Remarks Prepared for Delivery by Special Inspector General John F. Sopko at the Woodrow Wilson School of Public and International Affairs, Princeton, NJ

"No More Free Lunch: Afghan Aid with a Purpose"

Thank you, Dr. Shapiro, for that kind introduction. And thank you, ladies and gentlemen, for allowing me to share this time with you this afternoon to discuss what I would argue is one of the most important issues that will face our nation for generations to come - namely, how to do a better job of foreign aid and reconstruction of failed states in post-conflict environments.

And what better a place to learn from than the petri dish of Afghanistan. Let me start by stating that America's investment in Afghanistan is unprecedented. It is our longest war. Tomorrow will be the 14^th anniversary of its start. . The mission has been a mix of war fighting, counter insurgency, humanitarian aid, and economic development. Unfortunately, it also has been, to quote from President Wilson, at times "disturbing, confusing, bewildering afraid of its own forces, in search not merely of its road but even of its direction" with "many voices of counsel, but few voices of vision" with " much excitement and feverish activity, but [unfortunately] little concert of thoughtful purpose."[i]

The "excitement and feverish activity" I allude to includes nearly $110 billion from the U.S. taxpayer just for reconstruction. That's an extraordinary amount of money. To put that figure in context, that is more than the U.S. has spent on reconstruction for any one country in our nation's history. Furthermore, adjusting for inflation, it is more than the U.S. spent on the entire Marshall Plan effort to rebuild Western Europe after World War II. And we still aren't done in Afghanistan - we, in addition to our allies, have promised billions more for years to come.

Getting Afghanistan reconstruction right is critical to ensuring Afghanistan becomes a stable nation-state that will not again serve as a springboard for terrorist attacks on the U.S. or other countries.

Getting it right now offers the insurance policy that our 14-year investment of 2,500 lives and $1 trillion in treasure in Afghanistan was not wasted.

But getting it right is also important because I predict we will be doing this again.

Here at the Wilson School, you definitely understand that history has a funny way of repeating itself. If history is any guide, the U.S. will be involved again in reconstructing another country steeped in insecurity, suffering from widespread corruption, facing major narcotics production, and with extremely low levels of development.

Does that sound familiar to any of you? That could describe Syria? Iraq? Yemen? Or any myriad number of African and mid-Eastern states. For this reason, I suggest we must seek to learn and improve upon our 14-years of reconstruction in Afghanistan. The lessons we learn from our experiences in Afghanistan, will help you as future policymakers and implementers in the diplomatic and national security world, to ensure that U.S. foreign policy is implemented more efficiently and effectively in the future.

SIGAR 101

Taking note of the lessons learned in Afghanistan is where my small agency, with the odd tobacco-flavored acronym: SIGAR - SIGAR with an S, not a C, comes into play.

The U.S. Congress established SIGAR in 2008-seven long years into the Afghan war in part because of the extraordinary amount of money being spent there, but also because of a concern the normal oversight mechanism was not robust enough to protect these efforts. President Obama appointed me Special Inspector General in 2012 to replace the original IG, who the Senate forced to resign because they were dissatisfied with his performance.

I am a former state and federal prosecutor, with the Department of Justice, Organized Crime and Racketeering Section, as well as a former partner at an international law firm. I also spent more than 20 years on Capitol Hill working for the likes of Senator Sam Nunn, then chairman of the Senate Armed Services Committee, and Representative John Dingell, the powerful chairman of the House Energy and Commerce Committee. Both of whom made strong, bipartisan oversight the hallmark of their careers.

I learned from those two fine lawmakers, as well as others, that the role of a good inspector general is to be independent and speak truth to power. After I was appointed to be the IG, I told SIGAR staff that our job was to provide tough, fair, and effective oversight of the funds appropriated for reconstruction in Afghanistan. And I emphasized that my staff better have a 'Fire in the Belly' for this work, since the instructions from both the Executive branch and Congress were unambiguously short and simple-"fix it and fix it fast."

With those instructions in mind and the fact we are a temporary agency, I also firmly believed that our mission extends beyond merely filing reports with Congress and executive agencies. I have learned in the over 30 years observing the workings of our government in Washington that we must also reach out to the public if we wish to change things. It is their money, after all, that we are overseeing, and it is their voice that can add a touch of flame to the typically dry language of IG reports.

