Memorandum submitted by the Institute
for State Effectiveness
INSTITUTE FOR
STATE EFFECTIVENESS
1. The Institute for State Effectiveness
is an independent organisation, founded in 2005, to give neutral
policy advice and support to countries emerging from instability
and conflict. To date, it has supported leaders and managers in
Afghanistan, Kosovo, Nepal, Southern Sudan and Lebanon in formulating
analysis and crafting policies; and has advised a number of international
organisations and national governments in developing their approaches
to state-building. The organisation is led by Dr Ashraf Ghani
and Clare Lockhart, based on a program at the World Bank in the
late 1990s preparing toolkits and approaches to state-building;
their work in designing the Bonn Agreement, and the National Development
Framework and strategy in Afghanistan from 2001-05, and preparation
of frameworks for state-building since that time. ISE's work includes
designing frameworks for reconstruction and state-building; manuals,
guidelines and toolkits on state-building, and providing independent
support and advice to policy-makers. More information and conceptual
frameworks are available at www.effectivestates.org.
2. Dr Ashraf Ghani was UN adviser, Chief
Adviser to President Karzai, and Minister of Finance in the 2001-04
period in Afghanistan. He is currently Chairman of the Institute
for State Effectiveness and serves on the boards and commissions
of a number of global networks. He has recently been considered
for the posts of UN Secretary General and World Bank President.
He has taught at Johns Hopkins and Berkeley Universities, and
worked at the World Bank over a number of years. He is currently
advising a number of governments on their approaches to state-building
and institution-building.
3. Clare Lockhart is Director of the Institute
for State Effectiveness. Between 2001 and 2004 she served as policy
adviser to the UN and Afghan Government, responsible for the design
of national strategies and national programs, including National
Solidarity Program. In 2006, she returned to Kabul as Adviser
to General Richards at ISAF. Previously, she managed a program
designing approaches to institution-building at the World Bank.
4. Ghani and Lockhart's book, The Framework:
Fixing Failed States is to be published with Oxford University
Press in early 2008. They have also written for several journals
and newspapers and appeared frequently in the media.
TESTIMONY ON
AFGHANISTAN
5. This testimony is prepared by Clare Lockhart
based on a series of longer analytical pieces on Afghanistan prepared
by the ISE team. Some of these documents are already in the public
domain and others are available on request. Dr Ghani also met
with the IDC during their visit to Kabul in October 2007 and had
the opportunity to share an overview with the IDC. Clare Lockhart
would be willing to provide further details to the Committee on
the different dimensions—security, political process and
economic—of recent and current challenges in Afghanistan.
A CHANGED CONTEXT
6. A review of the current situation in
Afghanistan must recognise the changed context. Policies designed
for one set of conditions cannot be applied to another, and the
conditions in 2007 are very different from those in 2001, or 2004.
In 2001, the Afghan population were internationalist, welcoming
the foreign presence as liberators. While materially poor, the
population's confidence grew in the Bonn settlement, through carefully
designed measures to gain and enhance their trust. In 2004 trust
was high, and a manifesto designed for the President's re-election
promised a series of ambitious reforms focused on the economy.
7. In 2007, by contrast, different characteristics
prevail. First, the population's confidence in both their international
partners and leaders from across their political class is waning.
Second, while the population is materially better off, they are
psychologically more uncertain. Third, the dominant perception
and mood is one of insecurity and anxiety rather than confidence
and hope. The challenge at this point in time lies in arresting
further decline and restoring the confidence of the population
in a true partnership. Regaining the initiative will require a
modified approach that takes into account the implementation approaches
that can work in context. While use of force will be required,
use of rules and mechanisms for implementation that harness the
considerable resources available internationally will be critical
factors in putting Afghanistan back on course.
