Briefing Book

Addicted to Contractors

The United States is hooked on privatized warfare in Afghanistan. And it's more costly than you think.

Bring up the wars in Iraq and Afghanistan, and one of the first things bound to come up is contractors -- companies such as Blackwater/Xe, DynCorp, and ArmorGroup. But what most Americans do not realize is that they've only seen the tip of the iceberg. The United States has become addicted to contractors -- and it's an unsustainable habit.

In 2009, contractors accounted for 48 percent of the Defense Department's workforce in Iraq and 57 percent in Afghanistan, according to the Congressional Research Service. The State Department and U.S. Agency for International Development (USAID) use them extensively as well. Compare that with the height of the Vietnam War, when contractors accounted for 13 percent of the U.S. presence on the ground; today, contractors in Iraq and Afghanistan outnumber American men and women in uniform.

In addition to providing security, contractors feed, clothe, and house U.S. troops; they train army and police units, spearhead development projects, and even oversee other contractors and subcontractors. Without contractors, the United States would undoubtedly need a draft to ramp up its troop presence in Afghanistan.

Waging war through contractors also means a lot of waste. Money must change hands multiple times in a foreign country -- a standing invitation for corruption. The contracting apparatus spawns a web of complex financial transactions that the U.S. Congress cannot effectively oversee. Funding it is equally problematic; Washington continues to finance the struggle against terrorism through supplemental appropriations as though they were emergency operations. As the Special Inspector General for Iraq Reconstruction (SIGIR) has painstakingly documented, throwing taxpayer money at a problem in this fashion has led to astonishing waste, fraud, and abuse. Unless something changes, Afghanistan will be no different.

But perhaps most alarmingly, Washington's addiction to outsourcing has rendered much of its war-fighting wholly opaque. Despite having spearheaded the Federal Funding Transparency and Accountability Act (FFATA) as a senator, Obama is now leading a war in Afghanistan whose funding is effectively a black hole. The website USAspending.gov, created by FFATA, provided data for the analysis below. Yet information on subcontracts, the vehicle for operationalizing most contractor spending, was supposed to be made available to the public by January 2009. Nearly a year later, it remains shrouded in secrecy (the site is still "under development").

This means that taxpayers have little information about whom their government is paying to carry out the counterinsurgency campaign in Afghanistan. Thanks to USAspending.gov, we can at least follow the money flowing through prime contracts and grants for the main government agencies involved in the reconstruction of Iraq and Afghanistan. Here's a taste of how bad it has gotten:

 

 

 

 

 

 

 

In 2008, 82 percent of the Defense Department's budget went out the door in contracts and grants. About 83 percent of the State Department's requested budget did the same. At USAID, contracts and grants represented 96 percent of the net cost of operations. The high percentages in part reflect the financing of "contractors' wars" through supplemental funding legislation.

 

 

 

 

 

 

The steep rise in contracts and grants as a percentage of budgets from 2003 to 2008 reflects the full costs of fighting two contractors' wars simultaneously. Foreign policy has been effectively privatized.

 

 

This graph shows the ratio of federal money to federal employees, a figure that has grown dramatically over the last 50 years as spending has far outstripped human capacity to oversee it. Far from easing that burden on federal employees, contractors make the work of oversight even trickier in some respects. The U.S. federal government had the same number of full-time employees in 2008 as it did in 1963, yet the federal budget has more than tripled in real terms since then. The gap in service delivery is, in part, filled by contractors. But each federal employee is consequently responsible for the oversight of three times the taxpayer money that they would have been a half-century ago. The U.S. government today is but a shadow of its former self, with "big government" defining only the spending.

Methodology

All data on contracts and grants come from USAspending.gov (access dates: Sept. 24, 2009, for Defense and State Department data, and Oct. 1, 2009, for USAID). Although the site does not indicate such, USAspending.gov is a live data stream, and numbers can change from month to month for fiscal years that have long closed out. Yes, this is problematic for the cause of transparency.

Defense Department: Budget figures are from the Government Printing Office online at www.gpoaccess.gov. These figures are from the Defense Department's discretionary budget authority and do not include emergency funding requests, discretionary outlays, or mandatory outlays.

State Department: Budget figures were taken from the State Department budget online at http://www.state.gov/s/d/rm/rls/bib/.

USAID: Budget figures were taken from USAID Performance and Accountability Reports, online at http://www.usaid.gov/policy/afr08/. The figure used is "Net Costs of Operations" listed under the Statement of Net Cost.

Data on federal employees were taken from historical tables in the president's budget, online at http://www.whitehouse.gov/omb/budget/Historicals/ (see tables 17.1 and 17.2). Calculation of total federal employees was by end-of-fiscal-year count from 1945 to 2005; 2008 data was counted by number of full-time equivalents.

