Afghanistan’s state-building process has reached a crossroads. With a constitution ratified and the country’s first elections in decades scheduled for June-July 2004–although the continued deterioration of security conditions have placed this target in doubt–the Bonn political process has entered its final phase.

Afghanistan can boast of many remarkable achievements over the past two years: the adoption of a national development and budget framework, the reform of central government ministries, the return of millions of children to school, the repatriation of 2.5 million refugees and the resettlement of 600,000 internally displaced peoples (one of the largest voluntary refugee influxes in history), the introduction of a new currency (the Afghani), and the adoption of a constitution through a democratic process. However, in spite of these advancements, security remains precarious, and the vast majority of the population has yet to see a peace dividend.

A renewed political process–one that is inclusive of the country’s ethnic and political diversity and that reflects the realities of the situation on the ground–is required to keep the state-building process from veering off course. To forge this new political agenda, it is necessary to take stock of the lessons learned during the past two years. The significance of this exercise transcends Afghanistan . As the first state-building experiment of the post-September 11 era, the Afghan experience could potentially yield tremendous insight for the rehabilitation of other failed states. Although one must be wary when developing universalistic models for processes that are so complex and context-specific, such critical deconstructions are valuable nevertheless.

The principal challenges that confront Afghanistan’s state-building process can be summarized under the following four headings: security sector reform; public administration and civil service reform; coordination and government ownership; and donor funding and economic development. Setbacks, primarily relating to the delivery of reconstruction assistance and the complexity of re-engaging with a largely dysfunctional state, have been encountered in each of these areas, revealing deficiencies in the Bonn framework.

First, Afghanistan’s security sector reform process has proceeded at an excruciatingly slow rate and has been marred by a lack of funding, inadequate planning and coordination, and adverse security conditions. Second, Afghanistan faces an acute capacity deficit, particularly in regard to the government civil service, a residual effect of the three-decade civil war. Compounding this problem is the legacy of bloated and cumbersome bureaucratic structures, plagued by inefficiency and corruption, and an anaemic private sector, the result of three decades of economic stagnation and the large-scale exodus of human and material capital.

Third, experience in other post-conflict settings clearly dictates that a state-building process will be hard-pressed to succeed if it is not directed by indigenous institutions. Given the poor condition of Afghanistan ‘s national institutions, this means that the re-establishment of core state capabilities–the glue that binds central and subnational governments–will take far longer than originally anticipated. In essence, sustainable reform cannot be achieved if it is donor-driven. Insufficient coordination among the various stakeholders and programs has also hindered reform efforts from their inception, particularly in the area of security. Rivalries, suspicion, and a lack of communication between Afghan government ministries and donor states has had a negative effect.

Lastly, reconstructing a post-conflict state and rejuvenating its economy is an expensive and long-term proposition. By most established measures, Afghanistan is one of the most impoverished countries in the world, with up to 70% of the population living below the poverty line. Until the Afghan population is presented with the economic means and opportunity to escape destitution, many will continue to be drawn to violence and the illicit economy, perpetuating the country’s seemingly interminable instability.

Reconstruction funds are minimal, and it is vital that they are disbursed in a manner that maximizes their impact. Presently, the bulk of donor support delivered to Afghanistan has been allocated to projects outside the National Development Budget, either toward covert programs in the security sector or toward favored donor contractors, agencies, and nongovernmental organizations in the public sector. By circumventing line ministries in the disbursement of aid and largely bypassing the Afghan private sector, donors have effectively disempowered the government and divested it of its leadership role in the process. The utility and impact of money channeled to indigenous institutions far outstrips that of direct donor investment. Although a rational sequence between the volume of direct funding and the capacity of government to manage such resources needs to be observed, there is clearly a relationship between how and where resources are targeted and capacities built.

Each of the aforementioned issues is representative of broader dilemmas prevalent in all state-building cases. Addressing them will require a shift in conventional donor approaches to state building. Of course, the entire process is contingent on durable donor commitments, something that is by no means assured. Only two years after the fall of the Taliban in Afghanistan, initial signs of donor fatigue are apparent. The creation of an accountable and efficient security sector, a vibrant economy, and a stable and democratic political system requires the long-term vigilance of Afghans, neighboring countries, the international community, and donors.

The notion that states can be rebuilt after decades of conflict in a two-year period is fallacious and will only distort the process. Afghans, whose expectations were heightened after the Tokyo Conference in early 2002, will be the first to turn their backs on the new administration, unless improvements in security and access to basic services are achieved. The forthcoming Berlin Conference, scheduled for March 30 – April 1, 2004, will debate the political, security, and reconstruction needs of Afghanistan. The Afghan government, in partnership with key international stakeholders, has presented an investment program costing $28 billion. For the conference to be successful, the lessons learned over the past two years need to be understood and heeded.