Although many nameless bureaucrats decry the aggressiveness of our work - they really are upset that we publicize it. They would prefer I illegally classify it or otherwise hide it from the press and public. Unfortunately for them, I am also a student of history and I remember not only what I learned from my congressional experience but also from someone like our own President Wilson who observed from his experience that "if you want to make enemies, try to change something." Likewise, when it comes to my use of publicity, I often like to remind my critics of one of President Wilson's greatest appointments to the Supreme Court, the respected American jurist Louis Brandeis, who opined that "Sunlight is the best of disinfectants and publicity is commended as a remedy for social and industrial diseases."[ii]

The need for shining such sunlight is clearly great in Afghanistan. Since SIGAR's creation we have issued 199 audits, inspections, alert letters, and other products, totaling nearly 600 recommendations and that identified over $1 billion in funds put to better use. In addition, our investigations unit has conducted 883 investigations, resulting in 103 arrests, 136 criminal charges, 100 convictions or guilty pleas, 78 sentencings, and savings of over $944.5 million. I'll note three recent products just to give you a flavor of the breadth of our activities:

• In June, we sent an inquiry to USAID about its claims of progress in Afghan school enrollments, which supposedly rose from 900,000 in 2002 to more than 8 million in 2013. We noted that USAID's claims were unverifiable, and that Afghan ministers and officials had spoken publicly in their parliament of doctored statistics, nonexistent schools, embezzled funds, and other problems.
• In August, we submitted a review to USAID noting that the $355 million Tarakhil Power Plant produced less than 1 percent of its energy potential for the Kabul-area electrical grid. We also noted that the plant was designed to run continuously, that stop-and-start operating was damaging equipment; and that no economic fuel option has been developed to end the plant's use of highly expensive diesel fuel that Afghanistan does not produce and cannot afford to buy.[iii] And
• Just the other week, SIGAR issued an audit on a failed program to assist Afghan refugees, for which the U.S. has provided nearly one billion dollars. A timely topic that demonstrates how success or failure of one project in Afghanistan can reverberate across the world, or in this case, Europe. [iv]

Unfortunately, large amounts of taxpayer dollars have been and continue to be lost to waste, fraud, and abuse. SIGAR professionals have documented details of U.S.-funded clinics that lack staff or medicines, schools that can collapse on their occupants because of shoddy construction, and contracts that weren't performed properly or at all, troop rosters that can't be verified, cash assistance that can't be traced, and many other outrages. These disasters often occur when the U.S. officials who implement and oversee programs fail to distinguish fact from fantasy, or output from outcome and impact, and operate in a world where personal accountability is nearly nonexistent.

• failure to define requirements and assess suitability and sustainability of projects;
• lack of coordination within our own government and with the Afghans and other governments and organizations;
• poor planning, execution, and accountability; and
• theft and corruption by both American and Afghan military and civilians.

What's Conditionality?

These problems bring me to the topic of how conditionality can improve reconstruction in Afghanistan.

Although conditioning aid is a relatively new arrival to America's mission in Afghanistan, many of you know that conditionality itself is not a new concept. The basic definition of aid conditionality, of course, is that you try to incentivize behavior that you want, by either providing or withholding aid based on the aid recipient's actions. As students of international and public affairs, you all are aware that there has long been a dilemma in American foreign policy between promoting the hard interests of the United States versus promoting the softer values of the United States. Conditioning aid is one way you can try to square that circle to meet hard American goals by providing aid, but changing value behavior of the recipient by conditioning that aid on change.

The history of such aid conditionality covers more than five decades. For instance, Senator Henry "Scoop" Jackson and U.S. Representative Charles Vanik authored what is now known as the Jackson-Vanik amendment to condition the granting of most favored nation trade status to certain countries with market economies that allow freedom of emigration, which they considered a basic human right that was denied by many Soviet Bloc countries during the Cold War.

Another example of conditionality is the well-known Leahy Amendment, which was authored by Senator Patrick Leahy to prohibit the Department of State and Department of Defense from providing security assistance to foreign military units that violate human rights with impunity. The Leahy amendment has caused military assistance to countries with suspect human rights histories such as Egypt and Nigeria to be delayed, or in some cases, denied.

More specific to Afghanistan, the U.S. has supported conditionality-incentive features in international programs like the World Bank managed Afghanistan Reconstruction Trust Fund and the International Monetary Fund's (IMF) Extended Credit Facility.

Why it's important

But why is conditioning aid important? It matters for five reasons.

• First, it advances the vital goals of stewardship and accountability for the vast sums of taxpayers' money that have been committed to Afghan reconstruction.
• Two, it reflects the reality that the shrinking U.S. and Coalition presence in Afghanistan limits both our ability to conduct our own operations and our ability to assist the Afghans.
• Three, it is useful in promoting the growth of institutional capacity and institutional reform within the Afghan government.
• Four, achievement of agreed upon conditions can help maintain donor confidence and avoid disruptive or disastrous cutbacks in aid.
• Finally, and arguably the most important reason, conditionality is a tool to ensure the rights that extend to all humanity are protected, rather than lost in the fog of war.

