SPEAKERS CONTENTS INSERTS
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2006
AFGHANISTAN: IS THE AID GETTING THROUGH?
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
MARCH 9, 2006
Serial No. 109–149
Printed for the use of the Committee on International Relations
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Available via the World Wide Web: http://www.house.gov/international—relations
COMMITTEE ON INTERNATIONAL RELATIONS
HENRY J. HYDE, Illinois, Chairman
JAMES A. LEACH, Iowa
CHRISTOPHER H. SMITH, New Jersey,
Vice Chairman
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
DANA ROHRABACHER, California
EDWARD R. ROYCE, California
PETER T. KING, New York
STEVE CHABOT, Ohio
THOMAS G. TANCREDO, Colorado
RON PAUL, Texas
DARRELL ISSA, California
JEFF FLAKE, Arizona
JO ANN DAVIS, Virginia
MARK GREEN, Wisconsin
JERRY WELLER, Illinois
MIKE PENCE, Indiana
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THADDEUS G. McCOTTER, Michigan
KATHERINE HARRIS, Florida
JOE WILSON, South Carolina
JOHN BOOZMAN, Arkansas
J. GRESHAM BARRETT, South Carolina
CONNIE MACK, Florida
JEFF FORTENBERRY, Nebraska
MICHAEL McCAUL, Texas
TED POE, Texas
TOM LANTOS, California
HOWARD L. BERMAN, California
GARY L. ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
DONALD M. PAYNE, New Jersey
SHERROD BROWN, Ohio
BRAD SHERMAN, California
ROBERT WEXLER, Florida
ELIOT L. ENGEL, New York
WILLIAM D. DELAHUNT, Massachusetts
GREGORY W. MEEKS, New York
BARBARA LEE, California
JOSEPH CROWLEY, New York
EARL BLUMENAUER, Oregon
SHELLEY BERKLEY, Nevada
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GRACE F. NAPOLITANO, California
ADAM B. SCHIFF, California
DIANE E. WATSON, California
ADAM SMITH, Washington
BETTY McCOLLUM, Minnesota
BEN CHANDLER, Kentucky
DENNIS A. CARDOZA, California
RUSS CARNAHAN, Missouri
THOMAS E. MOONEY, SR., Staff Director/General Counsel
ROBERT R. KING, Democratic Staff Director
Subcommittee on Oversight and Investigations
DANA ROHRABACHER, California, Chairman
EDWARD R. ROYCE, California
JEFF FLAKE, Arizona, Vice Chairman
MARK GREEN, Wisconsin
MIKE PENCE, Indiana
JOE WILSON, South Carolina
WILLIAM D. DELAHUNT, Massachusetts
HOWARD L. BERMAN, California
BETTY McCOLLUM, Minnesota
ADAM B. SCHIFF, California
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GREGG RICKMAN, Subcommittee Staff Director
GREGORY MCCARTHY, Professional Staff Member
CLIFF STAMMERMAN, Democratic Professional Staff Member
EMILY ANDERSON, Staff Associate
C O N T E N T S
WITNESSES
The Honorable Don Ritter, Chairman, Afghanistan-America Foundation [former Member of Congress]
Barnett R. Rubin, Ph.D., Director of Studies/Senior Fellow, Center on International Cooperation, New York University
Mr. Frederick D. Barton, Senior Adviser and Co-Director, International Security Program, Center for Strategic and International Studies
Amit Pandya, Esquire, International Development Consultant
Seth G. Jones, Ph.D., Political Scientist, RAND Corporation
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Dana Rohrabacher, a Representative in Congress from the State of California, and Chairman, Subcommittee on Oversight and Investigations: Prepared statement
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The Honorable Don Ritter: Prepared statement
Barnett R. Rubin, Ph.D.: Prepared statement
Amit Pandya: Prepared statement
Seth G. Jones, Ph.D.: Prepared statement
AFGHANISTAN: IS THE AID GETTING THROUGH?
THURSDAY, MARCH 9, 2006
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on International Relations,
Washington, DC.
The Subcommittee met, pursuant to notice, at 8:06 a.m., in room 2172, Rayburn House Office Building, Hon. Dana Rohrabacher (Chairman of the Subcommittee) presiding.
Mr. ROHRABACHER. This hearing of the Oversight and Investigations Subcommittee is called to order, and I would like to welcome all of those who have managed to get up early enough to be here.
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I don't think that this is the earliest hearing in the history of the Subcommittee, but it is certainly one of the earliest. So, we will make due.
I am glad that we are having this early hearing in order to have your testimony on the record before another hearing that will be held at 10 o'clock this morning.
And I wanted to make sure that, with Mr. Delahunt's prodding, we have on the record some hopefully constructive criticism of America's policies, and America's program, and how it is operating, in Afghanistan.
And so the purpose of the hearing is to hear testimony to determine the efficacy of our aid and reconstruction program in Afghanistan, and specifically to ascertain whether or not the strategy being pursued by the United States is wisely marshaling our national and worldwide assets, and whether the job that is being done in Afghanistan is a good job or not.
Witnesses will address their assessment of the situation in Afghanistan in light of their expertise, and of course we need to know your opinions of how we are doing, especially in light of the ongoing insurgency that seems to still be there, as well as the challenge of narcotics.
The Subcommittee is interested in the constructive approaches that can enhance the effectiveness of America's commitment to the people of Afghanistan. This hearing is not being held to try to tear something down, but instead to offer ways of improving the way that America is doing its business in that country.
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We have a distinguished panel of witnesses, led by my former colleague, Don Ritter, who I served with in my first years in the Congress and is very well known to me and to us in the White House prior to my coming to the Congress.
Don has a long history not only in the support of the Afghan freedom fighters, who fought against Soviet troops, but also a long involvement with the Afghan people since then, and has tried to bring about a more peaceful and prosperous society there. He has traveled widely in Afghanistan, often at great personal risk. And we are very proud to have him with us today.
In addition, we have a panel of scholars, specifically Professor Barney Rubin of New York University; Dr. Rick Barton of CSIC (Center for Strategic and International Studies); Seth Jones of RAND Corporation; and Amit Pandya of the Center for American Progress.
All of these witnesses have something to contribute. I would respectfully ask all the witnesses to perhaps try to limit your remarks to your pithy 5 minutes, and then we will have a discussion. We may only have Congressman Delahunt and myself here, but we will have a discussion from this end, as well as a discussion back and forth on this.
So if you could try to make the points that you think we ought to understand, we will make that part of the dialogue today. I am interested in hearing our witnesses' reports about what has become of our USAID (United States Agency for International Development) projects, whether our money is being well spent, and where are the shortfalls, as well as, where are the strengths?
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What is our long range plan to aid Afghanistan, what does the outcome look like now, and what is your estimate of what is going to be happening a year or 2 years from now?
We need to be sure that our plan is not an ad hoc procedure for that country, but a sustained, well thought-out plan for reconstruction—is that your assessment of what is going on there?
So we are looking very much for your analysis, but also perhaps your suggestions, of how we can set Afghanistan on a path to peace and prosperity. This is an important hearing, and an even more important endeavor for our country, and I want to thank each and every one of you for agreeing to be here this early in the morning, and agreeing to testify.
Your opinions are going to be part of the mix of the discussion today, and as I say, a few hours from now, Administration officials are going to be sitting in the seats you are in right at this moment. We will be using the information you present to us to challenge those people in our Government who are overseeing the policy. So with that said, Mr. Delahunt, would you like to offer an opening statement?
[The prepared statement of Mr. Rohrabacher follows:]
PREPARED STATEMENT OF THE HONORABLE DANA ROHRABACHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
Good morning and welcome to hearing of the Committee on International Relations the Subcommittee on Oversight and Investigations. If this is not the earliest hearing in the history of this committee, it certainly is ONE of the earliest in years.
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And I'm glad we're having it at this hour because this subject is important enough. The purpose of this hearing is being held to determine the efficacy of aid and reconstruction, specifically to ascertain whether the strategy pursued by the United States is wisely marshaling national and worldwide assets. Witnesses will address their assessment of the situation in Afghanistan in light of their particular expertise and the ongoing insurgency and narcotics challenges. The Subcommittee is interested in constructive approaches that can enhance the effectiveness of US presence and expenditures.
We have a distinguished panel of witnesses, led by former colleague, Don Ritter, who represented Pennsylvania in Congress from 1979–1992. Don Ritter has business interests, extensive contacts in and has traveled widely to Afghanistan, sometimes at his own risk. Additionally, we have a panel of scholars: specifically, Professor Barney Rubin of NYU, Dr Rick Barton of CSIS, Seth Jones of the RAND Corporation and Amit Pandya of the Center for American Progress.
I am interested in hearing our witnesses' reports about what has become of our USAID projects, whether our money has been well spent and where major shortfalls are. What is our long-range plan for our aid to Afghanistan? We need to be assured that our plan is not an ad hoc procedure for the country but a sustained, well-thought out plan for reconstruction that will set the country on a path of peace and prosperity.
This is an important hearing and an even more important endeavor for our country. Thank you for agreeing to join me in this effort and I look forward to hearing from our witnesses. I now yield to Mister Delahunt for his opening statement.
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Mr. DELAHUNT. Yes, I will be very brief, Mr. Chairman. First of all, let me begin by introducing to you and to our panel the most recent addition on the Democratic side to this Subcommittee, a friend of mine, and someone who is a serious Member, and who does her homework, and is one of the rising stars in the Democratic Caucus, and that is Betty McCollum from Minnesota.
I am really excited to have Betty on board. Today, it is really a remarkable day and event for me, at 8 o'clock in the morning to be here, and to agree with the Chair of the Subcommittee, my good friend from California.
I want to associate myself with his remarks. I think that there is a window of opportunity. One can review the headlines regarding Afghanistan, the problems that obviously beset that devastated nation.
And I think that I have a sense that we are going to—and I have read some of your testimonies; former Congressman Ritter and Dr. Rubin. I have not had a chance to review the testimony of the other panelists.
But I found it refreshingly honest, and informative, and thought provoking. I suspect at 10:30 that we will have what we all know to be the pablum, the party line, and that is unfortunate. And again I am not denigrating the panelists that will be presenting today to us.
But without oversight, and without aggressive oversight, and without demanding data and evidence, we are simply not doing our job. And I really do want to commend Dana Rohrabacher, because he has had a long term commitment, as I am sure that you are all aware, to Afghanistan.
