CORRUPTION IN CONFLICT

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BOX 2: ABSORPTIVE CAPACITY (CONTINUED) However, as a World Bank report on Afghanistan’s post-2014 economic and political transition observed, high inflows of aid incentivized waste and corruption and impeded the building of a more effective Afghan state. 336 An empirical multination study also found that high levels of international aid tended to increase corruption, while low levels reduced corruption. 337 Common reference to “absorptive capacity” suggests there is a model to determine a country’s absorptive limits. This is not the case. A UN report concluded, “To date, there has been very little systematic effort either to define the key drivers of absorptive capacity or to measure a country’s ability to absorb scaled-up foreign assistance.” 338 In addition, establishing a causal link between oversaturation and adverse effect is difficult. Nevertheless, aid practitioners do employ informal estimates. Studies suggest that a state’s capacity to absorb aid can range from 15 to 45 percent of its GDP; states with weaker institutional capacity possess a lower threshold for aid saturation. 339 For most of the 2002–2015 period, appropriated U.S. reconstruction assistance to Afghanistan surpassed 45 percent of Afghanistan’s GDP, reaching a high of 105 percent in 2010 and never falling below 22 percent (see figure 4 on the previous page). 340 U.S. Efforts to Encourage Afghan Reform and Accountability U.S. anticorruption efforts sought to improve the Afghans’ capacity for and commitment to fighting corruption. Appendix F provides a list of the Afghan government organizations the United States assisted and supported as part of these efforts. Broadly, U.S. efforts fell into the four key areas described in Embassy Kabul’s 2010 draft anticorruption strategy: • Improving the transparency and accountability of Afghan government institutions to reduce corrupt practices • Building Afghan judicial capacity in investigations and prosecutions • Improving financial oversight • Helping the Afghan government and civil society boost demand for accountable governance 341 The shortcoming of this approach, however, was that it emphasized technical fixes rather than a concerted, high-level effort to address the political roots of corruption. U.S. agencies tended to do what they knew how to do best: support and advise on bureaucratic reform and capacity-building. The U.S. government was less adept, however, at addressing the fundamentally political nature of the corruption problem. 342 This required assessing what drove corrupt behavior, particularly by political leaders who established a tone and culture of impunity, and determining how to change the incentive structures for those engaged in corruption. 343 Furthermore, capacity-building efforts would be useless in the long term without Afghan political commitment to keep newly trained police, investigators, prosecutors, judges, and auditors in positions of responsibility, able to operate without political interference. 344 52 SIGAR I CORRUPTION IN CONFLICT I SEPTEMBER 2016
Capacity-building efforts would be useless in the long term without Afghan political commitment to keep newly trained police, investigators, prosecutors, judges, and auditors in positions of responsibility, able to operate without political interference. In fact, the embassy’s draft strategy was upfront about this political dimension. The strategy stressed the importance of “leveraging diplomatic, legal, and development assistance tools to increase the political will (within the Afghan government, the U.S. government, and the international community) to take fighting corruption seriously.” 345 However, in practice, shaping political will— which might have included the use of more aggressive tools to bring political pressure to bear on Afghan leaders—did not always take priority over other U.S. objectives. The Kabul Bank Crisis: Attempts at Resolution The 2010 discovery of massive fraud at Kabul Bank exposed high-level corruption. The Afghan government was slow to take critical steps to recover stolen assets and prosecute the individuals responsible for the fraud. 346 Senior U.S. officials repeatedly urged GIROA to pursue prosecutions and robust asset recovery, and grappled with how to leverage aid money in order to encourage reforms. 347 These efforts were intensively coordinated with the rest of the international community. 348 Meanwhile, however, Karzai publicly blamed the international community for the corruption of Afghan officials. 349 Donor pressure on GIROA further escalated. The IMF, in renewing its Extended Credit Facility (ECF) program, proposed terms for reforming Afghanistan’s financial system and regulatory regime. By agreeing to the terms, GIROA would qualify for assistance financing under the ECF program. The Afghans initially refused the proposed terms. This prompted donors, including the United States, to delay disbursement of 85 percent of the total $933 million in donations to the Afghanistan Reconstruction Trust Fund (ARTF) in solar year 1390 (March 2011– March 2012), until a new ECF agreement was approved. 350 Negotiations over the IMF program pushed GIROA to take actions, albeit limited ones. By May 2011, the Afghan government had fulfilled some IMF demands, including placing Kabul Bank under receivership, invalidating shareholders’ claims on cash and assets, and initiating criminal investigations. 351 GIROA also began asset recovery efforts. However, as the international community pressed for prosecutions and more robust asset recovery, the Afghan government failed to take meaningful actions. 352 For a period in 2011, the issue appeared frequently on the U.S. NSC Deputies Committee’s agenda, according to a former senior U.S. official who was involved in the meetings. 353 Embassy Kabul continued to monitor the Afghans’ progress on asset recovery and prosecutions and to press for follow-up. 354 Then, as little to SIGAR I CORRUPTION IN CONFLICT I SEPTEMBER 2016 53