BUILDING SYSTEMS
2001-04: AN INTERNATIONAL
PARTNERSHIP
8. Although context has changed, examining
the approach that underlay the state-building agenda 2001-04 may
have important lessons for a revived state-building effort. During
the period 2001-04, a carefully laid sequence of instruments was
crafted to increase both the confidence of the Afghan population
and the capability of the government, over time. The first of
these building blocks was the Bonn Agreement. The second was then
Chairman Karzai's speech to the Tokyo conference in January 2002,
which laid out a vision and programs. The third was the National
Development Framework, released by the Afghan Government in April
2002, which became the primary strategy document for all actors
(the UK Government, EC, Norwegian and Dutch Governments being
the first to pledge to support it, and subsume their own planning
processes to this strategy document). Fourth was the Afghan Budget,
prepared at the same time as the Framework. Lastly, and most critical,
were a series of National Programs, described by the President
in his speech. These were designed by a core team established
in Afghan Assistance Coordination Authority (AACA) in early 2002
(which was supported by Clare Short as Secretary of State for
DFID). They included a National Security Plan, National Emergency
Employment Program, the National Solidarity Program, National
Transportation Program, National Financial Management Program,
National Communications Program and Afghan Stabilisation Program
(these can be viewed at www.effectivestates.org). The National
Solidarity Program gives block grants to communities, against
three simple rules; an elected village council, a quorum of the
village deciding on projects, and posting of accounts in public
places. The NSP is now present in 23,000 villages, and on 10 November
2007, representatives from the program convened in Kabul for the
National Convention of Communities to discuss governance issues
that concern them.
9. Each of these programs contained a series
of plans and programs, containing catalytic mechanisms designed
to produce further effects and create domestic and regional stakeholders
in stability, for example the currency exchange, telecoms tender
process, the creation of the ANA. To create Afghan leadership,
a team of Afghans were carefully recruited and trained to operate
these programs, rules, methods, mechanisms and procedures to make
them a reality, carefully built over a three year period. A set
of instruments, including but not limited to the ARTF (Afghan
Reconstruction Trust Fund) was put in place to create interlocking
support mechanisms. A second phase of national programs was designed
to take effect from January 2005, but due to failure to agree
between the reform team and others, the reform team left the government
in early 2005.
PROBLEMS WITH
EXISTING APPROACHES
TO AID
AND DEVELOPMENT
10. One of the challenges regarding aid
and development in Afghanistan is proliferation of projects, funding
channels, and mal-coordinated bilateral initiatives. This itself
generates a coordination problem. In 2002, the UN agencies and
NGOs prepared a large appeal based on hundreds of atomised projects,
which failed to deliver a real dividend to the population. Rather,
the Afghan population resent enormously the perceived lack of
effectiveness, appropriateness and accountability in these projects,
with a general perception of waste. ISE interviews in Afghanistan
in 2006 attest to such disappointment and resentment, which has
become grist for the mobilisation of opposition parties and movements
in Afghanistan. While the individuals working in such projects
are usually selfless, hard-working and dedicated, the combined
effect of such projects are not the intended ones. Indeed, there
are so many that they literally cause system-gridlock—the
streets of Kabul jammed with the white cars of projects. More
damaging, the limited stock of civil servants and professionals
in Afghanistan were quickly leached from government positions
where they were doctors, teachers and managers at $50 per month
to become drivers, translators and assistants at salaries sometimes
approaching $1,000 per month. Further analysis and documentation
of this problem is available.
11. DFID itself is not to be blamed for
the proliferation in such initiatives. Rather, DFID, together
with Norway, Canada, Netherlands, the EC and the World Bank, was
at the forefront of supporting the Government's initiatives set
out above. Indeed, as suggested above, DFID support allowed for
the creation of the AACA which designed all the national programs
and oversaw the design of the National Development Framework,
and the telecoms tender process. The UN agencies, funded primarily
by a range of other donors, pushed an alternative approach and
since 2005, particularly with the expansion of the PRT model around
the country, projects as opposed to national programs have proliferated.