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He was right about Afghanistan and he was right about al-Qaeda long, long before anyone heard of, or had any in-depth engagement with the issues of Afghanistan, and subsequently al-Qaeda, and what tragically occurred on 9/11.
And it is a remarkable day because today is really the first day that we have done oversight. I mean, we have done a lot of hearings dealing with the United Nations, and they have been repetitive, and I think that they served a good purpose.
I usually am leading off, as Dana well knows, with a rant about the lack of oversight, and the fact that we have not done what we should be doing, in terms of oversight, in Iraq. You know, beginning with looking for that missing nine billion dollars.
But I will forego that today, because it is so remarkable to be here and doing something that I believe is constructive, is positive, and I have a sense that we are going to hear a very balanced view, and I know, given the commitment of this particular Chairman, that he will pursue your ideas.
I will support him, and we will try to make a difference if you believe and you can convince us that there is a better way, in terms of dealing with the issues confronting Afghanistan, and obviously the United States and our national interests, because I believe, as Dana does, that we have an obligation to these people.
We do have a moral obligation and we should not forget that. And with that, Mr. Chairman, Betty, do you want to say anything?
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Mr. ROHRABACHER. I would be happy to recognize our new Member, and let me note that we have—there has been an agreement about an oversight hearing on Iraq, but it will be at 5:30 in the morning.
Mr. DELAHUNT. Actually, it is 3 o'clock.
Mr. ROHRABACHER. Ms. McCollum, would you like to make an opening statement?
Ms. MCCOLLUM. Mr. Chairman, to Ranking Member Delahunt, I just want to let you know—and Mr. Delahunt knows how hard I have tried to get on this Subcommittee, and Mr. Chair, it reflects the type of leadership and commitment that I have seen working with you.
We don't always agree on things, but the one thing I know we do agree on is getting to the truth and asking tough questions, and being respectful when we do it. So I really consider it an honor to be on the Subcommittee.
And the part about the rising star, yes, the sun is the closest planet, and the sun did come up this morning, and I made it up this morning, too. The only comment I would make is that I know that we are going to be hearing a lot of things today, and a lot of things tomorrow, but one of the tensions that I have had is with some of the women that have been hosted here by the Administration that have talked about progress in schools, and microenterprises, and other things like that.
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If you look at the maternal mortality rate in Afghanistan since we have been there, and the child mortality rate in Afghanistan since we have been there, this is a place where truly keeping mothers alive and helping children survive is clearly a place in which hearts and minds are won, because you win the admiration and respect of families.
And I don't hear much talk about that, and I think we know why. There has not been success in that area. And so I think we quite often miss doing small interventions for little bits of money that make a huge difference in families' lives, and really do win the hearts and minds, as well as not doing the big interventions very well in my opinion, Mr. Chair.
Not to the ability that the United States could do them. So I look forward to hearing the testimony, and I want to thank you again, Mr. Chair, for having this oversight hearing, because if we are going to move forward as the great country we are, we have to look at the things that we do well, as well as the things that we don't do well. And there are many opportunities for improvement, and so thank you, Mr. Chair.
Mr. ROHRABACHER. I think that was an excellent point, and what a great way to start the discussion, and start the hearing with that specific point that you brought up. Now, again, if you could—and, see, Don, now you are on that side of the table.
And I can remember Don saying this as well to people—if we could take this in 5-minute segments, and go to your main points, and get this done so we can have some dialogue on the positions, and actually between panel members, as well as back and forth. So, Mr. Ritter, or Dr. Ritter. Are you really a doctor?
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Mr. RITTER. I am a Doctor of Science from MIT, yes.
Mr. ROHRABACHER. Isn't that fantastic.
Mr. RITTER. That kind of doctor.
Mr. ROHRABACHER. All right. Well, Dr. Ritter, formerly——
Mr. RITTER. In the Ranking Member's back yard.
Mr. ROHRABACHER. Congressman Ritter, Dr. Ritter, freedom fighter Ritter, you may proceed.
STATEMENT OF THE HONORABLE DON RITTER, SENIOR ADVISOR, AFGHAN INTERNATIONAL CHAMBER OF COMMERCE [FORMER MEMBER OF CONGRESS]
Mr. RITTER. Thank you, Mr. Chairman, Mr. Delahunt, Ms. McCollum, it is a great pleasure to be here testifying on this—I think it is an auspicious day. I think the Subcommittee has been quite intelligent in trying to balance off what they hear from the agencies, with people from what you call the private realm.
I represent in many ways the private business sector, and in addressing Ms. McCollum's issue, keeping young mothers who are dying in child birth, and keeping their children alive, the best thing that we can do for Afghanistan is to grow this economy in such a way that it comes up from the grass roots, and covers millions, and not thousands, that it covers villages, and not just cities.
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Economic policy is perhaps the most ignored feature of the Afghanistan policy landscape, and I am here today as an architect of the Afghanistan International Chamber of Commerce, which is a USAID-supported effort.
As the senior advisor to this private sector voice, trying to compete with a government left over from Communist, Islamist, warlord, and monarchist times, someone who has invested heavily of my own personal fortune, as well as building companies across Afghanistan, this is where I am coming from.
I want to start off talking about security, because security is denominating the headlines. And security is making people very shy of doing anything else but fighting a war and dealing with security.
And yet I am here to say that, in my humble opinion, that if you check out the murder rates in Washington, DC, Los Angeles, Detroit, St. Louis, you might come up with murder rates that are higher than Kabul, Kunduz, Herat, and perhaps even Kandahar.
So what you see in the media is not exactly what you get, and that is the basis of kind of where I am coming from. Pundits are talking to each other. The evening news is talking to the front page of the Washington Post, and the New York Times. I mean, Fox News is in the same boat as CBS on this.
Bombs are the greatest news since sliced bread when it comes to getting viewership, but that is not what is happening on the ground. You are looking at somebody who is working across the length and breadth of this country, who takes taxis all over the place, and who dresses not in an Afghan garb, but like I am dressed now.
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And I find the people very friendly. The business community has discounted, ladies and gentlemen, most of these risks. The Afghan business community is used to risks. Think about it. Think about what they have been through.
And recently in the World Bank report, violence, mayhem, murder, all you see about Afghanistan daily, nightly, is way down on the list. I think number 14 out of 18 listed concerns. Let me get into this a little bit.
The World Bank survey talks about what the business community, which is out in the field, and whose employees, hundreds, thousands, are also subject to the same conditions. What are their priorities? Electricity, access to land, access to capital, decent roads and infrastructure.
They are concerned about the lack of legal structures, corruption, taxes. They are not so concerned about the Taliban and al-Qaeda. We are fighting a war, and we thank God for our great men and women in the armed services, because what they have done has confined this battle to mostly the more remote areas of this country.
Yes, there is an uptick in Taliban violence, and there is an uptick in al-Qaeda violence. We are seeing IEDs (Improvised Explosive Devices) and suicide bombers, but we don't see them as people out in the field, as fellow members of the business community.
It is worth repeating these priorities; access to electricity, capital, land, building our businesses. We are concerned with arbitrary government action. Believe me, the business community, including me, fears arbitrary actions by the government more than we feel al-Qaeda and the Taliban.
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We fear stalling, and bribe seeking, and perhaps most of all, incompetence. I have often thought if I ever go down in Afghanistan, I am going to go down by the incompetence of the system, as opposed to a bullet. And I think that my colleagues in the business community feel the same way.
They fear unworkable rules and regulations imposed by 21st century society parachuted in out of the blue. As an environmentalist running a environmental policy institute for 10 years in this city, I was recently made aware of the United Nation's environmental policy efforts to install a policy in Afghanistan, which is coming out of the United States and Western Europe.
It is 21st century stuff to be sure, but Afghanistan is in the 15th century. And they are talking about a major program, and this is just a thought as to how international organizations act with Afghanistan.
They are talking about a major new industrial permitting process. With permitting necessary, by all the relevant agencies, can you imagine the time before you can start building anything? Can you imagine the tie up and the bureaucracy that would cause given the nature of Afghanistan, and the Afghan Government bureaucracy?
We are concerned about the Moustifyat, their IRS (Internal Revenue Service), and the Ministry of Commerce, charging a 20 percent tax rate in a country that needs to be a tax haven, and consultants comparing themselves with Hong Kong, Lebanon and the Baltic States. I mean, it does not work that way.
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Afghanistan has no electricity basically. It has little infrastructure. That has to be a tax haven. But, okay, given that, we are concerned that they are trying to—that their incompetence or whatever is seeking to take a 20 percent tax on the gross venues of a business, even when it has not made a profit yet.
Take a 20 percent tax on the amount of investment that we bring in. These people have studied economics in the Soviet Union, or have not studied at all, but have been exposed to this kind of non-market economics, which does not know the difference between gross, net, profit, investment, or whatever.
This is what we are concerned about. Recently, a colleague of mine, who has built one of the largest housing developments in Kandahar, and they have been so successful to date, had their property invaded by Ministry of Defense forces claiming their land. There was no paper—no legal or court actions.
They came there with violence, with guns, and with threats, saying the land belonged to them. Where is the rule of law? The rule of law is critical in this country. The bottom line to the security issue is that our security is less concerned with the Taliban and al-Qaeda than it is with day-to-day struggles—and that is due, again, to the successes of our armed forces in confining these struggles mostly to the border regions east, to the southeast, and to areas in the south which are outside of the major cities.
Okay. Our assistance dollars. They would be much more effective if they were directed more toward Afghans. This is an overriding principle that has been swept under the rug. If the reality on the ground is something other than what we are getting in the media, and if our success is so dependent on improving the lives of the Afghan people, then the American people have a right to ask how are we doing on that front, especially the economic front.
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How are the billions of dollars spent in rebuilding the country affecting social and economic progress? The answer is not good enough of the aid flowing into the country, only a fraction remains as the UN, and the United States agencies, big NGOs (non-governmental organizations), and foreign contractors, including the United States, of all shapes, sizes, and types, siphon off funds to pay for personnel and programs that positively dwarf what the Afghans are getting out of it.
In Kabul, the price of housing rivals Washington. The foreigners sop up the best employees, paying salaries and benefits totally unaffordable to Afghan companies. This is not new. It is one of the downsides of foreign aid.
And everybody is appreciative of the United States building roads, bridges, schools, hospitals, a new university and so on. The list is long. But the bang for the buck can be a lot bigger. We need to mentor, train, and upgrade.
