World Bank Report Sketches Reconstruction Challenges for Afghanistan

A World Bank report says the cost of stabilizing Afghanistan will run into the billions of dollars and test the international community's commitment to economic development. The report calls for the establishment of an international trust fund for Afghanistan, managed by a "credible institution." It also urges the creation of a reconstruction agency to build and manage development projects.

The World Bank "Approach Paper" said Afghanistan required a comprehensive modernization program if the country was to break a two-decade long vicious cycle of violence, which ultimately caused the country to become a major training ground for global terrorism.

"Merely restoring the pre-1978 economic situation in Afghanistan (even if it were possible) would leave the country one of the poorest in the world," said the report, referring to the conditions that existed prior to the Soviet occupation in 1979.

"This would make the task of maintaining political stability and promoting national integration very difficult, and would leave Afghanistan highly vulnerable to resurgence of conflict," the report continues. "Reconstruction will need to be combined with a major development effort."

The approach paper says it is "premature" to put an overall price tag on Afghanistan's reconstruction/development. However, the World Bank stresses that "the financial cost will be high, reflecting the toll taken by two decades of conflict."

For example, identifying and defusing all landmines in Afghanistan could cost as much as $500 million, the report estimated. At the same time, up to one-third of Afghanistan's population is vulnerable to drought, and is in urgent need of humanitarian assistance.

The report examines reconstruction efforts in other regions to provide context for the challenges facing Afghanistan. It says that Lebanon, with a population of 4 million, was estimated to have a need for $400 million per year for 10 years. Meanwhile, during 1995-99, the international community pledged $5.4 billion in humanitarian and reconstruction assistance for Bosnia-Herzegovina, a country of about 5 million.

Afghanistan has even greater needs than either Lebanon or Bosnia, while having an overall population of roughly 25 million - almost three times that of Lebanon and Bosnia combined. "The combination of reconstruction with urgent development needs will further raise the cost of reconstruction in Afghanistan," the report says.

The World Bank says that it is taking action to accelerate the international response to rebuilding Afghanistan, attempting to coordinate activities with other institutions, including the International Monetary Fund, the Asian Development Bank and various United Nations agencies. In the near-term, officials were working on rescheduling Afghanistan's $48 million in arrears to various international agencies.

The Afghanistan reconstruction effort, according to the World Bank, can't stop with the rudiments of aid. It must also embrace "sound economic management institutions" such as a Central Bank, Ministry of Finance, Treasury and Statistical System - a staggering concept for a country that still relies heavily on moneychangers.

"We don't want to go for state of art in the beginning," says William Byrd, acting country manager for Afghanistan at the World Bank. But he says a healthy financial infrastructure will be needed to manage development, once the more immediate emergencies such as food and shelter are eased. "You need a central bank that works and finance and aid management. You also need some basic building blocks - these are all things to be kept in mind. It will be a difficult task," Byrd said.

The approach paper also argues that an international "trust fund" would be the best way to channel development assistance to Afghanistan. Oversight for the fund would be the responsibility of an existing institution "with sound mechanisms for resource allocation and accountability," the paper says.

"Although not all assistance [for Afghanistan] would need to be channeled through such a trust fund, the proportion of unearmarked funding in the international assistance effort would need to be high enough to ensure the coherence and alignment of assistance with overall strategy," the paper adds.

Finding a sufficient number of contributors for an Afghanistan trust fund to meet needs may prove challenging, some observers say. Perhaps one of the biggest difficulties, suggests Tom Gouttierre, Director of the Center for Afghanistan Studies at the University of Nebraska, will be getting the United States on board. "I think the success will be directly proportional to the degree the United States steps out in front and leads this, not just as a multilateral effort but also bilateral," he says. "If the banner isn't hoisted high, then, generally speaking, the multilateral effort will lag."

Gouttierre went on to express concern about the depth of the US commitment to Afghanistan's economic development. "Our track record isn't good."

The World Bank argues that there are economic advantages - not just military objectives - for investing in the future of Afghanistan. "Where there could be a big payoff down the line for the region around Afghanistan will be options for transport, trade and energy," Byrd says. "The conflict in Afghanistan has been a tremendous drag on Pakistan and the surrounding region." For instance, some of the best potential trade and transport routes for Central Asia run through Afghanistan.

Don Ritter, a former US congressman who founded the non-profit Afghanistan-America Foundation, says: "I'm surprised we haven't been talking more about reconstruction. We might as well talk about it and get points from the Muslim countries." His organization, based in Washington, DC, has its own reconstruction ideas, including helping Afghan refugees who are lawyers, doctors, teachers and other professionals interested in returning to the country. There are tens of thousands of such professionals scattered around the globe, and many have expressed a keen interest in returning to their native home - even offering their own money, Ritter says.

"This is not going to be a great place to make a lot of money," admits Dr. Gouttierre. "But we need stability there, and we owe them a Marshall Plan of reconstruction. As John Kennedy said, we have the means - we only need the will to do it."