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Afghanistan

Afghanistan: Testimony to Senate Foreign Relations Committee, Clare Lockhart, Director, Institute of State Effectiveness

INTRODUCTION

The central foundation for stabilizing Afghanistan is the restoration of Afghan sovereignty. The current imperative is to identify a framework and process to rebuild legitimacy and credibility of Afghanistan's institutions, so that Afghans can govern themselves, maintain security, and raise their own legitimate revenue. This will in turn provide a viable exit strategy for foreign forces and financial support. Exiting responsibly depends on the increase in capability of Afghan security and public finance institutions. Credible governance is also the means by which the Taliban will be reduced and eliminated, as it is widely agreed that it is the vacuum of governance that provides their space of operation.

Governance is currently in crisis in Afghanistan. A combination of two decades of war, followed by lack of focus and unquestioning support allowed corruption and the illegitimate economy to fester. The elections have not produced a legitimate winner, and rather have laid open to global public scrutiny the flaws in the conduct of elections and the organization of governance in general. It is not Afghan governance alone that is to blame; to date, much international activity and assistance has been misdirected and even counter-productive, often undermining rather than working to build up Afghan capability and sovereignty. Now that the key problems of governance by both Afghan leaders and their international partners are widely recognized, we have one final and precious opportunity is to address the fundamental issues of how to restore Afghan sovereignty.

There is now the making of a good civil-military strategy on the ground. It is clear that the new Administration, across military and diplomatic arenas, recognizes the depths of the problem and has identified what needs to be done. The new plans emerging from the field articulate exactly the type of actions and approaches that have been sorely missing to date to achieve stabilization. The type of initiatives that the Bonn team never saw resourced in 2001 to 2005 are now finally being supported. Realizing their objectives now requires a clear step by step plan for operationalizing these goals, and making a set of realistic targets clear to Congress and the American public.

Recognizing that development and governance are key means almost a reversal of what we have been doing formerly. Whereas all our large civilian institutions are geared towards replacing native capacity, they now must be turned toward building it ; the civilian actors require the same internal reflections and overhaul of instruments and policies that the military has undertaken, having arrived at the reformed counterinsurgency doctrines through much loss of life and treasure. I will focus on what standards of governance and development are realistic to aim for; the mistakes that we must learn from; and some suggestions for moving forwards.

There has been a lot of discussion about what counts as U.S. reaching its strategic objectives. Denying Al Queda sanctuaries is a clear goal, but the question is how that is to be done. It will require a functional and legitimate enough Afghan government to be able to hold the country together as the U.S. draws down, as it eventually must. I propose as a starting point, that a criterion for success could be that momentum is turned decisively against the Taliban, by use of military force, economic development, building of civilian institutions, and by strengthening the Afghan National Security Forces to the point where they can hold their own against the insurgents. We do not need a perfect Afghan government, just one that is stable enough. Leaving behind a failing or failed state will certainly lead to civil war and probable eventual Taliban victory. Given what has happened in this last election, the goal of an effective Afghan state may seem a tall order, but I remain convinced it can be done.

It should be stressed that billions of dollars have been wasted on futile and ineffective measures, and that one cannot judge state-building in the future by what has happened in the past. Real focus on letting Afghans do the work of building their own future, except for some sputtering and inconsistently supported efforts, has only just begun. Stereotyping Afghans as somehow incapable of living in a modern state is only an excuse for our previous, misdirected policies. The Afghans I know are proud, practical people who, despite all their frustrations, are still willing to give us a chance, and certainly desperately wish to avoid the fate of living either under an oligarchy of violent drug lords or the Taliban.

WHAT IS GOOD ENOUGH GOVERNANCE IN AFGHANISTAN?

There is a much-touted myth that justice and public administration are an elusive dream in Afghanistan, with corruption endemic to the country and its people. This narrow view overlooks four factors. First, central to Afghan culture is an ancient appreciation of justice and fairness. The concept of the Circle of Justice emphasizes the need for a ruler to rule justly in order to raise the revenue from the people to pay for the army. Afghan villagers and townspeople I have met across the country complain bitterly about the repressive corruption that they insist is alien to their culture, which puts their families constantly at risk of kidnapping and intimidation. Second, through much of the 20th century, Afghanistan had a reasonable standard of public administration. A manual from the 1950s shows Afghan professionals running schools, clinics, road and irrigation projects. When I travelled across Afghanistan in January 2002, in most provinces there were functioning provincial offices, with trained civil servants carrying out their work. Third, to the extent a culture of corruption set in, in large part this was a result of empowering militia commanders with weapons and money to pursue the jihad, and then failing to bring them into the fold of rule of law once the Russians withdrew, resulting in a massive assault on the country's peace, women and assets throughout the 1990s. Warlords are not the product of Afghan traditional society, but rather, the product of the decimation of traditional Afghan tribal governance through Afghanistan's role as a proxy for struggle by foreign powers on its soil, and by Afghanistan having being abandoned to its fate once the short term security goals were achieved.

