[Senate Hearing 112-201]
[From the U.S. Government Printing Office]
S. Hrg. 112-201
AFGHANISTAN: RIGHT SIZING THE DEVELOPMENT FOOTPRINT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL
DEVELOPMENT AND FOREIGN
ASSISTANCE, ECONOMIC AFFAIRS, AND
INTERNATIONAL ENVIRONMENTAL PROTECTION
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 8, 2011
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.gpo.gov/fdsys/
----------
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COMMITTEE ON FOREIGN RELATIONS
JOHN F. KERRY, Massachusetts, Chairman
BARBARA BOXER, California RICHARD G. LUGAR, Indiana
ROBERT MENENDEZ, New Jersey BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania MARCO RUBIO, Florida
JIM WEBB, Virginia JAMES M. INHOFE, Oklahoma
JEANNE SHAHEEN, New Hampshire JIM DeMINT, South Carolina
CHRISTOPHER A. COONS, Delaware JOHNNY ISAKSON, Georgia
RICHARD J. DURBIN, Illinois JOHN BARRASSO, Wyoming
TOM UDALL, New Mexico MIKE LEE, Utah
Frank G. Lowenstein, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
------------
SUBCOMMITTEE ON INTERNATIONAL DEVELOPMENT
AND FOREIGN ASSISTANCE, ECONOMIC AFFAIRS,
AND INTERNATIONAL ENVIRONMENTAL PROTECTION
BENJAMIN L. CARDIN, Maryland Chairman
ROBERT MENENDEZ, New Jersey BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware MARCO RUBIO, Florida
RICHARD J. DURBIN, Illinois JAMES E. RISCH, Idaho
TOM UDALL, New Mexico JAMES M. INHOFE, Oklahoma
(ii)
C O N T E N T S
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Page
Cardin, Hon. Benjamin L., U.S. Senator From Maryland............. 1
Corker, Hon. Bob, U.S. Senator From Tennessee.................... 3
Feldman, Daniel, Deputy to the Special Representative for
Afghanistan and Pakistan [SRAP], Department of State,
Washington, DC................................................. 4
Prepared statement........................................... 6
Thier, Alex, Assistant to the Administrator and Director of the
Office of Afghanistan and Pakistan Affairs, United States
Agency for International Development [USAID], Washington, DC... 8
Prepared statement........................................... 10
(iii)
AFGHANISTAN: RIGHT SIZING THE DEVELOPMENT FOOTPRINT
----------
THURSDAY, SEPTEMBER 8, 2011
U.S. Senate, Subcommittee on International
Development and Foreign Assistance, Economic
Affairs, and International Environmental
Protection, Committee on Foreign Relations
Washington, D.C.
The subcommittee met, pursuant to notice, at 2:33 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Benjamin L.
Cardin, presiding.
Present: Senators Cardin, Menendez, Udall, and Corker.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
U.S. SENATOR FROM MARYLAND
Senator Cardin. Good afternoon, everyone. The Subcommittee
on International Development and Foreign Assistance, Economic
Affairs, and International Environmental Protection will come
to order. Let me thank Senator Kerry for his help in arranging
this subcommittee hearing to deal with Afghanistan, Right
Sizing the Development Footprint. I also want to thank Senator
Corker for his cooperation in convening this hearing.
We are at a critical juncture in our role in Afghanistan as
we approach the beginning of U.S. forces drawdown in
Afghanistan. The United States will begin to transition toward
a more robust civilian presence; and therefore, it is paramount
that we clearly define our position in the region. We must
emphasize the importance of assistance as a tool in promoting
the stability of that country.
But the United States must also insist on accountability
for this assistance, accountability for the money spent, and
accountability for the effectiveness and success of these
programs. The U.S. taxpayers and the Afghan people deserve
nothing less. We must understand the full impact of our
assistance, both positive and negative, on the Afghan people.
When done correctly, foreign assistance can fundamentally
change countries for the better and is a vital tool in our
national security toolbox. When misspent, it fuels corruption,
distorts markets, undermines the host government's ability to
exert control over resources, and contributes to insecurity and
instability.
In the last few years, the United States has spent more on
foreign aid in Afghanistan than in any other country. And after
10 years and roughly $18.8 billion spent, we have achieved some
real successes. There has been a sevenfold increase in the
number of Afghan children attending school and a significant
improvement in health care. It should be noted that the amount
of money spent in 10 years on aid in Afghanistan is about the
same as 6 weeks of military spending there.
But we should have no illusions. Serious challenges remain
that will prevent us from achieving our goals unless they are
addressed. Given the considerable capacity and security
challenges on the ground, the State Department and USAID have
performed admirably and have assumed considerable risks in
support of the President's civil-military strategy for
Afghanistan.
However, moving forward, our assistance can be more
effective and should meet three basic and necessary conditions
before it is spent. It should be necessary, achievable, and
sustainable. Unless these conditions can be met, I am skeptical
that a comprehensive strategy can be crafted that will help
build a government and society the Afghans would be willing to
support and carry on after the United States leaves.
In 2001 the United States intervened in Afghanistan to
destroy al-Qaeda's safe haven and pursue those who planned the
September 11 attacks on our Nation. Those initial objectives in
Afghanistan have been largely met. We have removed the Taliban
government that sheltered al-Qaeda. We have tracked down and
killed Osama bin Laden. We have disrupted the terrorist network
allied with al-Qaeda, and we have hunted down those who planned
the 9/11 attacks.
Now a different responsibility remains, ensuring the Afghan
people can govern and secure themselves, while working to
increase the capacity and empowerment of all their citizens to
become contributors to their own governance. We are here today
to explore how we achieve those goals.
In June this committee released a report about the status
of United States assistance in Afghanistan, including the level
of corruption and inefficiencies in United States assistance in
Afghanistan. As a part of this hearing I would like to hear
concrete steps have been taken to address the problems that the
committee's report brought out.
Congress has previously put conditions on the use of some
funds, including concerns about corruption, the ability to
strengthen accountability, and the role of women. We will want
to know how the agencies are complying with the restrictions
that Congress placed in the appropriations legislation.
I want to make particular note of the status of women.
Perhaps no country highlights the challenges facing gender
equality as does Afghanistan, including among the lowest life
expectancies and literacy rates in the world. It also has some
of the highest incidents of domestic violence and lack of
political inclusion. We must continue to press the Karzai
government on this priority and build the capacity and
sustainability of grassroots women-led organizations.
Integrating women into Afghan society and government is not
only the moral thing to do, but is also smart and strategic. If
women are marginalized in the political process and
reconciliation, there will be no lasting peace. Today I would
like to hear how in practice U.S. programs are implementing our
commitments to improve this situation.
The State Department and USAID are spending approximately
$320 million a month on foreign aid in Afghanistan. While a
small number in comparison to our military budget there, as we
work to reduce the budget deficit and rebuild our economy it's
important to examine how this money is being spent. We have a
responsibility to the Afghan people, but also a responsibility
to ensure that the hard-earned taxpayer money is being used as
it is expected.
The World Bank estimates that today as much as 97 percent
of Afghan gross domestic product is derived from spending
related to international military and donor community presence.
Afghanistan could very easily suffer a severe economic
depression when foreign troops and donors leave, unless there
is proper and realistic planning for its transition.
Additionally, I have concerns about the reliance on
contractors in Afghanistan. Numerous audits have raised serious
concerns about the lack of robust oversight. The corruption in
Afghanistan has diverted contractors resources and some of
these funds have ended up in the hands of insurgents.
Corruption costs United States lives and threatens the future
of Afghanistan. We must work to improve the capacity of the
Afghan Government and civil societies to blunt these efforts.
True development in Afghanistan will only succeed if
Afghans are legitimate partners and there's a path to
sustainability. Critically, we must continue to measure the
impacts of our programming, enabling us to know what is working
and what needs to change. Moving toward 2014, we cannot
continue with business as usual when it comes to assistance. To
that end, I am heartened that Administrator Shah issued new
guidance for USAID engagements in Afghanistan earlier this
summer which calls for bringing stability to Afghanistan and
confidence to the Afghan people in their government, assisting
the Afghan people to build more capabilities, inclusion, and
pluralistic governance that will help ensure sustainability. We
also need to find ways to encourage both public and private
sector investments.
I look forward to hearing more about this from the
witnesses we have today. I want to thank both of our witnesses
for being here, and I will introduce them shortly. But first
let me turn to Senator Corker for his opening comments.
OPENING STATEMENT OF HON. BOB CORKER,
U.S. SENATOR FROM TENNESSEE
Senator Corker. Mr. Chairman, thank you for calling the
hearing. I think most people in the Senate know I don't make
much in the way of opening comments, but I do thank both the
witnesses for being here. I spent a lot of time with Mr. Thier
yesterday going through some of the points he's going to make
today, but I think almost everybody in the Senate has been to
Afghanistan multiple times and knows that at the very least
what we're doing there financially is highly distortive to the
culture, and you could probably make other comments regarding
it, as you did in your opening comments, which I appreciate.
So I look forward to your testimony and the many things
that you're doing to try to rectify and make sure that the aid
that is being put in place in Afghanistan is being done in a
way that's most appropriate.
So I again thank you for calling the hearing.
Senator Cardin. Thank you, Senator Corker.
Our first witness will be Mr. Daniel Feldman. He's the
Deputy to the Special Representative for Afghanistan and
Pakistan, the United States Department of State. He will be
followed by Mr. Alex Thier, Assistant to the Administrator and
Director of the Office of Afghanistan and Pakistan Affairs,
United States Agency for International Development.
Mr. Feldman.
STATEMENT OF DANIEL FELDMAN, DEPUTY TO THE SPECIAL
REPRESENTATIVE FOR AFGHANISTAN AND PAKISTAN [SRAP], DEPARTMENT
OF STATE, WASHINGTON, DC
Mr. Feldman. Thank you, Senator Cardin and Senator Corker,
for your leadership on these issues and for inviting us to
testify before you today. We appreciate your thoughtful opening
statements, and I think our testimony will hope to get at many
of the questions that you raise, and we look forward to
discussing the rest in the question-answer session.
Almost exactly a decade after 9/11, all of our military,
civilian, and diplomatic efforts in Afghanistan remain focused
on one core goal--disrupting, dismantling, and defeating al-
Qaeda. As Secretary Clinton stated to this committee in June,
the administration has a three-pronged strategy to achieve this
goal: First, a military surge, which reversed Taliban momentum
and trained 79,000 additional Afghan National Security Forces
in 2010 alone; second, a civilian surge, to give Afghans a
stake in their country's future and provide credible
alternatives to extremism and insurgency. Our civilian surge
was not, nor was it ever designed to solve all of Afghanistan's
development challenges. Measured against the goals we set and
considering the obstacles we faced, we are and should be
encouraged by what we have accomplished. Most important, the
civilian surge helped advance our military and political
objectives in Afghanistan.
Finally, in February the Secretary announced a diplomatic
surge to support an Afghan-led political process that aims to
shatter the alliance between the Taliban and al-Qaeda, end the
insurgency, and help to produce more stability.
With Osama bin Laden dead, the Taliban's momentum reversed,
and the initial seeds of an Afghan-led reconciliation process
planted, we're now entering a new phase of our efforts in
Afghanistan and Pakistan. As Secretary Clinton noted earlier
this year, we have now reached the height of the civilian
surge, with roughly 1,150 U.S. experts serving in Kabul, on
PRTs, and in District Stabilization Teams. Our civilians have
helped Afghan farmers rebuild irrigation systems and expand
into licit high-value crops for export beyond Central Asia,
providing economic alternatives to joining the insurgency.
As the transition process advances, we will be shifting our
civilian efforts from short-term stabilization projects,
largely as part of the military strategy, to longer term
sustainable development that focuses on spurring growth,
building Afghan Government capacity in critical areas, and
integrating Afghanistan into South Central Asia's economy. This
approach is consistent with this committee's recommendation, as
you referenced, Senator Cardin, that we focus on increasingly
implemented projects that are necessary, achievable, and
sustainable.
