Watchman Newsletter

Up to $1 Billion in U.S. Aid Winds Up In Taliban Coffers

Fox News (Link) - Ed Barnes (October 22, 2010)

As much as $1 billion in U.S. aid has been diverted from programs meant to stabilize Afghanistan and has wound up in the hands of the Taliban and other insurgency groups, war analysts and government auditors say. 

In fact, they say, graft has gotten so bad that the U.S. government estimates that only about 10 percent of the aid budget actually reaches the people in Afghanistan who need it.

�Right now corruption is more important than the politics,� Michael Thibault, co-chairman of Congress� independent and bipartisan Wartime Commission on Contracting, told �I have been there seven times in the last year and the estimates I have been told are that 20 to 40 percent of the aid funding goes to corruption.�

�The problem,� he said, �is the Afghan culture and the subcontracting practices of the companies that do business there.�

In the past few weeks investigations by the U.S. Senate and the inspector general of the U.S. Agency for International Development (USAID) have focused on how guard services that surround U.S. bases have been compromised by the Taliban, jeopardizing the safety of American troops, and how one company, DAI of Bethesda, MD., involved in rehabilitation was forced to pay $5 million in protection money to Taliban-connected groups.

But those familiar with the country say the scale of the corruption is far wider. �Virtually every transaction in Afghanistan involves some degree of payoff,� says Christine Fair of Georgetown University�s Center for Peace and Security Studies. �Everyone is getting a piece of the money. If you want to get a clinic built, you have to make sure everyone in the village is paid off.� 

�It is now the cost of doing business in Afghanistan,� she explained, attributing much of the most serious corruption to the �lack of a security footprint� by U.S. troops. For example, without the U.S. military guarding major transport routes, the safety of supply convoys and other key transportation has been left up to private companies. And that, she says, has formalized a massive protection industry that is run, in many but not all cases, by the Taliban.

�We should be surprised not that convoys are attacked, but by how few get attacked,� Fair said.

That is the same assessment that Richard Holbrooke, the special envoy for Afghanistan and Pakistan, gave to President Obama more than a year ago, according to Bob Woodward�s book, Obama�s Wars. �All the contractors for development projects pay the Taliban for protection and use of the roads, so American and coalition dollars help finance the Taliban,� Woodward wrote.

Fair explained that the practice has become so deeply ingrained in the economic life of the country that it is often a crucial element in events that appear not to be related to corruption. She cited as an example the recent closing of the Torkham border crossing with Pakistan in the Khyber tribal agency. That closing, which blocked a key military supply route, was generally perceived as a dispute with Pakistan over the killing of four Pakistani soldiers by an American drone strike.

But, said Fair, �In reality it was a re-negotiation of the protection rates� along the route to Kabul, the Afghan capital. The border closing and the burning of supply trucks allowed drivers, contractors and everyone in the chain of corruption to up their rates because of new hazards, she said.

One consequence of the widespread corruption has been to encourage peaceful areas to take up arms -- not because they have a political agenda, but to get a part of the graft money. According to Barmak Pazhwak, a senior project officer with the United States Institute for Peace, when peaceful villages see the money that flows into restive ones, they quickly figure out that a few well-timed incidents will bring them money.

�For years the north has been relatively quiet as American operations focused on the southern part of the county, but recently there has been a lot of activity in the northern provinces,� Pazhwak said. �They have learned what attracts the money.�

Told of Fair�s analysis, Thibault said, �I agree with her.�

But there really is no way to know exactly how much money has been diverted, experts say, because the U.S. Agency for International Development (USAID) makes sure accounting practices do not pick it up and because of the structure of the subcontracting system.

As Thibauld has noted, subcontractors usually build in somewhere between 20 and 40 percent markup for payoffs. And that money never shows up on the books of the major contractors. But with more than $50 billion in U.S. aid money already spent, the diverted corruption costs would likely equal the amount of estimated graft generated by the country�s $4-billion-a-year poppy crop.

�It is amazing,� Fair said. �Every agency in Afghanistan has to file detailed reports except USAID, which does not report �overhead� on its books. It is deliberate obfuscation.� 

But she said it probably doesn�t matter. �In the long term, allowing the corruption is bad, but in the short term it helps maintain the status quo. Why aren�t the Taliban hitting more convoys?  Only the economic system of graft explains why.

�But the current military philosophy of �clear, hold, build and transfer,�� means there is little reason to change the system now, she said. �

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