The United States Government agencies, by far the biggest contractor for goods and services, need to take the lead in upgrading the capacity of Afghan companies and their employees to do the required job in every situation possible, from construction, to products, to logistics, to services of all kinds.
The process needs to be accelerated and invested in 100-fold over the status quo. Well, when the United States entities answer that the Afghan companies don't have the skill, then let us teach them, train them, mentor them, in order to upgrade their output.
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Invest in their technology, and their management, and their personnel. The current system, with some exceptions, is not doing that. One exception is the United States Army Corps of Engineers. They have a program to mentor and train some of the Afghan construction companies.
They have interest in bringing Afghan companies into the fold. They have a program especially designed for Afghan companies. Lieutenant General Karl Eikenberry is a model United States citizen in this regard, and hopefully at some hearing in the future, you can listen to him and get some of his ideas. We need to look closely at what he has accomplished and move forward and possibly build on it.
We can try and estimate how much aid stays in the country. Fifteen percent is the gut reaction of a lot of people. Fifteen percent of the total. When I mentioned this to Professor Ishaq Naderi, the chief economic advisor to President Karzai, he said, ''Do you think it is that much, Don?''
Okay. We need to have congressional oversight, and we need to benchmark this figure. We need a process, a mechanism, whereby we look at what the amount is that stays. We have a combination of the agencies that are required to report back to Congress, benchmarking, and improving the number, the percentage of the amount of our taxpayer dollars that are staying in Afghanistan.
Congress must be involved. It cannot happen without Congress, because the agencies at this point are only responsible to themselves, and nobody wants to risk their career on putting out some numbers that may not look that great.
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And they are some of the finest people that I have ever met. They are great people. They are trapped in a system that is to some extent dysfunctional. They generally stay in the country for a year, and they need to stay a lot longer. It is not acceptable.
Jack Kemp—and I am going to close with his quote. Jack Kemp, on Meet the Press, made this comment about Iraq, but it applies to Afghanistan as well. He said that, ''My most serious problem is that there is no economic component to the war on terror. In other words, there is a need for a 21st century Marshall Aid Plan.'' He later alluded to the same idea when he talked about, ''some economic component that will lead to jobs and an opportunity to better one's life and one's condition in life.''
Members of Congress, thank you so much. There are a lot of other things that I talk about in my testimony—the problems with the government, such as price controls in what is supposed to be a market economy.
And if you have price controls on agricultural products, how in the world are you going to get value-added products coming out of our big investments in ''alternative livelihoods?'' How are you going to get value-added products in the stores, when only the cheapest price-controlled products can survive? Market economy is a market economy. Price controls don't go with a market economy.
And I end up where I talk about substitution of a major portion of aid with credit, building this market economy, something that the donors in London missed. They missed that when all they talked about was giving money to the Afghan Government, and funnelling a lot of the aid through the Afghan Government and the so-called Compact.
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But that is real problematical, Members of Congress. It is a problem in distributing this aid, and it is similar to problems that we have, but in a different order, but credit, where is the credit. Thank you, Mr. Chairman.
[The prepared statement of Mr. Ritter follows:]
PREPARED STATEMENT OF THE HONORABLE DON RITTER(see footnote 1), Senior Advisor, Afghan International Chamber of Commerce [former Member of Congress]
RISK PERCEPTION AND SECURITY
Let's start with risk or risk perception as I will put forth a different view of the security issue when it comes to reconstruction of the country and the rebuilding of its institutions. It is based on the fact that the perception of security risk of Afghans in Afghanistan is vastly different and far less than the perception of security risk we get in the media.
Policy analysts, like the media, get noticed when there's bad news to report, when a crisis is occurring. This is a phenomenon not defined as left, right or center. Murder and mayhem enjoy equal opportunity coverage whether in Southeast, Washington, DC, Iraq or Afghanistan. Indeed when considering security or risk, we need to ask ourselves, what is the murder rate in DC or Detroit or LA compared to Kabul, Herat, Mazar, Kunduz, yes, even Kandahar in the south?
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My gut reaction, someone else will have to gather the data, is that it is higher in those U.S. cities. I take taxis everywhere in Kabul while our Embassy folks are riding in armored vehicles. Maybe they need to but that's not the Kabul that I and the Afghans see. They, in particular, are used to operating in far more dangerous situations that the present.
The coverage on Fox News of blood and guts resulting from the explosion of the day is likely to be equivalent to that of CBS. Similarly, the analyst or perhaps pundit or government official, whether conservative or liberal will also respond to the extreme behavior that he or she reads about in the papers or sees on TV. Most often, they are reading and responding to what other analysts or pundits have said about a problem or violent behavior.
Respected members of the Subcommittee, this is a luxury the private sector doesn't have. Indeed the Afghan people don't have it. That's why we in the private sector are out and about doing business as usual.
An increase in Taliban violence is duly noted as is the arrival of suicide bombers from outside the country. They are mainly concentrated in certain areas of the south and in areas near to Pakistan. They are mostly a threat to our war fighters and sometimes to Afghan officials in those regions. It's not good but it will not stop the Afghan people from moving forward unless we stop the process for them.
I'm not trying to be a Pollyanna but the American people need a lot more perspective on this security issue and the TV-driven media and the front pages of the newspapers, by virtue of what they all do for a living, are not helpful.
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The World Bank Looked at priorities of Afghan businessmen and women and security as an issue didn't show up!
The World Bank recently published a survey where members of the business community who were out and about in five major Afghan cities were asked what their greatest problems were. Electricity, access to land, access to capital, decent roads, lack of legal structures, corruption, capable labor force . . ., plus taxes, etc. Security did not appear on their list of concerns until way down the list and at that point the concern was not the Taliban but common crime that all businesses face in big cities! These people have employees and their employees have families. Surely if personal safety were threatened, these folks would feel it.
Indeed, I would feel it.
REAL FEARS—REAL RISKS:
The priorities of the business community, worth repeating, are access to electricity, land, the securing of capital for building their business, concerns with arbitrary government actions and a host of other issues. Believe me, the business community, including me, fears arbitrary actions by government officials, stalling, bribe seeking and perhaps, most of all incompetence and corruption in the government much more than they do a bullet or a bomb from the Taliban or Al Qaeda.
They fear rules and regulations imposed by 21st century societies on their backward nation that will make them diseconomic and dysfunctional. A recent example is UNEP's environmental policy creation that calls for an interministerial process of permitting industrial facilities before they can be built. Can you imagine the bureaucratic logjam that would occur in getting through the paperwork when the ministries really don't have the capacity to make those judgments? . . . and the fertile ground for corruption as businessmen and women seek to protect their investment and start working in a timely fashion . . . or more likely when officials ask for bribes?
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Why wasn't the community of manufacturers brought into the process of formulating the regulations before concoction of that travesty on common sense? Where were our own policy-makers?
We fear Moustifiat (the Afghan IRS) and the Ministry of Finance taxing our gross, as opposed to our profit, or taxing our investment itself, at the already way too high for Afghanistan 20% rate! Some educated in Soviet economic do not know the difference. These are the dangers we experience, not bombs.
There are as well Afghan government officials who see the private sector as adversary to their authority or a source of deep pockets to be bilked. Just recently, a powerful Ministry descended upon the largest housing development in Kandahar and claimed that the land which had been ceded to the developers by the then Governor some three years previously, belonged to them. No court order, no papers, just guns, threats and violence.
This kind of action is far more threatening to the creation of Afghan wealth and jobs than the Taliban or Al Qaeda.
The U.S. must work with the GoA to educate, train and influence, and to prevent these travesties for the Afghan market economy to actually be real.
BOTTOM LINE TO THE SECURITY ISSUE:
The brave and competent men and women of the US armed forces along with coalition troops are responsible for us business people being there in the first place by confining the violence in large measure to more remote regions. First, they routed the Taliban and Al Qaeda and now, except in certain well known areas, the enemy is on the run. They mostly run back into Pakistan where they subsist miserably in caves. Sure, they can be lethal but the vast majority of Afghans and foreigners, let's guess 99%, are not exposed to their misdeeds. Thank you U.S. military!
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AFGHAN PEOPLE'S REAL CONCERNS:
The American people need to know that Afghans are concerned with the same things that we are albeit at far lower standard of living. They would like to have a decent job, feed, clothe and house their families. I am talking about the 99%. They fear sickness, hunger, lack of a decent education for their kids and no work. The American people need to know that the Taliban and Al Qaeda are far from the minds of average Afghans.
To succeed in yet another ''long twilight struggle'', this time with a radical and distorted Islam alien to the Afghan people who are, in fact, strong Muslims, we need to give more hope and help to the people . . . we need to give it in a more direct fashion. That means helping them not only in reconstruction of the country but repair of the very fabric of society, thread by thread. Having invaded and protected it with our might, our blood, our treasure and our reputation, we now, like it or not, have a fair degree of ownership of the situation.
OUR ASSISTANCE DOLLARS CAN BE FAR MORE EFFECTIVE IF THEY ARE DIRECTED MORE TO AFGHANS:
If the reality on the ground is something other than what we are getting in the media and if our success is so dependent on improving the lives of the Afghan people, then the American people have a right to ask, how are we doing on that front, essentially the economic front? How are the billions of dollars spent in rebuilding the country affecting social and economic progress?
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The answer is, not near good enough. Of the aid flowing into the country only a fraction remains as the US and UN Agencies, NGOs, and foreign contractors including U.S. of all shapes, sizes and types siphon off funds to pay expenses for personnel and programs that positively dwarf what Afghans get out of it. In Kabul, the price of housing rivals Washington, DC. The foreigners sop up the best employees paying salaries and benefits totally unaffordable to Afghan companies. This is not new, it is the down side of foreign aid.
Everyone is appreciative of the U.S. building roads, bridges, schools, hospitals, a new university and so on. The list is long.
MENTOR, TRAIN, UPGRADE
Yet the U.S. government agencies, by far the biggest contractor for goods and services, must take the lead in upgrading the capacity of Afghan companies and their employees to do the required job in every situation possible from construction to products to logistics to services of all kinds. That process needs to be accelerated and invested in a hundred fold over the status quo.
If the US entity's answer is that Afghan companies don't have the skill, then teach them, train them and mentor them in order to upgrade their output. Invest in their technology and their management. The current system, with exceptions, is not doing that.
One exception which could serve as a model to be copied is the US Army Corps of engineers program to require that their contractors have mentoring and training for the purpose of getting more Afghan companies and employees in on the US assistance dollar while building their capacity for the future.