REALIGNING CURRENT
EFFORTS
12. The Afghan situation is very different
from Iraq, and certainly trends can be reversed. Currently, as
in late 2001, there is a proliferation of "strategy"
in capitals across the world. While any one of these approaches
might be sensible and coherent in abstract terms, the whole is
much less than the sum of its parts, as it firstly leads to fragmentation,
and secondly is by definition not owned by the Afghan government
and is therefore not actionable. The first challenge in this respect
will be to design an approach to realigning efforts that is based
on "Afghanisation" not only of the implementation process
but of strategy formulation. If initiatives are announced from
capitals away from Kabul, then they often produce opposition and
resentment rather than ownership. The second challenge is to ensure
that such an approach is tailored to existing conditions. Any
policy initiatives that are designed for the ambitious vision
set out in Karzai's 2004 election manifesto will not take into
account the challenges evident in 2007.
RECOMMENDATIONS
13. While ISE has, and is further refining,
a full set of analyses and recommendations on an integrated security
and economic approach for Afghanistan, some key elements are set
out below:
A modified approach to security
14. A security plan should be based on the principle
of "Afghanisation" which requires acceleration of the
balancing and strengthening of the army, police, intelligence
and community policing arrangements. There are a series of other
mechanisms which could protect NATO, diminish civilian deaths,
and see a reversal in security problems.
A new approach to the economy
15. The second key is an economic approach,
as opposed to a reconstruction or aid approach, that mobilises
the market behind the imperative of mass job creation. Employment
will create genuine stakeholders in stability, give individuals
dignity and the means to support themselves, provide a true alternative
to the poppy, and create the basis for the future fiscal sustainability
of the country. Creating these things cannot be achieved through
alternative livelihoods programs alone, nor through the current
modalities of the aid system. First, building a sustainable economy
requires putting in place a series of building blocks, including
a systematic approach to creating procurement systems (including
tendering and licensing processes and capabilities) that create
domestic stakeholders in the economy. At present there is a perception
in the population that licences are narrowly awarded to a cluster
of individuals and interests that do not allow entry to other
legitimate stakeholders. Second, there is a vast amount of money
within Afghanistan—running into several billions of dollars—but
currently there are no mechanisms to turn it into capital. A key
component of building the market in Afghanistan is to create the
mechanisms through which this money could be mobilised. Another
important block in a strategy to build the Afghan economy is to
systematically design, put in place and nurture linkages across
several key industries including marble, jewels and agriculture
as well as a number of other initiatives. Nurturing will mean
giving attention to the value chain from market to producer, and
ISE have produced a full plan of what a long-term, integrated
economic approach would entail in practice.
A regional approach
16. Between 2001-04 the Government built
a coherent, carefully designed approach to regional cooperation.
This began with the Bonn Agreement, but followed up with an evaluation
of each of Afghanistan's neighbours that examined the specific
opportunities and options available. For example, Finance Ministers
Ashraf Ghani of Afghanistan and Shaukat Aziz of Pakistan worked
to build up a trading relationship that would create stakeholders
in Afghanistan's stability in both countries. The strategy envisaged
growth in Pakistani exports to Afghanistan from US $2.8 million
in 2001 to US $1.5 billion by 2004. In 2007 the changed context
will again need to be recognised in order for the regional opportunities
for Afghan growth to be realised. In particular, for example,
the rise of the economic powers of the Gulf presents an opportunity
to rethink the regional prospects for the stability and prosperity
of Afghanistan. Imagination and innovation will be needed to spot
and exploit the opportunities of the current time in the service
of securing Afghanistan's future.
17. To put in place the above blocks will
require a modified approach from international actors. Key elements
of this will include:
(i) Enhanced support for the ARTF: The ARTF
is designed to be a dual key mechanism between Afghan Government
and the people of Afghanistan in service of its people, providing
a happy medium between budget support and project support. Currently,
it is not adequately funded. While DFID is a major contributor,
it will be necessary to persuade the US and Japanese governments
to channel significant funding through this mechanism if it is
to function as a unified financing channel.
(ii) Bolstering the World Bank financing
and presence: Search for a "coordinator" is something
of a red herring. The budget is the mechanism of policy coordination
in any functioning system, and the ARTF gives the international
community a mechanism to guide that coordination. Accordingly,
the best form of policy coordination will come if the World Bank
is formally assigned the role of economic coordinator, which should
accompany a shift from a military to a civilian emphasis. A UN
coordination role on the economic side can be highly problematic,
as UN agencies are not able to deliver on the whole value to the
Afghan population, and even more importantly are not seen to deliver
value by the Afghan population. (Here there is a key distinction
between UN qua secretariat and facilitator of peace, and UN qua
agencies: there is yet to be an audit of the several billions
of dollars disbursed by UN agencies 2001-05).