In the period 2001 to 2005, there were a series of examples of success in building institutions in Afghanistan, led by Afghans in partnership with small teams of international experts. The word "partnership" must be emphasized, as all to often various international actors have simply imposed their own formulas upon Afghans. Not only does this provoke resentment, but the imperatives of each country or bureaucracy involved conflict. On the other hand, the cooperative efforts between Afghans and mentoring organizations, with the emphasis on empowering Afghans to take over their own future as soon as practicably possible, succeeded then and efforts like them can succeed now. These include efforts to build the Afghan National Army, the National Health Program, and the National Solidarity Program which enabled the creation of Community Development Councils in 23,000 villages, and which now will expand to the remaining 9,000 villages, many in the south-east where security and lack of funding had prevented the expansion of the program. Other successful reforms during the 2001 to 2004 period included the public finance system and currency exchange which saw the creation and countrywide acceptance of a new currency in 4 months, the GSM telecoms licensing which created 7 million mobile phones and now more than $1bn in investment, and an infrastructure program that laid a template for reconnecting Afghan markets and people internally and regionally.

WHAT SHOULD WE BE AIMING FOR

To say that Afghan governance is central to stability is not to argue for an impossible goal, whether Switzerland or Valhalla. Rather, it recognizes that the way that rule of law is enforced is critical to the daily lives of Afghans, and whether they choose to live within, or challenge, the sitting authority. Naturally, our goals must be realistic and attainable. Choice in standards will depend on four factors: the type of Afghan leadership in place, the strength of US commitment, the agreement reached with Afghan stakeholders regarding red lines and goals, and the choice in the toolbox employed for implementation. While a team of reformers might be able to achieve one set of goals, even when the leadership is not committed to reform, there is the possibility of getting governance in certain areas right, especially if a tough approach to benchmarks and conditionalities is used, and if the right instruments are implemented. To recognize that governance is central also means understanding that the most critical factor is not what we (as outsiders do) but how the Afghans are organized to govern themselves, even if financing, advice and benchmarks from the US and its allies are key.

It is important to start discussion from an understanding of how the Afghan state is actually set up and functions. At least for now, Afghanistan is a unitary state, with all provinces governed according to the same legal framework. A provincial and district education or health officer reports to Kabul through the line ministries, not to a local governor. Many efforts now take place without understanding the set of Afghan laws and organizations that already exist. Unless and until the Afghan Constitution and legal framework change, efforts should work within this framework of laws and procedures. A "light touch" form of governance is possible, where formal structures, including line ministries, can "mesh" with local and traditional networks and social organizations. The National Solidarity Program, which feeds block grants to the local level from the center, but lets the village organize themselves how they wish, is one such example. Networks of traditional birth attendants, hawala dealers, traders, ulema and teachers can all be mobilized or partnered with for different tasks.

What type of Afghan governance will permit the stabilization of the country and provide the foundation for allocation of troops and money to be drawn down? It is necessary to articulate an "exit strategy" to demonstrate to the US public that the effort is not open-ended and to the Afghan population that the presence is not an occupation. However, an exit strategy must not be conveyed as abandonment of the country to the Taliban and Al-Qaeda; a "transition strategy" might be a more accurate term.

The first pillar certainly is the provision of security, through the operation of Afghan Security Forces. This certainly means building up the Afghan National Army, the Afghan Police Force, reforming the National Directorate of Security, Afghanistan's intelligence service, and provision of law enforcement through courts, judges and prisons. Provision of security must be embedded within a concept of rule of law and justice, otherwise a repressive regime will be built that only fuels the insurgency.

The second pillar is to ensure decision-making structures and processes that ensure fair and accountable decision-making, within a framework of rule of law. The Constitution for Afghanistan agreed in 2003 provides a workable basis. However, much work needs to be done to improve the functioning of the Presidency, of the Cabinet, and to insure appropriate selection criteria for the appointments in key personnel including mayors, governors and district heads. There need to be checks and balances from Parliament and civil society, particularly over revenue-raising and budget allocations.