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They also have a pool of contracts which go only to Afghan companies. Contracts given to Chinese, Turkish, Indian and Pakistani companies may get a job done more rapidly and may have higher quality but then the foreign contractors leave, and their money leaves with them, and their skills leave. Taxes are not paid and participation in the new democracy is non-existent.
I will mention one name in this context, US Army Commanding Officer in Afghanistan, LTG Karl Eikenberry. He and his charges have this philosophy to involve real and qualified Afghan companies in direct contracts and work for the US Army, no middle men. They are working to upgrade companies with promise as well. We need to look closely at what he has actually accomplished and move it forward and possibly build upon it.
HOW MUCH AID STAYS IN THE COUNTRY?
Dear members of Congress, I submit that while we have come a long way from the Taliban times and nearly 25 years of ruination prior to 9–11, our assistance programs face a crisis in that the percentage of U.S. taxpayer dollars remaining in Afghanistan and helping to reconstruct the country is thought, felt and understood to be extraordinarily small.
Some people estimate 15%. When I mentioned that figure to NYU endowed professor and now Chief Economic Advisor to President Karzai, Ishaq Naderi, he responded with a smile, ''Don, do you think it's that much''? Is it more or is it less, we don't know, but we need to put our heads together and find out where we are so that we can benchmark where we need to go and need to be in the future.
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The amount that stays presently varies from program to program but everyone is pretty much accepting that dirty little secret.
GETTING DATA ON RETENTION OF AID RESOURCES AND SETTING UP A CONTINUOUS IMPROVEMENT PROCESS:
We need much harder and better information on the flow of these taxpayer dollars and then we need an overhaul of our basic policy and approach incorporating some form of interagency mechanism that is connected to Afghan reality, robust and responsive to meet periodically and create strategies to both promote and monitor improvement.
We need to set goals and benchmark progress towards those goals in a transparent process that invites in ideas and ways to increase the percentage of aid retained.
CONGRESS NEEDS TO BE INVOLVED:
Last but not least, we desperately need concerted Congressional and perseverant public oversight of the process. We need change now as we are running out of time, and the momentum of past practices is great.
AN ECONOMIC PILLAR TO U.S. POLICY IN AFGHANISTAN:
Ladies and gentlemen, security and governance, the two pillars of U.S. policy being implemented by the Departments of Defense and State, respectively, cannot be removed from the economic pillar, a pillar yet to be constructed. And while that is more and more being understood in both Defense and State and USAID as they try and address the issue, a break with past policies and practices may be necessary to get the desired results.
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INCREASING TENURE OF USG PEOPLE IN COUNTRY:
Those working for the USG in Afghanistan are some of the finest men and women I have known and they are dedicated public servants and they did not create the policy framework within which they work. They are mostly in country for a year and when they truly get up to some sort of speed they are gone. They are cloistered most of the time in spartan living conditions within the U.S. embassy compound and and they deserve our complete respect but they have limited opportunity to live the Afghan experience.
While our people show personal integrity and professional excellence, their perspective, understandably affected by short tenure and limited contact, is also limited—somewhat akin to touching an elephant blindfolded and the toucher being asked to identify the touched.
Stellar members of the USG's Afghan team have been assigned to Iraq. Tenure is a real problem and needs to be addressed . . . by Congress, if necessary. Other countries seem to keep their people on the scene for longer periods of time, why can't we? Can we really defend the idea of one year in such a complex country on policy grounds?
WHO HAS LEADERSHIP RESPONSIBILITY FOR THE ECONOMY?
There is no signal point of responsibility for building the economy, a market economy as stated in Article 10 in the Constitution. No one in our policy playbook has explicit duties to foment a vibrant, wealth-producing private sector. It is necessarily a secondary priority for war fighters, diplomats, USAID infrastructure builders and for that matter, the UN and the big NGOs.
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That may be understandable but it is not acceptable if we are to do our best to win the wa and build the country.
The economy is not presently a pillar in the established order of U.S. policy-making for Afghanistan because we are simply not set up for it in our government structures and aside from a very small program in the Commerce Department which has been swamped by Iraq demands, there is no high-level USG attention dedicated first and foremost to the economy, as there is to Defense and Diplomacy. Commerce could easily beef up its work to include matchmaking between Afghan and US firms but what is needed most is a powerful economic policy and development initiative based on growing Afghanistan's market economy.
Ambassador Zalmay Khalilzad, during his tenure in Afghanistan, saw a lot of these problems early on and tried, through the Afghanistan Reconstruction Group (ARG) in the Embassy and its ARG ''Reachback'' team over at the Pentagon, to grease the skids on speeding project funding and execution but ARG still did not, or perhaps could not, address the centrality of the economic issue and tightly interweave it with the issues of security and governance plus counter narcotics.
On Sunday, Jack Kemp, on Meet the Press made the comment—it was about Iraq, saying, ''My most serious problem is that there is no economic component to the war on terror. In other words, there is no 21st Century Marshall Aid plan . . .'' He later alluded to the same idea when he talked again about, ''some economic component that will lead to jobs and an opportunity to better one s life, one s condition in life.
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Please know that countering poppy growing is related to all three of those pillars, security, governance and the economy. We can all admit there is no counter narcotics success without success on the economic front no matter how much criminal justice and eradication efforts are made. In a country with 60 to 70% unemployment, the poppy will remain the economy of choice for too many unless we build another economy that is reasonably competitive.
We need that economic pillar in our playbook and we need to creatively empower it at no less effort than we do the security and the governance functions if we are to succeed.
THE AFGHAN GOVERNMENT AND THE PRIVATE SECTOR:
The donor community has just signed a Compact in London with the Afghan government which the Afghan private sector supports. That agreement gives far more appropriating powers over donor funds to the Afghan government with supposed built-in safeguards to spend the funds wisely and spend them in Afghanistan and on Afghans. That's tricky to be sure but one surmises that no amount of corruption could rival the present institutionalized and legal outflow of assistance funds.
I personally think it's a good thing.
The GoA lack of capacity, admitted by them, to deal effectively with a market economy and its business community often leads to abuse of the principles of a market economy and the rights of the entrepreneur. For government officials, it's not just corruption; it's also the lack of basic understanding of modern economics on the part of those who serve as public officials. It is very important that the Compact have appropriate built-in safeguards.
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PRICE CONTROLS IN A ''MARKET ECONOMY'':
Members of Congress may be surprised to find out that price controls still exist in stores in the major cities across Afghanistan. Prices of milk, eggs, cheese, bread, meat, fruits and vegetables and other consumables fall under the price control apparatus in each city. Several hundred of these enumerators are employed in Kabul to go out to stores and check on prices daily. They can close a place down if the store-owner doesn't comply. Corruption is rampant as store owners keep the enumerators at bay.
Here is an economic issue that is disastrous to bringing higher value-added, meaning higher-priced agricultural products that could compete with growing poppies to market. It is potentially devastating to the USG's USAID Alternative Livelihoods Programs in the south, east and north, designed at substantial cost to provide economic alternatives to poppy growing. How can one compete with poppies if the price of ones higher quality output is pushed down to the levels of lower quality products.
More than that, price controls repress entry into the market of new players and new Afghan products with varying prices and varying quality that could be found on the shelves in the stores in addition to low priced ones. This is one of the reasons why all higher-end or finished agricultural products are currently imported.
THE GIANT PRIME CONTRACTORS: REFORM NECESSARY
For goods and services, the giant contractors that follow the U.S. military and government around are letting contracts on the basis of price only. That may maximize the profit for the U.S. prime but it promotes low quality and fly-by-night operations that respond to the stipulation for low-ball, low quality bids.
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Middlemen with political connection are getting contracts and establishing new businesses without any track records based on one contract if it is large enough! That puts existing businesses with a record and reputation at a tremendous disadvantage. We should favor those who are serious about their business not quick buck artists that are gone when the contract runs out.
There needs to be a USG policy written into regulation where our U.S. prime contractors do business with established firms that can show their record and bona fides and not skew the market by creating new firms through middlemen with political influence.
There needs to be a policy where U.S. prime contractors like Halliburton seek some measure of quality as opposed to price only otherwise the goods and services will be junk and they will be provided by incompetents who are not engaged in real businesses, only something set up to milk a big contract for all it's worth.
But taking the lowest bidder also maximizes the profit that goes to the prime contractor who is generally not Afghan and then that money leaves the country as well. The result: Lost business for Afghans, junk performance for Americans and more money in the pockets of the foreign primes. This is happening across the spectrum of U.S. contracting and is not helpful to a long-term Afghan market economy.
By not strengthening companies which are in the market economy for the long haul, serving Afghans as well as foreigners, U.S. dollars boost a short-term solely contract-seeking, non-market situation.
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FOREIGNERS BID UP PRICES:
The economy in Kabul is wildly distorted with government assistance agencies, the UN and well-heeled NGOs competing for land, buildings and personnel. Prices have been bid sky high for the private sector. These groups are constantly snatching the best and brightest of the Afghan work force from the private sector who in no way can match the western salaries with their hazard, hardship and other benefits added in.
There are three economies in Kabul: First is the foreign government and NGO economy; Second, is the contract and grant economy; and Third, is the market economy. Because of these distortions, Kabul has become less and less attractive as a place to do business if one is not related to the first two economies. Such is the damage to the market economy of current assistance policy.
SUBSTITUTION OF MAJOR PORTION OF AID WITH CREDIT: BUILDING A MARKET ECONOMY:
With all the difficulties in getting the foreign assistance programs to reach the Afghan people, the alternative is to reduce the size of the foreign footprint and its competition with the Afghan market economy by boosting the Afghan private sector potential directly and expanding credit to Afghan businesses to start, expand, employ, prosper and to repay the loans.
Donors in London were willing to provide funds directly to the Afghan government which is problematic but they missed out on providing credit to the private sector.
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Donors could provide aid in the form of equity participation in local private banks and then use their equity position to influence lending for investment projects and to hasten the GoA's adoption of international standards on property rights and bank collateral rules.
Enterprise Funds have had success in the NIS in post-Soviet times and Afghanistan may be ready for that approach.
The Marshall Plan was a trust fund or revolving loan fund and it was successful in both rebuilding Europe and repaying the loans themselves.
That's what Jack Kemp was talking about when he referred to the lacking ''economic component'' of the war on terror.
Mr. ROHRABACHER. Thank you, Dr. Ritter. There are a couple of questions about Fernando DeSoto and some other people that I will ask you about later.
Dr. Rubin, you may proceed.
