Dismantling the World’s Top Kleptocracy is a Key Challenge for Afghanistan

In the lead article to this series, I noted that success in Afghanistan will be determined by five critical variables: Political Transition and Reform, Afghan National Security Forces, Regional Diplomacy, Economic Progress, and initiation of a substantive Peace Process. This article will focus on Political Transition and Reform.

The Afghan government has become the world’s most sophisticated kleptocracy. Dismantling it will be a long-term project that will require extraordinary political courage and consensus-building, a clear strategy and implementation plan, and plenty of support and incentives from the international community.

Without significant progress by the end of 2016, Afghanistan risks a perfect storm of complete foreign troop withdrawal and donor flight that leaves the government battling an insurgency without money to pay its bills. The combined fiscal and political crisis could be catastrophic.

The Afghan government needs convince both its own people and donors that investment is a manageable and prudent risk rather than an uncertain and expensive gamble. Addressing the key elements of Political Transition and Reform is an important step forward. The red on the scorecard is a forward-looking assessment of issues that need to be addressed within this transition and reform period (see key).

Political Transition and Reform consists of three factors: the election, transfer of power, and political reform. With President Ashraf Ghani, CEO Abdullah Abdullah, and several key leaders in place, Afghanistan has only jumped the first and lowest hurdle.

Transfer of Power and responsibility includes the formation and efficacy of a new government. This will include selecting the leadership of critically important ministries such as Defense, Interior, Finance, Intelligence (NDS), Commerce, and the Independent Directorate of Local Governance (IDLG).

These powerful positions are likely to be contentious. Given the rocky road to achieve the National Unity agreement, the structure of the government promises to entail further hard-bargaining. Brinksmanship is a real risk, as supporters of Ghani and Abdullah jockey for position.

More critically, this team-of-rivals needs to govern. National unity governments have the potential to balance competing parties and interests; creating an agile synthesis of sensible compromises that lead to effective policymaking and implementation. U.S. President Abraham Lincoln used it successfully, according to biographer Doris Kearns Goodwin.

Others have been less fortunate. Such unity governments have the potential to be held hostage by rival interests and agendas making gridlock on substantive issues highly likely. Worse yet, the government can begin to tear itself apart by suspicion and a scrimmage for power. Even prior Afghan experiences with national unity governments in 1992 and 1993 ended in civil war.

Given the enormity of the tasks ahead, great statesmanship from the new president and CEO will be needed to produce a government that can function effectively — which means they can debate difficult issues, develop policy, and implement reforms. The key test of an Afghan transfer of power will be the initial enacting of critical reforms.

Political Reform will be even more challenging than a transfer of power. Foreign Policy’s Fragile States Index highlights Afghanistan as one of the world’s most troubled states. Critical issues to reform include: electoral reform, dismantling the kleptocracy, enacting business-friendly policies, and improving government competence.

Electoral reform is the most obvious target for improvement, and is included in the national unity agreement. The alleged scale of fraud in the recent election is deeply troubling, but is consistent with practices among other countries in what Paul Collier describes as the "bottom billion" – the least developed countries that contain one billion of the world’s population.

The key test for the Afghan government is developing a long-term electoral reform strategy, while taking near-term steps to reduce electoral fraud in the upcoming 2015 Parliamentary elections.

The parliamentary trial-run is important. Although the Afghan Parliament has much less power than the legislatures of other countries, these highly lucrative positions will be hotly contested. Parliament has the authority to impeach Ministers — a power that has motivated bribery schemes in the past. The situation may worsen if factions in the National Unity Government use such proceedings to threaten, distract, impoverish, and undermine their rivals.

Dismantling the Afghan kleptocracy, the world’s most sophisticated and effective one, will be the biggest and most important challenge for the new government. According to Transparency International’s Corruption Perceptions Index, Afghanistan is tied with North Korea and Somalia as the world’s most corrupt government. Such distinction is even more extraordinary given the amount of scrutiny from the international community over the Afghan government’s finances.

Afghans are outraged over the levels of corruption. According to the Asia Foundation surveys, Afghans complain that corruption remains one of the key factors moving the country in the wrong direction. Consistently, over 75 percent of Afghans surveyed have reported corruption as a major problem in Afghanistan and over 80 percent view it as a problem in everyday life.