The third pillar is to build systems of accountability in public finance, across revenue and expenditure. The country will function when it can raise its own revenue and spend this justly in the way that satisfies the population. Afghanistan is a potentially wealthy country, most notably with its mineral wealth documented in the recent US Geological Survey, and this, together with customs revenue and land and large taxpayer revenue should be providing Afghanistan with revenue at many times the multiples of today's figures. Reaching the revenue potential will reduce cost of intervention, and act as a forcing function for growing the economy and creating jobs. What is happening now is that much of the revenue is leaking, either by not being collected or being illegitimately collected. Licensing and procurement is an area where much corruption occurs, and more robust systems of transparency and oversight are required. Finally, ensuring that Afghanistan's budget resources - both from domestic revenue and from international donations- are well spent across the services the population so desperately need, is key to the stability and development of the country. The State Department's efforts to ensure more funding is spent through Afghan institutions is centrally important: not only is it much more cost efficient, an Afghan teacher costing less than two hundredths of a foreign project worker, but only by using the system will it begin to function. The Afghan Reconstruction Trust Fund contains a set of benchmarks and transparency and audit requirements that make the budget function like a dual key system, and in my view US funds should either be channeled through this vehicle, or another similar mechanism established directly with each line ministry. Already ARTF through its leverage over the Afghan budget has brought about major increases in transparency in the Ministry of Water and Power and in the Ministry of Education.

The fourth pillar is basic services for the Afghan population. Roughly, a village can reasonably expect five sets of services; irrigation so that they can grow their crops and sustain their livelihoods; access to transportation (usually a road) so that they can move to the local town to access markets and healthcare; basic health and education; access to water for drinking, electricity, and, where needed a modern access road to connect them to larger arteries. Many of these services the village can organize themselves, and the National Solidarity Program is the vehicle that was set up in 2002 to channel funding and technical support to the villages. This program allows the villages to choose, design and implement projects that suit their own needs. What is needed is a set of other National Programs which complement National Solidarity Program - including ones for agriculture, power, education and skills, and water. Each of these set out a national framework of policy, and then a package of basic services for each district, to be implemented through the most efficient mechanism whether local government, private sector or NGO. Existing National Programs are currently working well, but all will need constant review and adjustment,

There is often debate about whether the "central government" can carry out these services and whether decentralization is necessary. This is a false debate; the real question is for each function, who needs to do what at which level, across the five levels of Afghan governance; capital, province, district, municipality and village. For example, in health, the capital city will monitor disease and provide the large specialized hospitals, but every district requires its own hospital, and villages will need basic clinics so that travel times can be reduced. This is especially so since Afghanistan remains one of the most dangerous countries in the world for a woman to give birth, and much of this problem has its roots in the long distances that must be travelled. NSP can build the clinic building, but the Ministry of Public Health will have to provide the staff. Tightly coordinated ministerial actions are needed. In public finance, only the capital is authorized to issue money supply, but every province has a finance office to collect and distribute revenue. With National Solidarity Program, each village designs and manages its own project, but engineers are available at the district level and the accounts are kept at the capital level. In the original terminology, "national" means countrywide, not confined to the capital city.

To enable the Afghan civil service to carry out these functions, we will need to invest a lot in education. This sector has been severely neglected. You cannot transition a handoff of governing authority if there is no professional class, along with a trained middle class. There is a crisis of education and training, owing to the lost generation through the 1980s and 1990s, and the failure to invest in Afghan education and training post 2001. There is an urgent need for a properly resourced Civil Service training school, with branches across the country. However, if basic education only reaches to age 11, it is just as important to ensure that the pipeline of education from age 11 up to professional age is there. It is just not possible to train a doctor, engineer or accountant without proper institutional resources. We need an urgent inquiry into how Afghanistan's secondary and tertiary education and vocational training system is functioning, and where the gaps are if sufficient skills are to be created to manage Afghanistan's civil service, private sector and civil society. I might mention finally that to build up ANSF, both ANP and ANA, requires the formation of officer classes, and so few are literate that this is an immediate bottleneck on our ability to put an Afghan face on security operations.

Lastly, building the state cannot be seen as the total solution. As in any society, the key is the balance between the state, market and civil society institutions. Significant attention is required to nurture Afghanistan's market institutions, and to help create the space for the vibrant civil society and public discussion that will hold the government accountable, and for infusions of foreign and domestic capital and the building of sustainable economic growth.

