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# 11 The Scam of “Reconstruction” in Afghanistan

Sources:, August 27, 2006
Title: “Why It’s Not Working in Afghanistan”
Author: Ann Jones

CorpWatch, October 6, 2006
Title: “Afghanistan Inc: a CorpWatch Investigative Report”
Author: Fariba Nawa

Student Researchers: Madeline Hall and Julie Bickel
Faculty Evaluator: James Dean, Ph.D.

A report issued in June 2005 by the non-profit organization Action Aid reveals that much of the US tax money earmarked to rebuild Afghanistan actually ends up going no further than the pockets of wealthy US corporations. “Phantom aid” that never shows up in the recipient country is a scam in which paychecks for overpriced, and often incompetent, American “experts” under contract to USAID go directly from the Agency to American bank accounts. Additionally, 70 percent of the aid that does make it to a recipient country is carefully “tied” to the donor nation, requiring that the recipient use the donated money to buy products and services from the donor country, often at drastically inflated prices. The US far outstrips other nations in these schemes, as Action Aid calculates that 86 cents of every dollar of American aid is phantom.
Authors Ann Jones and Fariba Nawa suggest that in order to understand the failure and fraud in the reconstruction of Afghanistan, it is important to look at the peculiar system of American aid for international development. International and national agencies—including the World Bank, the International Monetary Fund and USAID, that traditionally distribute aid money to developing countries—have designed a system that is efficient in funneling money back to the wealthy donor countries, while undermining sustainable development in poor states.
A former head of USAID cited foreign aid as “a key foreign policy instrument” designed to help countries “become better markets for US exports.” To guarantee that mission, the State Department recently took over the aid agency. USAID and the Army Corps of Engineers now cut in US business and government interests from the start, making sure that money is allocated according to US economic, political, strategic, and military priorities, rather than according to what the recipient nation might consider important.
Though Afghans have petitioned to allocate aid money as they find appropriate, donor countries object, claiming that the Afghan government is too corrupt to be trusted. Increasingly frustrated and angry Afghan communities meanwhile claim that the no-bid, open-ended contracts being awarded to contractors such as Kellogg, Brown, and Root/Halliburton, DynCorp, Blackwater, and the Louis Berger Group are equivalent to licensed bribery, corruption, theft, and money laundering.
The Karzai government, confined to a self-serving American agenda, has delivered little to the average Afghan, most of whom still live in abject poverty. Western notions of progress evident in US-contracted hotels, restaurants, and shopping malls full of new electronic gadgets and appliances are beyond the imaginations or practicalities of 3.5 million war torn Afghan citizens who are without food, shelter, sewage systems, clean water or electricity.
Infrastructure hastily built with shoddy materials and no knowledge or respect for geologic or climatic conditions is culminating in one expensive failure after another. USAID’s website, for example, boasts of its only infrastructure accomplishment in Afghanistan—the Kabul-Kandahar Highway—a narrow and already crumbling highway costing Afghanis $1 million a mile. The highway was featured in the Kabul Weekly newspaper in March 2005 under the headline, “Millions Wasted on Second-Rate Roads.” The article notes that while other bids from more competent construction firms came in at one-third the cost, the contract went to the Louis Berger Group, a firm with tight connections to the Bush administration—as well as a notorious track record of other failed and abandoned construction projects in Afghanistan.
Former Minister of Planning, Ramazan Bashardost, complained that when it came to building roads, the Taliban had done a better job. “And,” he also asked, “Where did the money go?” Now, in a move certain to lower President Karzai’s approval ratings and further diminish US popularity in the area, the Bush administration has pressured Karzai to turn this “gift from the people of the United States” into a toll road, charging each driver $20 for a road-use permit valid for one month. In this way, according to American “experts” providing highly paid technical assistance, Afghanistan can collect $30 million annually from its impoverished citizens and thereby decrease the foreign aid “burden” on the United States.
Jones asks, “Is it any wonder that foreign aid seems to ordinary Afghans to be something only foreigners enjoy?”
UPDATE BY Fariba Nawa
Afghanistan, Inc. is a thirty-page report that digs deep into the corruption involved in the reconstruction of Afghanistan. The report focuses on US government-funded companies contracted to rebuild Afghanistan. The importance of this report is that it’s the first serious look at corruption of aid money spending from a grassroots level. It includes an emphasis on various projects in villages and the cities and it covers all sides of the issue. It shows how big money is spent on bad work.