Contextualizing State Building

Designing a stable and sustainable state-building process requires a thorough understanding of the historical, cultural, and political context of the country where it is applied. Its various pillars must be tailored to meet local conditions and confront the specific challenges to state formation, and they must be established and owned by key reformers within the administration. The Bonn political process, launched in Bonn, Germany, in December 2001, in many respects does not adequately address the realities of the situation in Afghanistan. There are three areas in particular that exemplify these shortcomings.

First, the Bonn process did not include a strong regional dimension. Afghanistan is at the heart of a complex web of competing state interests in Eurasia. The interconnected nature of the region–politically, economically, and ethnically–demands that any state-building program engage regional actors. Second, the current state-building process is rooted in the notion that a robust central state is the only viable option for the country. Although it is inaccurate to say that their country lacks any tradition of political centralization, Afghans have displayed an aversion to strong central authority, particularly since the 1979 Soviet invasion. The resultant tension, between traditional modes of decentralized governance and the modern conception of a unitary state, has come to the fore. In light of the incongruity of the political process with existing authority structures, it is hardly surprising that centrifugal forces, in the guise of warlords, have emerged. Constructing a robust central government is essential, since this body is required to restore a semblance of security, to serve as a conduit for donor support, and to coordinate development programs and activities. However, this does not obviate the need to develop subnational governmental structures or to institute crucial administrative reforms at the provincial, municipal, and local levels. A multilayered approach is needed to reconstruct Afghanistan’s political system, a nuance lacking in the current strategy.

Finally, the Bonn process did not adequately recognize the centrality of security to the entire enterprise, for without security, economic, development and democratization are unattainable. Security continues to rate as the foremost concern of the Afghan population. However, the issue was only addressed superficially in the Bonn Agreement. It is important to understand that the Taliban’s initial popularity, after they swept to power in 1996, was rooted in their ability to solidify an elusive peace for the country. It was the Taliban who ended the bloody battle for Kabul waged by the major Jihadi groups after the Soviet withdrawal, and it was the Taliban who disarmed the warlords. In many areas of the country, security conditions have actually deteriorated since the fall of the Taliban government. The impressive political gains achieved in Kabul , most notably the ratification of a new constitution, mean little to those communities now gripped by a climate of fear.

The overthrow of the Taliban in November 2001 was welcomed by most Afghans, who after six years of Taliban rule chafed at its authoritarian practices. However, the U.S.-led coalition, by utilizing regional warlords and power brokers as proxies in the fight against the Taliban–a continuing practice–effectively returned large parts of the country to the status quo before 1994, just prior to the Taliban’s emergence on the political scene. The only difference in the present situation is the relative stability enjoyed by those in the capital, an island of security guaranteed by 5,000 International Security Assistance Force peacekeeping troops. It is not surprising that, under such conditions, disillusionment with the political dispensation is a growing sentiment inclining some to speak nostalgically of Taliban rule and to offer their support to antigovernment spoiler groups.

The failures of the Bonn process to address the unique exigencies of the Afghan situation raise serious questions about the modern concept of state building. It clearly demonstrates that the application of state-building templates or formulas in post-conflict states can be counterproductive and dangerous.

Afghanistan: A Nation-State and Economy in Transition [2001-2003]

The Bonn Agreement was signed with an air of caution on December 5, 2001, by a group of predominantly anti-Taliban factions. Hamid Karzai was subsequently appointed as the head of state of the interim administration on December 22, 2001, a post he held for a period of six months. On June 13, 2002, after an emergency Loya Jirga or Grand Assembly, Karzai was officially sworn in as the president of Afghanistan ‘s transitional administration. On January 3, 2004, the next landmark of the Bonn timetable was achieved with the adoption of a new constitution by a constitutional Loya Jirga, formally inaugurating the Islamic Republic of Afghanistan. 1 The constitution calls for the establishment of a bicameral legislative branch comprising a lower house (Wolesi Jirga) and upper house (Meshrano Jirga).

Although significant progress has been made to advance Afghanistan’s political reform agenda, it has become apparent that parallel efforts to promote national reconciliation are required in order to reconstitute the machinery of the state. The Bonn Agreement remains central to the political reform process, particularly with elections forthcoming, but its overall impact has been mitigated by the largely dysfunctional state of Afghanistan’s civil service and core state institutions. Successful reform requires diplomacy, a constitutional framework, consensus, and time. The implementation of policy and institutional reform is dependent on the provision of equal political support for all key reformers within the new administration, a clearly defined road map for restructuring national and subnational structures, a fiscal plan and well-established national programs, and rules for budget formulation and execution.

