A Look at Americas New Hope: e Afghan Tribes,e New York Times(January31, 2010); and Ahmed Rashid, Taliban (New Haven, Conn.: Yale University Press).

3. As Joseph E. Stiglitz and Linda J. Bilmes argue in their book

e

ree Trillion Dollar War:

eTrue Cost of the Iraq Conflict(NY: W.W. Norton), non-budgetary costs should be added to the budgetaryones.ese include, inter alia, the cost in terms of lost earnings, lifetime disability payments, and healthcosts of dead soldiers and severely wounded veterans, equipment replacement, recruitment bonuses, andinterest on financing the war.

4. C.V. Chivers and Dexter Filkins, Allies Attacking Big Taliban Haven in Afghan South, New YorkTimes, 13 February 2010 and Joshua Partlow, Focus on Marjah Turns to Building Government, Fi-nancial Times, 1 March 2010.

5. e human cost of war has been high: thousands of Afghan troops and civilians have died since thebeginning of the war in 2001; U.S. and NATO casualties have amounted to 1,650, with 520 alone in2009. And so has been the financial cost of Operation Enduring Freedom: Congress authorized $224 bil-lion between 2001 and 2009, and this amount could exceed $300 billion by end of 2010. Of the money

spent up to December 2009, about 94 percent was allocated to the Department of Defense, basicallyfor military and security purposes (although about $2 billion or 0.7 percent of the total was used by the


14/18

G C

208

Provincial Reconstruction Teams (PRTs) for humanitarian and reconstruction purposes). e surge alonewill add about $33 billion or about $1 million per soldier per year in 2010. Economic aid to Afghanistanamounted to $21 billion out of the roughly $50 billion U.S.-provided support to Afghanistan (the restwas used for financing the Afghan security forces, elections and other political activities). us, aid toAfghanistan represented 17 percent of the $300 billion allocated to the Afghan War.

6. is was the title of the conference that I organized at Columbia University on 23 October 2009.e conference was jointly sponsored by the Center on Capitalism and Society (where I was the AssociateDirector at the time) and the Earth Institute. e program and video coverage of the conference, includingPanel 2 on Afghanistan, can be found at http://capitalism.columbia.edu/view/events/conference#ptr.

7. U.S. assistance for reconstruction purposes has been roughly $40 billion since the start of the war.In 2009, however, of $10.3 billion, $5.7 went to support Afghan security forces rather than economicreconstruction. For data see various Congressional Research Service (CRS) and Special Inspector GeneralAfghan Reconstruction (SIGAR) reports.

8. Graciana del Castillo, Rebuilding War-Torn States:e Challenge of Post-Conflict Economic Reconstruc-tion (Oxford: Oxford University Press, 2008).

9.e Taliban rank and file is more likely to react positively to incentives toward economic reintegration.

As Herman Schaper has noted, an unemployed young Pashtun is an often used short-hand description ofthe average Taliban; the perspective of better living conditions and rewarding jobs may induce them to giveup arms. Negotiations with the religiously motivated hard-core Taliban, and the even more fundamentalistnon-Afghans who joined them, will require hard negotiations and different incentives.

10. See M. Ishaq Nadiri, Economics as a Pre-Requisite for the Stability of Afghanistan and the Region,Paper presented at the Conference on Peacerough Reconstruction, ibid., http://capitalism.columbia.edu/files/ccs/Nadiri%20Working%20Paper%2045.pdf and his presentation in Panel 2, http://capitalism.columbia.edu/view/events/conference#ptr.

11. At the Bonn Conference convened by the United Nations with the participation of the four majorethnic groupsPashtuns, Tajiks, Uzbeks, and Hazarait was agreed to create a provisional governmentfor six months under President Hamid Karzai and an International Security Assistance Force to help bring

a lasting peace to the war-torn country.

e agreement gave the provisional government sole and ultimatepower on all policymaking decisions in the transition from war to peace. For more details on the politicalprocess, see del Castillo, ibid.: 168-169.

12. Although these transitions take place simultaneously and are affected by each other, reconstruc-tion needs to start right away, whatever the political and security framework is at the time. Waiting foran improved framework may well turn the country back into conflict. is is, indeed, what happenedin Afghanistan.

