The Crucibles and Dilemmas of US State Building in Afghanistan


The Love that Money Can’t Buy – Economic Stabilization Programs

Linked to the ever-shifting debate about whether the international mission in Afghanistan is one of counterterrorism or state-building, economic development efforts by the international community in Afghanistan have been plagued by a similar vacillation between two competing understandings of the purpose of economic development projects. Is the purpose of the economic projects to buy off the population and wean it off from the insurgents or are the economic efforts designed to produce long-term sustainable development?

The buy-off concept has included the so-called quick-impact projects carried out by the U.S. military with money from the Commander’s Emergency Response Program (CERP) or through the Provincial Reconstruction Teams (PRTs) as well as the so-called “economic stabilization projects,” also known as District Delivery Program or District Stabilization Framework, carried out by USAID. The latter were designed as short-term cash-for-work programs, lasting weeks or at best months. Their goals have been to keep Afghan males employed so that economic necessities do not drive them to join the Taliban and to secure the allegiance of the population who, ideally, will provide intelligence on the insurgents. Under this concept, U.S. economic development efforts have prioritized the most violent areas. Accordingly, the vast majority of the $250 million USAID Afghanistan budget for 2010 went to only two provinces: Kandahar and Helmand. In Helmand’s Nawa district, for example, USAID spent upward of $30 million within nine months, in what some dubbed “[the] carpet bombing of Nawa with cash.” With Nawa’s 75,000 people, such aid amounts to $400 per person, while Afghanistan’s per capita income is only $300 per year.

Although U.S. government officials emphasize that these stabilization programs have generated tens of thousands of jobs in Afghanistan’s south, many of the efforts have been unsustainable short-lived programs, such as canal cleaning and grain-storage and road building, or small grants, such as for seeds and fertilizers. Characteristically, they collapse as soon as the money runs out, often in the span of several weeks. Nor has adequate consideration been given to the development of assured markets; consequently much of the produce cultivated under the USAID-contracted programs would possibly not find buyers and rot.

There is also little evidence that these programs have secured the allegiance of the population to either the Afghan government or ISAF forces or resulted in increases in intelligence from the population on the Taliban. But as many of these programs were budgeted to run only through October 2010 or December 2010 (then to be replaced by long-term sustainable development that the persisting insecurity often still prevents), their closure sometimes antagonized the population by disappointing raised expectations. Another half a billion dollars of U.S. aid was allocated for southern Afghanistan in 2011.

Because of the complexity and opacity of Afghanistan’s political, economic, and contracting scene, many of these international programs have continued to flow to problematic, discriminatory, and corrupt powerbrokers, generating further resentment among the population, and intensifying Afghanistan’s rampant corruption and lack of accountability. At other times, they have spurred new tribal rivalries and community tensions.

Nor have these programs yet addressed the structural deficiencies of the rural economy in Afghanistan, including the drivers of poppy cultivation. A microcredit system, for example, continues to be lacking throughout much of Afghanistan. In fact, many of the stabilization efforts, such as wheat distribution or grant programs, directly undermine some of the long-term imperatives for addressing the structural market deficiencies, such as the development of microcredit or the establishment of local Afghan seed-banks and seed markets and rural enterprise and value-added chains. Shortcuts such as the so-called Food Zone in Helmand and similar wheat distribution schemes elsewhere in Afghanistan are symptomatic of the minimal, short-term economic and security payoffs (but substantial medium-term costs) mode with which the internationals have operated in Afghanistan. The result: persisting deep market deficiencies and compromised rule of law.

There is a delicate three-way balance among long-term development, the need to generate support among the population and alleviate economic deprivation in the short term, and state-building. A counternarcotics “alternative livelihoods” program in Afghanistan provides a telling example: Aware of the deeply destabilizing effects of poppy suppression in the absence of alternative livelihoods and yet under pressure to reduce poppy cultivation, Helmand Governor Mohammad Gulab Mangal, widely acclaimed as a competent and committed governor, launched a wheat-seed distribution project during the 2008-09 growing season. In order not to grow poppy, farmers were handed free wheat seeds. This program proved popular with the segments of the Helmand population who received the free wheat and the program was emulated throughout Afghanistan and continued in 2010.

Poppy cultivation did decrease in Helmand in 2009, and many enthusiastically attributed the results to the wheat distribution program, rather than low opium prices. And yet there are good reasons to doubt the effectiveness of the program, at least with respect to development and even governance. Because of land density issues in Afghanistan, the lack of sustainability of the favorable wheat-to-opium price ratios under which the program took effect, and the limited ability of wheat cultivation to generate employment, wheat turns out to be a singularly inappropriate replacement crop for large parts of Afghanistan. Indeed, much of the wheat seed ended up being sold in markets rather than sown.