(iii) Examining UN agency, contractor and
NGO effectiveness in terms of the criteria of value for money,
transparency and accountability in light of the analysis in (ii)
above. Examination of the value for money and controls upon the
security firms that are hired to protect the contractors is another
crucial measure. The UK has a particular role to play in this
regard as a major financier of both UN agency and NGO operations.
Both UK law and donor contracts could be major levers for increasing
NGO accountability, transparency and effectiveness and reducing
the negative impacts of NGO operations. The IDC in particular
would be advised to pay particular attention to the fact that
NGOs invest considerable funds in lobbying parliament to ensure
their budgets are maintained and increased. Finding mechanisms
of independent evaluation, particularly from Afghan stakeholders,
of NGO performance could be an important component of such a process.
In our submission, building a domestic service and contracting
sector is far more important for both stability and prosperity
as well as sustainability than maintaining an NGO contracting
service. In the light of the conditions in Afghanistan, this calls
for a major think in the role of NGOs.
(iv) Examining the effectiveness of the alternative
delivery system of National Programs, Trust Fund, and political
process, with particular focus on the National Solidarity Program
as an example of an integrated implementation mechanism. The design
principles behind this approach are fully set out in the book,
Fixing Failed States, forthcoming with OUP. It is ISE's
recommendation that existing programs should be strengthened and
new programs designed: further advice can be provided on these
ideas.
Comments on UKG and DFID's approach in the light
of the above analysis
18. The IDC inquiry asks specific questions.
This summary briefing endeavours to provide short answers to these.
Again, further analysis is available if there is interest.
— The Strategy embedded within
the ARTF/National Program approach allows both for short term
and long term balances to be made, and prioritisation of multiple
goals and objectives. It also allows for geographical balance
in the distribution of funding, as funds are allocated according
to transparent and fair criteria. Targeted programs are balanced
with criteria-based programs, allowing for even-handedness even
where specific targets are provided. The contribution of budget
support, through the Afghanistan Reconstruction Trust Fund, to
strengthen institutional capacity and accountability, remains
a core plank of a recommended approach. However, GoUK's role in
persuading other donors to switch their funding to this mechanism
will be critical, and also in working with the World Bank to alter
some of the mechanisms behind the ARTF: the ARTF was designed
for a particular moment in time and conditions mean that some
design alterations would be optimal.
— DFID's role to date has been
truly exemplary and the teams should be congratulated. Remarkable
leadership and managerial soundness has been shown from 2001 onwards.
— Co-ordination of the military
and development effort could be improved, particularly if each
culture made more effort to understand the mental models, goals
and constraints of the others. "Whole of government"
approaches can be misleading, especially if they tend to produce
Whitehall ossification of approach, rather than alignment to an
ever-changing reality on the ground in Afghanistan, according
to the leadership's priorities. To the extent that the military
presence will continue, far more strategic use of military personnel
and know-how could be used. Use of military engineers for infrastructure
planning and design is a significant area where military involvement
could make a critical difference. The Royal Engineers, for example,
have considerable capabilities in this area which could be used
to a far greater extent.
— The alternative livelihoods
and counter-narcotics approaches are admirable in intent but do
not have realistic implementation mechanisms reflecting the on-the-ground
situation built into them. An integrated economic approach is
required, and there is little evidence to date of a realistic
plan in this direction.
— The impact of NGO financing
on state capability shows damaging tendencies. While, as described
above, individuals are often dedicated and hard-working, as a
combined effect, NGOs can undermine state capability. Further,
they expose themselves to risks that take up security capability
diverting it from protecting Afghan civilians. NGO delivery mechanisms
are not—with some notable exceptions—a sustainable
means of service provision in Afghanistan in the short, medium
or long-term.
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