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Afghanistan: Endless International Aid Brought Nothing but Corruption and Dependency

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Afghanistan represents not only a military but a political defeat for the West, which poured millions of dollars into funding the backward country. Over nearly 20 years of intervention, Afghanistan received just over $76 billion in international aid, not counting $83 billion invested by the United States in the Afghan Security Forces.

Despite the fact that international aid accounted for as much as 50% of Afghan GDP, the economy never really took off. It is true that from 2006 to 2012 there were significant periods of economic growth, but as soon as aid began to decline, the Afghan economy stagnated.

The Afghan economy is highly dependent on transfers, as shown by its cycles that oscillate with international aid flows. (World Bank)

The recession naturally pushed many people into poverty, according to the latest survey, organized by the European Union and the Central Statistics Organization of Afghanistan. In the Muslim country — during 2011 — about 38% of Afghans lived on less than a dollar a day and by 2017 it was more than 55%.

The private sector is “extremely narrow” in the World Bank‘s own words and the vast majority of the population is still concentrated in very low productivity agriculture: 44% of the population is supported by agriculture, while 60% receive income from agriculture. The massive international aid failed to diversify the Afghan economy.

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The impact of violence in the country should not be discounted, as the constant war situation in many regions scares off any idea of investment or the creation of local businesses that depend on stable and secure value chains. In the last 6 years, the armed conflict has left 10,000 civilian victims annually. What is disconcerting is that the large investments in the Armed Forces have not prevented Afghanistan’s ongoing security problems.

The achievements of international aid

This is not to say that international aid was of no use, it is true that Afghanistan had important achievements as a result of the democratization of the country, such as the decrease in the maternal mortality rate per 100,000 births from 1,450 deaths to 638; or the decrease in chronic child malnutrition, which fell by almost 20 percentage points.

The literacy of the population also grew significantly, and now more than 70% of young men and almost 60% of young women can read. A considerable achievement when two decades ago less than 30% of women could read.

Millions of Afghans fell into poverty as the amount of international aid received by the government decreased. (EFE)

Thousands of Afghan men and women received a college education in institutions founded under the American model such as the American University of Afghanistan, and some had the opportunity to be educated in the United States.

However, neither more educated people, nor greater access to health services, nor a millionaire military assistance served to make Afghanistan a sustainable, equitable or secure country. On the contrary, Afghanistan may find itself in as delicate a situation as it was in 1996.

International aid helped finance the structures of corruption within the Afghan government

The truth is that the Afghan ruling class cared very little about leaving a better country, while their efforts were focused on living off international aid, on which 75% of the government’s budget depended even by 2020.

Customs officials in Afghanistan, for example, were known as “the men with the golden chairs,” as up to $500 million worth of international aid was lost annually in customs clearance in Afghanistan.

International aid also failed to create a transparent or efficient public sector based on meritocracy. It is estimated that up to almost half of the Afghan civil servants paid a bribe to their superiors to keep their jobs, positions were reserved not for the most qualified but for whoever was willing to pay the most.

Corruption was endemic in all institutions of the Islamic Republic of Afghanistan, starting with its own Armed Forces. (EFE)

The degree of corruption reached such an extent in Afghanistan that even in the Armed Forces there were “ghost soldiers,” that is, they were not among the ranks of the battalions, but they did receive a salary. Millions of dollars were lost through this ruse.

International aid brought spending power to Afghanistan, but not development

The truth is that while international aid artificially increased the spending capacity of the Afghans, it never increased the country’s domestic productivity, as the country’s trade balance shows. While imports quadrupled in 4 years, exports never stopped being stagnant.

Afghanistan’s trade balance reveals that while the Afghan population artificially had more income to demand more from the world, it never acquired the productivity to produce more. (OEC)

As Princeton University economist Atif Mian makes clear, “There was a spending boom, which faded as soon as international flows stagnated.” Even if international aid helped increase Afghanistan’s physical capital stock, it was not enough to increase the country’s productivity.

Although international aid constituted up to half of the Afghan GDP, there was never a focus on increasing the country’s productivity, and even though imports of goods increased, as Mian mentions: “You cannot import development.”

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica