Foreign Investment

Afghanistan Has Cost the U.S. More Than the Marshall Plan


The U.S. has now spent more on the reconstruction of Afghanistan than it spent on the Marshall Plan, which resuscitated Europe after World War II, according to a special inspector general.

The Marshall Plan delivered $103 billion in today’s dollars to 16 European countries between 1948 and 1952. That has now been topped by congressional appropriations for reconstruction in Afghanistan, which so far have come to $109 billion in today’s dollars. The difference: The Marshall Plan helped Europe get back on its feet, while Afghanistan is a chaotic mess.

The Marshall Plan comparison is the most striking fact in a depressing, 259-page quarterly report (pdf) to Congress issued July 30 by John Sopko, the congressionally appointed special inspector general for Afghanistan reconstruction.

Afghan forces seem unprepared to take over when the Americans depart. According to one recent audit by Sopko’s office, a U.S. contractor was unable, “because of security concerns,” to train the Afghan National Army to operate and maintain more than 600 armored strike-force vehicles it’s being given. Another audit raised concerns about the army’s ability to account for some 465,000 U.S.-provided small arms. This quarter, Sopko’s report says, a local police unit cut the power lines from Kabul to eastern Laghman and Nangahar provinces “in retaliation for not being paid for three months.” Security is so poor that large parts of the country “will soon be off limits to U.S. personnel due to base closures and troop withdrawals,” the report says.

Of the 30 audits, inspections, special projects, and other reports the special inspector general issued this quarter, Sopko writes, “Unfortunately, most uncovered poor planning, shoddy construction, mechanical failures, and inadequate oversight.”

The bottom line is that Afghanistan doesn’t seem prepared to stand on its own. Last year domestic revenue was only $2 billion out of a budget of $5.4 billion, with donor grants making up the difference. Those grants will tend to diminish, the report says.

To cut costs, NATO plans to shrink the Afghan National Security Forces to less than 230,000 by 2017, conditions permitting. But an independent assessment for the Pentagon concluded that the forces will require more than 370,000 people. That would cost three times as much as the Afghan government’s entire domestic revenue, the report says.

Poor as it is, Afghanistan could raise more money. Tax collections are only 9 percent of gross domestic product vs. an average of 21 percent in low-income countries. But that would require a culture of compliance that is absent. Mining could eventually raise money, but the report says it “appears unlikely to generate substantial revenues for years to come.”

Afghanistan’s main exports are carpets and rugs, dried fruits, medicinal plants, opium, and gems. But Sopko observes, “opiates are not part of the licit economy, and gems are easy to smuggle, so their contributions to government revenue are limited.”

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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