But even as we begin transitioning greater responsibility
to the Afghan Government and focus on increasing Afghan
ownership, we have been clear that this transition does not
mark the end of the United States commitment to the people of
Afghanistan or their region. An updated strategic partnership
is currently being negotiated this very day with a delegation
from Afghanistan between the United States and Afghanistan. It
will reaffirm our shared commitments to a stable, independent
Afghanistan that is not a safe haven for al-Qaeda, as well as
United States respect for Afghanistan's sovereignty. And it
will provide a transparent political framework for long-term
cooperation, not only on security issues, but also in the areas
of economic and social development.
Our long-term commitment reflects a belief a belief that we
cannot afford to repeat the mistakes we made in 1989 when our
attention shifted to Afghanistan from other challenges. Indeed,
even as we have made great strides over the past decade in
laying the foundation for sustainable economic growth in
Afghanistan, the World Bank and other financial institutions
have warned, again as you noted, Senator, that the drawdown of
the international combat presence in Afghanistan will have
significant economic consequences. Spending on goods and
services in Afghanistan, now a critical basis of Afghan
economic growth, will decrease and the United States, alongside
Afghanistan and members of our international contact group, is
working to implement a strategy for sustainable economic growth
that would undergird political stability and the security gains
we have achieved, including ensuring equal access to economic
opportunities for women.
Afghanistan will continue to need development support to
achieve this goal, but we are acutely aware that the United
States cannot bear the full burden. We recognize the financial
constraints. Other donors, private investment, and Afghans
themselves must carry the majority of the load.
A key challenge in the economic development of Afghanistan
is finding a way to integrate the Afghan economy into the
broader region. So 2 months ago in India, the Secretary of
State outlined her vision of a New Silk Road to foster Afghan
growth and prosperity by promoting stronger economic ties
throughout South and Central Asia, so that goods, capital, and
people can flow more easily across borders. This vision is
meant to act as a guide for Afghanistan's future development,
not a prescriptive menu of projects or a commitment from the
United States to fund a particular project or sector.
Over time, an economically connected region will generate
lasting employment for Afghanistan's population, raise
consistent revenue to pay for government services, and attract
international private investment in key sectors. This vision is
built upon existing Afghan development priorities and
especially upon the foundational investments that USAID is
already implementing and that my close colleague, Alex Thier,
will describe in more detail.
We are working toward this long-term vision of a New Silk
Road with eyes wide open. We understand the economic and policy
constraints and are realistic about what we hope to achieve. We
are working with our allies and partners in advance of
important foreign ministerial conferences in Istanbul and Bonn
later this year to build the framework for a truly
international effort.
This framework is not only important in and of itself, but
as a demonstration that the region and the international
community, not just the United States, are sustaining a
commitment to a secure, stable, and prosperous Afghanistan that
is not used as a base for international terrorism.
We are also well aware of the constraints of doing business
in Afghanistan and are continually trying to mitigate those,
particularly with regard to corruption.
Because of Afghanistan's prime importance to our national
security, we are committed to a continued effort, working
closely with the Afghans, Congress, and international partners,
to ensure that our development strategy and civilian transition
strategy drives the size of our footprint in direct pursuit of
our interests.
We recognize the unique fiscal challenges here at home and
will continue to be vigilant when implementing programs to
ensure that American development assistance achieves maximal
impact for our national security interests. And we believe our
modest civilian investment, which totals barely more than 3
percent of the overall financial commitment to the mission, is
paying important dividends.
We appreciate the opportunity to speak with you, and we
welcome your questions.
[The prepared statement of Mr. Feldman follows:]
Prepared Statement of Daniel Feldman
Thank you, Senator Cardin and Senator Corker, for your leadership
on these issues, and for inviting us to testify before you, today.
Almost exactly a decade after 9/11, all of our military, civilian,
and diplomatic efforts in Afghanistan remain focused on one core goal:
disrupting, dismantling, and defeating al-Qaeda. As Secretary Clinton
stated to this committee in June, the administration has a three-
pronged strategy to achieve this goal.
First, a military surge, which reversed Taliban momentum and
trained 79,000 additional Afghan National Security Forces (ANSF) in
2010 alone, bringing the total Afghan National Security Force to
305,000 which is 100 percent of the goal for fiscal year 2011, and on
track to grow to 350,000 by the end of fiscal year 2012. Even as we
begin reducing our combat troop levels and transitioning lead security
responsibility to these Afghan forces, we will continue our
counterterrorism activities and training efforts.
Second, a civilian surge, to give Afghans a stake in their
country's future and provide credible alternatives to extremism and
insurgency. Our civilian surge was not nor was it ever designed to
solve all of Afghanistan's development challenges. Measured against the
goals we set and considering the obstacles we faced, we are and should
be encouraged by what we have accomplished. And most important, the
civilian surge helped advance our military and political objectives in
Afghanistan.
Finally, in February the Secretary launched a ``diplomatic surge''
to support an Afghan-led political process that aims to shatter the
alliance between the Taliban and al-Qaeda, end the insurgency, and help
to produce more stability. Our diplomatic surge recognizes the need for
Afghanistan's neighbors and the broader international community to be
more concrete and specific about the ways in which they will support
Afghanistan through the current challenges of transition and Afghan-led
reconciliation.
With Osama bin Laden dead, the Taliban's momentum reversed, and the
initial seeds of an Afghan-led reconciliation process planted, we are
entering a new phase of our efforts in Afghanistan and Pakistan. I want
to briefly discuss how we see our civilian efforts evolving.
As Secretary Clinton noted in June, we have now reached the height
of the civilian surge, with roughly 1,150 U.S. experts serving in
Kabul, on 28 Provincial Reconstruction Teams and 38 District
Stabilization Teams. Our civilians have helped Afghan farmers rebuild
irrigation systems and expand into licit high-value crops for export
beyond Central Asia--providing economic alternatives to joining the
insurgency. Since 2002, our civilians have helped train over 170,000
teachers and ensured that basic health services are available to 85
percent of Afghans within 1 hour via any mode of transport, building
confidence in a vision for a more positive future. Joint United States-
Afghan counternarcotics efforts are disrupting opium production and
drug networks. These results come even as we continue to work in a very
challenging security environment.
As the transition process advances, we will be shifting our
civilian efforts from short-term stabilization projects, largely as
part of the military strategy, to longer term sustainable development
that focuses on spurring growth, building Afghan Government capacity in
critical areas, and integrating Afghanistan into South Central Asia's
economy. This approach is consistent with this committee's
recommendation that we focus on increasingly implementing projects that
are, ``necessary, achievable, and sustainable,'' and includes a
continued emphasis on maintaining respect for human rights such as
freedom of religion and freedom of speech.
But even as we begin transitioning greater responsibility to the
Afghan Government and focus on increasing Afghan ownership, we have
been clear that this transition does not mark the end of the United
States commitment to the people of Afghanistan or the region. An
updated Strategic Partnership is currently being negotiated between the
United States and Afghanistan. It will reaffirm our shared commitment
to a stable, independent Afghanistan that is not a safe-haven for al-
Qaeda, as well as U.S. respect for Afghanistan's sovereignty. And it
will provide a transparent political framework for long-term
cooperation not only on security issues, but also in the areas of
economic and social development. Our long-term commitment reflects a
belief that we cannot afford to repeat the mistakes we made in 1989,
when our attention shifted from Afghanistan to other challenges.
Indeed, even as we have made great strides over the past decade in
laying a foundation for sustainable economic growth in Afghanistan, the
World Bank and other financial institutions have warned that the
drawdown of the international combat presence in Afghanistan will have
significant economic consequences. Spending on goods and services in
Afghanistan--now a critical basis of Afghan economic growth--will
decrease. The United States, alongside Afghanistan and members of the
International Contact Group, is working to implement a strategy for
sustainable economic growth that would undergird political stability
and the security gains we have achieved, including ensuring equal
access to economic opportunities for men and women. Afghanistan will
continue to need development support to achieve this goal, but we are
acutely aware that the United States cannot bear the full burden. We
recognize the financial constraints. Other donors, private investment,
and Afghans themselves must carry the majority of the load.
A key challenge in the economic development of Afghanistan is
finding a way to integrate the Afghan economy in the broader region.
Earlier this year the Secretary of State outlined her vision of a ``New
Silk Road'' to foster Afghan growth and prosperity by promoting
stronger economic ties throughout South and Central Asia, so that
goods, capital, and people can flow more easily across borders. This
vision is meant to act as a guide for Afghanistan's future development,
not a prescriptive menu of projects or a commitment from the United
States to fund a particular project or sector. Over time, an
economically connected region will generate lasting employment for
Afghanistan's population, raise consistent revenue to pay for
government services, and attract international private investment in
key sectors, such as licit agriculture and the extractive industries.
This vision is built upon existing Afghan development priorities, and
especially upon the foundational investments that USAID is already
implementing and that Assistant to the USAID Administrator Alex Thier
will describe in more detail.
We are working toward this long term vision of a New Silk Road with
eyes wide open. We understand the economic and policy constraints and
are realistic about what we hope to achieve. Within the U.S.
Government, we are working with our interagency partners to develop a
strategy for U.S. economic assistance for Afghanistan that rationalizes
and prioritizes industry sectors and Afghan development goals.
Additionally, we are working with our allies and partners in advance of
important foreign ministerial conferences in Istanbul and Bonn later
this year to build the framework for a truly international effort. This
framework is not only important in and of itself but as a demonstration
that the region and the international community--not just the United
States--are sustaining a commitment to a secure, stable, and prosperous
Afghanistan that is not used as a base for international terrorism.
We also are well aware of the constraints of doing business in
Afghanistan, and are continually trying to mitigate those, particularly
with regard to corruption. We have increased our oversight capacity for
U.S. assistance projects including through the work of Taskforce 2010
and Taskforce Shaffiyat which identify and address weaknesses in our
processes. Even with increased oversight, we are going to encounter
challenges similar to those that you would encounter in any developing
country destroyed by more than 30 years of war. In these situations, we
will work with the international community and the Afghan Government to
eliminate sources of corruption and strengthen systems of
accountability.
Our handling of Kabul Bank is one example of this approach. The
United States and the international community have been clear to the
Afghan Government that the situation must be properly addressed
including compliance with IMF conditions to prosecute wrongdoers,
recapitalize the Central Bank and recover assets at Kabul Bank.
As I stated earlier, Afghanistan is of prime importance to our
national security, and we are committed to a continued effort, working
closely with the Afghans, Congress, and international partners, to
ensure that our development strategy and civilian transition strategy
drives the size of our footprint, in direct pursuit of our interests.
We recognize the unique fiscal challenges here at home, and will
continue to be vigilant when implementing programs to ensure that
American development assistance achieve maximal impact for our national
security interests. We believe our modest civilian investment--which
totals barely more than 3 percent of the overall financial commitment
to the mission--is paying important dividends.
Thank you for the opportunity to speak to you today, and I welcome
your questions.
Senator Cardin. Thank you very much, Mr. Feldman.
Mr. Thier.
STATEMENT OF ALEX THIER, ASSISTANT TO THE ADMINISTRATOR AND
DIRECTOR OF THE OFFICE OF AFGHANISTAN AND PAKISTAN AFFAIRS,
UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT [USAID],
WASHINGTON, DC
Mr. Thier. Mr. Chairman, Senator Corker, Senator Udall.
Thank you for the opportunity to appear before you today.
Ten years ago this week, our Nation was abruptly awoken to
the dangers of unchecked extremism. The terrible, untimely
deaths of over 3,000 innocents in New York, Pennsylvania, and
Washington was a tragedy and a portent, one that changed the
way a generation of Americans view the world.
For nearly 20 years I have spent my career working in or on
the issues of peace and security in Afghanistan and its region.
Following the attack, like many Americans, I responded to the
call and went back to Afghanistan. Our Nation pledged that
Afghanistan would never again become a haven for international
terrorism, a pledge that President Obama has repeatedly
reaffirmed as a central plank of U.S. national security policy.
We appreciate the attention this committee has devoted to
Afghanistan and the support you have shown for the civilian
surge that has gone in to parallel our military effort. As
President Obama has said many times, Afghans must take
responsibility for their own future. Our current assistance
effort is designed to help them do just that.
Our current effort, which focuses relentlessly on
accountability and impact, is delivering real results.
Approximately 1,000 American civilians, including over 300
direct hire USAID staff, and tens of thousands of Afghans take
risks every day to implement U.S. Government programs and turn
the tide against violent extremists. Insurgent attacks and
assassination campaigns kill our partners and raise security-
related costs significantly.