The political economy of Afghanistan remains extremely complex, a result of decades of internecine conflict, proxy war, and a ubiquitous disregard for central authority. As a Central-Asian land bridge, Afghanistan has repeatedly fallen prey to the interference of regional and global states. 2 The recently signed Declaration on Good Neighborly Relations, a pledge of noninterference in Afghanistan’s internal affairs by its immediate neighbors, is a welcome development, but it has yet to stimulate an alteration in policy and action. Continued external meddling and interference, particularly the backing of warlords not aligned to the new administration, has severely complicated the country’s security situation.

Poverty also remains a paramount problem and threat to Afghanistan. According to the United Nations Development Program’s Human Development Index, the level of poverty in Afghanistan is second only to Sierra Leone. With an estimated non-drug-related GDP of $4 billion, current per capita income averages a mere $200. The Kabul government is not just dealing with security and administrative reform issues, it is also managing popular expectations for growth and greater equity. After 2001, over 5 million Afghans (almost one-quarter of the population) were either refugees, economic migrants or internally displaced persons–further illustrating the massive scale of the challenge at hand. The linkage between enhanced security and poverty-reduction plays out ironically in the context of government efforts to eradicate the production of the opium poppy, which simultaneously constitutes a potent security threat but offers a lifeline for the rural poor.

One of the key themes to emerge during the course of the political reform process over the past two years has been the viability of state formation. The January 2004 Afghan Constitution, in spite of very real contestations surrounding its ratification, has outlined a new state structure based on a presidential democracy and supported by a bicameral national assembly. Legally, Afghanistan is a unitary state, but there is a strong de facto decentralized system of governance that needs to be reconciled with the authority of the central administration. Such reconciliation will be essential to guarantee security, to ensure respect for the rule of law and fundamental human rights, and to facilitate the remittance of customs duties to the central treasury. Recent research demonstrates that despite years of neglect and disloyalty to the central government, the administrative procedures adopted some 20 years ago remain functional. 3 Proving to the Afghan people that unitary state structures can provide them with the rights guaranteed by the constitution will require both political and budgetary unification.

The early reform drive of the Bonn process focused on establishing the basic framework for a central administration, an effort that neglected provincial governance structures. This was not an overt policy decision but instead reflected the government’s lack of wherewithal to implement even the most basic of reforms outside of Kabul–excluding employee payroll, which brought its own set of difficulties. The National Development Framework was established under the assumption that the ministerial infrastructure would be streamlined; however, the June 2003 Loya Jirga saw an increase rather than a reduction in the number of ministries, a decision designed to bring more ethnic balance to the Cabinet. In many cases this has led to disputes over official ministerial mandates, which could only be addressed when the national budget emerged as a vehicle for policy and institutional reform.

With the system of government for Afghanistan now largely determined–although there is likely to be ministerial consolidation in the coming months–the focus of international support has been on first identifying and then increasing the effectiveness of the central administration’s core functions. This includes the 30 parent ministries, their provincial departments, state-owned enterprises, municipal structures, and, in the future, district administration.

In the 2002-2003 fiscal year, a total of $83 million in domestic revenue was generated against an ordinary budget of $350 million. During that time, months passed when the Ministry of Finance had insufficient resources to pay the very meager wages of its civil servants–around $40 per month. In the current fiscal year (ending March 20) and against an ordinary budget of $550 million, the Afghan administration has pledged to achieve revenue earnings of $200 million–a target the government is likely to meet. A new currency has been introduced, new budget management procedures have been established, and a framework for priority administrative reform and restructuring has been launched. Priority areas of reform have encompassed:

• Support for the development of centralized expenditure-recording systems, payment-processing and reporting systems for budget expenditures, audit capabilities, a fully computerized accounting system for both revenue and expenditures, and efforts to enhance consolidated budget management. Reforms have focused on the Ministry of Finance and the Central Bank.
• An Independent Administrative Reform and Civil Service Commission was established to oversee the reform of the civil service, including the restructuring of state administration. The Priority Reform and Restructuring Decree (executive legislation) has focused on reforms to key central ministries and departments (such as Customs and Excise) and will eventually become the vehicle of choice for provincial reforms as well.

The fiscal plan, however, remains a key area of concern for the overall reform agenda, since reliance on international support for the ordinary budget is set to continue for a number of years. As the recurrent costs of new capital expenditures are absorbed into the budget, the size of the ordinary budget will double over the coming years–all against a rather narrow revenue base. The pressing need is not for tax reform but rather for tax collection. In many cases the provincial governors retain complete control over border revenues, depriving the federal government of an indispensable source of income. In the absence of reliable internal revenue sources, the World Bank-administered Afghanistan Reconstruction Trust Fund has become the main conduit of budget support for the government and an important vehicle to guarantee fiduciary control of expenditures.