13. Nadiri, ibid.14. Dexter Filkins, Afghans Offer Jobs to Taliban Rank and File ifey Defect, New York Times, 28

November 2009. Filkins reckons that 9,000 insurgents had turned in their weapons.15. Del Castillo,ibid., Chapter 4: 40-47.16. For a comprehensive analysis of past and present efforts, see Michael Semple, Reconciliation in

Afghanistan (United States Institute of Peace Press, 2009). For evidence of failure with earlier efforts, seeSimonetta Rossi and Antonio Giustozzi, Disarmament, Demobilization and Reintegration of Ex-Combat-ants (DDR) in Afghanistan: Constraints and Limited Capabilities, LSE Working Papers2, Series 2 (June2006), http://www.crisisstates.com/download/wp/wpSeries2/wp2.2.pdf. For an analysis of the politicaldifficulties of carrying out these programs see Barnett R. Rubin, Disarmament, Demobilization and Re-integration in Afghanistan, mimeo (2 December 2004), http://www.jca.apc.org/~jann/Documents/DDR.pdf and Barnett R. Rubin, Identifying Options and Entry Points for Disarmament, Demobilization, andReintegration in Afghanistan, Center on International Cooperation, New York University (March 2003),http://www.cic.nyu.edu/peacebuilding/oldpdfs/General_DDR_paper2.pdf. Larry P. Goodson, e lessonsof nation-building in Afghanistan, in Francis Fukuyama (ed.), Nation-Building: Beyond Afghanistan andIraq(Baltimore: John Hopkins University Press, 2006): 145-69, discusses the failure in linking reconstruc-

tion to security in the earlier period and argues in favor of a RDD process where reintegration precedesand paves the way for their eventual demobilization and disarmament (156-57). is is something that


15/18


20

should be seriously considered in new plans for national reconciliation.17. Del Castillo, ibid., Chapter 7 (Case study on El Salvador): 103-36.18. For a discussion of why policymaking and best practices during reconstruction are different from

those under normal development, see del Castillo, ibid., Chapter 3: 29-39.19. Based on the ethics of development, the NDF framework relied on three pillars: humanitarian

assistance and social policy to create sustainable living conditions and promote human development;external assistance for rebuilding physical infrastructure in order to create an environment conducive toprivate-sector investment; and an emphasis on the private sector, both domestic and foreign, as the majordriving force in reactivating the economy, creating employment, and thereby ensuring social inclusion.Mention of DDR was notoriously missing from this framework as it had been from the Bonn Agreement.Efforts at reactivating the private sector, although essential, turned out to be futile as security deterioratedin large parts of the country.

20. By 2004, the government decided that the implementation of a DDR program had become essentialto change the security situation and that To replace the rule of the gun with the rule of law, it is essentialto break down the destructive patronage-based power structures that pervade the country. As a result, DDRwas set up in the framework of security reform so that the country would regain a monopoly on the use

of coercive force. is sidestepped the issue that, to be sustainable, DDR needs to ensure the long-termremunerative employment of disarmed groups. Not surprisingly, the DDR strategy was a failure.

Pushing the Taliban to Pakistan instead of finding ways to reintegrate them peacefully was not a so-lution either. As Rubin noted, e Bush Administration failed to provide those Taliban fighters whodid not want to defend al Qaeda with a way to return to Afghanistan peacefully, and its policy of illegaldetention at Guantnamo Bay and Bagram Air Force, in Afghanistan, made refuge in Pakistan, oftenwith al Qaeda, a more attractive option. Barnett Rubin, Saving Afghanistan, Foreign Affairs86 (Janu-ary-February 2007): 57-78.

21. e MDGs are enshrined in the 2002 Afghan National Development Framework(NDF), 2006Afghanistan Compactand the Interim Afghanistan National Development Strategy(I-ANDS), and in the2008Afghanistan National Development Strategy(ANDS). e ANDS builds up on the earlier develop-

ment strategies, reports and plans and embodies the countrys commitment to achieving the AfghanMDGs by 2020.22. Alvaro de Soto and I first argued this when we both were at the UN Office of the Secretary-Gen-

