Good afternoon. I want to express my gratitude to the New America Foundation for inviting me to speak today, and I want to acknowledge your commitment to new ideas and new approaches as we face the challenges of the 21st century.
Given the many challenges we face at home and abroad -- and especially in Afghanistan -- everyone must commit themselves to impartial analysis and pragmatic solutions, as both SIGAR and the New America Foundation strive to do.
And thank you, Peter, for that kind introduction. I especially want to recognize your incredible contribution to our knowledge on terrorism and counterinsurgency efforts. While the impending end of the U.S. combat mission has led some to erroneously believe our involvement in Afghanistan is waning, your continued focus on Afghanistan is needed more than ever. We need your expertise to help guide the United States through the many challenges we will face during the transition and beyond.
Today, I’d like to talk about those challenges in Afghanistan. In SIGAR’s latest quarterly report to Congress, issued just last week, I explained why I believe the United States and its allies are entering the most critical phase of the reconstruction effort in Afghanistan.
As the United States and our coalition partners begin to pull out combat troops, the Afghan government must assume greater responsibility for its own country’s future. The continued success or failure of the U.S. mission will depend on whether the United States and its international partners have adequately prepared the Afghans to handle four key transitions:
- The security transition;
- The economic transition.
- The political transition; and
- The transition to increased direct assistance.
Let’s begin with the most important element first – security. Why is it so important? The answer is obvious -- because without adequate security, meaningful progress in Afghanistan is not possible. The reconstruction would come to a halt. The Afghan state could not defend itself from terrorist threats. Afghanistan could also once again become a safe haven for al-Qaeda and others that are determined to harm our nation.
America’s plan for ensuring security within Afghanistan is to build up the capacity of the Afghan National Security Forces. So far, the United States has spent more than $54 billion – over half of the total reconstruction effort – to train and equip the Afghan National Security Forces.
I am pleased to note that we have come a long way in this effort. The Afghan National Security Forces – or ANSF – have assumed the lead for providing security in many parts of Afghanistan. They now work hand-in-hand with U.S. and coalition troops to hunt down terrorists throughout the country. In addition, the ANSF special forces have made impressive strides toward becoming a fully independent and effective force. They can handle many of the more complex missions now handled by U.S. troops.
However, SIGAR’s audits and inspections have also identified multiple problems the United States must address to make sure the Afghan army and police are ready by 2015, when Afghanistan takes full control over its own security.
SIGAR has found police buildings turned over to the Afghans that sit empty; a lack of trained personnel capable of conducting basic operation and maintenance on the nearly 900 facilities the United States is building for the security forces; and an Afghan Ministry of Defense that may not even be able to handle purchasing fuel for the Afghan National Army once U.S. troops leave.
SIGAR has also identified problems with programs managed by the Americans. We recently reported that the U.S. government could not account for the fuel it provided to the Afghan National Army, and it paid to repair Afghan National Police vehicles without accounting for vehicles that had not been seen in over a year or had been destroyed.
Because of SIGAR’s ongoing concerns with the ANSF, SIGAR is building a body of work to eventually answer the ultimate question – are the Afghan National Security Forces ready?
To help answer this question, SIGAR has an ongoing audit looking into the reliability, accuracy, and usability of the reported numbers for the security forces. We are very concerned because the ANSF were supposed to achieve an end strength of 352,000 troops by last October. However, as reported last week in SIGAR’s latest quarterly report to Congress, the ANSF has fallen short of its staffing goals by 20,000 troops. The number of troops ready for duty is even lower when you consider AWOL employees, desertions, and ghost employees.
We also have concerns about the accuracy of the numbers coming out of the Pentagon. The DOD told SIGAR there is no way to validate the ANSF’s personnel numbers, often derived from reports prepared by hand by Afghan troops. It is hard to know if the Afghan army and police are ready if we don’t know how many troops are available to fight insurgent forces.
We need accurate troop numbers, in part, because the United States uses these figures to pay ANSF salaries, to supply them with food and equipment, and much more … we must know what we’re paying for or we expose ourselves to potential waste, fraud, and abuse.
Every Afghanistan expert I have met agrees – we need to ensure security or else everything we are trying to do will fall apart. That is why SIGAR will remain focused on this key pillar of the U.S. mission, especially as the ANSF begin to stand on their own.
Next, let’s look at the economic transition. Afghanistan’s economy has improved since 2002, but the country remains exceptionally poor. Its GDP per person is about $543 per year. And Afghanistan’s fiscal sustainability ratio — domestic revenues versus operating expenses — is one of the lowest in the world.