But despite some of the world's most challenging
conditions, Afghanistan has in fact made some dramatic
development gains in the last decade. Several of them were
highlighted by Senator Cardin. I won't repeat those, but will
list a few others.
Our investments have contributed heavily to the 10-percent
annual growth rate of the Afghan economy over the last decade,
by building infrastructure, promoting agriculture, and
improving the investment climate. Customs revenues alone have
increased 400 percent since 2006 and the gross domestic product
per capita has doubled since 2002, with 5 million people lifted
out of a dire state of poverty.
Access to basic education and health have expanded
dramatically, as the Senator noted, and there are now more than
400 new women-owned small and medium enterprises created in
Afghanistan in the last few years alone. We have also
rehabilitated more than 1,700 kilometers of roads, increasing
mobility and strengthening trade and security.
Though still a deeply impoverished country, Afghanistan has
made significant progress from the war-wracked country I first
knew in the 1990s. But Afghanistan does remain an extremely
high-risk environment, and we face considerable challenges in
implementing our efforts there. Because of these difficult
conditions, we've made oversight and accountability an
essential part of how we operate in Afghanistan. To ensure that
proper procedures are in place to protect our assistance
dollars, we developed last year, last fall, the Accountable
Assistance for Afghanistan, or A3 Initiative.
USAID in the last few months has dramatically enhanced the
safeguards for development assistance in four categories:
decreasing the number of subcontractors, undertaking a dramatic
vetting program, tightening financial controls, and increasing
project oversight. I'm happy to elaborate those in the question
and answer, but one example of this is that in the last 18
months we have tripled the size of our contract oversight
staff, and in the next 12 months we will double it again. We
have also tripled the number of USAID staff in Afghanistan
overall since 2009. This presence has dramatically increased
our oversight capacity in Afghanistan.
Going forward, our assistance strategy places primary
emphasis on enabling a sustainable and lasting transition, by
investing in priority sectors that will lay the foundation for
long-term growth, helping Afghanistan sufficiently develop its
economy and governance to prevent it from ever again becoming a
safe haven for terrorists.
We are making foundational investments to shore up the
Afghan economy in the face of sharp decreases in wartime
spending, lay the groundwork for sustainable economic growth,
and boost Afghan capacity to govern effectively and raise
revenue for fiscal sustainability.
Perhaps most important, as you yourself emphasized, our
investments need to be sustainable, and it was to this end that
we issued our new sustainability guidance. This guidance aims
to ensure that USAID's resources our people, our time, and our
budget are closely aligned with both United States and Afghan
national interests, and we're examining the entire complement
of our programs in Afghanistan to ensure that we meet three key
principles: Afghan ownership and capacity; increasing stability
and confidence; and effectiveness, both programmatically and
cost-wise.
I will conclude by saying that, as President Obama stated
in June, we are helping Afghanistan to move away from an
economy shaped by war to one that can sustain a lasting peace.
Indeed, as Secretary Clinton noted in her recent testimony and
you repeated, USAID's budget, although significant in terms of
its global spending over the last decade has been equivalent to
only 6 weeks of our current cost of our military presence in
Afghanistan.
I emphasize this because our contribution to transition in
Afghanistan will fundamentally affect our ability to drawdown
our troops effectively and make a durable contribution to
Afghanistan.
When I arrived in Afghanistan 18 years ago, it was a
collection of warring fiefdoms, no government, no economy,
millions of refugees, and a perfect breeding ground for violent
extremism. Today, through the efforts of our Nation and our
Afghan and international partners, we have lifted Afghanistan
far from that place of desolation and increased the security of
our homeland and our allies in the process.
This effort is far from finished, but our commitment to an
effective, accountable, and sustainable mission is resolution.
Thank you.
[The prepared statement of Mr. Thier follows:]
Prepared Statement of J. Alexander Thier
Mr. Chairman, distinguished members of the subcommittee, my name is
Alex Thier. I serve as Assistant to the Administrator and Director of
the United States Agency for International Development's (USAID) Office
of Afghanistan and Pakistan Affairs (OAPA). I will provide brief
opening remarks but would ask that my full written statement be entered
into the hearing record.
Ten years ago this week, our Nation was abruptly awoken to the
dangers of unchecked extremism. The terrible, untimely deaths of 3,000
innocents in our largest city, the Pentagon, and on United Airlines
Flight 93 was a tragedy and a portent one that changed the way a
generation of Americans view the world.
For nearly 20 years, I have spent my career working in or on the
issues of peace and security in Afghanistan and its region. Like others
who followed the intertwining paths of Afghanistan and al-Qaeda in
prior years, I knew immediately on the morning of September 11 that our
future was tied to Afghanistan's. The hateful, failed ideology of the
late Osama bin Laden is squarely to blame for these attacks. But our
abandonment of post-Soviet invasion Afghanistan contributed to the
misery and decline that lead to the Taliban regime, al-Qaeda's safe
haven, and eventually the attack on America. Following that
realization, our Nation pledged that Afghanistan would never again
become a haven for international terrorism, a pledge that President
Obama has repeatedly reaffirmed as a central plank of U.S. national
security policy.
It has been a long decade, and there have been many missteps.
Indeed, prior to the three surges--military, civilian, and diplomatic--
put in place by President Obama, our aid efforts and fighting forces
did not represent the full complement of resources required to
accomplish the goal of stabilizing Afghanistan. The civilian assistance
generously provided by American taxpayers and overseen by USAID
and State is a central component to ensuring we achieve our national
goals in Afghanistan.
We appreciate the attention this committee has devoted to
Afghanistan, and the support for the civilian surge that has paralleled
our military buildup. We all understand that improving governance,
creating economic opportunity, and supporting civil society is critical
to solidifying our military gains and advancing our political and
diplomatic goals for Afghanistan and the region.
I welcome the opportunity to appear before you today to talk about
how U.S. assistance to Afghanistan is an essential part of building the
peace and enabling U.S. troops to drawdown by 2014, as announced by
President Obama.
As President Obama has said many times, Afghans must take
responsibility for their own future. Our current assistance effort is
designed to help them do just that. This has not always been the case.
Too often over the last decade, goals have not fully taken into account
the limitations presented by the Afghan reality. Some programs have
been designed to meet immediate needs, and not long-term needs in a
sustainable fashion. Some programs have assumed more robust capacities
and resources than exist in one of the poorest countries on earth. Our
current effort--which focuses relentlessly on sustainability,
accountability, and impact--is delivering real results.
Our approach has three main elements:
First, in support of President Obama's pledge to disrupt,
dismantle, and defeat al-Qaeda, we will build upon the dramatic
development progress made over the last decade that is critical
to Afghanistan's long-term stability.
Second, accountability will be central to our policies and
programs to make the most of current and future funds. To
ensure development assistance in Afghanistan is achieving
intended goals, we launched the innovative Accountable
Assistance for Afghanistan (A3) initiative, which is
achieving important results.
Third, as we focus our programs with an eye toward
transition, ensuring that sustainability is at the forefront of
every decision we make, we will make key investments in
priority sectors that will lay the foundation for sustainable
economic growth and increasingly effective, legitimate
governance.
We understand fully that the fiscal reality at home means that
resources available for Afghanistan will decline over time. Weaning
Afghanistan from unsustainable levels of assistance is necessary for
us, and essential for them. To achieve this without triggering a
crisis, we are making tough decisions and prioritizing investments that
have the greatest potential for long-term sustainability by Afghans
themselves, and that ensure our troops can drawdown safely,
efficiently, and permanently.
significant development achievements
Approximately 1,000 American civilians, including over 300 direct
hire USAID staff, and tens of thousands of Afghans, take risks every
day to implement. USAID programs and turn the tide against violent
extremists. Insurgent attacks and assassination campaigns kill our
partners and raise security-related costs significantly. Since 2003,
387 USAID partners implementing our programs have been killed in action
and another 658 wounded in action. Between 2009 and 2010, there was a
twofold increase in the number of attacks on partners, from an average
of 29 a month in 2009 to 57 a month in 2010. Afghanistan is a difficult
operating environment to say the least.
Despite some of the world's most challenging conditions for
stabilization and development, Afghanistan has made some dramatic
development gains--with strong support from the U.S. Government. For
example:
Our investments have contributed heavily to the 10-percent
annual growth rate of the Afghan economy over the last 6 years
by building infrastructure, promoting agriculture, improving
the investment climate, and helping the government increase
revenue collection.
Customs revenues have increased 400 percent since 2006. And
GDP per capita has doubled since 2002 with 5 million people
lifted from a state of dire poverty.
Access to basic education has expanded dramatically,
increasing literacy and cultivating a new generation of more
capable Afghan workers and future leaders. Under the Taliban,
less than a million boys and no girls attended school. Today,
over 7 million students are in school, 37 percent of whom are
girls.
We've worked closely with the Afghan Ministry of Public
Health to massively expand access to health services from 9 to
64 percent of the population. In 2002, Afghanistan had one of
the highest infant mortality rates in the world and our efforts
have contributed to a 22-percent drop in infant deaths.
Maternal mortality has also dropped significantly as the use of
antenatal care in rural Afghanistan has risen from an estimated
8 percent in 2003 to 36 percent in 2008, thanks in part to a
USAID midwives training program that has trained over 1,600
midwives, contributing to an increase in active Afghan midwives
from 467 to 3,250. Afghanistan is one of only four countries
where polio remains endemic. Thanks partly to USAID's efforts,
over 90 percent of children under 5 have been vaccinated
against polio since 2002.
USAID has sponsored training and internships for over 5,500
women, and there are now more than 400 new women-owned small
and medium enterprises in Afghanistan since 2006.
We have rehabilitated more than 1,677 kilometers of roads,
increasing mobility and strengthening trade and security.
Approximately 80 percent of Afghans now live within 50
kilometers of the newly constructed Ring Road.
Improved access to water for Afghan farmers has enriched
irrigation systems on nearly 15 percent of Afghanistan's arable
land--in addition to the creation of 90,000 new agricultural
employment jobs, Afghan farmers now have access to improved
technologies and financial services.
USAID has also helped bring reliable, low-cost electricity
to more than 18 percent of the population up from 6 percent--
taking Afghanistan's total electricity supply from 117 MWh to
223 MWh per month--according to the Afghanistan Energy
Information Center, which is supported with USAID and DOD
funds. Now, Kabul has gone from barely having 2 hours of
electricity a day to being fully powered all day. The supply of
reliable, low-cost electricity has contributed to the doubling
of the Afghan economy since 2006. DABS, the Afghan electric
utility USAID has helped establish, has doubled revenues each
of the last 3 years--reaching $170 million this year, reducing
government fuel subsidy by nearly $100 million this year and
increasingly placing Afghans in a position of running and
maintaining their energy network on their own. Indeed, 2 weeks
ago I joined our Administrator, Dr. Rajiv Shah, in Afghanistan
to launch the new Afghan National Load Management Center--
giving the Afghans the tools and capacity to literally light
their own future path.
It is important to take stock of the many taxpayer funded programs
that have delivered results in Afghanistan and make sure that their
results endure. Though still an impoverished country, Afghanistan has
made significant progress from the civil war-racked country I first
knew in the 1990s.
accountability and transparency
Afghanistan remains an extremely high-risk environment, and we face
considerable challenges. Because of these difficult conditions, we've
made oversight and accountability an essential part of how we operate
in Afghanistan. This is an area on which USAID's leadership, including
Administrator Shah and myself, has focused intensively. It represents a
key part of our Agency's largest reform agenda and our team's approach
in Afghanistan.
To ensure that proper procedures are in place to help protect
assistance dollars from being diverted from their development purpose
to malign actors, USAID developed the Accountable Assistance for
Afghanistan (A3) initiative in the fall of 2010.
As a result, USAID has enhanced its safeguards for development
assistance in the following four categories:
Award Mechanisms--A subcontracting clause is being included
in new awards requiring that a certain percentage of work on a
contract be done by the prime contractor. It also provides for
the ability to restrict the number of subcontract tiers, and to
prohibit subcontracts with broker/dealers who do not perform
work themselves.