Given the exponential link between growth, increased trade, and revenue-earning potential, guaranteeing economic growth will be an essential precondition for the formulation of a sustainable state and for forging productive relations amongst the national, provincial, and district levels of government. A functioning administration would centralize revenue collection and eventually facilitate both central and decentralized expenditures. Now that core economic management functions of the central administration are somewhat in place, efforts to stabilize the provinces, through administrative reforms and enhanced budgetary allotments, is an important next step in re-establishing well-ordered center-periphery relations.

The size of the illicit, informal economy is also an area of emerging concern. In 2003, opium production was valued at $2.5 billion (some 3,600 metric tons), and smuggling of high-value commodities and arms amounted to a further $1 billion. Given that the Kabul administration plans to eradicate opium production within 10 years and increase compliance with new customs regulations, strong growth in the rural and urban economies will be essential in order to replace losses from illegal income sources. In addition to radically rethinking agricultural policy, attention will have to be paid to expanding legitimate trade through trade facilitation measures and financial market reforms, if the existing overdependence on low-value, low-profit goods is to be overcome.

There have been several administrative improvements, thanks to key reform ministers and the active support of the international community. The ministries of Finance, Rural Development, Commerce and Health are of particular note. By way of contrast, the reform of the security ministries has lagged far behind, both in terms of departmental restructuring and recruitment procedures.

There has been a resurgence in the Afghan economy spurred by good rains in 2003, the homecoming of more than 2 million refugees, and growing stability in some areas of the country. The continued success of projects such as the National Solidarity Program and the National Emergency Employment Program will be essential to alleviate conditions for the 53% of Afghans who live in extreme poverty. Gender disparity will also need to be addressed to allow the integration of women back into the social and economic fabric of the country. The risk of not providing income-generation support is all too clear–a narco-mafia state will emerge, fuelled by spiraling trafficking of opium, arms, and other commodities.

Rethinking Reconstruction and Public Administration Reform

From a reconstruction and development perspective, the situation inherited by the interim Afghan administration in early 2002 was far worse than had been anticipated either by the incoming cabinet or the international community. After 23 years of war, basic security could not even be guaranteed in the capital. Accordingly, the task of establishing an effective program of reconstruction, growth and poverty reduction over the medium term–an objective necessitating extensive policy and institutional reforms–appeared particularly imposing. Moreover, before this task could be embarked upon, the very legitimacy and efficacy of the state had to be established, requiring a National Development Framework (drafted in April 2002) and the formulation of a tenable national budget.

After the 2002 Loya Jirga and the formation of the interim administration, key reformers were tasked with the wholesale renewal of state institutions. The initial needs assessment for Afghanistan presented at the Tokyo Donors Conference in January 2002 grossly underestimated the costs of securing the country’s future, particularly in regard to: (i) the costs of commencing operations, (ii) the scale of reconstruction needs, (iii) the costs of achieving and maintaining security, (iv) the costs of security sector reform, and (v) the costs of adopting and overseeing a new policy framework where the state (and state-owned enterprises) would not crowd out the private sector. Another key constraint to progress that emerged over time was the wholesale absorption of highly qualified Afghan civil servants into aid agencies (some international nongovernmental organizations now have up to 4,000 staff), a brain drain that has contributed to a critical shortage of English-speaking civil servants needed to engage with the international community. In some key ministries the number of English-speaking civil servants in early 2002 could be counted on one hand. This created a communications bottleneck, given that all reconstruction documents were written and circulated in English.

The interim Afghan administration inherited wholly dysfunctional government institutions. There was no national framework for development, no national budget to cover recurrent and development needs, no cash in the treasury, no payroll system. Moreover, provincial customs duties, a vital source of revenue for the new administration, were not being voluntarily remitted to the central treasury by provincial governors. The functionality of key institutions, from the Cabinet down, could be characterized as poor, and there were several currencies in circulation–symbolic of a heavily divided state. Women, who had been excluded from public life by the Taliban, were granted few positions within the new administration, beyond a few who staffed district kindergartens.

In April 2002, the interim administration introduced a draft National Development Framework and, in October, a draft national budget. Together, the two documents sought to channel donor assistance toward focused public investment programs. A meeting held in October–convening the Cabinet and other key stakeholders, referred to as the Implementation Group–gave the Cabinet a forum to present its agenda for reform to the international community. This was itself a remarkable achievement, given the difficult conditions. At the same time, the government, spearheaded by the minister of finance, organized consultative groups to foster cooperation among lead ministries and donors in relation to the initial 12 public investment programs. This period involved a rapid re-evaluation of the overall functioning of the public administration, creating widespread uncertainty. It was, nonetheless, an essential process. In spite of the importance of these developments, which demonstrated the growing competence and assertiveness of the government, very little donor assistance was actually provided as direct budgetary support, effectively undermining the implementation of key reforms and threatening the sovereignty of the new administration.

