Afghanistan can't handle direct aid, U.S. watchdog says

WASHINGTON (Reuters) - Afghanistan's government does not appear able to manage the large amounts of direct aid that the United States and other countries have pledged, the U.S. watchdog monitoring funds spent on Afghan reconstruction said.

John Sopko, the Special Inspector General for Afghan Reconstruction, raised a red flag over U.S. plans to give Kabul billions of dollars more in direct aid instead of providing assistance through contractors and non-governmental organizations operating on behalf of the American government.

"The Afghan government does not appear to have the capacity to manage the amount of funding envisioned in the international community's pledges of direct assistance," Sopko told a House committee in testimony prepared for a Wednesday House of Representatives hearing.

He said oversight provisions, such as doling out funds incrementally instead of in large lump sums, should be built into direct aid programs "to protect the American taxpayer."

Sopko said his office, known as SIGAR, would be monitoring the uses of U.S. aid, including whether programs made clear contributions to American national interests, and whether Afghans needed or even wanted them. So far, the United States has invested almost $100 billion in Afghan reconstruction efforts, he said.

Afghanistan is regularly ranked as one of the world's most corrupt countries. More than $16 billion pledged in future aid at an international donor's conference in Tokyo last year was tied to a serious effort to crack down on graft.

But in an attempt to provide Afghanistan with more control over aid, international donors also promised to increase the amount of direct aid to Kabul.

Sopko said the U.S. government had committed to channel at least 50 percent of its development assistance through the Afghan national budget, but he had seen little progress in cleaning up fraud.

"Despite stated commitments from the Afghan government to address this problem, we continue to see reluctance on the part of Afghan officials to take serious action," he said in written testimony to the national security subcommittee of the House Oversight and Government Reform committee.

The subcommittee chairman, Representative Jason Chaffetz, said he was unhappy that the Defense Department seemed unable to account for much of the money spent aiding and rebuilding Afghanistan.

The U.S. financial commitment to the region was far from over, even as U.S. troops prepare to withdraw, Chaffetz said in a statement, adding: "We can't keep gambling away taxpayer dollars."

TENS OF BILLIONS STILL IN PIPELINE

Sopko noted a recent scandal at a U.S.-funded Afghan military hospital where patients were neglected if they could not pay bribes to staff, and an earlier massive fraud linked to the Kabul Bank. "Problems like this make the prospect of giving more direct assistance to the Afghans worrisome," he said.

If President Obama's request for Afghan reconstruction in 2013 is approved by Congress, there will be about $30 billion in U.S. funds available to Kabul "and much of this money is slated to be spent on direct assistance programs," Sopko said.

Obama requested $9.66 billion in assistance to Afghanistan this year, and an aide to Sopko said that at least $20 billion from previous allocations of U.S. assistance was unspent.

Sopko noted his ability to conduct on-site inspections may be hindered by security restrictions as the United States and other countries pull forces out of Afghanistan.

"U.S. and coalition forces have already pulled out of a number of locations in Afghanistan, leaving some of those places too dangerous for SIGAR or other agencies to visit," he said.

President Obama and Afghan President Hamid Karzai last month agreed to speed up the handover of combat operations in Afghanistan to Afghan forces. There are currently about 66,000 U.S. troops in Afghanistan; on Tuesday night Obama was expected to announce the pullout of about half of them by early 2014.

(Reporting by Susan Cornwell; Editing by David Brunnstrom)

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