eral in the early 1990s when a number of countries were coming out of conflict following the end of theCold War. For details see, Alvaro de Soto and Graciana del Castillo, Obstacles to Peacebuilding, ForeignPolicy94 (Spring): 69-83. In the months following the signature of the Salvadoran peace agreements, theIMF-supported economic stabilization program imposed fiscal restrictions that made it difficult to financethe Plan for National Reconstruction through deficit finance to cover the gap in donors financing andfulfill peace-related programs. Because of such restrictions and a business as usual approach on the part ofthe government and the IMF, the FMLN, holding the government responsible for not having started thearms-for-land program, unilaterally halted the third phase of its five-phase demobilization (each phase wasto demobilize 20 percent of its forces). As the peace process was at the verge of being reversed, it became

clear that optimal economic policies were not realistic and that the main objective was to keep the peace,even if the stabilization policies and the overall development of the country suffered in the way.

23. Del Castillo, ibid., Chapter 4: 40-47 and Chapter 9 (Case study on Afghanistan): 166-90.24. Afghanistan, just like other war-torn countries, has proved how much easier it is to restore mac-

roeconomic stability than to consolidate peace. e IMF, for example, reports that despite corruption,limited administrative capacity, and political tensions that hamper policymaking, the authorities havebeen successfully implementing the 2009/10 economic program. Economic activity is recovering from lastyears drought, inflation has been tamed [and projected at 6 percent], tax collection is expected to exceedexpectations [and reach 8 percent of GDP], and the envisaged structural reforms have been implemented,http://www.imf.org/external/pubs/ft/scr/2010/cr1022.pdf.

25. According to the IMF Country Report 09/135 (April 2009), grants channeled through the govern-

ment core budget represented 10.1% of GDP in fiscal 2008/09 (4.4 percent through the operating budgetand 5.7 percent through the development budget). Since estimates of the external budget (under donors


16/18

G C

210

control) represented 43 percent of GDP, 77 percent of aid was channeled outside government controlor in support of government priorities. International Monetary Fund (IMF) data (various reports) alsoshows that revenue averaged roughly only 5 percent of GDP in 2002-2006 and increased to 7 percentin 2007-2009. e government has found it difficult to increase customs revenues in border provincescontrolled by warlords.

26. Herman Schaper, Permanent Representative of the Netherlands to the United Nations and FormerAmbassador to NATO argued that his country believed that e best way to build capacity is not to dealwith dozens of different programs devised by individual donors, but to have donors fund programs thatare well-coordinated on the basis of Afghan priorities and with an Afghan lead. See video recording ofthe Conference on Peacerough Reconstruction, ibid., Panel 2 and paper, http://capitalism.columbia.edu/files/ccs/Schaper%20Working%20Paper%2046.pdf.

27. Alastair McKechnie, World Bank Country Director for Afghanistan at the time noted: Experiencedemonstrates that channeling aid through government is more cost- effective. To take one example, a basicpackage of health services contracted outside government channels can be 50 percent more expensivethan the package contracted by the government on a competitive basis. Furthermore, the credibility ofthe government is increased as it demonstrates its ability to oversee services and become accountable for

results to its people and the newly elected parliament. See also his presentation in Panel 2, ibid.28. Contrary to popular belief, corruption is not a major factor in US taxpayers money going to the

Afghan budget. First, less than 25 percent of aid is channeled this way. Second, most of this money ischanneled through trust funds, administered by the World Bank under transparency and accountabilitybest practices.

29. See, for example, the video recording of William Easterly presentation on Panel 2, ibid. In FixingFailed States(Oxford, 2008: Chapters 4 and 5), Ghani and Lockhart report a number of misuses of aidfinancing. For example, the UN first use for the $1.6 billion of donor financing channeled through theUN in 2002 was for an airline devoted to serving UN and other international staff, with the continuedcost of subsidizing this airline estimated at between $180 million and $300 million. ey also point outthat, had the UN adopted an electronic system, parliamentary elections in 2005 could have cost $140

million and would have generated an estimated $80 million in its first year by issuing passports, driverslicences, and identity cards. But the UN stuck to the old cardboard system at a cost of $400 million withthe excuse that one of its donors had supplied $10 million worth of cardboard and would have been of-fended if is were not used. In Flaws shown in Afghan aid, USA Today(2 February 2009), Ken Dilanianreports that USAID continues to pay hundreds of millions of dollars annually to private contractors thatfrequently fail to demonstrate resultsOf six different audits conducted by the agencys inspector general,only one found a program working largely as it was supposed to.