Due to the insecurity prevailing in Helmand at the time, the program was undertaken without any field assessment of what drives poppy cultivation in particular areas of Helmand and in Afghanistan more broadly, — a deficient policy-making processes in which policy was developed without understanding of the causes of the problem it was trying to address. Yet because most people welcome free handouts, the program was popular. But it also became politically manipulated by local administrators and tribal elders who sought to strengthen their power. Although the program was deficient from a development perspective, it brought immediate political benefits to those who sponsored it, including the political machinery of President Hamid Karzai who at that time was seeking reelection. Good governance was thus equated with the immediate handouts and their political payoff without regard for long-term economic development, best practices, and optimal decision-making processes.

At the same time, the wheat program and other economic stabilization programs often set up expectations on the part of the population of free handouts from the central government and international community without being economically viable and sustainable in the long term and without requiring commitments from the local community. Thus, many of the CERP and stabilization programs have encouraged the Afghans to expect payoffs for any activity consistent with the interests of the international community, even if the activity is also in their own interest.

The CDCs on the contrary have required strong community participation and commitments to the development projects. Modeled similarly, the approach of the Dutch PRT in Uruzgan (at least until its forces withdrew in 2010) was particularly effective in limiting both the locals’ expectations of free handouts and communal and inter-tribal tensions over the distribution of external assistance. The Dutch insisted that any economic project be sanctioned by the entire community and that the PRT would only contribute the resources or technical knowledge that the community lacked. Thus the community had to identify and carry out all that it could execute in the project on its own, and the Dutch PRT and partner NGOs would only supply the rest.

Despite such examples, political pressures from the bottom up continue to reinforce ISAF’s predilection for the short-term quick-impact projects. Sustainable development requires a lot of time, but the Afghan population has been highly impatient to see some minimal improvements and often has demanded handout programs without regard for long-term sustainability and desirability. At least some Afghan government officials, however, have become dissatisfied with the short-term cash-for-work programs and are demanding that foreign aid be instead structured as capacity-building efforts and long-term development projects.

Yet the persisting, even if substantially reduced insecurity even in high-profile focus areas, such as Marja and Arghandab, can threaten even the limited short-term “stabilization” programs. The Taliban has strongly intensified its campaign to assassinate Afghan government officials, international contractors and NGOs, and their Afghan counterparts who are cooperating with ISAF or the Kabul government. Both the implementers and Afghan beneficiaries of these programs have been killed. This intimidation campaign has scared off some Afghans from participating in the programs. U.S. and ISAF officials emphasize that in cleared areas in the south, shops have reopened on the streets and bazaars seem livelier. Yet Afghan shopkeepers often say that they are trying to make as much money as possible in a short window of opportunity because they expect security to deteriorate again and they may then lose all business opportunities.

Thus, even for these stabilization programs, security is a critical prerequisite. A major withdrawal of U.S. forces from the south to insert them into the troubled east can jeopardize all the fragile and costly improvements in the south.


  1. This is an excellent meta survey with good analysis. It is particularly valuable to those considering policy implications in development.

    The anti-corruption prescription from donors is often tinged with bias. For examplem there seems to be an emphasis on enforcement before capacity building and with little understanding of incentives.

    Part of your analysis, though, seems to jump to conclusions. Your statement about off-budget as “not necessarily in a less corrupt manner” is most likely factually incorrect. Off-budget funding is almost certainly more corrupt than on-budget. On-budget execution through the Ministry of Finance uses automated budget & commitment controls to prevent many forms of corruption. Transactions are fully auditable.There is additional oversight through the mult-donor trust fund. Reports from the govrnment system meet international public sector accounting standards. The latest Public Expenditure and Financial Accountability (PEFA) assessment was positive. Capacity building has enabled the Treasury to roll-out software and training to all regions in the country. Unlike off-budget, the on-budget funds avoid the quick transfer to cash. It’s cash that makes aid fungible and easily used for corrupt purposes. Of course, this will not eliminate corruption, but it makes corruption orders of magnitude harder. And, much easier to expose.

  2. On page 4, there is mention of a proposal for CDCs to exercise oversight of ALP. Does anyone know of a reference for that? I have read every assessment of NSP and every research paper mentioning NSP that I have been able to find over the past 2 years. I do not recall ever reading a proposal for CDCs to be used in that capacity. I would like to read about that in greater detail.

    • @TJM The proposal for CDCs to exercise oversight over the ALP came out of private meetings the author had with ISAF and USG officials. Unfortunately, no referencing note is available to follow up with it.

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