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Briefing Book

Money Can't Buy America Love

Millions of dollars are being pumped into hearts and minds projects from Kabul to Kandahar. Trouble is, it's not working. And it might even be making things worse.

While the debate over a troop surge in Afghanistan rages on, there has been virtual silence on the effectiveness of another central component of the U.S.-led strategy in Afghanistan: the surge of money intended to win Afghan hearts and minds. The figures are astounding: Next year, Commander's Emergency Response Program (CERP) funds, the monies available to the military to support projects intended to "win hearts and minds," are projected to nearly double to $1.2 billion. This far exceeds the U.S. Agency for International Development's (USAID's) global education budget of approximately $800 million. Even more startling, our research finds that such aid might be hurting -- or at best, not helping -- U.S. counterinsurgency efforts in Afghanistan.

Signs of just how important a weapon aid money is for the military are cropping up left and right, most prominently in the last tenet of the counterinsurgency mantra -- "shape, clear, hold, and build." An April 2009 U.S. Army handbook, Commander's Guide to Money as a Weapons System, provides operational guidance to military officers in war zones like Afghanistan to use money "to win the hearts and minds of the indigenous population to facilitate defeating the insurgents." The idea is to undermine insurgent support by providing a better life for local populations than militants ever could.

National security interests have always had a major influence over development assistance priorities, most notably during the Cold War. But never has aid so explicitly been viewed as a weapons system -- a fact that is having a major impact on the development assistance policies and priorities of the United States and indeed of many other Western donors. Most notable, perhaps, has been the dramatic increase in U.S. official development assistance since the Sept. 11, 2001, attacks. According to former Brookings Institution scholar Lael Brainard's book, Security by Other Means, the post-9/11 period has seen U.S. foreign assistance funding increase at a faster rate "than at any point since the onset of the Cold War." Marketing aid as a strategic "weapons system" is clearly a more effective way to convince Congress to appropriate funds than calling to alleviate human suffering and poverty in far-flung corners of the developing world.

The primary objective of U.S. aid to countries such as Afghanistan is also shifting -- from development for its own sake to the promotion of security. The result is that funding for insecure areas takes priority over secure areas. The main NGO coordinating body in Afghanistan reported that in 2007 more than half of USAID's large assistance program was spent in only four insurgency-affected provinces in the south, with the remainder split among 30 others. The leaked assessment of Gen. Stanley McChrystal calls for an even greater prioritization of resources "to those areas where the population is threatened." USAID's "new approach" in Afghanistan explicitly acknowledges that its development program is part of a broader counterinsurgency strategy and that its "essential initiatives" where it "will target areas" in conjunction with military forces and the Afghan government will therefore be in the perilous east and south. This prioritization of insecure over secure areas is not surprisingly being bitterly criticized by Afghans living in more stable areas, who feel they are being penalized for being peaceful.

All this amounts to what many fear is the "securitization" of aid, as more and more aid funding is being channeled through military forces or civil-military teams, such as the provincial reconstruction teams, rather than more traditional civilian humanitarian and development agencies.

Yet despite counterinsurgency doctrine's heavy reliance on the assumption that aid "wins hearts and minds," not to mention the billions of dollars being spent on it, there is remarkably limited evidence from Afghanistan supporting a link between aid and stability. The unquestioned faith in this assumption is particularly surprising given the considerable comparative research and historical evidence from Afghanistan highlighting exactly the opposite conclusion. The social forces that development and modernization often unleash, the literature notes, are often destabilizing. Many historians, for example, attribute the overthrow of King Amanullah from 10 years of rule in 1929 to the strong resistance to his Ataturk-style modernization efforts in the conservative rural hinterland. More recently, large-scale U.S. and Soviet foreign aid programs intended to win hearts and minds in Afghanistan during the Cold War did help promote development -- but they did little to promote stability. Indeed, a 1988 study conducted for USAID titled "Retrospective Review of US Assistance to Afghanistan: 1950-1979" damningly concluded: "The use of aid for short-term political objectives ... tended to ... weaken the longer-term political interests of the United States. Aid as a tool of diplomacy has its limitations when politically motivated commitments are at much higher levels -- and promise more -- than can reasonably be delivered in economic returns."

Our own research, conducted in 2008 and 2009 through the Feinstein International Center at Tufts University, found the same -- that there was very little evidence of aid projects winning hearts and minds or promoting stability. This should not come as a surprise; after all, the major factors perceived to be fueling insecurity have little to do with a lack of social services or infrastructure. Instead, one of the main reasons given by the Afghans we interviewed for the growing insurgency was their corrupt and unjust government.

