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$1.6 Billion to Afghan Reconstruction Programme

U.S. to Give $1.6 Billion to Speed Up Afghan Reconstruction Projects

Treasury's Taylor says goal is to complete projects by June elections

With an eye towards Afghanistan's first post-Taliban elections in June 2004, the United States is accelerating its reconstruction aid to generate "visible, measurable, on-the-ground results," said Under Secretary of Treasury for International Affairs John Taylor.

Taylor, speaking November 10 at Georgetown University in Washington at the "Afghanistan-America Summit on Recovery and Reconstruction," said the Bush administration is giving $1.6 billion to accelerate security and economic assistance projects between now and the elections.

Approximately $1.2 billion of the funds come through the $87.5 billion supplemental appropriations bill for Iraq and Afghanistan, signed into law by President Bush on November 6. Taylor said the other $400 million was re-programmed funding from the regular budget.

"[W]e have set specific interim and final goals through June 2004," said Taylor. The Bush administration allocated $700 million for security projects, such as police and army training, and counter-narcotics efforts. Taylor said the United States plans to have more than 19,000 police trained by June.

The under secretary said $900 million will be used for economic assistance, such as the building of roads, schools, and health clinics, and assisting power generation and private sector initiatives.

"We plan for 1,000 kilometers of secondary roads to be completed. To further stimulate private sector economic activity, we have a goal of building 100 market centers and 5 new industrial parks. And to help establish the rule of law we are planning on 16 new provincial courthouses," he said.

Taylor called upon other members of the international community to "[speed] up disbursements of existing pledges and [make] new pledges to be disbursed during this crucial period." He praised the European Community for making an additional pledge, and Japan for accelerating its assistance, and urged other countries to "join in."

Taylor said a surge in reconstruction efforts could yield "big payoffs" in both economic and political terms. He said he hoped that when the Afghan people go to the polls in June, they will feel that the progress of reconstruction undertaken by the country's transitional government and the international community has met their expectations.

Following is a transcript of Under Secretary Taylor's remarks:

Press Release
U.S. Department of Treasury

FROM THE OFFICE OF PUBLIC AFFAIRS

November 10, 2003
JS-982

The Time to Accelerate Reconstruction in Afghanistan

John B. Taylor, Under Secretary of Treasury for International Affairs
Afghanistan-America Summit
Georgetown University
November 10, 2003

It was exactly two years ago today. In the first major battle of Operation Enduring Freedom, the Taliban were driven from the town Mazar-e-Sharif, a strategic crossroads dating back to the days of Alexander the Great. Mazar's fall represented the start of a major acceleration of the war to end the Taliban's terrible rule over Afghanistan. Before the fall of Mazar, pundits were warning of many, many months of fierce fighting before the end of the Taliban's control. Yet only three days after the fall of Mazar, Kabul fell, then Kandahar fell, and then the remnants of the Taliban fled to the mountains. By the end of November, the international community was meeting in Washington to discuss our plans for economic reconstruction. I remember that upbeat meeting very well.

Now is the time to start another major acceleration, but this time on the economic reconstruction front. As in the case of the battle for Mazar, much has been done to prepare the way. The Afghan Transitional Authority under President Karzai is in control of the economic functions of government. Finance Minister Ghani has embarked on an impressive program to increase revenue. A new currency, the afghani, has been successfully introduced. A law creating an independent central bank has been passed. New commercial banking laws now allow foreign banks to open in Kabul. An Afghan Investment Support Agency has been created to reduce the red tape that entrepreneurs have had to endure when they start up or expand their business. Afghanistan is also working to improve regional trade and transit with its neighbors.

Construction of roads, bridges, airports and tunnels is underway. Schools have been reopened, refurbished, or built from scratch; and millions of girls and boys are back in school. The United States has fully supported this reconstruction effort. And so have many other donors following that initial upbeat meeting in Washington two years ago.

The World Bank, the Asian Development Bank, the International Monetary Fund, and the UN agencies have played an important role.

Measurement systems are being put in place to measure the results of reconstruction assistance with set timelines, so that financial aid is used effectively. For example, the timeline for paving the U.S.-funded road construction from Kabul to Kandahar is December 31. The same date applies to the road construction from Kandahar to Spin Boldek funded by the Asian Development Bank.

In sum, the stage has been set. A surge in our reconstruction effort can now yield big payoffs both economically and politically. Afghanistan is an extremely poor country. Without strong economic growth, it will stay poor for a long time. An acceleration of the economic reconstruction effort now will help stimulate that economic growth. It will also help to lock-in politically the important gains that have been achieved thus far. When the Afghan people go to the polls next June, how will they view the improvements in their own lives? Will they feel that the transitional government and the international community have met their commitments to help reconstruct Afghanistan? Will they feel that the progress lives up to their expectations? We want the answer to be "Yes."

To help make this acceleration effort a reality, last week the U.S. Congress passed, and the President signed, a supplemental appropriations bill with an additional $1.2 billion for Afghanistan. We have also re-programmed funding from the regular budget to bring the total acceleration to over $1.6 billion. Our goal is to use these funds to generate visible, measurable, on-the-ground results

As I have argued on many occasions, timelines for achieving measurable results are needed if our assistance is to be effective. Timelines are especially needed if you what to accelerate assistance; timelines measure the extent of the acceleration. We plan to finish this accelerated effort by June 2004. So, for each sector, we have set specific interim and final goals through June 2004.

A major part of our accelerated assistance will go towards improved security, which is needed for an improved investment climate and for raising economic growth. About $700 million will go for police, army training and counter narcotics. Our stated goal is for over 19,000 police to be trained by June. About $900 million will go to economic assistance, including roads, schools, health clinics, power generation, and private sector initiatives. We plan for 1,000 kilometers of secondary roads to be completed. To further stimulate private sector economic activity, we have a goal of building 100 market centers and 5 new industrial parks. And to help establish the rule of law we are planning on 16 new provincial courthouses.

This acceleration plan will not work if other donors do not also accelerate their assistance. Even with the increased U.S. funding, there are still many areas in urgent need.

See "Making Reconstruction Work in Afghanistan," Council on Foreign Relations, October 6, 2002.

These include irrigation projects, rebuilding major sections of the city of Kabul, and the National Solidarity Program, which provides block grants for community projects throughout Afghanistan.

To be successful the acceleration by other donors requires both speeding up disbursements of existing pledges and making new pledges to be disbursed during this crucial period. This, indeed, is what the United States is doing. For this reason, the government of Afghanistan is urging other donors to accelerate their assistance by moving forward commitments and by pledging additional funds this month. We, along with the government of Afghanistan, are also asking donors to set measurable results and timelines to meet those results. The reconstruction of Afghanistan is a collaborative effort and it is imperative that donors work together closely. We are pleased that the European Community has already come forward with an additional pledge. Japan has also committed to accelerating a portion of its assistance. We urge others to join in.

The United States is committed. We will continue to work with the international community. We look to Afghan government's continued leadership role. Our ultimate goal is nothing short of security, freedom, and prosperity for the Afghan people. With this timely acceleration, the Afghan people will be given the chance to achieve that goal.


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