Buying local: Will the US troop pullout pull the afghan out from under the Afghan economy?

Andrew Shaver, MPA


American military officials have initiated plans to withdraw the first contingent of US forces from Afghanistan this year despite the Afghan government’s dependence upon US operations for its own security and political survival. No less important, though infrequently mentioned, is the very uncertain economic future for Afghanistan in the wake of American withdrawal. The Senate Foreign Relations Committee cautioned earlier this summer that, without proper planning, Afghanistan “could suffer a severe economic depression when foreign troops leave…” Meanwhile, the Congressionally-mandated Commission on Wartime Contracting (an independent, bipartisan group established to study wartime contracting in Iraq and Afghanistan) warned in its final report this summer that many social and security programs developed in Afghanistan by the US government likely cannot be sustained by the government of Afghanistan.

While significant investigation has been done into the nature and possible effects of the significant State, Defense, and USAID spending in Afghanistan, similar scrutiny has not been applied to a major Department of Defense (DoD) program established in 2006 under which many billions of dollars have been spent on goods and services procured from Afghan firms.

Last month, Defense officials provided me with data recently made public on all contractual obligations made to Afghan firms by US Central Command’s primary contracting entity. The data are impressive. Based on commitments already made this year, DoD is on track to make more than $2 billion in obligations with Afghan firms by in fiscal year 2011. (To put matters in perspective, Afghanistan’s 2010 gross domestic product was roughly $27 billion.) While the US military begins to reduce its presence in Afghanistan, CentCom spending on goods and services provided by Afghan firms continues to increase significantly – obligations this fiscal year are 100% greater than 2009 and are set to exceed 2010 obligations by more than half a billion dollars.

Policymakers should consider possible effects on Afghanistan’s security conditions of terminating, quickly or slowly, billions of dollars in business with local firms. Has DoD business with local firms created industries that will remain functional in the years following America’s withdrawal? Has military spending created bubbles of economic activity that threaten to implode as the war effort grinds to a halt, leaving ranks of young males unemployed and susceptible to terrorist recruiting?

It is possible that the effect will be minimal. Of the roughly $1.7 billion already committed this fiscal year, nearly $1 billion are slated for purchases of various commodities. Because contracting guidelines do not require that Afghan businesses satisfy strict local-content or local-hiring requirements, little deters these firms from importing such commodities from abroad. Thus, the cessation of spending in Afghanistan may do little more than sound the death knell for an inflated market of Afghan middlemen. My discussions with contracting officials deployed in theater tend to corroborate this possibility. However, no formal study has been undertaken in this regard.

However, on the services side, data indicates that there may be jobs at stake, albeit within a somewhat narrow set of industries. Of the remaining approximately $700 million obligated this fiscal year, most are designated for the provision of “professional, administrative and management support services,” “utilities and housekeeping services,” and “transportation, travel, and relocation services.” Central Command also reported recently employing over 46,000 Afghans and estimated that a further 18,000 Afghans are employed as private security contractor personnel. Granted, many of these jobs may remain in place following a draw-down. But research into the way such industries have developed through US military spending is needed to provide policymakers with better understanding of how the timing and magnitude of troop withdrawal might ultimately affect Afghanistan’s economy.

Getting at such a question may not be as challenging as might otherwise be the case. Last year, now-retired General David Petraeus *85 *87 and Admiral Mike Mullen established Task Force 2010 to examine whether the Department’s contractual spending in Afghanistan is undermining efforts to stabilize the country. So far, this mandate has translated into investigations into whether funds have fallen into the hands of insurgency members, culminating with this summer’s finding that that the Taliban has extracted rents on US transportation spending. Yet, as an organization created to “follow the money,” as Petraeus testified to Congress, Task Force 2010 not only enjoys senior-level support but employs the type of civilian and military experts qualified to consider the broader effects of major contract spending on the country and the implications for its withdrawal. If properly resourced and directed, the task force could offer policymakers a unique way forward. Let’s hope.


A version of this article was published earlier this month by the Small Wars Journal blog, and is accessible here.

