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How Afghanistan Is Rebuilding Itself

Interviewee: J. Alexander Thier, Assistant to the Administrator and Director, Office of Afghanistan and Pakistan Affairs, U.S. Agency for International Development
Interviewer: Jayshree Bajoria
September 9, 2011

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Serious concerns persist in the international community about Afghanistan's governance abilities as the 2014 timeline for the security transition to Afghan forces draws near. The director of the office of Afghanistan and Pakistan affairs at the U.S. Agency for International Development, J. Alexander Thier, says economic effects of the drawdown "will be real" but points to sweeping improvements in Afghanistan's capacity to govern itself, singling out progress in health, education, energy, and road building. "We are changing the way we do business by doing more of our work directly through the Afghan government," to increase spending that goes directly into the Afghan economy, he says. Going forward, he says, investment in infrastructure and energy will be critical to increasing Afghans' capacity and making economic growth sustainable. He says the international community will be supporting development work in Afghanistan for years beyond 2014.

What's working from the standpoint of USAID in Afghanistan, and what are the problem areas?

We've had significant development achievements in the last ten years in the area of health and education. We've gone from having less than 10 percent of Afghans having access to any type of basic health services to nearly 80 percent. The same is true in the sphere of education, where under the Taliban less than one million children--almost all boys--were in school. Today, you have over eight million children in school, 35 percent of whom are girls.

Going forward, we are looking at a few key areas for investment in Afghanistan, what we call our "foundational investments." They're foundational because we know we have resources today that we might not have in five years, so we want to make sure that we're giving Afghans capacity economically, from an infrastructure point of view, to really carry their own future forward and become increasingly self-sufficient.

We've made enormous investments in roads, building something like 1,800 kilometers of roads, and we are making an investment in energy. One of the most important areas in economic growth is agriculture. One of the huge problems that agriculture faces in Afghanistan is in terms of access to water, but particularly in terms of getting the crops to market. There is a nearly 50 percent spoilage rate for goods that are grown in Afghanistan because the roads are bad, and people don't have cold storage, access to market, [or] access to properly dry and store foodstuffs for export. So, our ability to improve that value chain for food in Afghanistan is critical for food security, it's critical for economic growth, and it will depend upon improved infrastructure in the country.

In the longer term, Afghanistan is going to rely on mineral resources in part to increase its revenues, and it will also rely on trade from other countries. We're working hard on improving trade, particularly with Pakistan at the moment but also throughout the region. We're also working on making sure that Afghanistan has an environment that is conducive to investment, that is conducive to extraction in a way that will have positive benefits for the economy and avoid some of the other problems that many third world countries have had when they get sudden access to wealth that can undermine governance.

How are you doing that? And how do you ensure that the aid dollars don't feed into the insurgency?

[P]eople should not be viewing the U.S. commitment to Afghanistan as one that's limited by 2014.

When I joined USAID in the summer of 2010, I got a report about a project where funds may have been siphoned off for illicit power structures or insurgents. I asked the staff how we could ensure that that wasn't happening and what we can do in the future. As a result, we launched the Accountable Assistance for Afghanistan (A3) Initiative, and this is essentially adding several layers of accountability to the process of contracting and development work that we have in Afghanistan.

We put in place a vetting process that has access to a large number of databases and classified information, so that we can look at the Afghan partners that we're employing to make sure they don't fall into the category of organizations or people who we don't want funding going to.

One of the problems that we have contractually in Afghanistan, and around the world, is that when you have multiple subcontracts, we lose sight of where the money is going, who it's going to, or whether it's being cost-effective. One of the ways in which we can maintain a much tighter focus and accountability is to limit the number of subcontracts.

We're enhancing our capacity not only to measure outputs from our project but also looking at outcomes. One of the ways is looking at the question of sustainability. We don't want to spend money on projects that are not going to be sustainable. [We want to ensure that] there will be money in place to support those programs in the long term from the Afghan budget, [and] that the Afghans themselves own the project and can maintain it. One of the critical things that we've done in the last two years is to build DABS, the electric utility. That didn't really exist before, [and] today has the capacity to maintain their existing investments, and has doubled its revenue generation every year for the last three years.

As we look to the transition in 2014, do you think the Afghans have the capacity to take over?

One of the things that people don't appreciate is how dramatically far Afghanistan has come in the last ten years, in terms of the capacity for governance. In the 1990s, when I lived there for four years during the civil war, it was like Somalia. It was warring fiefdoms; there really wasn't a government.  But now, ten years on into the intervention, there are some very heartening signs of the ability of Afghans to handle their country. I went, for instance, recently to the Afghan civil service academy, and what you see are hundreds of young Afghans learning a variety of basic management skills. It's not sexy: it's accounting, it's budgeting, and it's the basic level of competence that you need in civil servants to serve in Kabul and around the country. That cadre of people did not exist ten years ago.

[T]here are already steps we are taking to mitigate the economic effects of the drawdown, but those effects will be real.

Another example is the cellphone network and industry. You could count the number of phones in Afghanistan on your hands a decade ago. Today, some 85 percent of Afghans have access to the cellular networks; some 60 percent are on and using the networks. We have a program that sends information to farmers about price and weather. We have just launched in Kabul an initiative to increase the amount of payments that people can make through their cell phones. Only 3 percent of Afghans have access [to financial services] or have a bank account; whereas 85 percent have access to the cell network. So, enabling them to make payments through the cellphone is actually going to blow wide open financial inclusion in Afghanistan.

Given the levels of corruption in the Karzai government and the rifts with the United States, do you still think that by 2014 the country will have put in place political and economic institutions needed for transition?

In many respects, Afghans have already taken over some of these responsibilities, and some of them will continue to be dependent upon the international community for years to come. Even as Afghanistan makes it through this process, it will still be one of the poorest countries in the world, having come out of decades of conflict. So, people should not be viewing the U.S. commitment to Afghanistan as one that's limited by 2014.

There are a number of projects aimed at economic growth, but what is the timeline for such projects? Especially given the warning sounded by a June Senate Foreign Relations Committee report that the Afghan economy could slide into a depression with the decline of foreign development spending?

We are already taking measures to ensure that the blow to the Afghan economy from the reduction in international forces and international assistance are taken into account.

Let me give you an example. When we spend money for development programs through local entities or through the Afghan budget, a lot of that money makes it into the local economy. When we spend that money through external entities, contractors and so on, less of it makes it into the local economy. So, when we look at USAID resources and probably much more importantly military resources, if we can increase the amount of spending that goes into the economy even as our overall input decreases, we can maintain for a number of years a relatively steady input of funds that are hitting the Afghan economy. So, we are changing the way we do business by doing more of our work directly through the Afghan government.

We committed in July 2010 at the Kabul Conference (PDF) to try to meet the goal of 50 percent of our funds in Afghanistan to go through the Afghan budget. That doesn't mean that we give the Afghans the money, but what it does mean is that we work with Afghan ministries, and that money gets programmed through specific institutions. So, there are already steps we are taking to mitigate the economic effects of the drawdown, but those effects will be real. We have to continue looking for opportunities through economic growth, in other words increase the amount that Afghans themselves are earning, and other such initiatives like more local spending in the economy to lessen [the negative effects of the drawdown].

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