Conditionality itself can cause tension with the aid recipient. On the one hand, the U.S. has values that it seeks to uphold, even in times of war. On the other hand, those values may pressure those in power or challenge cultural norms. The recent report of sexual abuse of Afghan boys amongst U.S.' military partners in Afghanistan can be seen as an example. The U.S. abhors the sexual abuse in all forms, and U.S. aid must be conditioned on the Afghan government responding to and prosecuting those who take part in the sexual abuse of another human being. Again, we must never forget that human rights cannot afford to be lost in the fog of war.

Congress agrees that conditionality is important. Last year, the then-majority staff of the Senate Committee on Foreign Relations made recommendations on how to improve the administration of aid to Afghanistan. The report stated: "The U.S. should…condition a higher percentage of its funding: if done properly by ensuring Afghan buy-in, conditioning U.S. assistance can improve the accountability of our aid, strengthen reform and institutions in the Afghan government and result in better development outcomes."[v]

Commanders in the field also agree. Major General Todd Semonite, former commander of the Combined Security Transition Command-Afghanistan (CSTC-A), told SIGAR that before he took command in 2013, "we had no conditions" on funds flowing through CSTC-A to the Afghan security ministries. [vi] The urgent demands of war fighting and paramilitary policing had trumped many other considerations. I'm glad to tell you that has changed and there are now conditions placed on U.S. assistance to the Afghan Ministry of Interior and Ministry of Defense.

But most importantly, the Afghan president himself, Ashraf Ghani, believes conditionality is important. In February of this year, I met with President Ghani. During the meeting, he personally voiced his support for conditionality on assistance provided to the Afghan government, saying that he plans to use conditionality to keep his government focused on meeting the performance targets, prioritizing its key tasks, and holding his ministers accountable.

Mechanisms for Conditionality

Given that policymakers, field commanders, and the Afghan president think conditionality is important, how do donor nations implement these conditions?

In 2014, General Semonite's command negotiated new letters of commitment with the Afghan Ministry of Defense (MOD) and Afghan Ministry of the Interior (MOI). Those bilateral agreements describe CSTC-A's conditions for providing aid. Both ministries agreed to more conditions for 2015, including 45 by the MOD and 48 by the MOI.[vii]

The conditions are targeted, such as linking U.S. aid disbursements to Afghan ministries' using electronic personnel-information systems and submitting corps- or province-level spending plans, as well as for use of military hardware. CSTC-A's December 2014 commitment letter with the MOD imposes the condition that they conduct an annual 100% weapons inventory, with reports of any missing weapons due within 30 days. If discrepancies are not reconciled or resolved, CSTC-A can freeze deliveries and withhold some repair support.[viii] General Semonite has told us that new iterations of commitment letters will include more conditions and changes to close loopholes in current language.

In 2012, the U.S. and other international donors' representatives met in Tokyo. The outcome was the Tokyo Mutual Accountability Framework (TMAF), which set the ground rules for future assistance to Afghanistan. "Monitoring of development and government benchmarks in a transparent manner," the TMAF document reads, "is a powerful means to enable accountability to the Afghan people, and reinforce reciprocal commitments of donors and the Afghan Government to improved development performance."

However, in the three years since the TMAF was agreed to, I am sorry to report that little has changed with the exception of measures taken by Generals Campbell and Semonite, despite the ever-growing need for such conditions, and a willing partner in the National Unity Government.

During the Senior Officials Meeting in September, donor nations and the National Unity Government re-evaluated the TMAF and renamed it the Self-Reliance Through Mutual Accountability Framework, or SMAF. The SMAF calls for the National Unity Government to:

• Implement administrative measures and enact and enforce the legal framework for fighting the underlying drivers of corruption following the policy of "zero tolerance;"
• Put in place mechanisms to review and implement the Independent Joint Anti-Corruption Monitoring and Evaluation Committee (MEC)'s national plan to reduce corruption;
• Ensure institutionalization of a National Procurement Committee and implementation of procurement reforms; and
• Guarantee new government officials under Constitution Article 154 (President, Vice Presidents, ministers, Attorney General, Supreme Court) declare their assets.

However, beyond a new name and these lofty pronouncements, I am not certain any concrete changes in the realm of anticorruption will occur. We await further developments and on my next trip to Afghanistan, I will be following-up with both our Embassy and the New Unity Government about any tangible and realistic changes in conditionality.

Problems with Conditionality

I cannot reiterate enough; simply having conditions for aid does not guarantee desired outcomes or behavioral changes, any more than the discovery of antibiotics eliminated all pathogens. As the World Bank said in a 2005 report, Conditionality Revisited, "More conditionality cannot compensate for weak government commitment or implementation capacity."[ix] -- a statement especially applicable to Afghanistan.

In addition, conditionality cannot be fully effective without buy-in from a willing partner. "Governments will agree to almost anything" to obtain aid, the National Academy of Public Administration observed in its report on the failure of international aid programs for Haiti. "Whether they support it is another matter."