THE EXTENT OF THE CHALLENGE

To express guarded optimism is not to underestimate the challenges in building governance. The legacy of three decades of war has left an entrenched set of actors and networks deeply embedded in flows of illicit trade. While there was considerable progress in building legitimacy and foundations for institutions after 2001, to such an extent that key powers could claim in 2005 that the country was stable, and plan for troop withdrawals, after 2005, stability in Afghanistan began to decline. In 2004, a memo (the "Cairo memo") was discussed by the key ground representatives of the US, UN and Afghanistan, detailing the growing factors of disorder and corruption in the governance arrangements that would lead to the revitalization of the Taliban and loss of trust of the Afghan people. This was primarily owing to the failure to adequately resource legitimate institutions. The memo documented how supporting the "reform team" to continue an agenda of institution-building would in have required an urgent financial commitment of $200m and/or facilitating control of two border posts and their customs revenue to pass to the center. As support for this agenda nor funds for it could be found, the reform team left office in 2005, recognizing that the internal systems of governance would most likely begin to collapse.

Back in 2002, during the preparation of Afghanistan's first post-Bonn budget, Afghanistan required a budget of $500m for the year to be able to pay its 240,000 civil servants (including doctors, teachers, and engineers) their basic salaries of $50 per month and to cover essential running costs. As the Treasury was empty, assistance was required. Unfortunately, donors initially committed only $20 million to the 2002 Afghan budget, meaning that Afghanistan's leaders could never in the 2002-4 period meet the basic costs of sustaining services. At the same time, $1.7 billion was committed to an aid system to build parallel organizations, which ended up employing most of the same doctors and teachers as drivers, assistants and translators to operate small projects at significant multiples of their former salaries. While some additional funds were later committed to the World Bank-run Afghan Reconstruction Trust Fund, this was never enough to sustain basic governance, and the civil service atrophied.

Rather than support the essential nation-wide services and programs within a framework of rule of law and policy, donors launched thousands of small, badly-coordinated projects. Billions of dollars were spent through the aid complex, resulting in little tangible change for most Afghan citizens. Their perception of aid projects was most vividly captured for me in a story told to me by villagers in a remote district of Bamiyan, who described their multi-million dollar project going up in smoke.

The prescriptions of the "aid complex" not only by-passed, but actively undermined Afghan capability: for example, it was aid donors forbade any investment in the Afghan budget for education or training over the age of 11, citing the overriding imperative of investing in primary education. Similarly, a $60 million provincial and district governance program designed to restore policing and justice services was turned down in 2002 for funding on the basis that governance was not "poverty-reducing".

At the same time, regional strongmen were strengthened over the last eight years. This was a way of "solving" the vacuum of power left by the exit of the Taliban, but this solution has led to the arbitrary exercise of authority, predation, and fantastic levels of corruption which, by preventing the government from functioning, have left an opening for every possible destabilizing element, from cartel members to simple criminal gangs to the Taliban and Al Queda. A strategy will be needed for negotiating with them, to increasingly bring them within the rule of law, through a combination of sanctions and the application of justice, and incentives to cooperate with legitimate state and market activities.

Partly as a result of the under-funding of Afghan institutions, the failure to build a robust enough set of accountabilities for either the government or the aid system, the re-empowerment of jihadi commanders to whom operations were farmed out, and the failure to set out a comprehensive water and agriculture policy to restore what the Russians destroyed, narco-influence and other forms of corruption set in at the heart of government institutions. This was most clearly manifested in the police, customs and the way that government assets were stripped, ranging from land and mines through to licenses for a range of the country's assets. It is no wonder that the two top concerns of Afghans all over the country are insecurity and corruption. Often they are more afraid of the police and the judiciary than the Taliban.

WHAT WILL IT TAKE

The U.S. team on the ground under the leadership of Ambassador Eikenberry has moved rapidly to develop approaches and strategies to support good governance and deliver development. Under current plans, ministries are going to be held to standards with funds conditional upon performance, building on the health program. Accountability systems are going into place. There are large scale plan for rapid delivery of basic services to cleared villages, through the National Area Based Development Program, which involves the cooperation of key ministries to get basic services down to the district level, and the National Solidarity Program, which gets basic means of life all the way to the village level. Delivery is planned in such a way that Afghans are actually asked what they want (and this is the most crucial change of all: consultation is security) and are employed to build it. Participation of the populace and the building of civil society go hand in hand with economic aid. Employment is crucial, and the new model of assistance being put into place emphasizes keeping money flowing in the local economy, rather than exporting them as subcontracting percentages to Washington and Brussels. If young Afghans have opportunities, recruitment opportunities for the Taliban can be rapidly reduced. The very formation of competent village councils and the existence of district councils immediately allow chances for reconciliation. Once a new Afghan Government is in place and agreement can be reached on a roadmap for governance and development, it will be vital to finalize and resource the plans for governance and development.

