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Which is more corrupt: Afghanistan or America?

President of Afghanistan Hamid Karzai and US President Barack Obama hold a news conference

By Michael Hirsh

Karzai cash payments highlight a growing friction as Afghans blame NATO for their poor reputation.

None of President Hamid Karzai’s top advisers knew that he had been receiving tens of millions of dollars in secret cash from the CIA, Afghanistan’s senior anticorruption official said, and he added that he did not believe the Afghan leader’s claim that he had been giving the agency regular receipts for the money.

Mohammad Yasin Osmani, the head of the Independent Joint Anti-Corruption Monitoring and Evaluation Committee, said in an interview last week that he and 39 other advisers who audit expenditures throughout the government “were not aware” of the decade-old payouts, which Karzai acknowledged at a news conference in Kabul on May 4.

But Osmani, like other Afghan government officials, was reluctant to criticize Karzai or accuse him of personal corruption, highlighting a growing friction between Afghanistan and the International Security Assistance Force led by the United States over an issue that threatens to upend the rebuilding effort here, and possibly U.S. plans for a post-2014 “strategic partnership” with Afghanistan. Many Afghan officials and politicians contend that their nation’s reputation for rampant corruption is exaggerated—according to Transparency International, a monitoring group, Afghanistan is the most corrupt nation on earth, along with Myanmar, North Korea, and Somalia. They say that more to blame are poor procedures by ISAF and Washington that hand aid money directly over to graft-plagued contractors and subcontractors.

Ashraf Ghani, a former finance minister who is currently the chairman of the Afghan Transition Coordination Commission, said the Karzai cash controversy is viewed in Washington as simply more evidence of Afghanistan’s corrupt ways. But he asked: “What does it say about the way the American government conducts itself?”

It is, perhaps, a fair point, especially coming after a decade in which the $60 billion American rebuilding effort in Iraq was deemed hopelessly corrupt—in part because, Special Inspector General for Iraq Reconstruction Stuart Bowen concluded in his final report in March, in many cases U.S. officials did not consult with Iraqis closely or deeply enough to determine what reconstruction projects were really needed. Now the Afghans are saying the same thing. Even as the security transition to the Afghan National Security Forces is said to be going more smoothly, civilian transition from U.S. to Afghan oversight is a disaster, Finance Minister Omar Zakhilwal said in an interview. “The transition has not happened,” he said, although as the ISAF-formed “provincial reconstruction teams” are being dismantled.

U.S. aid rules have themselves become a source of corruption, Osmani says. Too many private contractors skim off the top as they subcontract a job out, a practice that the Afghan government itself would not permit, he says. Beyond that, “nobody has the right [in the Afghan government] to monitor international community projects,” and yet international auditors are often too leery of going to insecure areas. So little monitoring occurs. And in some cases U.S.-built projects appear to be following the pattern in Iraq. Osmani cited a case in which the Special Inspector General for Afghanistan Reconstruction, John Sopko, criticized a $73 million contract given by the U.S. Army Corps of Engineers to DynCorp International for a shoddily built Afghan National Army base in Kunduz Province. “They didn’t allow the [Afghan] government to go out and supervise the project!” Osmani said.

The finger-pointing on both sides suggests a long-married couple—10 years of geopolitical marriage in this case—who are fed up with each other but can’t bear the idea of divorce. And the mood is getting testier. In a recent report, Sopko accused the Afghan government of “targeting American contractors with unjust taxes and intimidation.” Zakhilwal says the allegations are false. Even in the case of Afghanistan’s biggest economic weakness, the heroin trade, Afghan officials say the corruption is far greater outside Afghanistan than inside. “From 2002 to 2009, $420 billion to $460 billion was made by international dealers [out of Afghanistan], while $18 billion made by the Afghan mafia,” says Ghani, citing a report by the U.N. Office on Drugs and Crime. “The illegal economy is totally integrated into globalization: with credit and transport.”

The question of whether Afghanistan is just too corrupt to save has shaped the entire U.S. approach to post-9/11 Afghanistan, tilting the Obama administration gradually away from “nation-building” and toward a more pared-down counterterrorism strategy. In February 2008, three U.S. senators who are today the Obama administration’s key foreign-policy heavyweights—Joe Biden, Chuck Hagel, and John Kerry—had a crucial dinner with Karzai at the Afghan president’s palace. After Hagel raised the subject of corruption in Karzai’s government, including runaway graft and narcotics connections, Karzai replied, “My dear senator, there is no corruption in my government.” Things then got testier. The American visitors insisted they had a list of corrupt officials and that Karzai’s brother was at the top of it, but the Afghan leader disingenuously denied it all—until Biden, by the dessert course, threw down his napkin. “This dinner is over,” he said, walking out. Hagel and Kerry followed.

Biden never really regained his trust in Karzai, and by 2009, after he became Barack Obama’s vice president, he turned into the new administration’s No. 1 skeptic about nation-building. The doubts about Karzai, culminating in charges of election fraud, also poisoned the Afghan president’s relations with the late Richard Holbrooke, Obama’s special representative for Afghanistan. Karzai continues to deny charges of personal corruption, including about the CIA money. “This money was not given to warlords,” he said at the May 4 news conference in Kabul. “The major part of this money was spent on government employees such as our guards…. It has been paid to individuals, not movements…. We give receipts for all these expenditures to the U.S. government.”

Even Osmani is skeptical about that last point. Asked whether he believed there were “receipts,” he responded, “No.” But there are clearly two sides to every corruption story, and the U.S. and Afghan governments need to get their stories straight if the “partnership” is to survive after 2014.

Michael Hirsh is chief correspondent for National Journal. He also contributes to 2012 Decoded.

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