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Special Inspector General for Afgha
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Special Inspector General for Afgha
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TABLE OF CONTENTS EXECUTIVE SUMMARY
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ILLUSTRATIONS FIGURES FIGURE 1: Sha
Page 9 and 10:
In the early years of the reconstru
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Recommendations To address corrupti
Page 14 and 15: 1. Corruption undermined the U.S. m
Page 16 and 17: large sums of money. For example, a
Page 18 and 19: Corruption Has Increased from Pre-2
Page 20 and 21: capacity, legislative and regulator
Page 22 and 23: dynamic we have to change if we wan
Page 24 and 25: in corruption. 58 Afghans also witn
Page 27 and 28: ISAF Public Affairs photo PART ONE
Page 29 and 30: checkpoints, activities which they
Page 31 and 32: usinesses that served the internati
Page 33 and 34: for the long-term threat that corru
Page 35 and 36: combat corruption globally, which i
Page 37 and 38: opium when they raided the governor
Page 39 and 40: measurable benchmarks and target da
Page 41: While certain individuals and offic
Page 44 and 45: that Afghan leaders were not commit
Page 46 and 47: U.S. government documents increasin
Page 48 and 49: the state’s legitimacy and capabi
Page 50 and 51: and helping to fund the enemy. The
Page 52 and 53: would benefit from an approved stra
Page 54 and 55: fundamental flaw: The Afghan govern
Page 56 and 57: By the time of Salehi’s arrest an
Page 59 and 60: U.S. Marine Corps photo PART THREE
Page 61 and 62: and partners, other countries in th
Page 63: BOX 2: ABSORPTIVE CAPACITY In the d
Page 67 and 68: “The international community held
Page 69 and 70: success, due in part to unwillingne
Page 71 and 72: ability to conduct robust oversight
Page 73 and 74: The story elicited a sharp congress
Page 75 and 76: London, Kabul, and Tokyo Conference
Page 77 and 78: officials. The task force member no
Page 79 and 80: These cancelled or forestalled cont
Page 81: a desire to tackle corruption and a
Page 84 and 85: These findings underscore that the
Page 87 and 88: LESSONS USAID/Afghanistan photo Bas
Page 89 and 90: eport, international assistance acc
Page 91: in Afghanistan failed to address th
Page 94 and 95: This legislation should: • Requir
Page 96 and 97: Intelligence agencies should: • C
Page 98 and 99: 10. The State Department should pla
Page 100 and 101: the U.S. Embassy in Kabul, which wa
Page 102 and 103: APPENDIX B ABBREVIATIONS 4A Assista
Page 104 and 105: ODA OECD OEF OSD-P OTI PACC PRT PSC
Page 106 and 107: APPENDIX D Strategy or Plan Assessm
Page 108 and 109: Organization Lead Agency Mandate Hi
Page 110 and 111: APPENDIX F U.S. Support to Afghan G
Page 112 and 113: ENDNOTES 1 Ryan Crocker, SIGAR inte
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34 OECD Development Assistance Coun
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65 Fishstein and Wilder, Winning He
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101 Joint Staff, Joint and Coalitio
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148 Dressler, Counterinsurgency in
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192 NSC, White Paper on the Interag
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235 U.S. Embassy Kabul, “Afghanis
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284 Department of the Treasury, “
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Transition to Transformation, July
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368 SIGAR, Quarterly Report to the
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411 Torabi, email to SIGAR, March 5
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463 Congressional Research Service,
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525 U.S. Embassy Kabul, U.S. Govern
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586 U.S. Embassy Kabul, “Update o
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633 DOD, Report on Progress toward
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SELECT BIBLIOGRAPHY Afghan Research
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Century Foundation. Afghanistan: Ne
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Federal Bureau of Investigation.
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Human Rights Watch. Blood-Stained H
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Koumans, Mark. Testimony before the
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Pritchett, Lant, Michael Woolcock,
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Schmeidl, Susanne. “The Man Who W
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Stanekzai, Mohammad M. “Afghanist
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U.S. Department of State, Office of
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United Nations Development Programm
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ACKNOWLEDGMENTS SIGAR acknowledges
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SIGAR SPECIAL INSPECTOR GENERAL FOR
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