Vetting--The mission established a Vetting Support Unit in
February 2011. The unit conducts checks on non-U.S. companies
and non-U.S. key individuals for prime awards contractors,
grant recipients and subawardees to determine whether or not
they have a criminal history or association with known malign
organizations.
Financial Controls--The USAID mission is working with the
USAID Inspector General to establish a new program of auditing
procedures for 100 percent of locally incurred project costs.
Project Oversight--The mission is devolving more project
monitoring responsibilities to USAID personnel located in field
offices outside of Kabul. Assigned to specific projects, USAID
On-Site Monitors will have the authority to monitor
implementation of USAID projects and report to the USAID
Contract/Agreement Officer's Technical Representative.
Our A3 systems are yielding results.
Our project and contract oversight capacity has grown dramatically.
I testified before the Commission on Wartime Contracting in January
that we have tripled the size of our contract oversight staff since
2007. This year, we ordered a doubling of our contracting staff, and we
are in progress to complete this goal. Further, we have also tripled
the number of USAID staff in Afghanistan overall since 2009, with
approximately 56 percent of our 325 current U.S. staff deployed outside
Kabul, working alongside the military and other agencies. This presence
has increased our oversight capacity exponentially. Security conditions
in some areas do prevent us from getting out as much as we would like
to. We mitigate this by deploying national staff, and employing third-
party monitors who do independent assessments of our programs. The
Inspector General community also plays a critical role in the
monitoring and evaluation process through their investigations. Since
2003, our own USAID Office of Inspector General has conducted 45
audits, investigations and/or reviews and recovered over $150 million
in tax payer funds.
Consistent with the USAID Forward agenda, we also seek to empower
Afghan institutions, both public and private, to check and balance one
another in detecting and deterring corruption. This effort includes
strengthening the oversight role of elected Afghan institutions, such
as Parliament and provincial councils, as well as executive branch
agencies charged with combating corruption. An essential component of
our plan for sustainability, transparency, and accountability is to
strengthen Afghan capacity to manage more funds themselves.
As was noted in the recent full committee majority staff report,
``the Afghan Government must be a genuine partner for our assistance
efforts to succeed.'' Channeling assistance dollars through the Afghan
Government is an essential part of this process and important part of
ensuring the long-term viability of our investment. In 2010, we
committed with other donors at the Kabul conference to move toward
putting 50 percent of our assistance through Afghan institutions. We've
gone from providing 10 percent through Afghan institutions in 2008 to
37 percent today. However, USAID has a rigorous assessment process in
place to guarantee that every entity receiving funds has the capacity
to transparently and effectively handle U.S. funds. As a result, we are
very selective in which institutions we will fund directly, having
approved a few and rejected many more.
One specific example of this approach is work we've done with the
Ministry of Public Health (MOPH). With USAID's on-budget support, the
MoPH has been successful in procuring, managing, and monitoring 18
contracts with 10 NGOs to deliver basic health services in over 530
facilities in 13 provinces. In FY 2010, USAID helped the MoPH increase
basic health services coverage to 10 million people in 13 provinces,
serving over 800,000 patients each month. Seventy-six percent of
beneficiaries are women, and children under age 5. Ultimately this
approach is a triple win: it develops sustainable Afghan capacity; it
saves money by reducing reliance on contractors and security firms; and
it enhances government legitimacy by delivering effective services
through the government.
sustainability through foundational investments
Going forward, our assistance strategy places primary emphasis on
enabling a sustainable and lasting transition by investing in priority
sectors that will lay the foundation for long-term growth, helping
Afghanistan sufficiently develop its economy and governance to prevent
it from again becoming a safe haven for terrorists.
Recognizing that the financial and human resources available to
USAID for Afghanistan will decrease as the transition proceeds, we are
increasing the focus in our portfolio on those sectors that can serve
as a bulwark against economic and political instability. These
foundational investments are intended to shore up the Afghan economy in
the face of sharp decreases in wartime spending, lay the groundwork for
sustainable economic growth, and boost Afghan capacity to govern
effectively and raise revenue for fiscal sustainability. They will
complement the more traditional investments in development, such as in
health and education, and in stabilization that we will continue to
support.
Foundational investments require some combination of substantial
up-front financing, concentrated technical expertise, and sustained
political engagement on the part of the United States. Foundational
investments also exploit synergies created by our current civ-mil
presence in Afghanistan. For example, foundational investments in the
energy sector are required to unlock Afghanistan's most promising near-
term and long-term economic growth drivers: agriculture and extractive
industries. Given the current security situation, expanding the
national power grid would not be possible without the willingness of
our military colleagues to work hand-in-glove with us and our Afghan
partners. Similarly, expanding Afghanistan's nascent mobile financial
services sector--which will increase transparency in Afghan payment
systems and dramatically broaden financial inclusion--requires little
U.S. funding but intensive advocacy with Afghan officials and
cooperation with private sector partners. USAID's foundational
investments will focus on economic growth (agriculture, extractive
industries, financial inclusion through technology); infrastructure
(energy, water); and human capacity development (higher education,
vocational skills training).
Perhaps most importantly, our investments need to be sustainable.
To this end, the USAID Administrator recently issued our Sustainability
Guidance for Afghanistan. This guidance aims to ensure that USAID's
resources--our people, time, and budget--are closely aligned with both
U.S. and Afghan national interests. To confirm that our work is focused
on achieving the U.S. and Afghan immediate objective of transition, and
to ensure that the impact of our work is sustainable and durable beyond
2014, we are examining our programs to ensure that each meets three key
principles: (1) increases Afghan ownership and capacity, (2)
contributes to stability and confidence, and (3) is effective both
programmatically and cost-wise.
We are currently reviewing all of our projects through a lens of
sustainability. Based on this analysis, USAID is calibrating its
portfolio, and we are making tough choices to end or modify projects
that don't meet the new standards.
Economic Growth
Economic growth and jobs will lead to greater stability and help
increase the government's own revenues thereby lessening, over the
years, the Afghan Government's reliance on donor assistance. Boosting
the agricultural sector, in which 80 percent of the population
participates, is the most promising means of sustaining reliable
employment and enhancing economic security for the greatest number of
people. Pending availability of appropriations, USAID intends to
allocate over $1 billion of its Afghanistan assistance program over the
next 5 years for agricultural and alternative development programs to
increase food security, the production of high-value crops, and the
capacity of the government and the private sector to support
agriculture and agribusiness.
Afghanistan is also rich in untapped mineral and hydrocarbon
resources, with some of the world's largest undeveloped reserves of
copper and iron. With USAID, the efforts of the Task Force for Business
and Stability Operations, and other donor support, diverse mineral
sites throughout the country will continue to be developed to generate
increased incomes, public sector revenues, and employment. Our near-
term objective in the mining sector is to help Afghanistan develop its
technical capacity and infrastructure to manage these resources and to
meet international standards in transparency, regulations, royalties
and government oversight. This will help lay the groundwork for private
investment in the mining sector, generating a large and growing source
of public revenue for Afghanistan's robust development beyond 2014. Our
investments in transport and energy infrastructure will serve as key
enablers of the growth of the primary drivers of the Afghan economy
going forward: agriculture, extractives, and trade.
Energy
Asia Foundation surveys of the Afghan people reveal that access to
electricity is one of their highest priorities. The lack of electricity
reduces economic and social development opportunities and feeds
perceptions that the government has not been responsive to the needs of
its people. Since 2002, an annual 20-percent increase in electricity
supply has helped fuel an average annual 10 percent GDP growth rate.
Because of the power sector's critical importance to economic growth, a
key component of our work is building Afghan capacity in the power
sector and supporting power sector reform.
Developing a national energy grid and accompanying infrastructure
is accelerating investment in mining and agriculture, fueling private
growth and productivity, and facilitating value chain development.
USAID investments will provide electricity to more than 3 million
people, serving over 50 percent of the population in urban centers
along the ring road in eastern Afghanistan.
Our three integrated efforts include: building transmission
infrastructure to bring additional power to Kabul and the south;
improving energy security by increasing domestic power generation; and
developing the energy utility, DABS, that will fund and maintain the
energy infrastructure through revenue collection and capacity
development.
Human Capacity Development
A skilled workforce capable of servicing the needs of a rapidly
growing and diverse economy is a cornerstone of any country's
sustainable development. USAID's foundational investments in human
capital are increasingly being moved on-budget, and include vocational
training as well as post-secondary education. These investments will
result in cost savings compared with the cost of providing expatriate
technical assistance--it costs an estimated four to five times less to
work with and through the Ministry of Education and through the
Ministry of Public Health than it does to import expatriate technical
assistance. In addition to significant cost savings for the U.S.
taxpayers, these investments will also contribute directly to the
sustainability of these programs by building and reinforcing the
capacity of the Afghan Government to manage such programs in the
future.
USAID investments in human capital during the past decade have
helped expand access to basic, secondary, and vocational education and
increased literacy. Overall, increased levels of educational attainment
will generate significant social and economic returns over time and
lead to improved prospects for employment, enhanced participation in
democratic society, declines in fertility and improved health status.
Building on essential investments in basic education, over the next
few years USAID will support secondary and post-secondary technical and
vocational education and workforce development programs for young men
and women to generate informed and skilled workers to support increased
demand in government, business, and industry as the economy grows. With
a large and growing youth population, training in vocational and
productive skills is both a priority for long-term economic growth and
also improves the employability of youth at high risk by providing them
with marketable skills.
conclusion
USAID plays a vital role in implementing the President's strategy
for Afghanistan. We face significant challenges, but we're confident
that our work is necessary and our goals achievable. As Secretary
Clinton recently noted in testimony before this committee, USAID's
entire budget over the last decade in Afghanistan is the equivalent of
only 6 weeks of the cost of our military presence in Afghanistan. The
civilian portion of our assistance is not only a vital component to our
overall objectives, but one that can provide significant cost savings
as the military begins to drawdown. Civilian assistance to Afghanistan
is needed to help build peace as our troops come home. We owe it to the
Afghan people, and we owe it to the American men and women who have
made great sacrifices to help Afghanistan move toward a secure and
prosperous future.
As President Obama stated in June ``we're helping Afghanistan move
away from an economy shaped by war to one that can sustain a lasting
peace.''
When I arrived in Afghanistan 18 years ago, it was a collection of
warring fiefdoms--no government, no economy, millions of refugees--and
a perfect breeding ground for violent extremism. Today--through the
efforts of our Nation and our Afghan and international partners--we
have lifted Afghanistan far from that desolation, and increased the
security of our home and our allies in the process. This effort is far
from finished, and our commitment to an effective, accountable, and
sustainable mission is resolute.
Senator Cardin. Mr. Thier, thank you for your testimony.
Let me start by expressing my appreciation, and I think the
appreciation of all the Members of the Senate, for the
dedicated public servants who have been working in Afghanistan
on the civilian side to rebuild that nation. It's at great
risk, sacrifice, and they do it because they want to make a
difference, and I hope we first want to express our
appreciation for all those who have put themselves at risk in
order to try to provide stability in that region of the world.
We clearly have made a difference, and I very much want to
acknowledge that up front. I also want to acknowledge that a
good part of our assistance has come through the Department of
Defense, which we don't have a representative here today, and
many of the reports about moneys going to the insurgents have
been coming from--the source was more likely the Department of
Defense than it was the funds that are administered by the two
witnesses we have here today. I just want to also at least
acknowledge that point.
But I want to start out with the macrochallenge we have
here about sustainability that we talk about frequently. The
reports indicate, as I said in my opening statement, that less
than 10 percent of the economy of Afghanistan is generated
internally, that the overwhelming majority of their economy is
based upon the war economy, based upon international
activities, and not about domestic local production.
When I take a look at the amount of funds that the United
States is providing, the overwhelming amount of that goes into
security. That's the largest single part of the pie. After
security does come economic development, but it's a much
smaller piece. And then we look at humanitarian assistance,
counternarcotics, et cetera.
How do we transition to a domestic economy that's
sustainable if we have to maintain that type of allocation of
assistance? Can we really develop a sustainable economy in the
timeframe that the President has laid out as we're starting to
drawdown our troops, with the type of investments that are
currently being made in Afghanistan?
Mr. Feldman. Thank you, Senator. I'll start with that
answer and then let Alex conclude.