After rethinking its approach toward reconstruction and having reformed its public administration, the interim government identified the budget as the key instrument of policy and institutional reforms. The Ministry of Finance focused, in collaboration with lead program ministries, on building core financial management capacities and identifying policy and institutional constraints in order to expedite the execution of the budget. In spite of concerted efforts to enhance effectiveness, the pace of change was unsatisfactory, due to the weak fiscal position of the new administration. Nevertheless, the Cabinet’s presentation of the national budget and the consultative group model did allow key national priorities to be articulated, and these have subsequently been supported in various degrees by the aid community.

The National Development Framework, focusing on three core pillars of investment–social and human capital, physical reconstruction and natural resources, and the private sector and good governance–has, coupled with the National Development Budget, become a key force in the reform agenda. However, major constraints to effective budget formulation have emerged, including: (i) the narrow revenue base for autonomous development, 4 (ii) the uncertainty of external resources, either for direct budget support or assistance projects, and (iii) the lack of capacity (public or private) in project design. As far as budget execution is concerned, most constraints are either institutional–government capacities in contract management and the slow process of aid engagement–or security-related. Widespread insecurity in the south has limited both government and aid agency activities.

In terms of developing an efficient and effective central state, many nascent institutions, particularly at the provincial level, are constrained by the lack of resource transfers, particularly in regard to operations and maintenance costs. Other problems include insufficient qualified staff, reflecting uncompetitive salary structures, and poor coordination between different budget entities. However, the Independent Administrative Reform and Civil Service Commission and the Priority Reform and Restructuring framework have spearheaded the reform of over 20 key government departments. These reforms have promoted more focused departmental functions around an emerging policy agenda, have facilitated recruitment of higher-qualified staff (a result of the new interim pay scale), and have fostered the sequential focusing of investment across the breadth of key departments. This strategy was adopted following the determination that an across-the-board reform program would be neither politically acceptable nor financially feasible.

The National Development Framework, the National Development Budget, and the Priority Reform and Restructuring process have, over a short period of time, been institutionalized at the core of the reform and reconstruction process. The Afghan Transitional Administration has adopted these policy tools to carry out key provincial reforms as part of an emerging provincial stabilization program. A re-examination of the reconstruction and public administration reform agenda in the provincial context can be expected to assess several other issues, including: (i) the reform of security institutions, (ii) the development of core financial management capacities at the central ministry and provincial department levels, (iii) the lowering of the fiduciary threshold for provincial expenditures (until capacities can be built) to allow greater transfer of operations and maintenance costs, (iv) allowing the provincial governor and departments a greater say in national budget formulation and an oversight role in budget implementation, (v) the targeting of key provincial departments by the Priority Reform and Restructuring process, (vi) the simplification of investment programs, (vii) greater reliance on regional technical capabilities (in Pakistan, India, etc.), and (viii) the rationalization of sectoral sequencing of reform priorities.

Taking Stock of Security Sector Reform

Security sector reform is the key to ensuring sustainable security in post-conflict settings. The concept, first elaborated in the late 1990s, refers to the transformation of a country’s security apparatus with the aim of ensuring that it is managed and operated in a manner consistent with democratic norms and principles. Responsible and accountable security forces reduce the risk of conflict, provide an effective safety system for the citizenry, and foster an environment conducive for development activities. The immediate popularity of the concept derived from its integration of a number of key donor priorities into one overarching model: (i) the reduction of military expenditures and their reallocation to development, (ii) conflict prevention and post-conflict management, and (iii) improvements in the efficiency and effectiveness of government oversight and control over security institutions. Over the past decade, security sector reform has evolved into a catch-all term that can encompass virtually any aspect of state building with security implications, a trend that has complicated its implementation. Accordingly, the record of security sector reform in post-conflict states has been mixed, as the Afghan experience attests.

Afghanistan is at the forefront of the global war on terror and at the core of concern over international and regional security. Accordingly, it has been subjected to intensive international and regional intervention and competition, which has exacerbated existing societal cleavages, created artificial divisions, and altered domestic power dynamics. Halting this destructive pattern and restoring a semblance of security and stability to this troubled country is unmistakably the most imposing challenge to Afghanistan ‘s state-building process. It is a challenge that the international community simply must overcome, as the costs of failure–the reemergence of the country as a haven for terrorists and its degeneration into a narco-mafia state, serving as the principal supplier of opiates for the world market–are clearly more prohibitive than the costs of action.

