More Than Aid, Afghanistan Needs an Aid Management System

In February 2022, U.S President Joe Biden signed an executive order freezing almost half of the $7 billion in Afghan assets held in the United States pending the results of lawsuits by 9/11 victims’ families, and holding the other half “for the benefit of the Afghan people and for Afghanistan’s future pending a judicial decision.” Some groups, including the law firms representing the families of 9/11 victims, supported that order and some scholars, like Jennifer Murtazashvili, criticized Biden’s decision by describing it as “Robin Hood in reverse.” The Taliban called Biden’s decision “unfair,” and some Afghans protested that the money belonged to Afghans and should be return to Afghanistan without delay.

While foreign aid can help millions of Afghans survive, it is not a long-term solution for Afghanistan. As has always been the case, the problem in Afghanistan is not the amount of foreign aid, but the system and mechanisms that manage foreign aid and convert it into long-lasting outcomes that can enable the beneficiaries to sustain themselves. Trillions of dollars were wasted during the last 20 years through a top-down public finance management system, which was conducive to corruption, with no downward accountability and local participation.

Under the Taliban, the challenges are (and will become) greater.

First, the Taliban are pursuing the same top-down approach and since they are accountable to no one, there is no way to ensure that foreign aid reaches the wider Afghan population. The greater risk is that no one can guarantee that the Taliban will not use foreign aid for illicit, terrorist activities. As long as the public finance management system remains top-down, exclusive, and beneficial for certain small groups, the effects of foreign aid will remain minimal and the discussion over Biden’s decision will help no one.

Rather than being concerned about the amount of foreign aid, the international community and donors must be concerned about a sound mechanism to ensure foreign aid helps Afghans thrive. While extensive involvement like that seen over the last 20 years will be unlikely, the international community and donors can still play their role; they must use their leverage to help Afghans and Afghanistan. At the same time, the Taliban should know that their one-sided, exclusive governance approach will not get them anywhere. Afghanistan’s history is full of regimes that failed, one after another, solely because of an excluding, dictatorial approach.

Foreign Aid and Afghanistan’s Public Finance Management System

After the 9/11 terrorist attacks, international donors flooded Afghanistan with trillions of dollars through a centralized public finance management system. This aid covered all areas: from education to health care to governance reforms to infrastructure to paying government salaries. Under the top-down public finance management system, the president had excessive authority in planning and budgeting affairs. During the first 15 years, there was no meaningful local participation in planning and budgeting processes. Local administrations sent long wish lists of projects and the central government – mainly, the minister of finance – selected projects for securing political support.

Throughout the last 20 years, the planning and budgeting processes failed to achieve allocative and productive efficiency. For instance, Afghanistan’s annual budget reflected only an average of 15 percent locally identified and proposed development projects. Likewise, the central government was not able to spend more than 55 percent of its national development budget until 2015. This percentage was raised during the next few years, as the amount of development budget decreased by more than 40 percent.

Foreign Aid as a Tool to Buy Political Capital

The more important aspect of Afghanistan’s public finance management system relates to the political economy of the use of foreign aid. In a recent study, I explored this issue and came up with some revealing conclusions. During the last 20 years, political legitimacy has consistently been a challenge such that Afghan presidents, while trying to form broad coalitions, were in constant need of political capital as they could not win everyone’s support. Given the winter-takes-all nature of Afghanistan’s political system, the winners of the presidential elections were the sole winners, and the losers were the sole losers. This system incentivized presidents to always maintain a “minimum winning coalition.”

In addition to using public offices to win the hearts and minds of political partners, Afghan presidents used foreign aid in the form of the development budget to buy political capital. Instead of emphasizing efficiency and equity as the criteria for development budget allocation, the central government considered political factors such as ethnic affiliation (and alignment with central government policies), political importance, and strength and weakness of local actors. The executive branch – given the excessive centralization of public finance management system – rewarded friends and punished foes.