On the broader piece of this, the sustainable piece, you're
absolutely right. And this is the issue that we've all been
grappling with. This is exactly what was behind the vision
that, as I referenced in my opening statement, the Secretary
laid out of the New Silk Road. That's not looking at particular
projects. It's not looking at specific initiatives. It's the
vision that as we seek some sort of reconciliation,
reintegration, that we can lay out for the Afghan people to
say, this is what you can buy into; you can buy into an
economic web that is more integrated, more part of the broader
region.
We've been saying it's the vision of a safe, stable,
prosperous Afghanistan within a safe, stable, prosperous
region. Through our series of big conferences, ministerials, in
the coming months, and particularly concluding at the Bonn
conference, almost 10 years after the initial Bonn conference
in December, that's exactly what we're seeking. We're looking
for some sort of political assurances from the region,
neighbors, and near neighbors to Afghanistan, ideally a
consultative mechanism to accompany those, but even perhaps
more importantly, having the Afghans themselves lay out what
this broader vision would be of sustainability, whether it's
dependent on the extractive industries, building the
infrastructure for that, on continued agriculture for jobs, on
building sustainability and capacity within ministries, on
continuing to build the infrastructure so that the Afghan
Government can deliver for its own people.
Senator Cardin. The way you said it is exactly right. They
have to have a game plan that can replace an economy so that
there's stability in their country, frankly. But the clock is
ticking. The President's timeframe, which may or may not be
accelerated, there's certainly an interest here to try to
advance that timeframe. We're still talking about coming up
with that plan. It seems to me the Afghan Government needs to
be implementing that plan.
Mr. Thier.
Mr. Thier. Let me address your question at two levels. When
we talk about sustainability, there's the big question is, does
Afghanistan have a viable economy that can support its state
and some of the infrastructure and the civil service that we've
built for it. Then there's the smaller question about whether
our specific investments have sustainability built into them.
On the broader question, we have been very, very focused on
this concern because of the decrease in our assistance, the
decrease in international assistance. I've made four trips to
Afghanistan in this calendar year, and they have all been very
focused on this question. We are working with the World Bank to
answer the question of how much does the Afghan state cost and
what path is their economy on? In other words, what proportion
of that cost are they going to be able to carry?
And if it turns out, as we all know it will, that the
proportion is lower than what the state costs, then how are we
going to bridge that difference, and how are we going to bridge
it in a way that doesn't cause instability.
Senator Cardin. What's the timeframe for this?
Mr. Thier. Well, the timeframe, the immediate timeframe, is
that we are really working very intensively toward the end of
this year, in part because of the Bonn process, to examine
exactly what that state costs and to put programs in place that
we think are going to be generating an increase in revenue.
So there's two things we can do. We can decrease the cost
of the Afghan state and/or we can increase the revenues that
the Afghans are drawing so that they'll be able to pay. We're
trying to do both at the same time to meet the approaching
deadline.
Senator Cardin. Will you have by the end of the year a game
plan as to what type of industries within Afghanistan will meet
those revenues that you're suggesting?
Mr. Thier. Absolutely. Let me just give you an example. In
the agriculture industry, agriculture makes up about 75 percent
of Afghan employment and gross domestic product. It is the
agriculture industry that in the near term is going to provide
the greatest potential for increased employment and revenue
generation in Afghanistan. So we are looking very intensively
at a number of initiatives in terms of increasing agricultural
yield, increasing market access, increasing trade, that are
going to generate those livelihoods and generate those revenues
for the Government of Afghanistan.
In the longer term, we're of course looking at things like
broader regional trade and mineral resources development. But
that's, frankly, not going to impact the next 3 or 4 years in
terms of revenues to the state. At the same time, what we're
doing is making sure that those investments that the Afghans
have gotten from our investment and other members of the
international community are going to be sustained. So we are
looking intensively at things like the energy sector, where
there is starting to be some investment. We've spent the last 2
years building an Afghan utility that has grown, so that the
$175 million subsidy that they required from the Afghan
Government 2 years ago has now fallen by 80 percent, so that by
collecting revenues from people who are getting energy they
will be able to sustain their energy sector.
Senator Cardin. I think you've raised a very valid point
about sustainability of the Afghan economy and sustainability
of our projects. We need accountability on sustainability of
our projects, and I think what you're raising on the energy
sector is exactly on target. I'm going to ask that you make
available to this committee the details that you expect to have
by the end of this year as to the blueprint for sustainability
of the Afghan economy, as specific as is available. I'm very
interested as to where they see their short-term, long-term
economy from sectors and where they expect to make that type of
progress.
You mentioned agriculture, and I just point out, it's a
real challenge if you don't have land reform, it's a real
challenge if they don't change their whole attitude toward
women, as to how an agriculture sector could be productive for
that type of economy. So they have a long way to go in regards
to agriculture and women if it's going to be a sustainable type
of growth that they should have in their country.
We'll come back to some of these points, but let me turn it
over to Senator Corker and we'll follow up on some of these
points.
Senator Corker. Go ahead and finish up.
Senator Cardin. Well, OK, let me just finish up this one
point, then. Is it reasonable to expect that we could get that
type of information by the end of this year?
Mr. Thier. Well, yes, that's something that we're all
working on. But I think the most important piece of this,
obviously, is that this is an Afghan-led process. So we're
working very closely with the Afghans on developing exactly
what this is. So there's a role for the Afghans in
prioritizing. Many of the things which we've talked about as
part of this broader, New Silk Road vision are drawn from the
Afghan national development strategy, from their own stated
priorities over many years.
Second of all, it's involving the rest of the international
community, other donors, and particularly the multilateral
institutions. So we're working with the World Bank, and we're
working with other donors very, very closely. A number of those
meetings are going on even in the next few weeks, and I think
you'll start to see much more specific talk about this and then
the Afghans really taking ownership of where this plan will go.
But it's a very collaborative process.
Senator Cardin. I'll take that as a yes, you'll have the
information by the end of the year.
[The information referred to above was not available when
this hearing went to press.]
Senator Cardin. I just point out again, I understand it's
an Afghan process. The United States taxpayer has been asked to
be a partner here, and I can tell you, if this was a business
venture and if you don't have a good plan partners walk away.
So I think we obviously want to be a partner, but we don't want
to be part of a process that's not going to lead to a
productive conclusion. So we have a responsibility to make sure
there is a game plan there for a sustainable economy based upon
the types of reforms necessary to achieve a growing economy.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
Thank you both for your testimony and I'll second what the
chairman said. I appreciate your service to our country and
what you do, which brings me to--I've been in the Senate 4
years and 7 months and it seems like every so often our reasons
for being in Afghanistan evolve to a different reason. I know
that has to wreak havoc on what people are doing on the ground
there.
The most recent I guess description of how we want to leave
Afghanistan is ``good enough.'' It's fairly abstract. I just
wonder if--I talked to Mr. Thier about this yesterday, but has
there in the State Department crept in thoughts of, look, what
we're really trying to do is cause this place to hang together
for a couple of years after we leave, so we can at least say
for a period of time we've been successful?
I'm wondering if that has affected--has that thought
process been discussed any in the State Department, and if that
kind of ``good enough'' thinking affects what you're doing on a
daily basis. Mr. Feldman?
Mr. Feldman. I appreciate the question, Senator. I think
the goals have actually been extremely consistent over the
years. The way in which we address those goals, and, as I noted
in my opening statement and as the President and the Secretary
have said many times, it remains to disrupt, dismantle, and
defeat al-Qaeda and prevent its return. Obviously, there have
been some great successes.
But our goal is still for Afghanistan's sovereignty and
territorial integrity to be assured and sustained by Afghan
forces in the lead, and that we will continue to support that.
We obviously still see a very distinct national security
interest in the region as a whole--2 billion people with 2
nuclear-armed nations--and we have to ensure that we have that
stability.
Our specific interest is the same in terms of defeating al-
Qaeda. The military operation with counterinsurgency has been
quite successful. As we are transitioning to the transition
phase of this, we are looking at a different role for the
civilian surge. It's hand in hand. These things must all go
together, civilian, military, and diplomatic. So the mechanisms
to the goals have shifted as the battleground has shifted, but
the goals remain the same.
Senator Corker. I'm not sure I understood. Let me go a
different level. We talked about the budget, and I guess the
ability of the country to sustain itself. I suppose one of the
big components is just the payment of paying for the Afghan
National Police and military. I think the budget authority,
last I saw in Afghanistan, was about $1.3 billion. I think it's
risen slightly. But what is that budget authority today? Their
ability to carry out a budget is what in Afghanistan, what
level?
Mr. Feldman. I believe the Afghan Government's revenues are
about $1.5 billion.
Senator Corker. $1.5 billion now. So it's grown a little
bit. So I guess you'd have to have a little over five times
that in income to the government just to sustain the military
and the police that will be left after we leave; is that
correct?
Mr. Feldman. If we are striving for Afghan National
Security Forces of around 350,000 to 370,000, yes, the
estimates are anywhere between $6 to $10 billion.
Senator Corker. So that being the case, when you account
for this sustainability that Mr. Thier was referring to are you
taking those kinds of things into account?
Mr. Feldman. Of course. I mean, the only way that we can
ultimately drawdown American troops is that if the Afghan
security forces themselves are stood up and capable of doing
this. That includes being able to do the training and
everything else that that money helps to ensure.
The goal is, first of all, that if we have some sort of
political-diplomatic resolution that perhaps you may not need
as many of those Afghan National Security Forces. There's the
recognition that countries as they begin to drawdown will
hopefully recognize their own savings and start contributing to
funds to help ensure that the security is there. That's in part
why we and NATO are designing these longer term strategic
partnership relationships, which are defining what we will do
over the course beyond 2014.
And last, we're trying to build over the long term the
Afghan economy itself so they can ultimately support these
costs themselves. The economy obviously is growing year by
year. Whenever it gets to a point that----
Senator Corker. I would say in your lifetime it would be
very difficult for them to have the budget ability just to
carry out the security piece, right? So that's a pretty awesome
goal that you have.
Mr. Feldman. Well, it's dependent, of course, on whether
that number stays that amount, and then how much we can do on
developing the economy over the next decade or two.
Senator Corker. So we talked extensively with a gentleman
who had just come from there. I think he's pretty respected. I
guess the question of the Afghan police--you can only have an
effective justice system if there's actually a justice system,
meaning that you have police who enforce the laws. My guess is
in Afghanistan they're going to be not what we would hope to
have on the streets of Washington, DC.
Then if you have a justice system that just doesn't operate
at all, which apparently is the way it is right now in
Afghanistan, how does that work together, where you have a
trained police force, but you don't have any ability to judge
whether people are innocent or not innocent after they've been
apprehended?
Mr. Feldman. There are several different pieces, obviously,
rolled into that question. On the issue of the ANP as well as
the army, I actually think we've made very----
Senator Corker. I understand I don't think they're ever
going to be of a very high level, from what I've seen on the
ground. But back to the justice piece, so they're probably not
infallible. So since we haven't really been able to make much
headway, if any, as it relates to a real justice system there,
how do you deal with that, getting back to some of the issues
that Mr. Cardin was raising regarding human rights and that
kind of thing?
Mr. Feldman. Well, first of all, I think you have to look
at what the baseline is, what the starting point is. For that
alone, I think we have made great strides. No, we're not
seeking a police force on parity of Washington, DC. But the
fact that we have now incorporated----
Senator Corker. That might not be the right level, by the
way.
Mr. Feldman. Or any other city here in America.
But the fact that we have now incorporated literacy
training, the fact that there's much more continuity, the fact
that we've addressed salary issues, all these have gone to the
fact that there is a much more professional force.
Broader justice issues are also incredibly complex,
obviously, and there's been some headway, but again I think you
have to look at the baseline. I think issues of prison reform
have been quite successful. I think there have been some pilot
programs on rule of law, which Alex and others can talk about a
little bit more.
So there has been some headway, but there's much more to
do. And you're obviously talking about things that could be
generational in terms of how quickly they change, and we're
doing the best we can with the resources we have to stand up a
sovereign entity.
Senator Corker. But you would agree just that if you have a
police force and you don't really have any system of
adjudication or anything like that, it's kind of problematic? I
do think that that's an area that there's been like almost no
real progress in. Would you agree with that?