Over the past two years the security situation across many areas of Afghanistan has deteriorated significantly. 5 The causes of Afghanistan’s security crisis include the resurgence of anti-government spoiler groups, the burgeoning narcotics trade, the entrenchment of regional power brokers or warlords, and the rising incidence of banditry and general criminality. After 23 years of internecine warfare, Afghanistan’s security sector is in disarray. The acute lack of resources and capacity confronting the country’s security institutions necessitates long-term international investment. Although the pace of security sector reform in Afghanistan has been much slower than planned, significant gains have been made that have laid a solid foundation for continued reform. Achievements include: (i) the inauguration of an Afghan National Army and police force, (ii) the design and implementation of a national disarmament, demobilization and reintegration program, (iii) the formulation of a National Drug Control Strategy, (iv) the initiation of a comprehensive review of the country’s judicial infrastructure, and (v) steady progress in de-mining. These are important steps toward establishing security and the rule of law in the country, but to guarantee and accelerate further progress on this path, a shift in course will be required.

The main impediment to the implementation of security sector reform in Afghanistan and other post-conflict countries is the lack of an overall strategic framework to guide the process, a product of the ambiguity that still surrounds this nascent pillar of state building. Although the strategic framework that is devised must be tailored to meet local conditions, there are a number of universal guidelines that should be observed in the formulation of security sector reform programs.

Indigenous Ownership: The only actors that can effectively and sustainably manage security sector reform are local institutions and governmental bodies. Although international financial and technical support of the process is indispensable, domestic actors should maintain ultimate authority over the direction of reforms. To promote local ownership, a strong centralized security institution should be erected to devise policy and oversee its implementation. In the Afghan context, the National Security Council was designed to fill this role. The purpose of this body is to craft government security policy and coordinate the activities of government institutions, donor states, nongovernmental organizations and intergovernmental agencies on issues pertaining to security.

Donor Coordination: Inadequate donor coordination is a widespread and debilitating problem afflicting developing countries. It has had a particularly adverse impact on Afghanistan ‘s security sector reform process due to the multisectoral donor support scheme erected to facilitate international assistance. This scheme divided responsibilities for each of the five pillars of the reform process among the five main states funding the security sector: the United States (military reform), the United Kingdom (counternarcotics), Germany (police reform), Japan (disarmament, demobilization, and reintegration of ex-combatants), and Italy (judicial reform). The success of security sector reform depends on orchestrating synergies between the various pillars of the process. The different institutions that constitute a security sector are intricately interconnected, so any reform of the system requires consensus to be established around a unified framework. Unfortunately, competing interests within the government and among donor states have obstructed coordination and have disjointed the process. If the actions and agendas of the various donors are not harmonized, the process risks collapse.

Integrated Political Process: Security sector reform cannot be implemented during a conflict. A genuine political solution to hostilities, incorporating all relevant actors, must be achieved for any changes to take hold. Security sector reform should occupy a central position in any post-conflict peace agreement and must be integrated into the subsequent political process, guaranteeing that all parties to the conflict accept and engage in the reform programs. Allowing powerful actors to remain outside the process at its outset offers them the option of assuming a spoiler role at a later juncture, an eventuality that has come to pass in Afghanistan with detrimental implications.

The Bonn Agreement was not a peace agreement in the classic sense. Not all parties to the conflict were present at the December 2001 conference, and the delegates who attended were not fully representative of the diversity of the Afghan population. The agreement also failed to institutionalize security sector reform and tie the major power brokers to it. The provisions that did address the security sector–most notably in reference to disarmament, demobilization and reintegration–were vague and open to interpretation, making them more of an impediment to implementation than a vehicle to legitimize the process.

Periphery Stabilization: Security sector reform processes have a proclivity to dedicate a disproportionate amount of resources and attention to stabilizing and securing the core of a country, the capital and major population centers, as opposed to the periphery. This opens up a political space for spoilers to operate, and it fragments the process along a rural-urban axis. Creating robust national institutions, though essential to nurturing a viable central government, will have little impact in stabilizing a country if these institutions lack authority and legitimacy outside the capital, as is currently the case in Afghanistan. Because the peripheral provinces serve as the principal revenue base for the central administration, enhanced loyalty to the central government is also essential for the state budget and can boost ongoing efforts to clamp down on the illicit informal economy.

