ARIF AYUB Security, development and governance are the three objectives the US and its allies set out to achieve in Afghanistan nine years ago. So far despite having spent $15 billion on development assistance to Afghanistan the effect on the Afghan economy has been negligible. The main reason for this lacuna is the fact that out of the $15 billion only a minuscule amount actually reached the Afghans or the project on the ground. Most of the assistance is channelled back to the donors in the form of consultancy fees for the technical documents and security costs for the consultants. This has always been a negative factor in development assistance and in the sixties Hamza Alvi had estimated that in Pakistan only 30 percent of US aid actually benefited the country directly. The rest was channelled back to the US because of consultants fees for technical assistance and higher costs because of tied aid. In Afghanistan, because of the insurgency the costs have become higher and most Afghans estimate that only about 10 percent of the aid actually reaches the ground. Consultants fees are exorbitant reaching about $1,000 per day, as this is the only way to attract expatriate professionals to risk their lives in Afghanistan. Moreover, the related security costs are estimated at $14,000 per day. One can imagine the positive effect this large scale expenditure could have had if had been directed towards Afghan nationals. Afghans also complain that the technical documentation required for projects is deliberately made complicated. For example, the equivalent of our PC-I is about 350 pages and only experts with intimate inside knowledge of US procedures could possibly complete such a complex document. Such experts are usually found amongst the 'beltway bandits ' or former US AID employees which makes most bidding on contracts a closed affair. These consultants normally charge 25 percent of the project cost for their services. Additional conditionality and corruption take care of the balance which accounts for the impression that only 10 percent of the aid is actually reaching its target. There are basically two processes behind the failed dynamics of the aid programme. The first is theoretical. Harry Johnson had shown about five decades ago that aid was the worst way to foster development. If one believed in a free market economy then free movement of capital and labour (the factors of production) was a prerequisite for development. We can see this in the case of Pakistan where the remittances from our expatriate workers have become one of the saviours of our economy. However, since this model was unacceptable to the developed world due to prejudice against the international mobility of labour, the second best alternative should have been free trade in goods and services which would reflect and tend to balance the differences in factors of production. This too created problems for the developed countries as the goods being imported were labour intensive and in the short-term affecting their employment levels in these industries. In Pakistan we have seen the effect of these policies in the restrictions imposed on our textile exports by the US and Europe. Hopefully, this is now changing. In order to find a palliative which would avoid using the above two free market policies that could have worked, development assistance was introduced as the third best model, using the example of the Marshall Plan which dramatically helped resuscitate Europe after the devastation it had suffered in the Second World War. This analysis failed to take into account the fact that the levels of development realised by Europe were a couple of centuries in advance of the developing world. The assistance required to make a similar drastic change would, therefore, have to be dramatically larger. Development assistance, therefore, started out with weak theoretical underpinnings whi-ch were further damaged by inadequate levels of funding. This was even further distorted by political conditionality attached to aid which limited its application normally to those countries where there was a strategic interest for the donor. The structuring of the assistance was also modified to ensure that most of the money was spent in the donor countries. Whatever little remained was mostly wasted due to inefficiency and corruption prevailing in the developing world. After the US invasion of Afg-hanistan there was a ray of hope that Afghanistan, which by that time had reached the status of one of the poorest countries in the world, would finally receive the economic attention of the world, so that the impoverished Afghans could find a means of livelihood beyond working for various warlords and the country could regain its basic infrastructure which had been destroyed during the war. This should have been relatively easy to achieve in a couple of years since the USSR had made a tremendous investment in building up the infrastructure in Afghanistan particularly in roads and electricity and repairs of this infrastructure would have been sufficient to jump start the Afghan economy at a minimal cost. Instead the donors were intent on reinv-enting the wheel and descended on Kabul in a phrase made famous by the Lords of Poverty like a flock of benign vultures carrying away the last dollar of the aid bonanza. This problem had been highlighted in the Brussels Conference in 2001 where NGOs had noted rents in Kabul had increased tenfold due to the massive migration of expatriate workers. These fears were totally discounted and the result is that while they are libraries full of development reports but hardly any development on the ground. For example, even the Kajkai Hydel Project, (constructed by the US in the sixties in a couple of years) has still not been made functional; while the Kabul-Kandahar Highway bid was won by a US contractor for about $1 billion which was later subcontracted to a Turkish firm and again subcontracted to an Afghan firm. The result is before anyone who is willing to take the risk of the journey. The results of these half-hearted measures for development are that there has been hardly any change in the lives of the average Afghan who have flocked to the ranks of the Taliban as the resurgence of their grievances and resentments are fuelling the insurgency and leading Afghanistan back into the cycle of violence it experienced in the nineties. Cumulative military expenditure in Afghanistan by the US alone has reached about $300 billion and the whole economic scenario would have changed if only 10 percent of this amount was spent judiciously to assist the Afghans. The writer is a former ambassador.