The International Monetary Fund recently released a report about the looming budget crisis in Afghanistan explaining that it is partly caused by widespread tax evasion and the increasing theft of customs revenues. They noted that the Afghan government can’t even cover half of the country’s current budget and is years away from being able to pay its own expenses.
We need to face up to this stark reality. The Afghan government currently raises only about $2 billion in annual revenue, yet it may eventually cost up to $10 billion per year to sustain everything the international community has helped build up over the last decade.
SIGAR is carefully studying this problem by focusing on Afghanistan’s efforts to raise revenue – primarily through taxes and customs duties.
We will issue a report next week that examines taxes that the Afghan government may be inappropriately assessing on U.S. businesses. I guarantee this report will be compelling reading once it is issued – on the hill, in the press, in the think tank community, and in the executive branch.
SIGAR’s auditors and analysts have also looked at USAID and the U.S. Customs and Border Protection Agency’s efforts to help the Afghans generate revenue at the borders.
Unfortunately, the Afghans have struggled with corruption at customs and duty offices. Some customs offices reportedly lose 70% of potential government revenue due to corruption. And, last fall, SIGAR found that cash counters installed at the Kabul International Airport to help prevent illegal money laundering were still not being properly used. In fact, passengers designated by the Afghan government as very important persons – or VIPs – could bypass the currency controls altogether. The Afghans had even created a V-VIP lounge for high ranking officials.
U.S. Department of Homeland Security officials told SIGAR that Afghan customs employees were afraid that they would experience repercussions if they instituted real cash controls at the airport.
During my next trip to Afghanistan, I had hoped to visit all of the largest border crossings to personally examine U.S. and Afghan efforts to combat illegal activity at the borders. Unfortunately, due to security issues, it may not be possible for me to visit all of them which, in itself, is a stark reminder of the tenuous hold we have on security in the countryside outside of Kabul.
Ultimately, unless the Afghan government raises more revenue, the U.S. Mission will be at risk. So, until I see otherwise, I will remain deeply concerned that we need to see more progress from the Afghan government on corruption connected to taxes and customs.
The economic transition goes hand-in-hand with the political transition. Helping Afghans build a stable, representative government capable of providing basic services is a core goal of the U.S. reconstruction effort.
The next milestones in Afghanistan’s political evolution will be the presidential election, set for 2014, and the parliamentary election, set for 2015. The stakes are high: if either of these elections goes badly, the impacts could damage the Afghan government’s legitimacy, incite ethnic and tribal tensions, and inflict a devastating blow on the chances for a political settlement to the Afghan conflict.
USAID has provided $179 million to help Afghanistan prepare for these elections. But there are troubling signs that more oversight is needed. For example, SIGAR’s latest quarterly report to Congress warns that the Afghan Parliament has made no changes to the country’s electoral law , which are needed to help avoid the serious allegations of ballot box stuffing and other voter fraud encountered during the last elections. And, the head of the Independent Elections Commission has warned that it will be unable to identify counterfeit I.D. cards.
Unless we fix problems like these before the 2014 presidential election, the Afghan people may have powerful reasons to question the results.
Regardless of who wins the elections, the U.S. needs to place more pressure on Afghan leaders to combat corruption inside their government. Corruption in Afghanistan is absolutely corrosive – eating away at its reputation in the world, and at the faith of the Afghan people in their government’s leaders, programs, and policies.
According to Transparency International, Afghanistan is perceived as having the worst public corruption in the world – tied for last with North Korea and Somalia. And according to the United Nations, half of the Afghan population pays a bribe when requesting a public service. Some experts have even described Afghanistan as a vertically integrated criminal patronage network stretching from the lowest civil servant to the highest levels of the government.
SIGAR, itself, has had much experience battling against this criminal patronage network. For example, we are proud of the fact that we are the first U.S. law enforcement agency to proceed with an in rem action in Afghanistan.
Briefly put, we identified roughly $50 million stolen from the U.S. government which was sitting in an Afghan bank account. We obtained a court order here in the United States and served it on the Afghan government to get them to seize the money. For months we pressed the Afghan Attorney General's Office to freeze the account and begin the legal process to allow us to seize the cash. At first, we were told the bank account was frozen and the money protected.
Unfortunately, as is too many times the case, a few weeks ago we learned that the money was mysteriously unfrozen by some powerful bureaucrat in Kabul. Now, most of it is gone.
