Good Money After Bad in Afghanistan?

Helmand Province, Afghanistan – It was all smiles and good will in Nawa as the U.S. Secretary of Agriculture made a surprise visit to one of Afghanistan’s most troubled areas.

“There is a tremendous potential here,” said Secretary Tom Vilsack one week ago, surveying a town that has been the scene of a major U.S. military operation over the past six months. The offensive managed to clear out most of the Taliban and bring a measure of stability to one of the country’s most volatile districts.

Nawa, in Helmand province, has long been a major poppy producing center. Now the challenge will be to convince returning farmers to abandon their traditional cash crop for wheat and fruit.

The United States is about to launch a new agricultural initiative in Helmand, providing fruit saplings for 1,000 hectares of land (approximately 2,500 acres).

“Farmers need to be encouraged to do the right thing,” Reuters quoted Vilsack as saying.

Agriculture ranks as one of the Obama administration’s first priorities, in the hopes that an aggressive effort to wean farmers away from poppy will help to diminish Helmand’s stature as the world capital of opium.

Vilsack was accompanied by Helmand governor Gulab Mangal, the architect of one of the most successful agricultural initiatives ever mounted in Afghanistan, and the only one to show real results in the fight to cut down on poppy cultivation.

The Helmand Food Zone Project also helped to restore confidence in the government to the province’s beleaguered population. But it could not escape the devils that threaten to sink many other efforts at reform in Afghanistan: corruption, inefficiency, factionalism and an international community that has been outstandingly unsuccessful at penetrating the opaque world of Afghan society.

The plan was simple: identify up to 30,000 local farmers who would agree to forsake poppy for wheat, distribute seed and fertilizer, help them with marketing, and wait for opium harvests to decline.

And decline they did. Helmand saw a 33 percent drop in its opium harvest last spring, the first year that Food Zone was operating. But by the summer trouble was brewing – over the past six months more than 90 people involved in the project have been detained and questioned, with several dozen currently in jail awaiting trial on charges of embezzlement and corruption.

Those arrested include the very top of Helmand’s provincial administration: the governor’s chief advisor for the program, Salim Zmarial, and the head of Helmand’s Department of Agriculture, Ghulam Habib. The deputy governor, Abdul Satar Mirzakwal, was also implicated, but has angrily denied involvement and has so far escaped detention.

The governor insists that all will be punished if the charges are substantiated.

“There will be no amnesty or impunity,” said Mangal. “I will send them all to jail.”

The British government, acting through the civilian-led Provincial Reconstruction Team (PRT) in Helmand’s capital, Lashkar Gah, provides the funding for the Food Zone program – close to $12 million the first year, in 2008-2009, over $13 million for the current year. The project is being administered by Rift Valley Agriculture (RVA) an international company based in Australia.

The stakes were high – the Food Zone project brought large amounts of cash into a rural and backwards province, and for many of those charged with administering it, the temptation apparently proved too great.

The techniques that were allegedly used were simple but effective. An employee of the Department of Agriculture, speaking on condition of anonymity, described some of them.

“We were told to buy whatever kind of wheat we could find,” said the man. “The PRT gave us $570 per ton to buy top-quality seeds, but we were ordered to buy inferior wheat for $330 per ton. We bought 4,000 tons. At least 80 percent of the wheat was poor quality. They mixed chemicals with it so that it looked like good, but the farmers could tell. The yield is less than half of what it would be for good wheat.”

That scam alone would have yielded its perpetrators close to $1 million.

Another method of bilking the system was to create lists of “ghost farmers” – non-existent beneficiaries of the Food Zone aid. According to reliable sources within the National Directorate of Security, the head of the agriculture department confessed to putting close to 1,000 fictitious names on the list, appropriating more than 6,000 sacks of wheat and fertilizer for his own personal use. Other officials were accused of taking bribes to include some farmers and exclude others, while the top administrators were allegedly taking kickbacks to award contracts to certain suppliers.

It was business as usual in Afghanistan, which was classified as the second most corrupt nation on Earth in Transparency International’s annual index for 2009. Only Somalia had a worse image.