Mr. Feldman. I would say that there's two different
mechanisms here. There's a formal justice system and there's a
more informal system.
Senator Corker. But the informal system is hard to use with
the police force, right? I understand about the informal, elder
system that occurs, but typically that's not going to involve
the Afghan police, is that correct?
Mr. Feldman. I think that's correct, but we can certainly
get you more detail.
[The information referred to above was not available when
this went to press.]
Senator Corker. I know my time's almost up, or maybe it is.
But we talk about the coordination and sustainability issues.
How do you feel about the CERP funding then? It's pretty
amazing. Our men and women in uniform are my heroes, and I
think they're probably yours, too, and I hold them on a
pedestal. But at the same time, a lieutenant colonel I guess
can spend 200 grand without talking to anybody, and millions
and millions and millions are being spent in that fashion.
How does the CERP funding relate to all these other things
you're talking about? Basically, you're the mayor, you're the
everything when you're in that position with CERP funding. How
does that tie to what you're doing and how do you measure the
sustainability of what our military is actually spending on
civilian activities?
Mr. Thier. Let me say one thing about that. Having been
working on this over the last 10 years, I think it's really
important to note how far we have come in making what we call
civ-mil, the civil-military relationship, a real partnership
from where it was a decade ago. It used to be that people were
doing separate things, and we would kind of share information.
Today it is much more integrated.
So the good news in terms of what you're asking is that our
folks, our development folks, our State Department folks, our
Department of Agriculture folks, are sitting at the same
platforms with our military folks, and there is much less of a
distinction in terms of these funds. If there's an important
project to fund, then people sit around the table and decide
how to go about and do that.
Although I can't speak to the evaluation--that's not
something that we do--of CERP programs. We evaluate our own
programs. But I have really noticed a dramatic increase in the
extent to which we are working together to make sure that those
funds that are coming in, whether civilian or military, are
being used in a way to further our combined objectives in the
area.
Mr. Feldman. Both in the field and in Washington.
Mr. Thier. Yes.
Senator Corker. Mr. Chairman, thank you. I appreciate it.
I would say to Mr. Feldman in closing, the international
community I don't think is quite as impressed with prison
reforms as you are, based on recent reports we've seen. It
might be something you could look at a little bit.
I thank you both for your testimony.
Senator Cardin. Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman.
I want to follow up on Chairman Cardin's line of
questioning because I think it leads to the question of not
only right sizing the development footprint, but the integrity
of the development footprint and the fiduciary responsibility
we have to the taxpayers of this country.
I am very concerned about the lack of coordination and
accountability for United States funds expended on Afghan
reconstruction and development. In addition to reports about
the inability of the United States to oversee these projects,
account for project expenditures, and limit funding to
sustainable projects, the most recent SIGAR report indicates
that United States assistance may be making its way into the
hands of Afghan insurgents. I am incredulous that at the end of
the day, United States taxpayer dollars go to the very people
we're trying to defeat.
I recognize the difficult environment in which United
States civilian and military personnel and contractors are
operating, but since 2002 the United States has spent $18.8
billion on Afghan development and reconstruction and another $3
billion on CERP. And SIGAR has repeatedly flagged lack of
oversight and sustainability in both programs.
So it seems to me that the parameters for providing any
civilian or military assistance should be that the project
funded is necessary, achievable, and sustainable. For me the
mere expenditure of funds is not a measurement of success. I am
concerned enough about the issue of SIGAR that I'm circulating
a letter to Secretaries Panetta and Clinton on it.
I'd like to know, how does the Department and the Agency
intend to integrate SIGAR's recommendation into project
oversight?
Mr. Thier. Let me say, thank you for your question. I am
equally concerned about the issues that you raise, and in fact
one of the reasons I took this job was to make sure that
precisely what you outline is actually coming to fruition, that
we are spending our money responsibly and that it's achieving
the results that it needs to and that it's doing so
sustainably.
We have taken some pretty dramatic steps in the last year
to get at some of the very concerns that you raise. When we
developed the Accountable Assistance for Afghanistan Initiative
last fall, it was really targeted at several of the points that
you've raised. First of all, vetting. We believe that it is
critical that we know where our money is going down to the last
subcontractor level and who those people are. So we have taken
steps that had not been taken previously by the Agency: (a) to
demand that information from our contractors and, (b) to put
all of those subcontractors into a vetting process that
includes information from multiple sources, including
intelligence sources, so that we can make sure that our money
is not being misdirected and certainly that it is not going to
insurgents.
We have already, having put this process in place, vetted
thousands of individuals and hundreds of subcontractors, and
some have been cut out of the system. Those that we have found
derogatory information about have been precluded from receiving
U.S. assistance.
Another way that we get at this problem is by overall
limiting the number of subcontractors that we have. When there
are multiple subcontractors we lose oversight, we lose privity
of contract, and that makes it much more difficult for us to
demand full accountability. So we are putting clauses into our
new agreements that limit the number of subcontracts and
increase the percentage of work that all prime contractors or
grant recipients must do themselves, again for precisely these
reasons, because we don't want the money to be misused, and we
don't want it going into places, frankly, that we can't see.
The third thing that we've done is that we have tripled
overall the number of staff that we have on the ground in
Afghanistan who are there to see projects every day, and we
have also specifically tripled the number of contract oversight
staff that we have. Some of the reports that you allude to and
others over the last several years have consistently noted that
the lack of enough specific oversight staff has led to an
inability to be able to effectively monitor.
We took that on board and have tripled the number of staff
and are going to again double them over the next year, for
precisely this reason, because we need to have the staff in
place on the ground in Afghanistan, not sitting in Washington
or in Bangkok, who can watch where those dollars are going.
By building in these multiple layers of accountability, we
believe that we are responding to the types of concerns that
have been raised in the past and are going to do a much more
effective job of accountability going forward.
Senator Menendez. So when you have this all in place, the
next SIGAR report is unlikely to reflect most of these
concerns?
Mr. Thier. All we can do is try our hardest to improve our
record. I think that we can already demonstrate real progress
over the last year and will continue to do so.
Senator Menendez. If you could, submit to the committee--
SIGAR had a series of recommendations, and you've referred to
some of the actions you've taken. If you could submit to the
committee which of those have been implemented, are in the
process of being implemented, and which you dispute, I'd
appreciate that.
Mr. Thier. I would be happy to do so.
[The information referred to above was not available when
this went to press.]
Senator Menendez. Second, on Tuesday, Norway announced that
it is freezing aid payments of $55 million to Afghanistan until
issues surrounding the collapse of the country's biggest
private lender, Kabul Bank, are resolved. The Norwegian Foreign
Minister indicated that good governance was a priority for
Norway and a major obstacle in providing aid.
The IMF has also withheld a scheduled payment of $70
million from the World Bank-administered Afghan Reconstruction
Trust Fund for similar reasons. The CIGAR report stated that
the lack of cooperation by Afghan ministries and the central
bank has limited the oversight of U.S. funds flowing through
the Afghan economy.
Can you comment on Afghan cooperation and whether this
issue has been addressed with President Karzai and senior
Afghan leaders?
Mr. Feldman. I can assure you, Senator, that this issue is
raised very, very frequently with President Karzai and with
senior Afghan leaders.
Senator Menendez. What was the response?
Mr. Feldman. We have laid out a series of things that we
would like to see in support of the IMF statement, to restart
the IMF program, including prosecutions, recapitalization of
the bank, forensic or particular types of auditing, and
recapturing some of the lost assets.
There has been some movement on some. There's a lot of
evaluation and this is something that's at the core of our
bilateral relationship right now and our multilateral
relationship with other donors.
Regarding that particular report, we actually did reach out
to the Government of Norway when we saw it. I don't think that
there's anything new there. There's a series of governments,
including Norway, which have decided with us several months ago
to not allow any--to seek to push for the IMF program to be
restarted, and we have kind of all agreed on this together.
We'll have to--there's an Afghan Reconstruction Trust Fund
board meeting, quarterly board meeting, next week and this is
continuing the process of evaluation. But we work very closely
with Norway and the other donors on this.
Senator Menendez. Mr. Chairman, I appreciate the evaluation
process. What concerns me is that if others who are engaged do
the same as the IMF and Norway have in holding back funds, we
will be left on our own to face the challenges that I just
discussed with Mr. Thier. We need other countries and entities
like the IMF to be engaged.
That doesn't seem to stop us from continuing our funding,
even though accountability questions exist. So it gives some of
us, who have been supportive of providing resources, real
concerns about how we continue to be supportive when there are
issues with the Government of Afghanistan and problems with
attaining the type of accountability and transparency that we
want.
So I look forward to hearing the result of that
conversation. It's great to bring it up to President Karzai.
I'd like to see what his actions will be, so that we might
understand whether or not we should continue to have faith and
confidence as we move forward.
Mr. Thier. Senator, could I just add one thing to what my
colleague just said, just to emphasize, because I think this is
where your question was going. You should rest assured that the
United States has actually been the most stringent of all the
donors in demanding results on Kabul Bank, and in fact we have
not made certain payments to the Afghan Government in
anticipation of that.
So it's not as though there are donors, the Norwegians or
others, who are ahead of us in demanding this level of
accountability. We have done the same quite vigorously.
Senator Menendez. Then I'd appreciate knowing what we've
withheld, the dollars amount, to understand whether that's a
serious enough message to the Afghan Government.
Thank you, Mr. Chairman.
Senator Cardin. Senator Udall.
Senator Udall. Thank you, Chairman Cardin.
I also echo what others have said. We very much appreciate
your service and appreciate the hard work that you're putting
in. But I, like others that have questioned, have some real
doubts about the aid and about the corruption and about the
problems that Afghanistan is facing.
On Tuesday the BBC first reported that NATO forces have
suspended the transfer of detainees to at least eight Afghan-
run prisons after a U.N. report set to be released this week
revealed--and this is the quote--``commonplace and systematic
torture and other abuse'' at the facilities.
What kind of aid did we put into the process? We were
talking earlier about the justice system, and there were
questions about the justice system. I assume that these
facilities were first run by us, and then there was an aid-and-
development process to turn them over to them, with extensive
consultation and dollars put in place. Now what we're seeing is
that they aren't capable of running these.
What can you tell us about this U.N. report and where we're
headed on what's happening to detainees in Afghanistan and
these prisons and the holdup of detainees going in?
Mr. Feldman. Well, I can tell you what I know about it,
which obviously this is still being played out. We're obviously
aware that the U.N. is working on this report, and the United
States also, obviously, takes all allegations of human rights
abuses extremely seriously and is very committed to protecting
the safety and dignity of people all over the world.
We encourage and support any action by the Afghan
Government to investigate these allegations of human rights
abuses, hold those people----
Senator Udall. Are they investigating? The Afghan
Government, are they investigating these abuses?
Mr. Feldman. This is all as of the last few days, but my
understanding is yes, that that has already started. And
because the report is not yet public, I can't say too much more
about that. And DOD would have to answer specific questions
about transfer from ISAF.
But it does allow me to go back to the previous point I
made to Senator Corker, where the prison reform I was talking
about was actually the infrastructural improvements themselves,
and obviously some of what we had done there in terms of the
categorization, the advice and training on categorization of
prisoners and things like that, in an effort to deradicalize,
has been quite successful.
So there are pieces of it--and there's also a variety of
different types of prison systems. There's the DOD versus DOJ
equivalent of prisons, whose transferring to what. So it's a
more complex issue than just that. But yes, we have raised
these issues, as has the rest of the international community,
and the Afghans are looking into this straight away.
Senator Udall. These were facilities that were run by ISAF
originally, these eight Afghan-run prisons now?
Mr. Feldman. I think I would have to defer until the actual
report is out, which talks in more detail about that. I'm
sorry, Senator.
Senator Udall. Well, when the report comes out I hope that
you'll update our committee on the questions I've asked and
anything else that you would like to include.
Mr. Feldman. Of course.
Senator Udall. I wanted to follow up on some of the
questions that were asked earlier about the Afghan economy and
then what's happened since our intervention. I think the figure
was used that 10 percent of the economy is really generated
internally, and so that 90 percent is from the outside, from
the United States and from all of this aid from our military
efforts.