Rebalancing civilian-military operations: A two-way street

Rashad Badr, MPA


There is a great deal of discussion about the need to adjust the balance between civilian agencies and the military in executing U.S. foreign policy and programs. The easiest argument to make is that the vast American defense complex overshadows US diplomatic and developmental efforts in almost every way. The Department of Defense (DoD) budget in 2010 was $691 billion, whereas the State Department’s budget for that year was just $16.4 billion. The United States Agency for International Development (USAID), the development arm of State, similarly faced a shorter stack in pursuing its goals abroad. However one wants to add it up, defense spending surpasses civilians projects by about 40 to 1.

Other State advocates point to the sprawling manpower that the military possesses when compared to its civilian counterparts. Just one example of this mismatch: the personal staff of the Central Command Combatant Commander (CCDR) – known for previously serving a famous Woodrow Wilson School graduate, General David Petraeus *85 *87 – is larger than many of the embassies that fall into Central Command’s theatre. When CCDRs travel, they normally arrive with a small army of assistants and personnel. When I saw Assistant Secretary of State Jeff Feltman travel to the Middle East last summer, he traveled with a single assistant.

Secretary of Defense Robert Gates has argued before Congress that the State Department needs more funding. Secretary of State Hillary Clinton, with the help of our very own former dean, Professor Anne-Marie Slaughter, has pioneered the Quadrennial Diplomacy and Development Review (QQDR). In it, Clinton and Slaughter aim to remap American diplomatic and developmental efforts, putting them on par with defensive operations, in accordance with President Obama’s “3D” approach to foreign policy: defense, diplomacy, and development. This document has many creative ideas and useful insights. But what have we seen of it so far?

More importantly, we’ve heard all of this before. So what should we do about it?

Unfortunately, the situation is bit more complex than a simple issue of funding parity or even mission creep. But first off, let’s get one thing straight: I’m a big fan of State and a staunch advocate for the need to elevate diplomacy as a tool of national security. That being said, the department needs to critically alter its mission and operations in three ways.

First, State has to get serious about assuming greater risks while conducting diplomacy. Current security measures, left largely in the hands of Regional Security Officers abroad, effectively keep diplomats trapped behind embassy walls. If a country is deemed “dangerous,” then diplomats have to jump through numerous hoops before they are allowed to leave compound – and when they do get permission, they have to be escorted by armed guards and in armored vehicles. There is something counter-intuitive about effectively marginalizing our Foreign Service Officers in the places that need the greatest diplomatic efforts. Of course relaxing these standards will come with attendant risks and dangers, but diplomacy is a dangerous endeavor. Unfortunately, the State Department’s allergy to potentially hostile situations – to which the military is largely immune – has ultimately led to its marginalization.

Second, the department needs to reassert control over peacekeeping, nation building, and wartime operations. The US’s two biggest engagements currently are in Iraq and Afghanistan. A study of peacekeeping operations and nation building efforts in both of these countries reveal DoD dominance in both developmental and diplomatic activities. Diplomats and aid workers argue that they simply don’t have the funding or the operational capacity to work in these environments. Fine, but let’s also not forget that the State Department’s mission has been steadily cut down since the Clinton presidency (without much of a fight might I add) and traditional State and USAID operations have been farmed out to DoD. In fact, one of the biggest complaints I hear from people in uniform (at all levels) is that State and USAID are just not stepping up to the plate. State and USAID will have to not only reassert themselves in these areas on a macro level, but take substantive steps to fund and train civilians in taking over from DoD.

Which brings me to my third point: the State Department needs to implement its goal of “engaging beyond the state,” as referenced in the QDDR. In Iraq and Afghanistan, that means picking up some of the work done by Special Operations in navigating and channeling tribal and ethnic currents. Elsewhere in the world, it means engaging outside of our “comfort zone,” to include more engagement with Islamist groups and opposition movements. American diplomatic efforts will always be limited if we (read: American policymakers) are content engaging with official, traditional government counterparts and Western, liberal thinkers. American diplomacy cannot be considered robust if it is not widened to take into account the full spectrum and picture of political actors operating in today’s complex international environment.

These criticisms may come off as a bit harsh on the State Department and USAID, but these are necessary issues to keep in mind if civilian efforts will ever near parity with military power. Because at the end of the day, American policymakers can’t just ask DoD to give up turf; they need to have a strong and aggressive civilian sector willing to pick up and take over.