Experts also associate high levels of corruption with lower levels of investment and economic growth. The 2005 Investment Climate Assessment for Afghanistan cited corruption as a significant constraint to business. Corruption reduces the effectiveness of industrial policies and encourages business to operate in the informal economy, reducing the government’s tax base. Even in cases where corruption and economic growth coexist, corruption creates severe distortions, rewarding senior officials at the expense of poorer citizens. Corruption also creates significant opportunities for organized crime. Criminal groups use the proceeds of illegal activity to bribe officials, but also to infiltrate the legal economy, making them harder to track and more likely to win government contracts where further profits can be made. Organized crime can choke out its competitors because it is both wealthy and unscrupulous, allowing it to avoid regulations that legitimate businesses must follow.
Corruption at the highest levels of government diverts resources to inefficient projects and undermines development goals. The relative fragility of GIROA also encourages officials to steal and take bribes. Staffan de Mistura, a United Nations Assistance Mission Afghanistan (UNAMA) official, links GIROA corruption to “the intensity, quantity and short time frame of huge investments that are coming inside Afghanistan.” He says that with so much money floating around, the “temptation [to steal] becomes quite irresistible.” At the highest levels, the problem creates a trap where corruption breeds more corruption, and escape is extremely difficult. Furthermore, endemic corruption can drastically reduce a government’s ability to manage foreign assistance and deliver effective aid.
If Corruption Is a Financial Problem, Where Does the Money Come From?
One way that Afghan and coalition officials may work to better understand the corruption problem is by following the money, and there is a lot of money to follow. By September 2010, America had spent more than $445 billion on Afghanistan. The US spends most of the aid (almost 85 percent) on military objectives. However, Afghans divert a substantial amount of aid along the way. By the beginning of 2012, over $1 billion per year in cash was leaving Afghanistan by plane for Dubai. The whole procedure is legal if declared, and there are three flights per day, each way. There are no searches in the Kabul International Airport VIP section, where government officials leave from, and a 2010 report claimed a senior diplomat left with $2 million in undeclared notes. Officials transfer money this way mostly to avoid wire transfer fees but also to protect identities, and most of the cash is in USD and EUR, although some is in Saudi Riyals (SAR). GIROA and US officials reportedly have no idea where the money is coming from, but it would be a good bet that it relates to corruption.
Rose-Ackerman says that corruption is essentially an economic issue. With that fact in mind, the following sections seek to identify the sources of money that fuel the problem, as well as examine some of the policies and programs of GIROA and the ISAF that prolong, entrench, and exacerbate the corruption problem.
Three Kinds of Corruption
In her analysis of the corruption problem, journalist and scholar Kim Barker breaks corruption down into three categories: low-level petty corruption, high-level grand corruption, and corruption related to the Western presence. The first two categories should be of no surprise, but Barker’s third categorization turned heads when published in 2009. American and GIROA officials now acknowledge the threat posed by Barker’s first two categories (less so for high-level corruption), but few Westerners consider, let alone write about, the third classification. The third category includes conventional skimming and profiteering from development projects but also includes cultural conflicts, like alcohol consumption and exposed female flesh that are the indirect result of the Western presence. While Western officials may scoff at the idea that Afghans consider ancillary practices like subcontracting, high-paying consultant salaries, or off-the-clock lifestyles as corrupt, the perceptions of Afghans matter and these issues figure heavily in their analysis of the situation.
Mostly, the average Afghan views the development framework as corrupt because very little aid actually reaches the ground level. High overhead costs, large salaries for Western consultants, and multiple layers of subcontracting all drive up costs without affecting the end result of a development project. A 2011 bipartisan commission of US politicians found that the US wasted one out of every six dollars spent in Afghanistan and Iraq, totaling more than $60 billion. Reuters reported that Western contractors and corrupt Afghan officials pocketed most of the aid and assistance sent to Afghanistan (some $100 billion from the US in 2010 alone). While many in the West do not consider high consultant salaries or profit margins for Western contractors to be “corrupt” per se, it should be easy to see why poor, under-served Afghans might take issue with this arrangement. Western companies funnel most of the money back to the US economy, and corrupt officials and connected criminals scoop up the rest. Everyday Afghans do not get any of the financial benefits of the occupation, but they often are caught in the crossfire of the insurgency.
Overview of the Western Development Program
The corruption problem in Afghanistan took root and grew because GIROA’s international partners consistently failed to pledge enough support. Corruption later blossomed when the US attempted to pour billions of dollars into development without the proper safeguards or a unifying development agenda. Ironically, post-surge increases in development aid may be as destabilizing as the lack of funds was before the surge. These extremes in funding highlight the need for a consistent and managed, long-term approach to development.
The US and its partners recently renewed their commitment to rebuilding Afghanistan by significantly increasing aid, but the scale of the current program would be unnecessary if the US had not left the development program underfunded and undermanned when it shifted focus to Iraq. When the war in Iraq started in 2003, the US and NATO all but forgot about Afghanistan, failing to deliver the governance and development necessary to secure the peace they had won. Even when they did promise assistance, they did not deliver on the commitments. Development goals in Afghanistan have long been secondary to military and security objectives. In fact, the US and its international partners spent more than 90 percent of all money spent from 2002 through 2009 on military and non-ODA (Official Development Assistance) security operations. ODA accounted for the remaining 10 percent of spending during that same period.
US official statements immediately after the invasion show that the US had little interest in development. On September 26, 2001, President Bush declared, “We are not into nation building. We are focused on justice.” From October 2001 to May 2002, the US spent $17 billion, designating $1 billion for aid. The US gave the Central Intelligence Agency (CIA) full authority over the $1 billion aid budget and cut civilian development agencies and professionals, like the United States Agency for International Development (USAID), out of the picture. The CIA used the money primarily to buy the loyalty of warlords, hire local militias to police the countryside, and run special-forces operations in the al-Qaeda hunt. Officers only carried out a few quick-impact projects (QUIPs). By the time senior officials allowed USAID and other development experts access to Afghanistan policy it was late 2002 and the US focus had shifted to the looming invasion of Iraq.
The amount of aid spent per person during the early days of the US occupation was the lowest amount spent in any recent conflict zone. In 2002, the US delivered only $75 per person in aid to Afghanistan, compared to over $250 per person in aid for conflicts in Bosnia, East Timor, Kosovo, and Rwanda. In 2004, donor countries pledged only $42 per person for 2004 through 2009, although that amount did eventually increase. The World Bank estimated in 2006 that GIROA needed $4 billion per year in support, yet the 2006 London Afghan Compact pledged only half that amount ($10.5 billion over five years). Total ODA from 2002 through 2009 was $26.7 billion, of which the US provided approximately one-third. By August 2011, total ODA had risen to $90 billion pledged, with $57 billion disbursed. Those figures represent a dramatic increase in aid. From 2002 through 2009, aid averaged $3 billion per year. From 2009 to the present, the international donors have spent another $30 billion, more than doubling the pre-surge figures.
In addition to aid shortfalls, when ISAF nations disburse money, they do not spend evenly throughout the country. The West spends more than half of all aid in the four most insurgency-prone provinces. Furthermore, “off-budget” aid that is not coordinated with GIROA continues to dominate spending, accounting for more than three-quarters of 2006 ODA. Off-budget spending is hard to manage and often involves competing interests. Afghanistan is no exception.