U.S. aid plan seeks to shield Afghanistan from end to war economy

KABUL (Reuters) - The Obama administration will unveil on Monday a package of aid initiatives it hopes will help Afghanistan, still one of the world’s poorest countries after a dozen years of massive international aid efforts, shield itself from the departure of foreign troops and an expected drop in assistance.

The announcement from the U.S. Agency for International Development (USAID) of three new development initiatives worth almost $300 million is part of a U.S. effort to ensure that Afghanistan, as its ‘war economy’ ends, won’t slide backwards into greater poverty or reverse gains made over the last 12 years in health, education and other areas.

“The question is, what can we do now to make sure Afghanistan is as healthy, sustainable and feasible as possible going forward,” Larry Sampler, the agency’s chief official for Afghanistan and Pakistan, said in an interview.

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The initiatives extend U.S. assistance for Afghanistan’s food sector; seek to help the Afghan government boost revenue and join the World Trade Organization within a year; and secure agreements between U.S. and Afghan universities to ensure young Afghans are trained for jobs.

But how much outside help aid-reliant Afghanistan will receive in the years ahead remains in doubt, as uncertainty continues about a possible post-2014 NATO troop presence and as fiscal pressures in donor nations squeeze aid budgets.

Last month, U.S. lawmakers halved civilian aid for Afghanistan, reflecting growing reluctance in Congress to continue generous aid levels there, concerns about waste and fraud, and frustration with the Afghan government itself.

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The Obama administration continues to press Afghan President Hamid Karzai to sign a bilateral security pact needed to keep U.S. troops there after this year. His refusal to do so has strained already fraught U.S.-Afghan relations.

Decisions by the United States on future aid levels to Afghanistan may in turn shape actions by other donor nations, which gathered in Tokyo in 2012 to announce their intentions to provide aid to Afghanistan for years to come.

While the United States did not pledge a specific amount for future aid, it had promised to seek aid near current levels of just over $2 billion at least through 2015.

ECONOMIC BUFFER

U.S. officials said the new initiatives would not be affected by the recent budget cut, because they would set aside money now for the full four or five years they are designed to last.

Sampler said the initiatives would aim, in part, to provide a buffer as the war economy winds down. As foreign troops leave, so will the contractors and service providers supporting military operations, and the knock-on economic activity they have created since 2001.

“There’s going to be a lull in the economy, and we want to minimize that lull,” he said.

Andrew Wilder, who directs Afghanistan and Pakistan programs at the U.S. Institute of Peace, said the focus of the new programs on regional trade and the rural economy made sense given the “difficult and painful” economic transition Afghanistan would face in coming years.

“However, realizing this potential will largely be dependent on relative peace and stability in Afghanistan, and a significant improvement in Indo-Pak relations - which unfortunately both still seem like enormous obstacles to overcome,” Wilder said.

Under the new USAID programs, $125 million will go to Afghanistan’s food and farm sector, traditionally the base of its economy.

While aid programs have poured millions of dollars into the farm sector since 2001, poor roads and Afghanistan’s land-locked position in central Asia make food exports difficult. Sampler said the new programs would focus more on agribusiness and on getting crops to market than in the past.

Another $77-million, four-year program will seek to open Afghanistan up to greater international trade and investment, and to improve tax and revenue collection. Sampler said Afghanistan may be able join the World Trade Organization in late 2014 or early 2015, which could give its economy a boost.

A final program worth almost $100 million would seek to help 10 Afghan universities give young people the practical skills they need to work in the private and public sectors, in partnership with three U.S. universities.

(Editing by Jessica Donati and Robert Birsel)

This story has not been edited by Firstpost staff and is generated by auto-feed.