It seems to me that we built this very, very war-heavy
economy within Afghanistan if they're only generating a very
small part, and I assume most of that is from agriculture,
because this is a very tribal society. I think the per capita
income is a couple of hundred dollars a year. These are people
that are living on the land, except in several of the larger
cities, that are just eking out a living.
What were the things before we got in there that they were
doing that we're trying to complement at the local level? It
seems to me when we talk about sustainability, what's really
important with sustainability is helping them do the things
they were doing well before we got there and trying to build
upon those.
So could you talk a little bit about that, both of you, and
how much our aid right now is trying to build upon the things
that were the basis of their economy?
Mr. Feldman. Let me just say a few words by introduction,
and then I'll let Alex talk about kind of more of the
specifics. But my former boss, Ambassador Holbrooke, was fond
of saying that agriculture was the most important nonsecurity
initiative that we had in Afghanistan. So, given that 75, 80
percent of the country is rooted in the agriculture industry,
the fact that we poured a huge amount of effort in, as we talk
about the civilian surge, it's very important to note that our
USDA colleagues went from someplace around 15 or 16 in country
to about 60 at this point, complemented by another 25 or so
USAID agriculture experts.
So connecting farmers to market, providing seeds,
reinvigorating the agricultural industry, pomegranates, which
are now being exported to Dubai, raisins, a range of other
things, has been a big focus of the capacity-building and the
sustainability piece.
Some of it obviously was also--there is a stabilization
aspect to it, which is in sustainable cash-for-work programs
and other aspects. But it was based on continuing to grow and
reinvigorate this industry.
But it gets to Senator Corker's question as well in terms
of what ultimately is going to provide the type of revenue to
support the national security forces and the range of other
things. That's not going to come ultimately from agriculture.
So it's got to be complemented over the longer term with some
of these other issues in extractives and energy and elsewhere.
That is why we're trying to meld those pieces together for
what will take us through a short to medium term to what may
ultimately hopefully be much more sustainable over the longer
term.
Mr. Thier. Let me say, first of all, our understanding of
the Afghan economy is that Afghanistan's gross domestic product
right now is around $16 billion a year. We only estimate that
probably $2 to $3 billion is actually due to local spending in
the economy. There is a roughly equivalent amount of money
that's coming from the international community to support the
Afghan economy. But overall I think that the figure that the
Afghan--that domestic product represents of the economy is
probably closer to something like 50 percent of the aggregate
of economic activity in Afghanistan.
But specifically to your question, you are exactly right.
What we need to be doing in Afghanistan is emphasizing the
things that Afghans can do, know how to do, traditionally have
done, have the ability to do within their means.
The good example in agriculture is that in the 1970s before
all of the crises that hit Afghanistan their biggest export was
dried fruit and nuts. We have today, for the first time since
that period, returned Afghanistan to that place by improving
very simple things, like increasing crop yields, like having
small-scale dehydration facilities so that they can take their
crop and dry it and sell it abroad.
We have brought that industry back, not to where it was,
but to being the largest export that Afghanistan has today. The
point is just to underscore what you're saying, that if we're
going to succeed in Afghanistan it's going to be to build on
the traditional things that Afghans have done in the past and
know how to do. I believe that that really is where our focus
is in terms of the near-term economic generation, because
that's proven again and again to be what works.
Senator Udall. Thank you.
Sorry for, Senator Cardin, running over on that.
Senator Cardin. Actually, I think you used less time than
any of the rest of us.
Senator Udall. I know Senator Corker wants to ask many
questions, other questions.
Senator Cardin. I want to ask a few more questions, but
just clarify that math for me? You said--did you say 50 percent
or 15 percent?
Mr. Thier. About 5-0, the best that we can discern.
Senator Cardin. I don't understand your math. Maybe you can
just help me quickly. I don't want to get bogged down. I
thought you said $3 billion was your estimate of their local
consumption? You said $15 billion is the revenues coming in?
Mr. Thier. Sorry, no. Gross domestic product for
Afghanistan overall is about $16 billion.
Senator Cardin. $16 billion, I mean.
Mr. Thier. About $3 billion of that--local spending of
international community, international forces in the Afghan
economy is estimated to be in the 3 or so billion dollar
figure.
Senator Cardin. So you think the Afghans themselves are
developing about $8 billion?
Mr. Thier. No; probably more--including all agricultural
output and everything, probably in the neighborhood of $12
billion domestically produced economy.
Senator Cardin. These are huge differences from what we're
seeing here. So I'm going to ask that you again give us the
details on that, and we'll come back to you with some questions
as it relates to it, because that's a huge difference.
What we've been told is that it's somewhere between 90 to
97 percent is war economy.
So, if we could clarify that, that would be helpful.
Mr. Thier. We'd be happy to do that.
[The information referred to above was not available when
this went to press.]
Senator Cardin. I want to get to accountability for one
moment. You had exchanges with just about every member of our
committee on the accountability of these funds. You talked
about A3, Accountable Assistance for Afghanistan,
which was clearly a positive step. But let me just remind you,
the report that came out from our committee, which was June of
this year--the A3 came out well before that--was
critical on the accountability of the USAID funds. It said:
``The United States Government relies heavily on contractors in
Afghanistan. Multiple reports have raised alarms about the lack
of robust oversight and accountability for multibillion dollar
investments. USAID and the State Department have insufficient
qualified contracting staff serving in Afghanistan to oversee a
multibillion dollar portfolio.''
You have talked and said, well, you've increased your
staff, but this report's indicating the staff has a very high
turnover, so you don't have the expertise and institutional
memory in order to adequately oversight the accounts. The off-
budget issues, the committee reported this approach can weaken
the ability of the Afghan state to control resources, which can
fuel corruption and has led to the creation of thousands of
donor-driven projects without any plan for sustaining them.
This is June of this year, the report from our committee.
And I'll have you respond. Then the Appropriations Committee
included in its restrictions on the use of these funds that
none of the funds may be appropriated unless you certify that
the Government of Afghanistan is demonstrating a commitment to
reduce corruption and improve governance, including, et cetera,
and a whole list of things that are there, to support
reconciliation and reintegration activities, only if Afghan
women are participating at national, provincial, and local
levels of government, et cetera.
It's a whole list here. Then I was told that a relatively
summary response was sent to the committees this past week in
regards to the concerns of Congress. These are major concerns
we have. And we know you're making progress, but we have a
responsibility to get detailed information about changes that
are being made to protect against U.S. taxpayer dollars being a
source of corruption.
We're working in a country that is not known for its
honesty of government and therefore it's challenging to make
sure that our funds don't fuel a corrupt society. But that's
our demand. We've had hearings in this committee where we've
said: Look, we'll walk away from countries rather than support
corruption. That's our policy.
So we have a responsibility to get details from you as to
what steps you're taking in a very challenging environment to
make sure that our funds are not being used to help finance any
form of corruption, whether it's a local official taking bribes
or whether it's someone just padding their pocket on the
contract dollars that we're making available.
I don't know if we've gotten that detailed information, and
I think you have a responsibility. We have a responsibility to
make sure you supply it. I'm not yet satisfied we have as much
information as we need.
Mr. Feldman. I would say in regard to the certification
that you referenced, Senator, we did send up the certification
on meeting certain guidelines, baselines, on corruption and on
women's empowerment issues, which I hope was not perceived--
this was sent up in early July, so I'm not sure if it's the
same thing that you're referencing as earlier this week or not.
But it was certainly not a summary response, because it was
something that we worked on for quite a bit, and we would be
happy to do any additional briefings on it, but which really
sought to lay out where we thought there had been strides made
and what we were able to accomplish.
On the gender issues, it looked at what had been
accomplished, including references on women's rights by
President Karzai and others, the goals that had been made on
basic education and health, the incorporation of women into
civil society. This is obviously something that Secretary
Clinton and Ambassador Grossman and Ambassador Crocker all
speak about quite a bit, and we would be happy to do a briefing
particularly on that.
On corruption, the certification focused on a few key
organs. I think again there's at least two pieces of the
corruption here. Obviously, corruption is a fundamental
challenge in a society like Afghanistan, and I think you have
to look at again what the baseline is. We've been working
closely with Afghanistan to try to continue to strengthen
bodies like the High Office of Oversight, the adoption of
subnational governance policies, continuing structural reform.
Much, much more has to be done, but we are there working on it
every day.
In terms of the USG money, I think that there have been
great strides over the course of the last year or 2 on the
interagency piece of this, the coordination between the
civilian and military sides, particularly on such things as the
formation of Task Force 2010.
Then within that are the kind of general accountability and
oversight mechanisms like A3 that Alex laid out. So
this is something that we recognize the great burden that we
have with U.S. taxpayer money, and we are doing everything that
we can to control that and have the appropriate levels of
oversight to prevent that corruption, but recognizing that in
the circumstances that we're operating it's impossible to get
to 100 percent of that.
Senator Cardin. Staff turnover?
Mr. Thier. Let me say something about that. We have tried
to address the concern that you're raising in two different
ways. One is by actually really increasing the number of
oversight staff we have, period, which was necessary.
The second is dealing with the problem of rapid staff
turnover. We've done two things. One is that we have moved to
encouraging and offering 2-year tours, which is up from 1 year
and so it's a dramatic improvement.
Senator Cardin. How many of these contract officers are 2-
year assignments?
Mr. Thier. We'll have to get that answer to you. I don't
know that off the top of my head.
[The information referred to above was not available when
this went to press.]
Mr. Thier. The other thing that we've done this year is,
taking a cue from our military colleagues, we have started what
we call the AFPAK Hands Program, where we take people who have
done a year or 2 of service in country, we bring them back to
serve in Washington working on Afghanistan and Pakistan, and
then their commitment is to go out for a second tour.
I can tell you, as somebody who has worked on the region on
and off for the last 18 years, that it is a place where
relationships matter, where an understanding of the culture
matters, and I agree fully with the premise of your question.
We need to have staff who know what they're doing, who have
familiarity with the context, in order to be able to do their
jobs effectively. We are looking at multiple ways, both the
State Department and USAID, to increase the length of time that
our staff spend in these environments, despite the hardships
that they face in doing so, in order to be more effective.
Senator Cardin. Well, if you would give us the length of
time that the staff is there, that would be helpful for us to
analyze, because numbers are important; experience is
invaluable. You are dealing with a long-term problem of
corruption in their society, and without experience of having
to deal with this it's difficult to believe that a significant
part of our funds are not going to corruption, and that is
something that we will not tolerate. So I would appreciate as
much information as you can get to us about turnover.
I couldn't agree with you more, 1 year is hardly enough to
be able to understand the local community as it relates to
overseeing contracts and making sure the money is going for its
intended purpose.
One last question, and that is: Is there anything that you
would like to see Congress do that could make your jobs a
little bit easier, other than giving you a larger budget? I'm
not talking about dollar amounts. Is there something we could
do to help?
Mr. Thier. To be honest, Senator, I think we have an
extremely constructive working relationship with Congress right
now. We are here frequently briefing staffs, briefing members,
talking to members before they head out on CODELs. I think it's
just asking for continued understanding and flexibility about
what the needs are going to be, which at this point we can't
necessarily determine. We'll have to see what the facts on the
ground are like, conditions on the ground, a year from now.
We'll have to see where the military campaign goes and then how
that's supported on the civilian side.
But I think in these very difficult economic times here it
obviously can seem easy to cut a piece of this, and the
civilian piece might be important. I would just say, given, as
you noted, the very small percentage that that represents of
the overall amount spent, I think it's getting great value for
that, and it's an integral part of the combined military and
diplomatic effort.
Senator Cardin. Thank you.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
First of all, I want to again thank you for what you do. I
think you sense some frustration here. We had a little off-line
conversation a minute ago. I think we're in Afghanistan today,
we're there because we're there. If the situation on the ground
were there and our military wasn't, there's no way we'd send
them in.
On the other hand, our presence there probably has created
the positive developments that we've seen in Afghanistan. But
it's very frustrating to all involved, and our frustrations,
which I have many and I'm sure the chairman has many, are not a
reflection of how we feel about individuals like you that are
trying to carry out the work.
I will say to Mr. Thier the turnover issue can be solved
within the U.S. Government, but we have about 40 percent of the
activity on the ground taking place by other international
players; is that correct? And they I don't think are engaging
in the same type of tenure. We have people coming in for 8
months, making a name for themselves, changing what the last
person did, and then the next person coming in to change what
the person before them did. And there's not a lot we can do
about the tenure of those from the international community, is
there?