STATEMENT OF BARNETT R. RUBIN, PH.D., DIRECTOR OF STUDIES/SENIOR FELLOW, CENTER ON INTERNATIONAL COOPERATION, NEW YORK UNIVERSITY
Mr. RUBIN. Thank you very much. I believe this is approximately the 21st anniversary of my first testimony about Afghanistan, possibly before the two of you, at the Joint Commission that they had in January 1985.
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Since approximately August, through the end of January, I spent most of my time in Afghanistan, where I was working with both Dr. Naderi, whom Don mentioned; that is, with the Afghan Government, and the Oversight Committee of the Cabinet, and with the United Nations, on the drafting of the Afghan National Development Strategy, the interim version.
I also worked with the UN and all the donors, as well as the Afghan Government on the drafting and negotiation of the Afghanistan Compact. I will come back to that. I would also like to say that like Don, I am a private investor in Afghanistan.
I have founded a company called Goldston, which is manufacturing essential oils, floral waters, and personal care and fragrance products from the natural products of Afghanistan. We thought if you can grow flowers, and convert them into a highly profitable commodity, and export them, why not do it legally.
So that is what we are working on, and in a few months, we will have our first Afghanistan-based perfumes that are from orange flowers, roses, and other wild plants that we have collected, and which we can present to the Members of this Subcommittee.
Now, first, let me start with—and I should also say that I am not sure what level to pitch this. I could have a lot to say about the general way the Afghanistan operation has been conducted from the beginning—the balance of the various parts of it; political, military, economic.
If we could find those $9 billion that we lost somehow in Iraq and get them to Afghanistan, it would have made a hell of an impact. Generally, my view is that the priorities after 9/11 were quite wrong.
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But I will focus, and I will be happy to answer questions on those issues if you would like, but I will focus my remarks on specific forward-looking questions about Afghanistan. Now, Mr. Rohrabacher asked what I thought was a very key question. Is there a plan?
The answer is, yes, there is a plan. Here it is. This is only the summary of it. It is an interim plan. It is going to be changed. It has to be a rolling plan. It is not a Soviet 5-year plan that cannot be changed.
But this is the Afghanistan Compact, and it is the summary of the interim Afghanistan National Development Strategy. This is a declaration that was painstakenly negotiated with the good offices of the UN between the Afghan Government and the key representatives of the so-called international community, which is usually a meaningless, vacuous term.
But if you go to Afghanistan, it is one of the few places that I have been where you actually feel that there might be such a thing, because you have representatives of the major governments, the UN agencies, NATO (North Atlantic Treaty Organization), the World Bank, and so on, all working together for a common goal.
And their views are all represented in this. In addition, this plan is not just a foreign plan imposed on Afghanistan. It represents, and it is completely consistent with the plan that I helped the Afghan Government with, the interim Afghanistan National Development Strategy.
And I cannot say often enough that when I come to Washington, you get the impression that what is going on in Afghanistan sometimes is a bilateral operation, where the United States is doing something with Afghans. That is not the case.
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This is the most completely multilateral operation that you will find anywhere in the world. That is part of what contributes to its legitimacy. The United States has been fully involved, and its leadership has been indispensable in making this multilateral operation work.
But it has been, and it is a multilateral operation, and it is an operation in which the Afghan Government is increasingly formulating the objectives, and is exercising leadership.
And I would urge the Members to look at or have their staff members look at this internationally agreed plan, in which the United States played a big role, and we should support that plan. It reflects our goals. We should get behind that.
Now let me just say a few words about some major themes, and I will abbreviate them very much. First, I agree on the whole with Don's statement that what makes news generally tends to be the insurgent attacks. However, the insurgent attacks are extremely important.
The DIA (Defense Intelligence Agency), they are not all over the country, and we are operating in so-called eastern Afghanistan, Jalalabad, and Kabul, without any problems from the Taliban. Nonetheless, you cannot build a legitimate national government when the government and the international assistance providers do not have access to several of the most important provinces because of this growing insurgency.
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Now, there are many reasons for the insurgency. One of the key things that needs to be settled there is Pakistan-Afghan relations. This is not a new issue. It goes back to 1947. And we need to have a coordinated and coherent plan, not just toward Afghanistan and toward Pakistan, but toward Pakistan-Afghan relations, which I do not see that we have.
The President's visit to the region actually badly aggravated the hostility between Pakistan and Afghanistan, which we see in the escalating war of words between President Karzai and President Musharraf. So we are going in the wrong direction there.
I will not say anything more about it now, but you are welcome to come back. Second, narcotics. I think that we have misunderstood and misinterpreted this policy and this problem.
Again, as part of the Afghanistan National Development Strategy, there is a counternarcotics policy, which is integrated into that strategy. Bear in mind that narcotics is about a third of the economy of Afghanistan. It is not only supporting criminals and terrorists. It is supporting a good proportion of the Afghan people, and enabling them to survive.
Now, we have to get rid of it because of its impact on governance, corruption, and terrorism, and so on. But if we try to get rid of it in a way that actually impoverishes people, the people that we need to win over, we will not succeed.
Therefore, the policy that they have is a long term plan. You cannot abolish a third of the economy of one of the poorest countries in the world in a couple of years using law enforcement in a country which has no law enforcement capacity.
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It has to be mainly a development program, with governance targeted against the most corrupt officials and so on. I won't go into this in more detail, but there is now a coherent plan, and we should get behind it. I would respectfully ask Congress not to put short term benchmarks on counternarcotics for the Afghan Government.
This country is tied for last place with Sierra Leone and Arundhati in terms of its level of economic development. So we need to put a serious development effort there as Don was saying into, in particular, the rural areas over time, and the Afghan Government has a plan to do it, and we should support that plan.
Now, a lot of my discussion in the paper is actually about aid effectiveness. The main principle of making aid effectiveness is, again, that it must support a coherent plan. You cannot just go around building schools, clinics, whatever, if there is no plan to operate them, if you don't have money to hire teachers, if you don't have security to enable kids to go to school.
And again I would disagree with Don's idea that somehow Afghanistan needs a smaller government. It needs a more effective government, but this is the smallest, weakest government in the world, and so they need taxes. They need taxes.
Mr. RITTER. I agree with that.
Mr. RUBIN. Then I misunderstood you. They need taxes. I totally agree that they need to rationalize their taxation system, but this government——
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Mr. RITTER. That is the difference between Democrats and Republicans.
Mr. RUBIN. Well, how would we function if——
Mr. RITTER. No, we definitely need taxes.
Mr. RUBIN. Yes. This government collects 5 percent of the GDP (Gross Domestic Product) in taxes. That is the legal GDP. If you count the total GDP, it is even less. That is the lowest in the world of any country for which you have data. That means that Somalia might be less, but we are not sure. But it is less than Nepal, for instance.
So this country has the weakest government in the world. Based on their own revenue, they can buy everybody in the country a case of coke every year, and then they have nothing left over for defense and education.
So they need to enlarge their fiscal capacity. We need to support them in doing that, and of course, they need an economic base that they can tax to provide these basic public services, including the public services that are needed to reduced the maternal mortality rate, child mortality rate, nutrition, water supply, and all the other things that go into that.
And I will mention that there are specific benchmarks for doing all of those things in the Afghanistan Compact, backed up by concrete programs, which we need to get behind and fund. Now what that means for the way that we give aid is as follows.
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At the moment, about 75 percent of the aid that is given to Afghanistan does not go through the government budget. Now, that means it is not going through some wonderful private sector either. It is still going through governments, but it just is not going through the Afghan Government.
It is being implemented directly by foreign governments, including USAID, through their own contractors and so on, which means that while there is some coordination mechanisms, the Afghan Government does not get credit for this. It does not build up the capacity of the Afghan Government. It is not part of a plan.
Now note that we are having a very important point. We are having an oversight hearing here, and I want to thank you for that. Oversight is one of the most important functions in democracy. Afghanistan has a new Parliament. That Parliament wants to engage in oversight.
When they ask the government what is happening to all the aid money, you know what the government says? We don't know, because they are not responsible for it. All the aid organizations are responsible for it, and that is why you are getting a huge amount of demagoguery instead of real oversight.
So putting aid through the government budget is not just a matter of technical aid effectiveness. It is central to building democracy, because you cannot have democracy without oversight and public expenditure. I will end on that point. Thank you.
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[The prepared statement of Mr. Rubin follows:]
PREPARED STATEMENT OF BARNETT R. RUBIN, PH.D., DIRECTOR OF STUDIES/SENIOR FELLOW, CENTER ON INTERNATIONAL COOPERATION, NEW YORK UNIVERSITY
Before the terrorist attacks of September 11, 2001, and all that followed, Afghans and the handful of internationals working on Afghanistan could hardly have imagined being fortunate enough to confront today's problems. The Bonn Agreement of December 2001 providing for the ''reestablishment of permanent government institutions'' in Afghanistan was fully completed with the adoption of a constitution in January 2004, the election of President Hamid Karzai in October 2004, and the formation of the National Assembly in December 2005.(see footnote 2)
On January 31 to February 1, 2006, President Karzai, United Nations (UN) Secretary-General Kofi Annan, and Prime Minister Tony Blair presided over a conference in London of about 60 states and international organizations that issued the Afghanistan Compact, setting forth both the international community's commitment to Afghanistan and Afghanistan's commitment to state building and reform over the next five years. The Compact supports the Afghan National Development Strategy (ANDS), an interim version of which (I–ANDS) the Afghan government presented at the conference.(see footnote 3) The Compact provides a strategy for building an effective, accountable state in Afghanistan, with targets for improvements in security, governance, and development, including measures for reducing the narcotics economy and promoting regional cooperation.(see footnote 4) The Compact also prescribes ways for the Afghan government and donors to make aid more effective and establishes a mechanism to monitor adherence to the timelines and benchmarks.