Recipient-nation leaders may be focused on opportunities for short-term control of funds and unconcerned about longer-term outcomes. They may construct compliance charades like enacting high-sounding but unenforced laws and conceal day-to-day practices. They may be willing to tolerate penalties for failing to enact reforms they do not actually want. Or they may simply lack the political or administrative clout to deliver compliance in the first place, but agree to conditions in hopes that failures will bring no consequences.

Once aid flows start, the National Academy noted, political pressures may keep it flowing despite waste, because "Cutting off or slowing assistance can wreck or undo progress."[x] This phenomenon can lead to other problems. Aid agencies "often fail to enforce conditions," says Vassar College economist Christopher Kilby. "This pattern," he writes, "undermines the credibility of conditionality, weakening incentives to implement policy reforms."[xi]

Whether the lack of conditionality-enforcement rigor stems from unclear requirements, loss aversion, security concerns, or other sources, the effect can be pernicious. Aid-receiving country leaders may conclude that donors' political sensitivities about perceptions of failure, reluctance to write off gains, or prioritization of strategic over developmental objectives will shield them against donor enforcement of conditions.

Even worse, perhaps, actually cutting off aid may not achieve the intended incentivizing effect if the impact falls on the wrong people. An example General Semonite once shared with me, which is especially relevant given the recent events in Kunduz, is that we can't withhold things like fuel, guns, and bullets from the ANDSF on the front lines, but we can penalize senior commanders by taking away their toys and defunding pet projects in order to accomplish our objectives. If conditionality penalties do not threaten the actual interests of the people agreeing to the conditions, similar reservations could apply to conditional penalties for programs aimed at reducing corruption, improving the judicial systems, or limiting election fraud.

Development of SMART Conditionality

To help alleviate some of the aforementioned problems, SIGAR has developed ten preparatory tasks that may assist U.S. policymakers in practicing smart conditionality. Rather than discuss all ten, I am going to focus on three of the most important themes for conditionality with a purpose : coordination, feasibility, and sustainability.

First, coordination. Coordination may be one of the most important aspects of smart conditionality. The U.S. is not the only country engaged in the reconstruction effort. It is critical we coordinate with our partners to avoid or reduce contradictions and burdens on Afghan ministries. If we do not coordinate, the contradictions in conditions undermine our efforts, increasing the cost to the U.S. taxpayer and ultimately hurting the very people we are trying to help - the Afghans.

Second, feasibility. Feasibility is crucial when thinking about aid conditions. If feasibility is not considered, the Afghan government could do everything in its power to meet the conditions, but ultimately fail because what was asked was not feasible. Some critical things to consider when setting conditions: 1) do the proposed conditions have a realistic causal link between their achievement and overall goals? 2) Are conditions well understood and supported by the Afghan officials, staff, and other stakeholders who must implement the policy, so that they are clear on the reason for the conditions and on the benefits of meeting them?

Third, sustainability. Chairman of the Joint Chiefs, General Martin Dempsey, pointed out the need for smarter conditionality in response to a question about Iraq. "Support needs to be conditional," he said, requiring actions by its recipients. If the local government fails to build an inclusive state and address grievances, the general added, "then nothing we do will last. It will be painting over rust."

While General Dempsey was discussing Iraq, the idea that conditionality needs to breed sustainability applies to Afghanistan and future conflicts as well. We do not have unlimited treasure or resources, and our efforts need to be able to sustain themselves over time. Conditionality is one way to ensure host governments are working to build self-sustaining institutions and processes.

Conclusion

In conclusion, as the recent news from Kunduz highlights, we are at a crossroads in Afghanistan. The National Unity Government is a willing though still weak partner. The president, himself, wants conditionality. The key is having the will and knowledge to institute smart conditions on our aid in Afghanistan. Ensuring the conditions we set are smart will certainly be difficult, but as President Woodrow Wilson once said, " The man who is swimming against the stream knows the strength of it." Just because we know the strength of the stream doesn't mean we should stop swimming or in this case fighting to ensure smart conditionality that are coordinated, feasible and sustainable.

I firmly believe that applying more forethought and care to aid conditionality can bring great benefits to the American taxpayers, U.S. strategic and humanitarian goals, and the people of Afghanistan. But, as a highly respected diplomat who served in Afghanistan warned me over three years ago when I first started this job, "in order for conditionality to work in Afghanistan, we not only have to hold the Afghans feet to the fire, we have to hold our own, too."

I hope you agree and keep these concepts in mind as you begin or return to your careers. Best practices and lessons learned are only good if they're actually followed and implemented. Many of you may turn out to be those implementers.

Thank you again for this opportunity to visit with you today and since I follow President Wilson's advice to use not only all the brains I have but also all that I can borrow to carry out my duties at SIGAR, I look forward now to listening to you as you share with me your comments, suggestions and questions.