As one tribal elder in the southeastern province of Paktia put it, the very real "lack of clinics, schools, and roads are not the problem. The main problem is we don't have a good government." He continued, "There's a growing distance between the people and the government, and this is the main cause of the deteriorating security situation." Interviewees also cited the geopolitical ambitions of Pakistan, ethnic and tribal grievances, and the behavior of the international military forces as destabilizing factors. Unemployment came up as well, but the short-term "cash for work" jobs offered on road-building or other reconstruction projects were not having any significant or sustainable stabilizing effect. Although more and more resources are being directed toward building roads because of their perceived stabilizing benefits, our research highlights the overwhelming importance of context. In areas where insecurity remained chronic and governance structures broken, the road-building cash has tended to fuel corruption (both perceived and real), intercommunal strife, and competition between local warlords.

The findings go further. Not only are foreign aid projects unlikely to make either the Afghan government or its international backers more popular, but reconstruction assistance seems in fact to be losing -- rather than winning -- hearts and minds. As the conflict has proceeded, Afghans' perceptions of U.S. and international aid, as well as those who deliver it (be they military forces, the government, aid contractors, or NGOs) have grown overwhelmingly negative. Common complaints included: too little or nothing accomplished (despite in some cases considerable evidence all around of many recently implemented projects), a perception that other communities received more aid, very poor quality workmanship, the wrong kinds of projects for the setting, and the list goes on. However, the single overriding criticism of aid was the strong belief that it was fueling massive corruption, which undermined some of the positive impacts it may have otherwise had. (A notable exception to this was the Ministry of Rural Reconstruction and Development's National Solidarity Program, which was viewed more positively for the greater role that local communities played in the planning, design, implementation, monitoring, and evaluation of the projects.)

Our research found that not only is aid not contributing to improved security, but in some cases it may actually be fueling the conflict. In the zero-sum nature of Afghan society and politics, where the gain of one individual, village, tribe, or ethnic group is often perceived as a loss for others, aid projects can often be destabilizing by creating perceived winners and losers. In the southern province of Uruzgan, for example, one government official complained, "The problem of foreign aid exacerbated the situation because Durranis [a major Pashtun tribe to which President Hamid Karzai belongs] not only got all the power in government, but some also controlled and benefited from all the aid programs."

Indeed, donors often (if unwittingly) bankroll unsavory elements both within and outside the government. Many important actors are profiting a great deal from the growing insecurity in Afghanistan -- and the money that comes with it. Just one example comes from the numerous reports of the Taliban, local warlords, and private security companies (usually with links to senior government officials) being paid to provide security -- or at least not to create insecurity -- for road convoys and donor-funded construction projects. A recent article in The Nation states that U.S. military officials in Kabul estimate that "a minimum of 10 percent of the Pentagon's logistics contracts -- hundreds of millions of dollars -- consists of payments to insurgents."

It is important to note that the overwhelmingly negative assessment of aid comes at a time when more aid is pouring into Afghanistan than at any other point in its history. There have indeed been some important successes from that investment -- from improvements in the health and education sectors to infrastructure to telecommunications. But the flood of free money since 2001 has also raised expectations about what foreign aid could and should achieve. This raises the question that, in one of the world's poorest countries, how much reconstruction and development aid will be necessary to win hearts and minds and bring about stabilization?

The most destabilizing aspect of aid, however, is its role in fueling corruption. And here, Western donor governments have been slow to acknowledge their contribution to this problem. Our research suggests that the failure to win Afghan hearts and minds is not because too little money has been spent. In fact, money has been part of the problem. Spending too much too quickly with too little oversight in insecure environments is a recipe for fueling corruption, delegitimizing the Afghan government, and undermining the credibility of international actors. But policymakers also ignore the most obvious, effective, and quickest way to reduce corruption: reduce funding, especially in the most insecure areas, to levels more in line with what Afghanistan can absorb. Future benchmarks for success, as well as incentive structures for both military and civilian institutions, should be changed from the number of projects implemented and amounts of money spent to ensuring accountability and the quality and impact of programs.

Improved security is clearly the top priority for the vast majority of Afghans, not to mention the international community. If there were compelling evidence that aid money could get the job done, treating it as a "weapons system" against the Taliban-led insurgency would be understandable. But in the absence of such evidence, development assistance should be used to promote what it has demonstrated that it is well-suited to achieve -- development. It makes little sense to waste billions of dollars on the dubious assumption that money can buy Afghan hearts and minds. Afghans can tell the difference between being assisted and being bribed. "Foreigners think money is the only issue," one tribal elder said. "Money can't win hearts and minds. If you give an Afghan a great meal but insult him he will never come again. But if you treat him with respect but only give him a piece of bread he will be your friend forever."

MANPREET ROMANA/AFP/Getty Images