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During his visit to Afghanistan, India, and Pakistan in March 1–5, 2006, President George Bush praised Afghan successes, telling President Karzai, ''You are inspiring others, and the inspiration will cause others to demand their freedom.'' He did so the day after the administration's own intelligence chiefs reported that the anti-government insurgency in Afghanistan is growing and presents a greater threat ''than at any point since late 2001.''(see footnote 5) Some Afghan officials say the world thus far has put Afghanistan on life support, rather than investing in a cure. Tally up the following conditions:
An ever more deadly insurgency with sanctuaries in neighboring Pakistan, where leaders of al-Qaeda and the Taliban have found refuge;
A corrupt and ineffective administration without resources and a potentially dysfunctional parliament;
Levels of poverty, hunger, ill-health, illiteracy, and gender inequality that put Afghanistan near the bottom of every global ranking;
Levels of aid that have only recently expanded above a fraction of that accorded to other post-conflict countries;
An economy and administration heavily influenced by drug traffickers;
Massive arms stocks despite the demobilization of many militias;
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A potential denial of Islamic legitimacy by a clergy that feels marginalized;
Ethnic tensions exacerbated by competition for resources and power;
Interference by neighboring states, all of which oppose a long term U.S. presence in the region;
Well-trained and well-equipped security forces that the government may not be able to pay when aid declines in a few years;
Constitutional requirements to hold more national elections (at least six per decade) than the government may be able to afford or conduct;
An exchange rate inflated by aid and drug money that subsidizes cheap imports and hinders economic growth; and
Future generations of unemployed, frustrated graduates and dropouts from the rapidly expanding school system.
Making aid more effective, as agreed by the US and other donors in London, is key to addressing these challenges.
DOMESTIC RESOURCES OF AFGHANISTAN
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Basic indicators of human welfare place Afghans among a handful of the world's most hungry, destitute, illiterate, and short-lived people. The country ranks approximately 173 out of 178 countries in the basic index of human development, effectively putting it in a tie for last place with a few African countries.(see footnote 6) Afghan women face the highest rates of illiteracy and the lowest standards of health in the world. Afghanistan has the youngest population in the world (an estimated 57 percent under eighteen years old) with few employment prospects in the offing.(see footnote 7)
The livelihoods of the people of this impoverished, devastated country are more dependent on illegal narcotics than any other country in the world. According to estimates by the UN and IMF, the total export value of opiates produced in Afghanistan in 2005–2006 equaled about 38 percent of nondrug GDP, down from 47 percent the previous year due to growth of the nondrug economy. Much of the trafficking profits do not enter the Afghan economy, but even if only a third of trafficking income stayed in the country, the direct contribution to the domestic economy would amount to 15 percent of the total, with more attributable to the multiplier effect of drug-financed spending. The UN estimates that in recent years nearly 80 percent of the income from narcotics went not to farmers, but to traffickers and heroin processors, some of whose profits corrupt the government and support armed groups.(see footnote 8) The distribution of the proceeds of narcotics trafficking, not elections, largely determines who wields power in much of Afghanistan.
Afghanistan has one of the weakest governments in the world. The International Monetary Fund (IMF) estimates that the government revenue will total 5.4 percent of nondrug GDP in 2005–2006, less than any country with data. Furthermore the administration has difficulty disbursing the funds it has: the ten poorest provinces receive the smallest budgetary allocations, leading to nonexistent government presence and rampant security problems.(see footnote 9)
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The Afghanistan Compact requires the government to raise domestic revenue to over 8 percent of GDP by fiscal year 2011 and to be able to cover 58 percent of the recurrent budget with its own resources, compared to 28 percent in fiscal year 2005. Nonetheless, escalating costs of security and civil service reform will make these targets difficult to achieve.
The Coalition and Afghan government should support continuing fiscal reform, including ISAF and Coalition military deployments in support of control of borders (for revenue collection) and state banks (for expenditure). The government should rationalize the procedures for business taxation, abolish nuisance taxes, and find other ways to tax the expenditures of the international presence, as it has done through rent taxes. For instance, the government could tax non-work-related imports.
Aid programs should assist the ministry of finance in establishing electronic tax payment, revenue tracking, and expenditure systems, compatible with the Treasury system already in place. Developing and funding of programs, including those sponsored by PRTs, through the Afghan budgetary process, rather than through independent donor mechanisms, is essential to developing a fiscally sustainable state.
ADMINISTRATION AND SERVICE PROVISION
The government has started reforms at the national level, but many ministries are still nonfunctional or corrupt. The provincial and district administrations, the face of government for most Afghans, are largely controlled by illicit or violent powerholders.
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Afghanistan's weak administration has few if any effective controls over corruption, which has undermined support for the government. Some systems have been instituted to prevent the most important types of corruption, notably a system requiring transparent public bidding for procurement. Increasingly, however, ministries are sidestepping this procedure and signing sole-source contracts, many of which are then approved by the President in the interest of not delaying important projects. The Compact obliges the government to fight corruption without saying how.
The Afghan president should tell his cabinet that he will no longer sign sole-source contracts without exceptional circumstances and that all ministers found proffering such contracts will be sacked. International donors should invest in building the capacity of the Afghan government to draft proposals and process contracts so that transparent procedures do not lead to intolerable delays.
Among the measures taken by the Coalition and NATO to strengthen the administration has been the establishment of Provincial Reconstruction Teams (PRTs). The PRT terms of reference now state that they will ''assist the Islamic Republic of Afghanistan to extend its authority, to facilitate the development of a stable and secure environment in the identified area of operations, and enable SSR and reconstruction efforts.''(see footnote 10) In response to Afghan concerns that PRTs were building projects that the government had no budget to operate, the Coalition now reviews projects to align them with Afghan government priorities. But the Coalition's development activities are still not integrated into the coordination procedures of the civilian aid donors, nor are military officers the best development partners for local administration.
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PRTs should be reconfigured to support governance and development more effectively, by including more political officers and development specialists from NATO member countries, a possible role for the EU. The development funds disbursed by PRTs should be subject to the same criteria for effectiveness as other assistance; those funds would be more effective if disbursements were accountable to provincial administration and elected councils, as through a trust fund.
FINANCING PRO–POOR GROWTH
All efforts to stabilize Afghanistan will fail if the licit economy does not expand fast enough to provide employment, incomes, and investment that more than balance the loss of incomes from opiates and provide a fiscal basis for expanding public services.
In 2004 the Afghan government estimated it would cost $27.6 billion to achieve stabilization goals over seven years with disbursements over twelve years starting in 2004–2005; the I–ANDS tentatively revised this estimate upwards. Initially, the resources devoted to Afghanistan were modest. According to data collected by the RAND Corporation, during 2002–2003, Afghanistan was far below all Balkan operations, East Timor, and Iraq, and even below Namibia and Haiti. After this slow start, especially by the United States, funding for reconstruction is increasing toward the rate needed to meet the target of $27.6 billion. The cost of delivery of assistance, however, has been higher than expected, and much of the increase in aid has gone to the security sector, which has cost far more than projected.
U.S. pledges of assistance rose dramatically in 2004–2005, as Presidential Special Envoy and Ambassador Zalmay Khalilzad presided over a program called ''Accelerate Success,'' intended to build support for President Karzai during his election campaign. Figure 1 also shows, however, that the United States was not able to match disbursements to its pledges and commitments.(see footnote 11) Instead, the pressure for politically motivated quick results led to waste and failure to deliver on Afghans' expectations.(see footnote 12) Other donors have experienced similar problems, but they are particularly severe for the United States.(see footnote 13)
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[Note: Image(s) not available in this format. See PDF version of this file.]
Source: Afghanistan Ministry of Finance
The Afghanistan Compact includes an annex on aid effectiveness. The Afghan government commits itself to transparency and accountability, to raising more domestic resources, and to improving its capacity to manage expenditure and implement programs. In return, the donors agree to: allocate their assistance according to ANDS priorities; provide ''multiyear funding commitments or indications of multiyear support''; increase untied aid channeled through the government budget; build Afghan capacity; and report on aid in a way that enables the Afghan government to integrate aid into its national budget and reports on its use to the National Assembly.(see footnote 14)
More than 75 percent of all aid to Afghanistan funds projects directly implemented or contracted by donors. This mode of delivery, while initially inevitable, is ultimately self-defeating. If prolonged, it undermines, not builds, the state. Enabling the state to provide services directly promotes legitimacy and responsibility; integrating aid projects into the budgetary process promotes sustainability. A government that cannot report to its parliament about public expenditure can hardly be called democratic, no matter how many elections it holds.
Three of the largest donors, however—the United States, Japan, and Germany—insisted on weakening these provisions. U.S. officials claim that the U.S. government's fiduciary responsibility to taxpayers makes it difficult to channel money through the Afghan government's budget. Like other donors, the United States cites the prevalence of corruption and lack of capacity in Afghanistan, which are valid concerns, though they do not prevent the United Kingdom from channeling aid through the budget. The argument of fiduciary responsibility, however, collapses under the weight of evidence of what the U.S. government actually does with much of taxpayers' money in Afghanistan; it disburses it to U.S.-based contractors. These contractors spend a significant (and unreported) part of the funds setting up office. In at least one case their services were of such poor quality that the Afghan ministry they were supposed to help expelled them. Security regulations sometimes prevent U.S. contractors from implementing projects in the field and impose significant additional costs. Both the fiduciary responsibility to the U.S. taxpayer and the policy goals of the U.S. government would often be accomplished better by direct budgetary support to the Afghan government, combined with programs for capacity building.
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International donors, and the United States in particular, should give aid in accord with the priorities of the ANDS. They should overcome legal and political obstacles to funding through the government budget by setting specific criteria for doing so. Congress should not undermine these efforts by insisting on U.S. contracting or earmarking.
REGIONAL DIMENSIONS OF RECONSTRUCTION
Afghanistan's development requires cooperation of this landlocked country with its neighbors, especially Pakistan and Iran, which provide outlets to the sea.(see footnote 15) Without confidence in regional security arrangements, neighboring countries may resist the economic and infrastructural integration that is indispensable for Afghanistan's future.
The United States and other donors should support regional economic cooperation, including in infrastructure, trade and transit, water use, energy, migration and manpower, and development of border regions, by establishing dedicated funding frameworks for regional economic cooperation in this region.
The United States and its allies, perhaps through NATO, should initiate high-level discussions to insulate Afghan economic development from conflict with Iran or concerns over the Coalition military presence.
ANNEX II—IMPROVING THE EFFECTIVENESS OF AID TO AFGHANISTAN
The international community has made a significant investment in the future of a democratic state of Afghanistan since December 2001. This Compact is an affirmation of that commitment. The Afghan Government and the international community are further committed to improving the effectiveness of the aid being provided to Afghanistan in accordance with the Paris Declaration on Aid Effectiveness (2005), recognising the special needs of Afghanistan and their implications for donor support.