Administrative Reforms: Post-conflict states invariably face significant administrative and bureaucratic deficiencies. This problem is particularly acute in Afghanistan , where after 23 years of civil war most of the machinery of state has collapsed, and indigenous capacity has been severely depleted. The current government is beset by problems of bureaucratic inefficiency, disorganization, corruption and nepotism. To institute the rule of law and create viable and politically reliable security forces, central security institutions must be reformed to make them efficient, accountable, transparent and broadly representative. To achieve this objective: (i) salaries of all security forces must be raised to a level commensurate with the costs of living and paid on a timely basis, (ii) a comprehensive training and retraining program for civil servants and security forces must be designed and launched, (iii) unqualified personnel must be re-deployed or removed–a severance scheme should be introduced to remove employees who are politically unreliable or who lack applicable skills, and (iv) the succinct recruitment procedures and guidelines established by the Independent Administrative Reform and Civil Service Commission must be applied in the security ministries. It is vital that a meritocratic system is established to attract bright and qualified candidates, a process that will reduce cronyism and nepotism and should build public faith in government institutions.

Investment in Traditional Structures: Security sector reform is rooted in the underlying notion that traditional security structures are outdated and anachronistic and should be deconstructed and replaced with modern, Western-oriented structures. In practice, supplanting organic structures with formalistic security mechanisms can frequently do more to disrupt communities than to provide stability. In Afghanistan, there is a mistaken notion that all traditional security systems have either been destroyed, are dysfunctional, or are incompatible with international norms of human rights. Not only are traditional structures intact, functioning and, in many cases, loyal to central administration, they present the most viable option to promote security and stability in some areas.

In light of the security crisis facing Afghanistan , structures shown to be effective, and that do not contravene international human rights norms, should be encouraged, not displaced. This does not obviate the need to introduce international models and standards. A mixed, flexible approach is most suitable.

Funding Security Reforms Through the National Budget: Most aid committed to Afghanistan’s security sector is channeled through donor agencies and programs–often covert in nature–rather than to government institutions. This is a common feature of post-conflict states, particularly those subjected to external military intervention. Such practices divest local actors of ownership over the process, obstruct donor coordination, and arouse suspicion of donor intentions among the local population. A more effective policy would be to transfer aid to national government institutions through internationally administered trust funds. This would permit robust international oversight of donor aid while giving the government authority over aid disbursement. It is vital that domestic institutions are empowered through the delivery of aid and are increasingly recognized as the engine of change by the populace.

Raising Public Awareness: Following a civil conflict, residents lack faith in security institutions and have minimal understanding of their function and role in society. In states where government security forces may have been guilty of atrocities or acts of aggression, this crisis of confidence is even more acute. Security forces such as the police cannot function unless they have the full support of the communities that they are obligated to serve and protect. Restoring the public’s trust in these institutions and reinforcing the security sector’s image as the legitimate guarantor of the people’s rights and safety requires a concerted education and awareness-raising campaign. This campaign, utilizing various mediums of communication, should educate the population about the structure, duties and responsibilities of the security sector as well as the inalienable rights of each citizen in relation to it.

Regional Security Framework: As the process of globalization has progressively blurred state borders, security issues have increasingly adopted a distinct transnational character. The emergent threats to the international system–terrorism, narcotics trafficking and organized crime–do not respect national boundaries. Accordingly, civil unrest in one state is invariably perceived as a threat by its neighbors and often by the entire international community. This realization has led to both constructive and unconstructive interventions in post-conflict states. To ensure that interventions are constructive, it is vital to bind all relevant regional and international actors to a multilateral regional security framework.

In Afghanistan, the need for regional involvement in the security sector reform process is clear; the influence and interference of neighboring and regional states has been one of the paramount sources of conflict and division in the country for the past two centuries. Afghanistan ‘s geopolitical importance has impelled regional states to surreptitiously compete for influence and pursue their interests via proxies, a tactic that has served to fragment the country along ethnic, religious and political lines. To arrest the growth of insecurity in Afghanistan , it is critical that regional states cease all support for substate actors–individual parties, tribes and warlords. A significant step toward achieving this goal was made with the signing of the Kabul Declaration on Good Neighborly Relations, a pledge of noninterference by Afghanistan’s immediate neighbors–Pakistan, Uzbekistan, Turkmenistan, Tajikistan, China, and Iran–signed on December 22, 2002. The international community must exert pressure on the signatories of this declaration, along with other states with a history of intervention in Afghanistan, to observe the agreement’s fundamental principle: the inviolability of Afghanistan’s sovereignty. Similar steps must be taken in other post-conflict states, whether it is Iraq or the Democratic Republic of Congo, where the potential for external interference is high.