The majority of Afghan elders I speak with note their disgust over the gaudy mansions in Kabul, while none of the international community largess has made any impact in their communities.

Afghanistan suffers from what scholars Larry Diamond and Paul Collier call the "resource curse." Liquid resources (international aid in this case), combined with highly centralized governments with poor mechanisms for public accountability create powerful incentives toward kleptocracy. Afghanistan, in this respect, is little different than many others in Collier’s bottom billion.

Much of the Afghan government has adapted over time to resemble a gigantic vacuum cleaner — inhaling money and resources, moving them through power-brokers in Kabul, who then jettison the money out of the country into overseas banks.

Several senior Afghan officials have reported to me that many governors, chiefs of police, and other powerful persons purchase their positions at exorbitant prices from benefactors in Kabul. The rent to keep their position is normally renewed every six months or year. The officials are given license and protection from their benefactors – shelter that often tolerates officials to engage in predatory practices, all to earn rent and personal profit.

Under different circumstances, public revolts would take place against the predation.  As insurance against such backlash, some corrupt officials have used unwitting Afghan and international forces as bouncers. This exploitation has caused many people to turn to the Taliban for retaliation, protection, and justice.

Dismantling this deeply entrenched and highly lucrative "pay-for-play" system will take extraordinary political courage and consensus-building. Afghanistan needs an Ombudsman system that covers national, provincial, and district levels to provide a much needed venue for public reporting of corrupt and predatory practices. The re-opening of the Kabul Bank investigation is an important signal of intent — holding officials accountable for misconduct will be a significant anti-corruption test.

The international community can help systemic reform efforts by implementing more powerful incentives including rewards for exceeding benchmarks. Continued failure to enforce provisions in the Tokyo Mutual Accountability Framework needs to be fixed.

Enacting business-friendly policies will complement efforts to dismantle Afghanistan’s kleptocracy. The World Bank ranks Afghanistan at 164 of 189 economies for ease of doing business; a rank six places better than 2013. The greatest inhibitors of business are often closely associated with corruption: construction permits, land registration, enforcing contracts, and protecting investors. One colleague spent nearly two years in Afghanistan on behalf of a U.S. company interested in competing for mining contracts. Eventually, the company ended its efforts because the demands of corruption were so acute.

Better business policies will likely to improve foreign investment in Afghanistan.

Finally, the Afghan government needs to create powerful incentives to improve government competence. Most Afghan ministries spend only a fraction of their budget and the movement of money from the central budget to provincial and district line ministries is stagnant.

The Ombudsman system mentioned above can help address this issue. By putting emphasis on good performance, government officials will be held accountable for the results of their actions, the key requirement of government competency.

Providing the public a voice at national and local levels can help the government identify the worst performers and take action to address predatory practices, incompetence, and lack of capacity. Establish a venue for legitimate complaints (something even the Taliban do), and holding officials accountable for performance should substantially improve perceptions of government legitimacy.

Reducing the size of the bloated public sector will improve effectiveness and reduce corruption, but will also take time. According to one senior Afghan official, the government payroll includes a whopping 850,000 people — not including the 352,000 in the Army and police. This is for a population of roughly 30 million in which over 64 percent are under the age of 25.

Political transition and reform will be the biggest challenge for the new Afghan government. President Ghani and CEO Abdullah will need to form a common vision and game-plan and partner relentlessly and ruthlessly on implementation. The two have the potential to be highly complementary: the passionate reformer with the agile consensus-builder.

Rivalries below them, however, threaten to pull the two leaders apart, and if successful, the resulting kleptocractic gridlock will probably doom Afghanistan.

The President and CEO can afford no daylight between them if they hope to succeed. The key tests above should be achievable by 2016. This should give enough confidence to the Afghan people and the international community that investment in that wonderful country has transitioned from an uncertain gamble to a manageable risk.

Christopher D. Kolenda is the Senior Military Fellow at King’s College London and the President & CEO of Kolenda Strategic Leadership, LLC (www.kolendastrategicleadership.com) which helps NGO’s maximize their impact in conflict zones. He has been a key senior advisor on Afghanistan and Pakistan to three U.S. Secretaries of Defense and four ISAF Commanders, to include serving four tours in Afghanistan.