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Consistent with the Paris Declaration and the principles of cooperation of this Compact, the Government and the international community providing assistance to Afghanistan agree that the principles for improving the effectiveness of aid to Afghanistan under this Compact are:
1. Leadership of the Afghan Government in setting its development priorities and strategies and, within them, the support needs of the country and the coordination of donor assistance;
2. Transparency and accountability on the part of both the Government and the donors of the international assistance being provided to Afghanistan.
Under these principles and towards the goal of improving the effectiveness of aid to Afghanistan, the Government will:
Provide a prioritised and detailed Afghanistan National Development Strategy (ANDS) with indicators for monitoring results, including those for Afghanistan's Millennium Development Goals (MDGs);
Improve its abilities to generate domestic revenues through, inter alia, customs duties and taxes; and to achieve cost recovery from public utilities and transportation;
Agree with donors, international financial institutions and United Nations agencies on the benchmarks for aid channelled through the Government's core budget and for the utilisation of such aid; and monitor performance against those benchmarks; and
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Provide regular reporting on the use of donor assistance and performance against the benchmarks of this compact to the National Assembly, the donor community through the Afghanistan Development Forumand the public at large.
The Donors will:
Provide assistance within the framework of the Afghanistan National Development Strategy; programmes and projects will be coordinated with Government in order to focus on priorities, eliminate duplication and rationalise donor activities to maximise cost-effectiveness;
Increasingly provide more predictable and multiyear funding commitments or indications of multiyear support to Afghanistan to enable the Government to plan better the implementation of its National Development Strategy and provide untied aid whenever possible;
Increase the proportion of donor assistance channelled directly through the core budget, as agreed bilaterally between the Government and each donor, as well as through other more predictable core budget funding modalities in which the Afghan Government participates, such as the Afghanistan Reconstruction Trust Fund (ARTF), the Law and Order Trust Fund for Afghanistan (LOTFA) and the Counter-Narcotics Trust Fund (CNTF);
Provide assistance for the development of public expenditure management systems that are essential for improving transparency and accountability in the utilisation of donor resources and countering corruption;
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Recognise that, because of the need to build Afghan capacity, donor assistance provided through the external budget will be designed in such a manner as to build this capacity in theGovernment aswell as the private sector and non-profit sector;
Ensure that development policies, including salary policies, strengthen national institutions that are sustainable in the medium to long termfor delivery of programmes by theGovernment;
For aid not channelled through the core budget, endeavour to:
— Harmonise the delivery of technical assistance in line with Government needs to focus on priority areas and reduce duplication and transaction costs;
— Reduce the external management and overhead costs of projects by promoting the Afghan private sector in their management and delivery;
— Increasingly use Afghan national implementation partners and equally qualified local and expatriate Afghans;
— Increase procurement within Afghanistan of supplies for civilian and military activities; and
— Use Afghan materials in the implementation of projects, in particular for infrastructure;
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— Provide timely, transparent and comprehensive information on foreign aid flows, including levels of pledges, commitments and disbursements in a format that will enable the Afghan Government to plan its own activities and present comprehensive budget reports to the National Assembly; this covers the nature and amount of assistance being provided to Afghanistan through the core and external budgets; and For external budget assistance, also report to the Government on: the utilisation of funds; its efficiency, quality and effectiveness; and the results achieved;
— Within the principles of international competitive bidding, promote the participation in the bidding process of the Afghan private sector and South-South cooperation in order to overcome capacity constraints and to lower costs of delivery.
These mutual commitments are intended to ensure that the donor assistance being provided to Afghanistan is used efficiently and effectively, that there is increased transparency and accountability, and that both Afghans and the taxpayers in donor countries are receiving value for money.
Mr. ROHRABACHER. Thank you, Dr. Rubin. And, Mr. Barton, you may proceed.
STATEMENT OF MR. FREDERICK D. BARTON, SENIOR ADVISER AND CO–DIRECTOR, INTERNATIONAL SECURITY PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES
Mr. BARTON. Thank you very much, Mr. Chairman, and Congressman Delahunt, and Congresswoman McCollum, and thank you to your staff as well, and thanks to Barney, who has been working on this issue long before many of us were in many parts of the world. He certainly has been a steady force, and we have used his work liberally throughout.
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To your key question, is the aid getting through? I think the straight answer is not as much as it could, or as it needs to. I would like to offer three major points, and then just give you a little bit of background in my 5 minutes.
The first question that I would have is whether the balance within the $15 billion or so that the United States is spending there is appropriate. The second would be whether the priorities that we have are clear, and the third would be are we spending the money in the most effective way?
So this is based on my experience in about 25 of these places, where everything needs to be done, and we seldom make choices. We often times spend the money that we have available, as opposed to what is needed in the place.
And so I think that this is a good place for you to enter. What we did last year was to essentially go around the country and interview about sixteen hundred people. We hired and trained 12 Afghans. We did interviews in most of the provinces.
We then took all of the studies that had been used, and all the focus groups—there are very few polls of any value in the country. But our effort was to see how progress is proceeding from the view of the Afghan people, and I would say that they are optimistic. They are hopeful.
They have had really the best 3 years that they have had in the previous two decades. But they were also going through a series of changing expectations, looking for things that we are not that familiar with.
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We were good at the war, and we were good at the humanitarian assistance, and we are good at building structures, and now we are in a different phase, where people are really looking for the direct improvement in their own lives.
They had seen much tangible progress, but now they are looking for something else, and this is going to be a harder step for us to take because it is really going to take a much more entrepreneurial approach, as I think both of the speakers have suggested, than our Government systems are really set up to deliver in this kind of setting.
What I would like to do is probably just jump to how we can get more value for our assistance, and put a few ideas before you. The first area that I would like to emphasize is in the general guidance category.
When you work in these post-conflict settings, because there is never enough money to do the job, and there are millions of things that need to be done, you have to have a much more integrated approach than we are used to.
So having the Defense Department do what it is familiar with, and the State Department do what it does, and USAID (United States Agency for International Development) do what it does, is not usually an effective way to move ahead. We have seen some pretty good integration and some efforts in Afghanistan, some path breaking efforts.
Some of them, such as the PRTs (Provincial Reconstruction Teams), likely have too heavy an overhead for a long term promise, but they have been effective, particular in areas where there is high risk.
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But every choice that we make has to be able to deliver two or three results, or we are probably not making the right choice. We have to avoid the absorptive capacity trap. This is something that you hear many, many times, that there is not absorptive capacity.
This place is really the Sahara Desert. If it rained there for 3 years, there would still be a problem with water. So when you hear people saying there is an absorptive capacity problem, it is because we are used to working in a certain way, rather than the need being there, and there is a way to spend to meet that need.
You have to put the people first in many cases, because to have high expectations of a functioning, competent central government, that can barely get around the country, is really unrealistic.
Yes, we have to work on it, but we have to consider more direct forms of assistance to people than we have done up until now, and we also have to increase our direct assistance to the provinces, because when you go out to a place like Gazni, you see that if Gazni doesn't make it, it is like Ohio not making it, and you are not going to do very well.
And you are not going to do it all out of Kabul, and that has dominated our focus, whether it was through our Government or their government that we are spending the money. Then I think we also have to narrow the focus.
I am not typically a big fan of large infrastructure projects in highly fragile places, and the expense of the road project was way over the top. On the other hand, I believe in the final analysis that it was probably a good call, and that it is making a difference. It showed the Afghan people that you could in fact do something in these kinds of circumstances.
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But we have to narrow the focus, and then we have to check the priorities, and I think what Barney was saying in particular about the anti-narcotics program is interesting. We have about $15 billion a year, and we spend $10 billion on our military, and we spend $3 billion on their military, and $2 billion, which is the toughest $2 billion to get, we spend on everything else.
And about $750 million of that is being spent on counternarcotics approaches, which have not proven to be wildly successful in other places. So we have a pretty big industry, and it is mostly our industry at work on this issue, and I think there are better ways. Barney has made some suggestions, and I would be happy to come back to this.
So four quick steps to take. The first one is that the safety has to improve. When you travel around the country, the police are basically who you see. It is great to have a new army, and it is important, but the police are not getting paid.
The key border crossings are still up and at risk and that is a good place to look at how you get a two for or a three for out of it. If you look at a key border crossing, it is a good test for the new army. It is a challenge to the warlords. It is a source of revenue, probably the most reliable revenue for the central government.
And it is maybe the best way to actually interdict the poppies, because this is a big place, and you can't get around, and a lot of those initiatives that are out there in the countryside are just not going to work.
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The second point that I would make is that we need to stabilize a very tiny middle-class, because we have to give them a chance to make it and to be our anchor 10 years from now, and this is really a 10-year effort. Not because I mean 10 years, but because I mean a long time. This is a tough, tough place that is in a big hole.
I would start with paying for teachers, and paying for the women at the Women's Centers, and other key elements of the social change agenda. We visited five Women's Centers, and they were all reconstructed by the United States Government, and they were all quite impressive.
They all had extremely impressive women working there, and none of them were getting paid, and all of them were talking about what they would have to do if they didn't start getting paid fairly soon. Go back to Pakistan to teach, for example.
This is something that we don't like to do, and we say we don't pay salaries anywhere, but we are paying the entire Afghan army's salaries right now, and so thinking about some of the other elements of this society that might need pay is something that I think you might consider.
Again, it won't happen unless the Congress encourages it, because when you work at a place like USAID or the State Department, the golden rule is that Congress doesn't like to pay salaries. We are paying salaries in that neighborhood.
We are paying for most of the Afghan Government, and we have got to make sure that it reaches the teachers, and it reaches the people that are actually delivering the services, because if one thing is going to get people educated in that place, it is a few teachers. You can have all the beautiful buildings on earth, but they won't help without good teachers.
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Finally, I would say in terms of focusing, let us think about the water. There are virtually no efficiencies in Afghanistan. The only thing that is 21st century there that I saw was the cell phones, and it was a pretty interesting development, and a lot of elements of it that are good models.
But as far as water, people get sick from the water, and the irrigation stinks—you have had droughts for 10 years. You have got to focus on it and make it work. There are some very interesting small hydro projects that the United States Government and others have helped to support. There are old hydro projects which need to be revived.
They are going to have to start working, and they are going to have to be part of this sort of coordinated plan that Barney and others have spoken about. So those would be the areas that I would focus in on, and I think we could probably make improvements.
Basically, this is a long haul, and I think we have got good leadership there. I think that the balance that Barney has spoken about is a solid balance, and there is hope, but as we say in our report, it is very much in the balance.
[No prepared statement was submitted by Mr. Barton.]
