Afghanistan: Arranging the building blocks


	January 22, 2002	atimes.com

Japan

Afghanistan: Arranging the building blocks
By Richard Hanson

TOKYO - Potential donors to the cause of reconstructing Afghanistan began loosening their purse strings on Monday in Tokyo, as nature provided an unseasonable roll-call of thunder and lightning over the posh neighborhood where delegates from 61 countries and 21 international organization met to raise billions of dollars for the long task ahead.

The biggest sources of funds for the war-torn nation led the way at the start of the hastily organized two-day meeting. They made some show of pledging generous amounts of much needed grant aid in the medium-term to help to support the efforts of a one-month-old interim Afghani government.

"Others have come in at the top end" of expectations, said the administrator of the United Nations Development Program (UNDP), Mark Malloch Brown, which along with the World Bank and the Asian Development Bank (ADB) are overseers of a trust fund established to pool a good portion of the money flow.

Donors choose their own mix of aid. Some prefer bilateral grants directly to Afghanistan and others assistance outside of the trust fund. About three-quarters of the money expected to be pledged through Tuesday is likely to be in such diverse forms.

Aid experts prefer pooling through a trust fund because it gives the receiving government more assurance that budget plans can be met. The broad trust fund being created has yet to be named, but it is open for business. Among the advantages of a trust fund is that it should simplify somewhat the delicate and complex problem of accounting for who actually gives money and how it is eventually spent, the bane of nearly all aid programs in times of disorder.

A new data base system, dubbed the Global Gateway, is being created to monitor how all the funds are being managed. This system should be able to report on a constant or real-time basis for a country where chaos has been about the only real constant for two decades.

The president of the ADB, Tadao Chino, says that the trust fund itself will be managed in line with the most stringent international standards. "That makes me a little bit optimistic," Chino said.

The real test will come after the first two-and-a-half years of aid management as that's when a permanent government is expected to be created in Afghanistan.

Drawing up a pecking order of donors is tricky at this stage among the countries announcing amounts. Japan, the host and a co-chair of the "International Conference on Reconstruction Assistance to Afghanistan", said that it would provide up to US$500 million over two-and-a-half years. Japan expects to cover as much as about 20 percent of total grants expected to be raised. Of the other co-chairs, the United States is committed to provide $296 million over one budgeting, or fiscal, year. The European Union (EU) pledged $500 million for a fiscal year. Saudi Arabia will provide $220 million over three years.

Among the international organizations, the World Bank and the ADB, which have the most solid financial backing, will be major contributors. The World Bank, for example, says that it will provide up to $50-70 million in immediate grant assistance. Pending shareholder approval, the World Bank proposes $500 million in concessional aid over a 30-month period. The ADB puts its plans at around $500 million over 30 months, but, as Chino remarked, "There is no upper limit."

Afghanistan obviously needs very long-term financing at rock bottom interest rates to tackle a mammoth rebuilding of a basic national infrastructure. On a smaller but also vital scale, the country's government also needs fast cash just to pay its immediate bills, such things as salaries for civil servants that have not been paid for months.

The UNDP has extended emergency aid for such basics. Some $20 million has been provided, about half of which came from the EU. Such aid will end by June or sooner. What the interim government of Hamid Karzai needs is the means to collect taxes so that the administration can finance itself.

The final tally for what will be committed to Afghanistan is unlikely to match precisely the foreseeable needs over the next decade. Those numbers are probably best left rounded out in billions of dollars ($10 billion or $15 billion, maybe). In real terms, what is at stake is providing a list of priorities that starts with being able to grow food and provide a means for people to have a livelihood.

"Schools, fields and jobs," is how World Bank President James D Wolfensohn summed up the dilemma. That the welfare of women and children is a big concern of the country is a constant theme heard from men who are otherwise regarded as bean counters in the grant aid business.

A bit of thunder, lightning and rain falling on the conference may have helped clear the air for the final tallies on Tuesday.

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