Drawdown could cripple Afghan economy: US Senate

WASHINGTON: Afghanistan's international aid donors must overhaul their approach in order to avert an economic collapse when foreign forces leave the war-torn country, a US Senate report warned Wednesday.

"Afghanistan could suffer a severe economic depression when foreign troops leave in 2014 unless the proper planning begins now," the US Senate Foreign Relations Committee's Democrats said in a report two years in the making.

The study, released as President Barack Obama was due to announce soon a decision on the pace of US force withdrawals, said Washington must shift the focus of its roughly $320 million in monthly aid spending for Afghanistan.

"US assistance should meet three basic conditions before money is spent: our projects should be necessary, achievable, and sustainable," the report said, calling for a shift to "more effective" aid to smooth the US drawdown.

"We should follow a simple rule: Donors should not implement projects if Afghans cannot sustain them," it said.

Afghanistan has been the top recipient of US aid over the past ten years, with some $18.8 billion flowing from Washington to projects meant to stabilize the war-torn country and win "hearts and minds" from a stubborn insurgency.

"We're not out to -- clearly -- create a shining city on a hill. That's not going to happen," veteran diplomat Ryan Crocker, Obama's choice to be the new US ambassador to Kabul, told the committee at a confirmation hearing.

"But there needs to be progress," said Crocker, who warned that security and economic gains were "fragile and reversible" and that "enormous challenges remain," notably widespread corruption.

The report said some 80 percent of US Agency for International Development (USAID) funds are going to "short-term stabilization programs instead of longer term development projects" in the war-torn country's south and east, home to traditional strongholds of the Taliban militia.

And about 97 percent of Afghanistan's economy stems from spending tied to the international military presence there and global aid nearly 10 years after the US-led invasion in the wake of the September 11, 2001 terrorist strikes.

But the report warned that fragile progress on the security front as well as a weak central government in Kabul and corruption watered down the benefits of aid and that a flood of foreign cash distorts sectors of the Afghan economy.

"The administration is understandably anxious for immediate results to demonstrate to Afghans and Americans alike that we are making progress. However, insecurity, abject poverty, weak indigenous capacity, and widespread corruption create challenges for spending money," it said.

Washington should consider crafting a multi-year civilian aid strategy, must reevaluate the performance of stabilization efforts, and must make sure that Afghans can take over projects when international workers leave.

"Transition planning should find the right balance between avoiding a sudden drop-off in aid, which could trigger a major economic recession, and a long-term phaseout from current levels of donor spending."

The report said that "perhaps the single most important step" Washington can take is working with the Kabul government to standardize Afghan salaries.

"Donor practices of hiring Afghans at inflated salaries have drawn otherwise qualified civil servants away from the Afghan government and created a culture of aid dependency," the report cautioned.

It also offered a scathing review of what it described as US over-reliance on contractors, citing a "lack of robust oversight" and corruption.

The report noted that Obama has requested some $3.2 billion in aid for Afghanistan in the 2012 fiscal year that opens October 1.

And "the US government will continue to support the government and people of Afghanistan with foreign assistance after our troops come home," it said.

At the White House, spokesman Jay Carney disputed parts of the report but said Obama agrees that the need for projects that can outlive the presence of 100,000 US troops "is an issue."

"That's why so many of our efforts are focused on building institutions so that Afghans can sustain the progress that has been made over these last several years," he said.

Copyright AFP (Agence France-Presse), 2011