We will continue to work with honest Afghan officials. But, I fear our recent experience may be the future for rule of law in Afghanistan unless we make fighting corruption a priority for the Afghans and hold their feet to the fire to do what they promised to do in a number of international agreements.
At the July 2012 international donors’ conference in Tokyo, the Afghan government agreed to combat corruption. And, the international donor community said the Afghan government must demonstrate a commitment to deterring corruption to continue receiving assistance.
It is the responsibility of U.S. officials to hold the Afghan government accountable to these commitments. We cannot back away from this responsibility. We need to have the courage to withhold funding if progress is not made by the Afghan government.
During my upcoming trip to Afghanistan, I will once again put U.S. agencies on notice that both Congress and American taxpayers need to see concrete steps by the Afghan government to combat corruption and improve governance. If this is not done quickly, we risk the loss of U.S. and international donor support for the mission. It is the job of my agency to hold the U.S. agencies accountable to ensure the Afghan government lives up to its commitments.
The U.S. must also remember that it plays a role in combating corruption by policing its own actions in Afghanistan. The U.S. must embrace transparency and hold its own contractors accountable for poor performance and criminal acts, and ensure that our contracting dollars do not go to terrorists or warlords’ who work with terrorists. We must serve as an example to the Afghans or they may waiver in their commitment to fulfill the promises made at the Tokyo conference.
Which brings me to the final pillar of transition – the shift to increased direct assistance.
Before 2010, the united states provided most of our assistance to Afghanistan through contracts, grants, and cooperative agreements. These have been executed outside of the Afghan budget and for the most part beyond the reach of potentially corrupt Afghan officials.
But that’s changing.
At the Tokyo conference in July 2012, the international community – including the United States – agreed to provide more than $16 billion in foreign aid through 2015 and to give 50 percent of that money as direct assistance. During president Karzai’s subsequent visit to the United States, he apparently received assurances of more direct assistance, including a promise by USAID to transfer assistance for the construction of the third turbine for the famous Kajaki hydroelectric plant, directly to the Afghans.
Direct assistance, sometimes called government-to-government assistance, is development aid deposited in a host country’s national budget. This assistance can be delivered through multinational trust funds or through bilateral agreements between two countries. The host country controls the money. It can be used to support every aspect of a developing country’s budget, from paying civil servant salaries to constructing new schools.
Despite what some may say, SIGAR does not oppose direct assistance. It has many potential benefits. For example, studies suggest that direct assistance may have a larger positive impact on a developing country’s economy because more of the funds stay in the country rather than going to large foreign contractors. It also helps the host government learn how to carry out the work on its own, rather than depending on foreign donors.
Despite its potential benefits, I have two major concerns about the use of direct assistance in Afghanistan. First, the Afghan government may not have the capability to manage and account for the billions pledged by the international community. Second, pervasive corruption may divert a large portion of this money from its intended uses.
Capacity problems haunt even the best ministries in Afghanistan. For example, USAID frequently cites the Afghan electrical company, referred to as DABS, as one of the most capable ministries for the transition to direct assistance. SIGAR’s audit work says otherwise. We found that the despite improvements, DABS continues to depend on a subsidy and requires technical assistance to install equipment paid for by the United States.
SIGAR’s concerns about the capacity of other ministries were heightened by our recent discovery that USAID completed capability assessments of 13 Afghan ministries scheduled to receive direct assistance. We recently launched an audit to examine the assessments.
Our preliminary review to date raises some concerns about the Afghan government’s ability to handle direct assistance funds. For example, one of the assessed ministries had questionable costs that exceeded the ministry's entire budget. Its staff lacked minimal procurement training. And it had no specific mechanism to check beneficiaries for ties to terrorists.
I’m pleased USAID conducted these assessments. But as I recently told a number of senior USAID officials here in Washington, this is only the first step in protecting U.S. taxpayers from potential waste, fraud, and abuse. The second step is for USAID to use these assessments to demand that the Afghans allow us to create effective safeguards based on the weaknesses we identified. And, more importantly, USAID must be willing to stop funding Afghan ministries if they do not live up to these safeguards.
I believe these safeguards should be built on a foundation of transparency. But I have some serious concerns on that front. SIGAR received emails from USAID officials and was told that the Afghan ministries had the right to redact any part of the assessments they didn’t like before the assessments were shared with my office and the American public and the U.S. Congress.
How can we hold the Afghan ministries to tough standards if USAID starts off by letting them hide serious problems from both the American and Afghan public?