The report was first published in English through CorpWatch, a watchdog of corporations, on May 2, 2006. It was translated into the Persian languages of Dari and Pashto in September 2006. The companies investigated in the report continue to receive millions of dollars in contracts from the US government despite their incompetence and wasteful spending. Louis Berger, Bearing Point, Chemonics, and DynCorp are still taking American taxpayers’ money and showing minimum results in Afghanistan.
Some of the mainstream press gave the report coverage, including NPR’s Morning Edition, KRON Channel 4 news in San Francisco when it was first published, and later on, BBC radio and many other European outlets continue to call and ask the author about the report. However, that’s a limited response to the fact that this was a groundbreaking report with important information for policy change. The report has been a source for many others researching the subject. If you’d like more information on corruption on reconstruction in Afghanistan, please refer to CorpWatch’s website Integrity Watch Afghanistan is another organization that monitors corruption in the country and produces various reports.
Nine months later the conundrum I described—no peace, no security, no development—still pertains, and Afghan hopes sour.
The US still looks for a military solution. In the first five months of 2007, seventy-five coalition troops were killed (compared to fifty-three in the same period last year), including thirty-eight Americans. Civilian casualties were variously reported—some sources said “almost 1,800”—including 135 killed by US or NATO forces.
The US position on military “progress” against the Taliban, expressed by Defense Secretary Robert Gates on June 4, 2007, as he prepared to visit Afghanistan, remained “guarded optimism.” Gates told reporters a goal of his trip was to insure close coordination of combat operations and development and reconstruction efforts. That’s a switch, suggesting some clue that reconstruction may be a better way to “kill” the Taliban, but leaving unanswered the question of how to coordinate war and peaceful activity.
The real importance of “Why It’s Not Working in Afghanistan” lies behind the front page military coverage—in what it reveals of the systemic scams and should-be scandals of American aid. The story makes news now and then when billions “disappear” from reconstruction projects in Iraq, but to my knowledge it has yet to be investigated by media or congress. What’s discussed is the occasional budgetary black hole that suggests some random malfeasance, in much the same way that torture at Abu Ghraib was discussed as the work of a few “bad apples.”
Maybe reporters don’t want to take up the story because it’s complicated. It’s about numbers. Like Enron. Dreary, ho-hum, life-shattering stuff. I don’t know. But one curious thing: when my book Kabul in Winter appeared in 2006, a very long section on this topic was the one part no reviewer touched.
Now bigger voices than mine speak out. Abdullah Abdullah, the distinguished former Foreign Minister of Afghanistan, recently complained that of every $100,000 promised to Afghan development, less than a third reaches the country. Matt Waldman, head of Afghanistan policy for Oxfam, one of the most respected humanitarian NGOs in the world, wrote in The Guardian (May 26, 2007) that “America is bankrolling Afghanistan” but “as in Iraq, a vast proportion of aid is wasted.” And more to the point, “Close to half of US development assistance goes to the five biggest US contractors in the country.” Waldman argues that too much aid money is lost to high salaries and living costs of international experts, purchase of non-Afghan resources, and corporate profits. He figures the cost of the average expat (read “American”) expert at half a million dollars a year.
So why is it left to representatives of foreign governments, foreign humanitarian organizations, and foreign press to expose this fraud?

To keep up with news about Afghanistan see, a daily roundup of stories from the world’s English language press. For policy issues see the Web site of New York University’s Center on International Cooperation ( or that of the Center’s senior fellow and Afghanistan expert Barnett Rubin ( To keep an eye on the corridors of power see the website of the Center for Public Integrity (, and specifically for information on corporate scams see
Journalists should also be advised that several professional organizations are protesting the increasing difficulty of covering Afghanistan because of interference by US, Afghan, and ISAF forces. They include IFJ (International Federation of Journalists), AIJA (Afghan Independent Journalists Association), and CPAJ (Committee to Protect Afghan Journalists). Currently Afghan journalists are also boycotting the Afghan Wolesi Jirga (lower house of Parliament) to protest its enactment of repressive media laws and the consequent imprisonment of journalists.

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