With no downward accountability and local participation, the public finance management system became the main source of political corruption. This in turn resulted in the waste of international funding and ultimately the failure of the state building process in Afghanistan.

The Taliban and the Prospect of Foreign Aid in Afghanistan

With the Taliban in power, the situation is (and will be) worse than before. The Taliban pursue the same top-down governance and public finance management system. Like the previous regime, there is no venue for the Afghans to participate in governance and keep the Taliban accountable. More importantly, Afghans had no say in the Taliban taking over Afghanistan. The Taliban governance structure, suggested by their constitution and practice, provides a top-down, centralized system – coupled with a taste of religious extremism – in which the group’s emir has the final authority, and the public finance management system is no exception to that. This makes the Taliban’s constitution similar to most of Afghanistan’s many constitutions in terms of centralization.

According to the Taliban’s constitution, the cabinet, directly appointed by the emir, prepares the budget, and presents it to him for final approval. This suggests that the cabinet would be involved in deciding the type and number of projects and the amount of budget to be allocated to different provinces and localities in Afghanistan. This, by itself, suggests that the public would not be involved in determining their needs and preferences.

What makes the situation worse for Afghans and Afghanistan is that the Taliban government is not internationally recognized, making foreign aid scarcer than before. What aid does come in is strictly humanitarian. That means international donors are not allocating funding for reforming governance structures and improving the capacity of Afghans. While humanitarian aid will provide temporary solutions to the extreme poverty and hunger of Afghans, it provides no prospect of self-sufficiency and improvement for Afghans and Afghanistan. By imposing themselves on Afghans, the Taliban only disrupted the slow and challenging development process in Afghanistan.

Moving Forward

As far as foreign aid is concerned, it is not logical for international donors to allow any money to flow into a system that has no credibility but a proven record of failure. Like the last 20 years, international funding under present conditions would go waste and would not reach the main beneficiaries, the poor and starving Afghans. The international community should learn from the past 20 years. Instead of pouring in resources, donors can use their leverage to help Afghans and Afghanistan. Any flow of foreign aid without accountability would only enrich a small group, who are taking Afghanistan hostage while imposing themselves over more than 36 million people. The international community and donors cannot afford another 20 years of funding with no prospect of sustainability for Afghanistan.

With pending recognition and a vague aid management system, the international community should push for more inclusion of Afghans in matters that influence their lives. There is no way for the existing aid management process to work without the inclusion and involvement of Afghans in the decision-making process. Afghans, like anyone, should have the right to self-determination. Such inclusion is the very first step that can help the Afghanistan and facilitate a better condition of life for Afghans.

Finally, the Taliban’s current acts – including their genocidal measures against the Hazara ethnic minority, their ban on girls’ education, and their restriction on Afghans’ political and civil rights – all require the attention of the international community. Afghans are the direct victims of the Taliban’s brutal rule. The international community should be strict on these issues and should take necessary measures to support and protect Afghans, especially women and children. Yes, more aid may help Afghans survive, but Afghans are dying every day in fear of persecution and restriction of their basic human rights.

The current situation in Afghanistan is not only an issue for the international community and donors. The Taliban, who claim to be working for the good of Afghans, should prove so by their actions rather than words. So far, the Taliban’s words, thoughts, and deeds are no different than the past. The Taliban need to understand the realities of Afghanistan, which is a severely divided society in terms of ethnicity, religion, and language. In no way does their seizure of power give them the legitimacy to decide on behalf of more than 36 million Afghans.

Afghanistan’s diverse ethnic, religious, and linguistic groups have become mobilized during the last 20 years. They participated in elections, educated themselves and their children, and experienced greater political and civil rights. What the Taliban are imposing on Afghanistan in no way matches the expectations and preferences of Afghans. Without such a realization, the Taliban will just continue to impose themselves on Afghans, and that will exacerbate tensions and accelerate a struggle for power by other Afghan groups as occurred in the past.