I recently reminded these senior USAID officials that they must recognize that we are negotiating from a position of strength – remember, we are giving the Afghans the money. We are in a position to insist on attaching strings to direct assistance – and those strings should bind the Afghans to strong internal controls and U.S. government oversight on how the U.S. taxpayer's money is spent.
For these reasons, SIGAR is conducting a careful review of these assessments to determine whether the Afghan government has the capability to handle direct assistance and to review what USAID is doing to address the shortcomings identified in the assessments.
Corruption is another serious risk that must be considered when providing direct assistance to Afghanistan. Both SIGAR and the State Department have found that Afghan officials remain reluctant to prosecute corrupt government employees – especially if they are high-ranking or well-connected.
So it’s clear that direct assistance must be accompanied by mechanisms – established by the United States and other donors – to provide independent and effective oversight. This is essential if we hope to ensure that funds passing through Afghan ministries go to the most qualified contractors – and not to the corrupt cronies of some Afghan official.
Funding should be conditioned not just on meeting measureable outcomes – but on providing the United States and international donors unfettered and timely access to relevant documents, employees, and records. And most importantly, access to the projects and programs financed by U.S. assistance.
Managing all four of the transitions that I described today – security, economic, political, and direct assistance – will not be easy. Despite everyone’s best efforts in Afghanistan, SIGAR will undoubtedly find problems that must be addressed.
In closing, I think it’s important for me to add something here for the public record about my role and the role of an independent inspector general. Since my appointment by the president last summer, I have been surprised to learn how many people both in and out of government do not understand the role of an independent inspector general.
Over the last ten months, I have been criticized by some bureaucrats for not pre-clearing my press releases with them, for not letting them edit the titles of my audits, for talking too much to congress, for talking too much to the press, and, basically, for not being a “team player” and undermining ‟our country’s mission in Afghanistan.”
Many in our government, even some surprisingly senior officials who should know better, SEEM to believe that an inspector general should be their partner – or rather a silent partner. In their opinion, my reports should be slipped under their doors in the dead of night – never to see the light of day – because these reports could make parts of the U.S. mission look bad or embarrass President Karzai and the Afghan government.
To their surprise, I actually do support our mission – that is why I accepted the appointment when President Obama offered it to me. We must defeat the terrorists hiding in Afghanistan and build up an Afghan government capable of ensuring that Afghanistan will never again become a safe haven for those who want to harm us.
But, I also believe passionately that for the mission to succeed, we must conduct independent and robust oversight. Oversight that will bring about needed change and improvements. Oversight that gets the attention of the American people and the Congress – to help ensure that the problems we identify are addressed and not swept under the rug and ignored.
I am not a cheerleader. I’m a watchdog – it’s my job to point out what isn’t working, so it can be fixed. To do it any other way is to just muddle along. And then nothing will change.
Too many Americans have been killed and wounded in Afghanistan, and too much taxpayer money has been spent there, to simply accept the status quo.
I have spent over three decades in Washington working in and around the government including over two decades on Capitol Hill. If I learned anything from those 30 years, it is this: nothing gets done in this town – reform is not possible – if you don’t generate support for that change on the Hill and with the American people, through the vehicle of the press and public discourse - with institutions and subject matter experts such as you here at the New America Foundation.
So I can assure you today that SIGAR will continue to work in a transparent manner to ensure that the truth is heard before it is too late to fix our mistakes. We don’t have decades to get it right in Afghanistan – we only have a few years.
There are touchstones in history that can help guide us through the challenges we now face in Afghanistan and the need to continually improve our efforts.
I’m especially inspired by the words of Abraham Lincoln in his second address to Congress, delivered on December 1st, 1862.
With the civil war not even a year old and the outcome far from certain, President Lincoln told Congress that the question confronting the nation’s leaders was not, “can any of us imagine better?” But “can we all do better?”
He said, “the dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.”
Ladies and gentlemen, those words ring as true today as the day they were spoken. They speak to the war in Afghanistan, just as they did 150 years ago during our Civil War.
We must recognize that although there have been some successes in Afghanistan, some mistakes have been made – that some programs and policies could have been done better. We must be honest about that and not drown out needed reform and new ideas with “happy talk” and rosy press releases. We are not going to win the war nor succeed in the reconstruction with a better public relations campaign. It is time for our country to think anew and act anew in Afghanistan when it comes to reconstruction.
SIGAR is ready, willing and able to help in such an effort with honest and robust oversight. I hope we can also rely on your help in this ongoing challenge. The alternatives are simply not acceptable – not to us, not to our partners, and certainly not to the Afghans. Thank you for having me. I’m happy to take your questions…