The Other Drawdown — Why Donor Fatigue Is Threatening to Derail Afghanistan

The Other Drawdown — Why Donor Fatigue Is Threatening to Derail Afghanistan

On Dec. 3 to 4, British Prime Minister David Cameron and Afghan President Ashraf Ghani will host yet another international donors’ conference on Afghanistan in London. It will be the 12th major international conference on Afghanistan with expected participation of high-level government officials and delegations from around the globe to discuss the future of their economic assistance programs and political support to Afghanistan and the newly elected president.

Afghanistan is one of the few countries with such a high number of post conflict aid conferences and donor fatigue is at an all-time high due to rampant corruption within the Afghan government and the effectiveness of aid delivery systems to the country.

Since the fall of the Taliban regime, Afghanistan has had 11 major international donor conferences, presented five different development strategies, and held dozens of other regional and thematic conferences around the globe. It started with the Bonn I and Tokyo I conferences; the last donor conference, in which the international community pledged more than $ 4 billion in economic assistance to Afghanistan, was held in Tokyo on July 8, 2012. The impact of these conferences on building a sustainable Afghan economy is questionable and controversial at best.

Meanwhile, the sad reality remains that there are still enormous security, economic, and political challenges ahead of a prosperous, stable, and democratic Afghanistan and the country no longer enjoys the prima donna attention it garnered in the early 2000s from major donors and the international community because of the newly emerging geopolitical priorities around the world. This implies that international financial resources for Afghanistan are scarce and Afghanistan will have to share the world’s attention and resources with these newly emerging geopolitical realities of the world. Though, the question remains how much money and commitments the new Afghan president and his economic team will be able to secure in the upcoming London donors’ conference on Afghanistan and what are options?

Ghani, who is an experienced former World Bank official and Finance Minister, understands well that at this point of time in its history Afghanistan needs more investment, trade, WTO membership, market access, development of Afghanistan’s nascent mineral and hydrocarbons sector, combined with consistent diplomatic, political, and military support at the international level for a significant number of years to come.

A Realistic Model and Vision for Afghanistan — Modern Mongolia or South Korea

On several occasions, President Obama and several European leaders, including Prime Minister Cameron remarked that the international community and NATO should not expect to build another Switzerland out of Afghanistan and expectations should be kept moderate. But what is it realistically that the international community can achieve in Afghanistan? Some argue Mongolia could be a good model for Afghanistan while others envision a South Korea type of economy with a big push and specialization in a few specific sectors of the economy. Pursuing and formulating such a vision is more the job of Afghan politicians and policy makers than Western officials, but Afghan leaders and policy makers have failed miserably in generating such a vision and future economic model for their own country as of yet.

A New Leader — A New Team: The man with too many ideas and no team yet

There is an expectation that Ghani would bring fresh new faces to his cabinet and his economic, national security, and foreign policy teams and break away from the incompetent leadership of the past. The Afghan economic, financial, and foreign policy machineries require new teams and energy to bring a momentum and confidence into Afghan public institutions. The current leadership of the Afghan ministry of finance has been accused time and time again of political cronyism and corruption. The confidence of the international community is shaky at best on the Afghan economic and financial systems and institutions, in large part due to the lack of a checks and balance system to monitor corruption.

While Ghani is a highly motivated, dynamic, and hardworking individual who has many ideas and programs for Afghanistan, he cannot run and rebuild the country alone. He requires a dedicated, professional, and committed team that will translate his ideas into realities on the ground. In order to restore confidence to Afghan institutions, Ghani needs to build competent teams at both the national and subnational levels.

Aid Conditionality — Tie aid to key political, policy, and public sector reforms

The conference in London should not be business as usual. This conference could be so much more effective if the Afghan government could present a realistic and long-term program of reform for Afghanistan and, concurrently, the international community could commit themselves at the highest level possible to support Afghanistan in economic, political, and military terms over the long haul.

The international community and major donors of Afghanistan should tie their aid and economic assistance programs to key reforms in the public institutions — such as fighting corruption, reforming of the judiciary, implementing the rule of law, improving subnational governance, and improving Afghanistan’s public financial management system. Condition-based provision of aid pushes for much needed, hard reforms in Afghanistan while also giving Ghani and his team the justification needed to satisfy the Afghan public that in the absence of these reforms, Afghanistan will have difficult time securing foreign aid.

Corrupt Political Elite and Incompetent Bureaucracy — where to channel the aid?

The flood of cheap money and easy foreign aid combined with military contracts have created a new class of Afghan political and business elite who are extremely corrupt who control the government, parliament, and Afghanistan’s nascent private sector. This can be overturned by undertaking critical reforms in key Afghan economic and financial institutions who oversee public sector accounting, financial management, procurement, revenue collection, and contracting in order to ensure proper oversight and check for corruption and leakages.