There now exists for the Afghan National Army a robust plan for building its capability. The same type of rigorous plan needs to exist for each of the other key ministries, including Finance, Education, Health, Water, Power, Agriculture and Mining. This does not mean that the US needs to resource trainers or funding for each of these; on the contrary, for many of these ministries, resourcing should come from domestic Afghan revenue, and only a small number of advisers will be necessary. However, it is vital, if governance and development is to be taken seriously, for each ministry, its laws, policies, personnel and organizational maps to be understood. All to often in the past, aid planning has completely by-passed these existing structures and built thousands of small projects in parallel, ignoring for example that there is already a health or education service in place that requires strengthening.

The key steps for supporting each function are first to understand the existing context including the organization; and then to agree with the relevant officials a plan for strengthening its capability, whether through financing, technical expertise, or other resources. The concept of the "National Program" harnesses such inputs into actual delivery of services, so that accountability for outcomes is built into the system. As Afghans need to see results broadly, at scale, national programs allow for implementation at scale, rather than boutique projects which, while in certain cases desirable, will not have the impact in a short time frame. This approach will allow for progressive "Afghanization", while making resourcing dependent on meeting standards of accountability, transparency and delivery. The face that delivers development must be Afghan, even if actual delivery takes place from whoever can get things done. Planning must start from the outset for what and how will be handed over. This means train up and mentor, rather than build big operations that cannot be maintained.

Such plans for reconstruction and development can only work if the military provides security. Insecurity has now spread across much of the country and additional forces will be required to protect the population. Accordingly, resourcing the military plans is central to the success of efforts in governance and development.

On the civilian side, changes in how aid is designed and spent are needed. The models of the National Health and Solidarity Programs should be generalized. Greater commitments to ARTF are needed, or adoption of a "ministry certification scheme" whereby funding to a ministry's national program can flow, dependent on certain standards being reached in phases. At the moment, there appears to be a greater focus on sending in consultants and experts, rather than focusing on

how to equip Afghans to be self-sufficient. Our experience in designing national programs showed that the most successful programs often involved thousands of Afghans but only a handful of foreign experts. It will be a considerable task for the US to get the thousands of fragmented aid agencies- many of which it finances- to unite behind one coherent, rule-based, restructured delivery system.

Changes are required in the way that foreign assistance is delivered, but also in the leadership style and policies and priorities of the Afghan Government. It can be debated whether governance and development initiatives will succeed, if there is not an Afghan Government in place sufficiently committed to serving its citizens and building its own capability. If a minimum threshold is not met, then options are either to withdraw, or to build up parallel systems. The trouble with the latter is that parallel systems will create dependencies that are hard to overcome. It is certainly evident that the more committed and competent the government leaders are, both at the top, and throughout the system, the more effective development and governance initiatives will be. Therefore, current discussions to form a new Afghan Administration are critical. Use of strict conditionalities and benchmarks can help to incentivize this new Administration. Encouraging the new Administration to include competent and honest leaders in key positions will be fundamental to the ability to make core government services work. Where there are reformers in place, allowing them the space to formulate and execute their own programs, rather than substituting for them, is desirable.

As described above, concrete plans are also required to grow the economy and create jobs, and to open the space for public discussion and civil society. Afghanistan does not have to be poor. It has an abundance of natural gas, lapis lazuli, copper, lime, and wonderful agricultural land along with some of the most plentiful water resources in the world. With the right system Afghanistan could be come a net exporter of electricity. Building value chains and webs around key assets including agriculture, including fruit and vegetable processing and livestock, mining and jewelry, textiles production and urban services will create jobs and revenue. To support these activities, new instruments are required. OPIC has run a very successful program offering risk guarantees to investors. This program should be expanded. Other, similar, programs are required to provide small and medium sized loans, risk guarantees and insurance. We should also look to using bond financing, enterprise funds and other vehicles, in conjunction with careful examination as to how key assets and licenses should be allocated. A regional perspective for investment in key economic assets, including water, power, transportation and trade, could catalyze economic growth and building incentives for political cooperation.

WHO DOES WHAT?

A joint civil-military plan is needed to reflect these plans. The p