International Security Assistance: In post-conflict situations such as Afghanistan, there will inevitably be some residual effects of the recent conflict in the form of insurgency activity and terrorism. Although this is to be expected, a minimum level of security is required as a foundation to advance state building. Domestic security forces will invariably be unable to provide this base level of security five years or more following the cessation of major hostilities, the time it usually takes to complete fundamental structural reforms and to reshape security forces of a critical mass necessary to carry out basic security functions. During this period, it is advisable that international forces fill the prevailing security vacuum. In Afghanistan, either an expansion of the International Security Assistance Force or a strengthening of the Provisional Reconstruction Teams could fill this void.

There is, however, a tolerance threshold for international intervention in every country. If this threshold is exceeded, peacekeeping forces could be depicted as occupiers rather than as enforcers of peace and stability. In countries with a long history of external interference and intervention, such as Iraq and Afghanistan, this threshold is low. Although there is widespread public support for an expansion of the ISAF peacekeeping mission in Afghanistan, such enthusiasm would undoubtedly evaporate if the size of the force surpassed 50,000 troops–an unlikely prospect. Dedicated peacekeeping missions provide vital support for security sector reform; however, to ensure that they bolster rather than undermine the process, their size, mandate and structure should be carefully molded to meet local conditions.

Currently, the NATO-led ISAF peacekeeping mission in Afghanistan comprises 5,000-6,000 troops and is based in the capital. Its mandate is limited to maintaining security within Kabul and its immediate environs, contributing to the sharp disparity between security conditions at the nerve center of the country and those along the periphery. For Afghanistan to embark on the next stage of the state-building process, the expansion of ISAF to key areas across the country is urgently required. Although NATO leaders have recognized this need and committed themselves to fulfilling it, member states have yet to contribute the requisite troops, fueling the growing credibility gap in the eyes of the Afghan populace toward the international community and the government it supports.

Linking National, Regional and International Political Economy Agendas

Afghanistan lies at the crossroads of Asia–a land bridge across which the famed Silk Road trading route once passed. As a landlocked state, the political and economic linkages between Afghanistan and its neighbors constitute a significant determinant of patterns of economic growth, security, and political development. Moreover, given the porous nature of Central Asian borders and continuing unrest over the contested Durand Line separating Afghanistan and Pakistan, building a broad-based consensus in the region around political economy issues is essential. In light of the transnational nature of security threats, whether spawned by drugs or terrorism, collaboration between intelligence and other security forces is a precondition for regional and global stability.

Trade, economic growth and poverty reduction are important crosscutting themes in guaranteeing peace and stability within the region. Indeed, improvements in the road and transport sector in Afghanistan would enhance the competitive edge of all economies that trade with and through Afghanistan . Since trade relations, supported by improved trade logistics, are a key to mobilizing economic interests around peace, the Afghan administration, in partnership with the international community, has endeavored to strengthen bilateral and multilateral trading relations. In pursuit of this objective, the Kabul government has endorsed a progressive and open trading regime, has simplified the new import tariff structure, and is embarking on significant investments in both customs modernization and trade facilitation. In many respects, the trade regimes of surrounding states are far more restrictive than Afghanistan’s, and further measures will need to focus on freeing up trade relations and enticing the untaxed, informal economy into the formal trading framework.

Another major area of concern to be addressed is the scale of the illicit economy, encompassing the trade in drugs and arms and the smuggling of high-value commodities such as petroleum and lumber. The value of these traded goods, which are not included in trade flow estimates, is very substantial–the opium trade generated approximately $2 billion in fiscal year 2002-03. Clearly, if Afghanistan is to pull back from the brink of state collapse, enhancing regional collaboration to address the continued expansion of the shadow economy will be as important as investment in the formal economy. As it stands, the scale of the illicit economy threatens to undermine the legitimacy and efficacy of the state. This illegitimate economic activity has challenged nascent efforts to establish the rule of law and has crimped the taxable base at the disposal of the government. Strategies to eradicate opium production and to legalize the petroleum and lumber trade will need to be advanced to combat this threat; however, such initiatives must remain cognizant that the resulting losses in livelihoods and their impacts on specific categories of men and women will need to be addressed on a systematic basis through targeted interventions.

In developing a political-economic framework for Afghanistan and its neighbors, the current value and mix of traded commodities–whether exchanged between countries, transited within the region, or traded with the outside world–can provide an important indicator of further opportunities for harmonization and collaboration. According to a 2003 International Monetary Fund trade report, it is clear that up until 2002, formal trade flows between Afghanistan and its neighbors remained relatively small. At that time, Tajikistan ranked as the Central Asian country with the highest reliance on regional trade–over 20% of its national total–followed by Turkmenistan and Afghanistan at about 10% each (see table below). Since 2002, Afghanistan’s economy has seen a resurgence in growth. Again, it is important to stress that these flows relate only to formal trade; the picture would look very different if all trade were being measured.