Mr. Thier. I think that contractually it's probably quite
difficult to do. But I will note, having come from that
community before serving here, that in fact it's often in those
implementing partners where the people who have much longer
term experience and association with the region do reside. So
many of our implementing partners actually have people in
place--of course, not to mention that Afghans make up the vast
majority of the staff of all of our implementing partners--have
a lot of experience in the region.
But it's something that we need to consistently encourage,
because it only helps our effort.
Senator Corker. So let's talk about the corruption issue,
which I think is--we had a conversation with a gentleman
yesterday at length about this. Is there something about the
Afghan culture itself, the culture, that causes it to be a more
corrupt culture than the culture we're used to here in America?
Mr. Thier. In my experience, Senator--and this goes for
other countries I've worked in as well--there are not
particularly cultures that are more or less susceptible to
corruption. The problem is lack of institutions, lack of rule
of law. There are many societies that once previously
experienced an enormous amount of corruption, were not
democratic, and have made that transition, not because the men
and women of that country suddenly became better, but because
institutions were established that enforced the rule of law.
Ultimately, I believe that we've seen and in fact
demonstrated in Afghanistan that that is possible. Some of our
partners in Afghanistan, some of the institutions that we work
with on a daily basis, like the Ministry of Rural
Rehabilitation and Development, which implements the national
solidarity program, or the Ministry of Public Health, have
received funds from the international community for a number of
years. They have made enormous impacts. They have good leaders,
and they have not been cited for problems with corruption.
So it can work in Afghanistan, but it requires leadership,
and it requires institutional development, and it's critical
that we apply that metric more broadly to the other
institutions in the country.
Senator Corker. So that's consistent actually with what
another, ``noted'' expert said yesterday, that culture itself
is not the issue.
So let me ask another question. Obviously, there's huge
amounts of money flowing in from us and other places. Like
Senator Cardin, I would question the part of the Afghan GDP
that's generated internally and the part that's coming in
because there's a war there. I too would assume that much more
of it is because of the money that is coming in because of the
war activities and the rebuilding activities.
But do you think that it's our money, then? I know we
talked about institutions, and I want to get back to that in
just a second. But is the huge amounts of money that's coming
into the country from us and other donor countries and involved
countries, is that creating the environment also for additional
large amounts of corruption?
Mr. Thier. I believe that in any country it is critical
that the primary funding source for the government is derived
from the revenue of its people. Building that connection
between citizen and state is ultimately what creates
accountability and the rule of law.
I think that our, the international community's, assistance
is critical in diminishing corruption in Afghanistan, in the
sense that it invests in institutions and training, so that
corruption is reduced. But at the same time, it creates a
dependency on assistance that will not be healthy in the long
term for Afghanistan, which is why we all I think sit before
you with an understanding that our inputs into the Afghan
economy, our inputs into Afghanistan's budget, need to decline
over the next years as the Afghans' ability to fund their own
budget increases.
Ultimately, that link of accountability is going to be what
will improve the rule of law and make Afghanistan's leaders
more accountable to their people.
Senator Corker. So my sense is--and I don't have near the
evidence or stats that any of you have--I can feel it on the
ground, that the huge amount of money that we are pouring in is
highly distortive to their culture. I think many of the inputs,
as you would describe them, have been very damaging to the
Afghan people and to their culture.
Sitting down with tribal elders who are beginning to talk
about nuclear reactors, I mean, craziness. Seriously, I think
we have done tremendous harm to the people of Afghanistan with
the huge amounts of United States dollars that have come into
the country, and especially the way that they've come in. So
both from a standpoint of just our own sustainability, but,
candidly, what we've done to that culture ourselves to me has
been highly destructive.
I know that people were doing all of that with good
intentions, and I know this goes between two different
administrations of two different parties. I'm not in any way
being partisan with this. But I think that's true.
Now let's move just to the justice system then again. So
you have a culture that on its own is not more corrupt than
ours, I think is what you just said. You're going to be cutting
back on the inputs, and I think we may be pushing you to cut
back more than you may be talking about pushing back.
But I really do think, I go back to this justice system. We
have a President that I don't think is trying to deal with
corruption. We have a hospital that we turn over and the
physicians and nurses are taking bribes to keep people from
having--I won't even describe it, it's so grotesque what
happens to these people in these hospitals.
I don't think we're dealing with a leadership group that
wants to deal with corruption, and I absolutely know we've
failed miserably at putting in place any kind of justice system
that would allow corruption to be weeded out. Again, you can
build an Afghan police and military, but if you don't have a
justice system to sort of figure out whether someone committed
a crime or not, you're just going to have tremendous
corruption. It's going to expand, actually, because the police
are not infallible, and certainly in many cases there are going
to be bribes.
So I think it's a really depressing scenario, highly
depressing. I think this whole nation-building effort that has
been put on steroids, and now I know it's been weaned down per
our conversations, but other administration officials have said
the same--I think we have really fouled up, and I think we've
done a lot of harm. I think the fact is that this economy is
just--it's not going to be sustainable.
What's going to happen as we move away with our military
and as we begin to sort of tone down the amount of inputs,
there is going to be a major, major recession economically,
major recession, because I think, like Senator Cardin, the
number's a whole lot bigger as it relates to what we're placing
into the country relative to their overall GDP than I think you
just said.
So I think we've helped create a major, major problem in
the country. I hope that smart people like you and maybe with
some assistance from a lot of folks, maybe even us, we can
figure out a way of withdrawing over time and doing so in an
appropriate way.
Senator Cardin. Thank you, Senator Corker.
Senator Udall.
Senator Udall. Thank you, Chairman Cardin.
I just have one more question on this corruption issue.
These figures come from the Commission on Wartime Contracting.
I'm interested in whether or not you agree with them or not. We
have an insurgency which is very strong. We have made impacts
with it, as Mr. Feldman has said, but our fellow committee
member on Foreign Relations, Senator Casey, just returned and
the number of IEDs is dramatically higher. So they're getting
resources out of Pakistan, this fertilizer and everything, to
build these IEDs.
This commission has said that the number one thing fueling
the insurgency in terms of resources is the opium and the poppy
and all of that. But the No. 2 is the dollars from the
corruption, the dollars from U.S. aid and NATO aid and all the
organizations around. Do you agree with that? This is an
astounding issue, that if the insurgency is living off opium
and then it's No. 2 is all the dollars that are flowing out of
all the activity we've been talking about, that's something
that's very worrisome. Do you agree with that? Do you dispute
it? What are your numbers on this?
Mr. Thier. I certainly think that the CWC report as regards
USAID or civilian assistance in Afghanistan does not attribute
that charge to our assistance, that civilian assistance is one
of the leading sources of that corruption. In fact, although
the CWC report does focus on I think some important
recommendations and some projects, many of them completed
several years ago, there was not a significant percentage of
our assistance in any way, shape or form that was indicted as
being problematic or prone to corruption in that report.
I think we drew from this some important lessons and,
frankly, the CWC process has been going on for some time, and
we've been engaged in an ongoing dialogue with them. So very
few of their conclusions or recommendations came as a surprise
to us because we've been having this discussion with them.
But I haven't seen anything that characterizes corruption
resulting from USAID civilian assistance as being anything that
is a significant factor in fueling the insurgency. In fact,
we've never found any direct evidence of any of our funding
going to the insurgency and, although it remains a concern and
why we put these safeguards and vetting programs in place, I
certainly don't think that in any way, shape, or form it's fair
to characterize that our assistance is a primary or even
significant contributor to insurgent financing. I've never seen
that before.
Senator Udall. Mr. Feldman.
Mr. Feldman. Well, let me just say, on the fueling of the
insurgency, you have to look at every input. The narcotics
trade is clearly one of them, and that's why we have sought to
make the strides in our counternarcotics policy, switching from
eradication to interdiction, along with Afghan-led eradication
programs, and we've seen a decline in opium production in the
last few years.
It's in the flow of funds and that's why we've instituted a
variety of reforms there over the past few years that help to
track this terrorist financing. Of course, you have to look at
all the money that's flowing into Afghanistan from multiple
entities, from across the array of United States agencies, and
again where the civilian assistance is a very small piece of
that, to what the rest of the international donor community is
doing.
We have sought to do everything we could do within our
remit, within our jurisdiction, and we have continued to do
much more on the interagency side. And we've done much more on
the international coordination side.
But again, with that amount of money flowing in and with
the lack of the inherent institutions, yes, of course it's
going to fuel it as one of several factors.
Senator Udall. Thank you, Mr. Chairman.
Senator Cardin. Thank you.
As I noted earlier, of course, DOD funds are also involved
here, which we don't have before our committee.
Just to underscore what Senator Udall said, the report of
our committee in June did point out that most United States aid
to Afghanistan is off budget, meaning it doesn't go through the
Afghan Government. This approach can weaken the ability of the
Afghan state to control resources, which can fuel corruption.
Do you disagree with that finding?
Mr. Thier. No. In fact, we believe strongly that the amount
of our civilian resources going through the Afghan Government
needs to be increased, and in fact it has increased from 12
percent to 37 percent. But I do want to add a significant
caveat, which is that we will not provide funding to any Afghan
Government institutions without very stringent controls.
For example, one of the main ways in which we have funded
the Afghan Government programs in the past is through the
Afghanistan Reconstruction Trust Fund. That fund is a dual-key
fund with the World Bank, so everything that's done is very
heavily audited. We also conduct intensive examination of
Afghan institutions that are going to be receiving United
States resources to make sure that they have the appropriate
accounting and other standards.
So while we have increased the amount of money on budget,
which frankly is a real triple win because it increases the
capacity of the Afghan Government, it often lessens the cost of
programs, and at the end of the day increases the likely
sustainability of the program, we have done that, but we also
do so very deliberately so as not to risk any taxpayer
resources in the process.
Senator Cardin. What is your goal as to what percentage
should go on budget?
Mr. Thier. We committed in Kabul at the Kabul conference 1
year ago in July 2010 with other donors to move toward a 50-
percent funding level through the Afghan budget. That said, we
will only reach that goal if we are convinced that the
institutions have the absorptive capacity and the
accountability to handle those funds. This year we're at 37
percent, and we'll continue to work towards that target.
Mr. Feldman. I completely concur with Alex on this, and
actually I'm glad you raised this issue because I think it's a
little-understood piece of what we do in terms of our
assistance in Afghanistan, but a very important one and a much
better news story than I think there's a recognition about.
Because of the fact that we, along with the rest of the
international donor community, sought this 50-percent
aspirational goal, we've made great strides in getting it from
below 10 percent up to the 37 percent in the last few years,
but hand in hand with a very vigorous vetting and oversight
process.
So right now we're funding four or five ministries on very
targeted programs with that level of oversight. It's taken a
very lengthy amount of time to make sure that they meet our
vetting processes, but those have been some of our most
successful programs.
Senator Cardin. We want you to have that oversight. What
Senator Corker said I happen to agree with, and that is the
problems of corruption within the Government of Afghanistan, so
therefore you need to have the confidence that the funds moving
on budget in fact will be used for its intended purpose and not
be siphoned for governmental corruption funds. So we agree with
that.
We understand the challenge. Believe me, we do. And we
understand the difficult circumstances in which you're
operating. The question I asked as to how we can be helpful was
a sincere question because we want you to succeed in building a
stable Afghan Government and society. But there's a limit to
our patience and there are certain standards that we cannot
deviate from, including corruption, the empowerment of women,
equality issues, and we need to make sure that there is
constant progress being made in good faith for the continued
support of the U.S. involvement.
I'm going to keep the committee record open until close of
business Monday. There may be some additional questions that
will be asked by members of the committee. I would ask that you
respond to those questions in a timely manner. I've also asked
for some additional information, which when it becomes
available I'd appreciate you making it available to our
committee.
As each member of our committee has said, we really do
thank the two of you and the people who work for your agencies
for their incredible public service in an extremely challenging
part of the world that is very, very important to U.S.
interests. We appreciate your dedication.
With that, the hearing will stand adjourned.
[Whereupon, at 4:08 p.m., the hearing was adjourned.]
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