Big Pledges, Little Commitments, and Even Less Disbursements: Match words with action

The experience of the past decade has shown that there is a long way between donor pledges and the materialization of those pledges into commitments and disbursements. Based on the Afghan Ministry of Finance figures and analysis, the average percentage of the translation of pledges into commitments and disbursements of any donor conference for Afghanistan is almost half among more than 70 donor countries  and only 20 percent of the entire money disbursed to Afghanistan is channeled through the Afghan government budget (famously known as on budget support) while the remaining 80 percent has been direct funding of each country’s companies, firms, and NGOs to carry out projects in Afghanistan.

The international community and donors should agree on a mechanism to translate their pledges into commitments and disbursement through the Afghan government budget aligned with Afghan government priorities.

Mutual Accountability and Follow up Mechanism — Afghanistan’s weak diplomacy and institutional follow up

The last London conference and subsequent Tokyo II conference provided mutual accountability framework for donor assistance to Afghanistan, but it was later politicized by former President Hamid Karzai and his economic team.

The economic diplomacy of Afghanistan has been almost nonexistent or weak, to say the least. Except some broad regional initiatives such as Heart of Asia process or the Silk Road — both with little achievements to show for themselves — the Afghan diplomatic machinery has failed to engaged in a constructive way with the donor community and the region to set up proper accountability and follow up mechanisms on their financial and in kind commitments to support various economic projects. It has often been the case that major donors have actually formed their own groups and rallied other relatively small donors for their projects and priorities of their choice or encouraged them to follow the priorities of the Afghan government.

This calculus has to change if the way aid is delivered and trickles down to its beneficiaries in Afghanistan hopes to be reformed. Meanwhile, the efficiency and effectiveness of certain initiatives should be evaluated.

Afghan Commitments: Anticorruption, counter narcotics, fundamental reforms, and the rule of law

Good governance, rule of law, anti-corruption, counter narcotics, and public sector reform remain some of the favorite buzzwords of the donor community and senior Afghan officials in Kabul. Much has been said, written, done, and funded in these sectors, but like any post conflict reconstruction and development situation, much more remains to be done. The international community should ask Ghani and his economic team to come up with a specific long-term policy and strategy to address the menaces of corruption and narcotics, bringing fundamental reforms to the Afghan financial and economic institutions, and upholding the rule of law in the country.

The Afghan government and international community will not be able to achieve any milestone with the existing numerous and sporadic policies, strategies, programs, and projects right now. These have to be consolidated for each sector with a clear vision, goal, and objective with measurable and results-based indicators.

International Community Commitments: Effective aid, Afghan priorities, parallel structures, more coordination

Donor coordination still remains a big challenge in Afghanistan; each donor pursuing their own stated goals and priorities through their own agencies, NGOs, and contractors with little reporting or transparency to the Afghan government. At the London conference, the Afghan government and major donors should push for better coordination, alignment, and transparency of foreign aid to Afghanistan. Donors should be encouraged to align their country’s strategies to Afghan government priorities and increase their on-budget support by simplifying and harmonizing their bureaucratic processes and procedures and following their commitment in the Paris Declaration of aid effectiveness.

Technical assistance in the form of advisors, consultants, and project managers should be cost effective, demand driven, coordinated with the Afghan government, and aligned with the national priorities.

A New Deal for Afghanistan — A New Partnership

At the upcoming London conference, both the Afghan government and the international community should agree on key economic growth enhancing policies for Afghanistan, rather than the business-as-usual foreign aid assistance and financial support, which is not sustainable. The current empty treasury and budgetary difficulties of the Afghan government should serve as a wakeup call for both the Afghan government and the international community that, with rampant donor fatigue, declining foreign aid, and high levels of corruption, Afghanistan has no choice but to look for sustainable domestic sources of economic growth through the revenues of which it can meet its own financial and budgetary goals.

At the London conference, Ghani should ask the international community for investment, trade, market access, support for WTO membership, development of world class agribusiness sector for Afghanistan, encouraging global value chains to use Afghan products, and maybe even support to export of Afghan opium for medical purposes in the West — all with the goal of finally turning Afghanistan into the transit and trade hub of South and Central Asia. The Gulf States and especially Iran can play an important role by importing Afghan unskilled labor for their labor market needs through bilateral agreements.

Afghanistan has all the potential to develop an indigenous and sustainable economy, but requires a big push and investment on the sources of its comparative advantage. The London conference should serve as the venue to ignite this big push and investment for building a self-sustaining and less aid-reliant Afghan economy through pursuing growth-enhancing economic policies.

Tamim Asey is a fellow at Asia Society and a Fulbright scholar at Columbia University pursuing a degree in Economic Policy Management. He was also a former government of Afghanistan official and taught at the American University of Afghanistan (AUAF).