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Afghanistan: Nations Pledge $4.5 Billion, But Will Money Get Where It's Needed?

  • Antoine Blua

A two-day international conference on assistance for Afghanistan ended in Tokyo today with total pledges of more than $4.5 billion over the next five years. Afghan delegates say they are more than satisfied with the figure, while donor nations expressed their readiness to make concrete their commitments and to help the Afghan people in their reconstruction efforts. But uncertainties remain, notably, how quickly will the international aid be distributed?

Prague, 22 January 2002 (RFE/RL) -- Nearly 50 of the countries that gathered in Tokyo this week say they are prepared to give more than $1.8 billion this year to begin Afghanistan's reconstruction. Longer-term but less-certain pledges are expected to exceed $4.5 billion.

Sadako Ogata is the former UN high commissioner for refugees who acted as the host chairperson of the two-day meeting. Today, she declared the conference a success and called for long-term support for the war-torn country.

"The cumulative amount [pledged for donations] was more than $4.5 billion. Participants agreed on the urgency of rapid disbursement and the importance of addressing the immediate financial needs for the functioning of the Afghan interim authority over the next few months."

There is apprehension, however, that some of the pledges made at the conference could evaporate once Afghanistan's plight loses its prominence. According to the UN, a "startup fund" established for the government after the inter-Afghan conference in Bonn last month has not realized all the money promised. Pledges of almost $18 million were made. Of this, only $8.6 million has been committed.

Mike Taylor is a specialist on the Balkans for the London-based Economist Intelligence Unit (EIU). He says that probably 50 percent of the amount pledged for Afghanistan's reconstruction this year will actually come into the country. He says this is approximately the same proportion of money that became available to Yugoslavia following a donors conference in mid-2001.

Few governments seem ready to deposit cash directly into the coffers of the Afghan interim administration because aid organizations do not yet have a final figure for the full reconstruction of the country. According to Gareth Price, a specialist on South Asia for the EIU, there is also concern that donated funds will be wasted.

Price believes Afghanistan will have to become "relatively peaceful" before donor money starts flowing into the country: "Donors want to have some involvement in what projects their money will actually be spent on."

World Bank President James Wolfensohn stressed the importance of banking reform, auditing, and a transparent financial system in ensuring that the donated money reaches its intended goals.

Hamid Karzai, the chairman of Afghanistan's interim administration, tried to head off these concerns by announcing that eradicating corruption is one of his top priorities. "On our part, we are fully committed to accountability, transparency, and efficiency in the use of financial aid."

As for donors' long-term commitment, some European diplomats say the European Union is prepared to invest heavily in Afghanistan during the coming years only if the country proves it can move away from factional fighting and drug smuggling.

U.S. officials emphasize their commitment is for the long term, but U.S. Treasury Secretary Paul O'Neill warns that the Bush administration is leery of giving money directly to the Afghan government, arguing that "there is no structure there yet to properly control monetary flows."

According to the EIU's Price, "Money will come in in the short term as a sort of emergency relief, ensuring that the civil and social services start functioning," until Afghanistan builds up its institutions. In the longer term, he says, pledges will be delayed because many of the projects have to be done with the cooperation of the Afghans. And considering the state that the country is in at the moment, "there will be a lot of dispute about what the money will be spent on."

Some participants also expressed doubts about the competing agendas of various governments and aid agencies, and the long-term commitment of the international community. Moreover, the varying terms of the pledges make it nearly impossible to determine whether Tokyo met its goal of raising an initial $1.7 billion for this year.

According to a summary of conclusions issued at the conference today, participants agreed that the existing mechanisms of bilateral financial cooperation and contributions through international organizations, such as the United Nations, will be used and that a single trust fund will be entrusted to the World Bank.

The World Bank trust fund has failed to garner much enthusiasm. Wolfensohn, the World Bank president, could not say yesterday how much of the $500 million in aid that his organization is committing to Afghanistan will go into the trust fund.

The Asian Development Bank, which has also pledged $500 million, has also been vague about its contribution to the fund.

Price believes rules still need to be worked out on how the aid will be spent: "I think the problems are going to arise when donors come to actually spending the money and then looking at each project."

Many of the largest donors are opting to give most of their aid bilaterally, because they believe it will have greater political impact.

Malloch-Brown, administrator of the UN Development Program, estimates that the trust fund will eventually represent only about 25 percent of total Afghan funding.

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