30. e IFIs include the IMF, the World Bank (WB) and the regional development banksthe AsianDevelopment Bank (ADB) is the relevant of these for Afghanistan.

31. Neil MacFarquhar, Budget Fights Are Brewing at the United Nations, New York Times, 8 No-vember 2009.

32. Ghani and Lockhart, ibid.: 93. In 2007, Rubin, ibid, also reported that donors spent $500 million

on poorly designed and uncoordinated technical assistance.33. While many people think that government corruption involves taxpayers money going to the Af-

ghan Government, this is not in general the case. First, as discussed earlier, less than a quarter of donorsaid is channeled through the government budget. Most of this money is channeled through two trustfunds, administered by the World Bank under transparency and accountability best practices.e controlsare so tight, that the problem with these funds is that disbursement is often slow. Second, because aidmoney is largely channeled outside the government-operating budget, the government is unable to paycompetitive salaries to civil servants, ministers, and other government and parliamentary staff. is situ-ation has limited the ability of the government to recruit competent people. It has also led to a pervasiveculture of bribes.

34. See Nadiri, ibid.: 2 and the video recording of Panel 2, ibid. As Senior Economic Advisor to

President Karzai from 2005 to 2008, he played a key role in the design of reconstruction policies and insetting up priorities.


17/18


21

35. U.S. policy in this respect has lacked the right incentives. When the United States abandoned itspoppy crop eradication policywhich killed subsistence crops and polluted water at the same timeitbriefly flirted with the idea of paying farmers for not producing. For a country that urgently needs toresume production and exports, this is also the wrong policy. So far, there has not been a consistent andwidespread policy for alternative production that provides the right kind of incentives for farmers toswitch into licit production. Furthermore, President Obamas assertion in his brief visit to Kabul on March28, 2010 that President Karzai should step up the fight against the drug trade and reports that U.S. andNATO forces are turning a blind eye to opium production in Marja despite efforts by Afghan officials todestroy the harvest is adding to the confusion. See Rod Nodland, Fearful of Alienating Afghans, U.S.Turns Blind Eye to Opium, New York Times(20 March 2010).

36. Ashraf Ghani,A Ten-Year Framework for Afghanistan, Report of the Atlantic Council of the UnitedStates (April 2009): 11-12.

37. http://www.gpfa.org/ProjectSummary.pdf.38. In A Short Overview of the Fundamentals of State-Building, paper presented at the Conference

on Peace rough Reconstruction, ibid., http://capitalism.columbia.edu/files/ccs/Myerson%20Working%20Paper%2044.pdf, Roger Myerson argues that centralization often alienates local leaders who are not

aligned with the faction that holds power in the capital. In a more decentralized, de facto if not de jure,regime that devolves substantial power to locally elected provincial council or municipal governments,local leaders throughout the nation would compete for a share of local power and an opportunity to spendpublic funds responsibly.us, local leaders could have more of a vested interest in carrying out an effectivestrategy for reconstruction. At the present time, the president chooses the provincial governors. Myersonargues that the most important first step to success in Afghanistan could be simply to require that provincialgovernors can only serve with the confidence of the locally-elected provincial councils.

39.e most promising include copper, gold, gas, iron and barite, as well as gemstones such as emeralds,lapis lazuli and rubies. See U.S. Government, Doing Business in Afghanistan, for the full list.

40. A Chinese state-owned enterprise, the China Metallurgical Construction Corp. reached an agree-ment in 2009 to invest $3 billion to exploit one of the worlds largest unexploited copper reserves in a

former al Qaeda stronghold 30 miles southeast of Kabul. Although the mines have great potential in termsof production, government revenue, exports, infrastructure and job creation, it can also turn into a targetfor sabotage by the Taliban and a source of conflict among local groups living in that area. For a discussionsee Raymond Gilpin presentation at the Conference on Peace rough Reconstruction, ibid, Panel 3.

41. Ghani, ibid.: ix.42.e experience of training programs relating to DDR of war-affected groups conducted by UNDP

and other institutions have been largely a failure. Trained people usually cannot find jobs once they gointo the market. at is why on-the-job training often works better.


18/18

Copyright of Brown Journal of World Affairs is the property of Brown University and its content may not be

copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written

permission. However, users may print, download, or email articles for individual use.