Mr. ROHRABACHER. Thank you very much. Mr. Pandya.
STATEMENT OF AMIT PANDYA, ESQUIRE, INTERNATIONAL DEVELOPMENT CONSULTANT
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Mr. PANDYA. Thank you, Mr. Chairman, and thank you Members of the Subcommittee. One of the advantages of being at the tail end of a panel is that most of the useful stuff has already been said, and so you can actually get all that you have to say in our allotted time.
I just wanted to clarify one thing. I actually am not associated with the Center for American Progress. I have published with them, but I don't represent them today, and so I speak for myself as someone with a long involvement in Afghanistan, and someone who continues to do work on the legal system today in Afghanistan.
In assessing effectiveness, it is important that we have a realistic sense of how chronically poor and insecure Afghanistan was for decades before the United States invasion, and how stubbornly those factors have persisted since.
Although there has been substantial progress in a constitutional system, and in a representative democracy, in the development of police, and the development of an indigenous military, the significance of those developments for the effectiveness of aid remains slight.
Afghanistan remains one of the poorest countries in the world, ranking near the very bottom of the UN's Human Development Index. Its literacy rate is below that of Sierra Leone, and Guinea-Bissau, and between one-third and a half of its neighbor, Iran.
There is a 4 in 10 probability that an Afghan newborn will not make it to the age of 40. One out of five children dies before the age of 5. Between 75 and 85 percent of Afghans have no reliable access to clean water, and a smaller number have access to sanitation.
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As a result, approximately 85,000 children every year die from diarrhea. Fewer than 14 percent of births are attended by any type of skilled health worker, and as a result, a woman dies of pregnancy related complications every half-hour.
Even where there have been assistance initiatives that have posted records of success, such as improvements in the legal and judicial infrastructure, and institutional capacity, through, for example, courthouse construction, technical assistance to ministries and legal education, the reality remains that the majority of Afghans outside the cities, and many in the cities, remain untouched by them.
They avail themselves of the inconsistent patchwork of informal dispute resolution mechanisms based on ethnic or local custom, and embodied in the local jirga and shura. These are notable as much for injustice and inequity, particularly to women and local ethnic minorities, as they are for the provision of ready dispute resolution.
More than 2 million displaced people have been able to return to their homes in the last several years. However, approximately 3.4 million Afghans remain outside their country, around 3.4 million by the latest UN estimate are still outside.
Now, to some extent, I guess I disagree with Don Ritter on the importance of security in the overall aid effectiveness picture. I think that the uncertain security situation and the related uncertain reach of government authority poses a substantial constraint on the effectiveness of United States assistance.
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The plain fact is that many of the government's enemies have opposed, undermined, and attacked aid programs and their implementers. We have seen often fatal attacks on UN workers, indigenous and expatriate, on bilateral aid workers, and on non-governmental aid personnel, on facilities, vehicles, et cetera.
And these not only undermine the effectiveness of the projects in question, but they have also more significantly I think inhibited planning and operations of prospective projects, and they have certainly increased costs, slowed implementation, and complicated attempts to monitor, evaluate, and assess effectiveness and accountability.
Infrastructure projects have been mentioned by a couple of the witnesses, and maybe I will sort of leave that to the questions if there is anything further to be said about it, although I do think it is very important, as Rick was suggesting, that we be very focused when we think about infrastructure, and focus on those elements of infrastructure that are likely to make a difference in the immediate future, because it is obviously something where one can lose focus and diffuse attention and resources rather quickly.
The difficulty of the security situation, to return to that for a moment though, is very much compounded, as Barney suggested, by the uncertain intentions and actors of Afghanistan's most influential neighbor, namely Pakistan.
And I just wanted to say a little bit more about some of the dimensions of why the United States needs to address issues of Pakistan policy toward Afghanistan. The Subcommittee, of course is well aware of the current, rather heated, controversy between the Presidents of the two countries.
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Elements in the Afghanistan Government have alleged that Pakistani intelligence has not entirely ceased its pre-2002 practice of covert assistance to the Taliban. President Karzai has more modestly suggested that, at the least, he would like more cooperation from the Government of Pakistan in pursuit of Afghan rebel forces based in Pakistan.
Now, these are, of course, the very same forces that constitute a significant security impediment to the effectiveness of aid programs. General Musharraf, on the other hand, has spoken up in a somewhat piqued tone, to suggest that all these criticisms are part of a sinister anti-Pakistani agenda.
My opinion is that there is substance to Afghanistan's concerns, whether because of intentional actions by elements of the Pakistan Government seeking to hedge their political and strategic bets in Afghanistan, or because of intragovernmental divisions, or the President's incomplete control, and most probably a mixture of both.
But whatever the merits of that controversy, it is clear that part of the answer to aid effectiveness in Afghanistan is, as Barney suggested, to be sought in Pakistani policy, and particularly given our enormous influence over Pakistani policy, I think we have been decidedly wooly in the way that we have thought about it.
An equally significant impediment to aid effectiveness has been the persistence within Afghanistan's borders of the multiplicity of local armed groups, the so-called warlords. Despite the somewhat ambivalent and modest efforts of the Kabul Government, many of these warlords continue to function as nominal local and regional representatives of the Kabul Government, and as significantly, many continue to cooperate tactically with United States forces.
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Many of these leaders have reinvented themselves as elected representatives, despite legal strictures on their running in the recent elections. I think that it is important on the one hand that we address this issue, but on the other hand, quite frankly I am a little bit pessimistic, because I think there are practical limits on Kabul's capacity to govern and on United States forces capacity to carry out military operations without them.
Both aid effectiveness and pervasive insecurity are obviously implicated in opium production. Although the GDP (Gross Domestic Product) has increased modestly, at least in the most recent past, the poor economic and social condition of Afghanistan's overwhelmingly impoverished population, coupled with stagnation of opportunity, has left many farmers with at least the compelling temptation, if not the absolute necessity, of growing poppies.
Meanwhile, the control of trafficking has supported primarily criminal enterprises, whose armed capacity and proclivity to illegal behavior, contributes to poor security. That is to distinguish that somewhat from insurgency, but also to recognize that there is a substantial amount of overlap, particularly because trafficking has also emerged more recently as a partial source of finance for insurgents of various stripes.
We should be clear that there is a distinction to be drawn between farmers and traffickers, and it is apparent that what we have here is a vicious cycle of insecurity and underdevelopment that is not susceptible to a one-dimensional solution.
But the appeal of aid programs will have to be very solid and very bright, which I think is highly unlikely under the current circumstances, if it is to have any hope of ending farmers' reliance on the dubious armed protection of traffickers.
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And any realistic attempt to address obstacles to aid effectiveness must factor in opium production, because in some ways it is very much the key. It is the linchpin, I think.
In conclusion, let me just say that I think it is very important that as we think about aid effectiveness that we avoid facile conclusions about the failures of assistance.
The highly insecure and dangerous conditions in Afghanistan pose obstacles not only to effective assistance, but even to its meaningful measurement and evaluation. Political military policies are the key to the effectiveness of assistance, and reconsideration is long overdue of United States reliance on partners whose commitment to Afghanistan's security, stability, and prosperity, is highly dubious.
Whatever the short term military advantages of such partnerships of convenience, they cut against the sustainable pursuit of United States interests, and against Afghanistan's stability in the long run. Thank you very much.
[The prepared statement of Mr. Pandya follows:]
PREPARED STATEMENT OF AMIT PANDYA, ESQUIRE, INTERNATIONAL DEVELOPMENT CONSULTANT
Mr. Chairman, members of the Subcommittee,
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Thank you for the opportunity to testify on this very important subject. Given the substantive and symbolic importance of the effectiveness of US aid in Afghanistan to US security interests in the country, it is frankly shocking how little attention the topic has received from decision makers. This hearing is therefore timely and to be commended. We have seen much greater attention to the security and political dimensions of our involvement in Afghanistan. Yet aid effectiveness is an essential condition of success in these latter areas.
I shall focus today on the context for and constraints on effective assistance programs. I shall also focus on US assistance. This is not to deny the importance of the efforts of other donors and the international community as a collectivity, but rather to begin with what Congress has greatest influence and control over, and through what is within US control to work by means of positive example.
Two pervasive realities must frame our understanding of the effectiveness of US assistance. The scale of the development and humanitarian challenge in Afghanistan is enormous, even four and a half years after the overthrow of the Taliban and involvement of the international community. Furthermore, the daunting security environment constrains, and even vitiates, the international community's efforts to assist Afghanistan's reconstruction.
It is important that we have a realistic sense of how chronically poor and insecure an environment Afghanistan was for decades before the US invasion, and how stubbornly these factors have persisted since. Although there has been substantial progress in the gradual establishment of constitutional and representative political processes and of government authority, and the rudimentary development of indigenous police and military capacity, the significance of these for effective aid delivery has been slight.
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Afghanistan remains one of the poorest countries in the world, ranking near the bottom of the UN's Human Development Index. Its literacy rate is below that of Sierra Leone and Guinea-Bissau, and between one-third and a half that of its neighbor Iran. While there have been advances in school enrollments, particularly for girls, since the invasion, these remain at below 40%. Life expectancy at birth in Afghanistan is 75% that of Pakistan's, well below the average for low income countries, and below the average for low human development countries and least developed countries. There is a four in ten probability that an Afghan newborn will not live to age forty. One out of five children dies before the age of five. Despite modest improvements, birth weight of Afghan babies has remained low and fairly stable over the period before and after the invasion, at around half of all newborns. Half of five year olds are stunted in their growth.
Between 75 and 85% of Afghans have no reliable access to clean drinking water, and a smaller number have access to sanitation. Approximately eighty five thousand children under five die from diarrrhoea every year. Fewer than 14% of births are attended by any type of skilled health worker, and a woman dies of pregnancy related complications every half hour. It is to be noted that these samples of development indicators are the realities today, after several years of substantial international attention and intervention.
Even where there have been assistance initiatives that have posted records of success, such as improvements in legal and judicial infrastructure and institutional capacity—through courthouse construction, technical assistance to ministries and legal education—the reality remains that the majority of Afghans outside the cities (and many in the cities) remain untouched by them. Those avail themselves of the inconsistent patchwork of informal dispute resolution mechanisms—based on ethnic or local custom and embodied in the local jirga and shura. These are notable as much for injustice and inequity, particularly to women and local ethnic minorities, as for provision of ready dispute resolution.
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We should note that there have been real accomplishments. Four million children have enrolled in school since the fall of the Ta