With the Food Zone so recently in mind, it might behoove the United States to try and put more stringent controls in place. Of course, this approach has failed spectacularly, time and again, as experts from the aid community have pointed out time and again.

As Andrew Wilder, a longtime analyst of trends in Afghanistan, now at Tufts University, recently pointed out to GlobalPost, the U.S. government is “recklessly pouring money into Afghanistan with perverse incentives.”

Wilder said too many of the projects have budgets as high as $100 million and insufficient staff on hand to monitor the contracts.

“The big contracts become faceless and more open to corruption. They tend to have little or no connection to the community.”

Referring to projects with budgets that run into the 10s of millions, he added, “It’s hard to spend that kind of money” effectively and accountably.

But financial shenanigans are only part of the problem. Helmand, even more than the rest of Afghanistan, is a bewildering labyrinth of competing interests: tribal affiliations, complex political ties and regional factionalism all lurk just below the surface coloring attitudes and dictating actions.

The PRT, which for security reasons largely remains holed up on its fortress-like base, and the international administrators, restricted to compounds surrounded by high-priced security firms, cannot hope to penetrate the secrecy.

The Food Zone scandal is a case in point.

Most of the charges were leveled by Abdulahad Helmandwal, a tribal leader from Helmand’s Nad Ali district, who furnished evidence of wrongdoing to the governor and the security authorities.

“Do not ask me how I found the proof,” he laughed. “I gave the evidence to the NDS. [These people] not only stole money, they misused their relationship with Gulab Mangal.”

Mangal is widely seen as one of the most effective governors in Afghanistan.

But the scandal has damaged him, and the Food Zone program in general. This, say some officials, was exactly the point.

Deputy Governor Abdul Satar Mirzakwal, who was named as a possible co-conspirator but has not been arrested so far, claims that the entire case is politically motivated.

“A number of people, like Helmandwal, who do not want to see Helmand removed from the list of drug mafia states want the Food Zone program to fail,” he said.

Mirzakwal alleges that Helmandwal is among the numerous public officials with large poppy interests in Helmand. The nexus of drugs and insurgency has been enormously profitable to those who deal in Helmand’s largest cash crop.

Helmand alone supplies close to half of the world’s raw material for heroin, or it did before last year’s significant decline.

Helmandwal angrily answers his detractors.

“I am not corrupt,” he told a press conference last month. “I work for the people of Helmand. I am sorry that the governor is not arresting all of his advisors who are involved in this project, and I am sorry that we are fighting each other. And I am sorry that people from the United Kingdom, on the other side of the world, are funding seeds and fertilizer for the people of Helmand. Instead of thanking them, we are looting them.”

Some feared that the scandal would sour the British on continuing the program. But there is little chance of that.

“It is our largest project in Helmand,” said a source at the PRT, speaking on background. “We think in general it is a good sign that the government is dealing with this problem and not just letting people out of jail. We are overseeing it in general, but we prefer not to know all the details.”

The Food Zone program is continuing into its second year, with no systemic changes that might help to prevent the kind of fraud that allegedly occurred the first time around.

“We are confident that RVA has sufficiently robust controls in place to deal with the problem,” said the PRT source.

But according to Deputy Governor Mirzakwal, an RVA official was recently detained in Helmand for contributing to the Food Zone scandal. This could not be independently confirmed; the PRT had no information, and officials from RVA declined to be interviewed.

While the Food Zone program is undeniably popular among those farmers who received free wheat and fertilizer, it is difficult to judge just how much it contributed to the decline in poppy cultivation.

A major factor in farmers’ decision to switch crops may well have been normal market considerations. The price of poppy has plummeted in recent years, due to massive overproduction. According to reports from the U.N. Office of Drugs and Crime (UNODC), world demand for opium poppy hovers around 4,000 metric tons per year. In 2007, Afghanistan produced 8,200 metric tons, more than half of which came from Helmand.

In 2007, Helmand farmers could expect to get $140 per kilo of raw opium paste. By last harvest the same quantity would fetch only $35, according to local poppy growers. The price of wheat, meanwhile, soared, boosted last year by Pakistan’s ban on wheat exports to Afghanistan.

“It is difficult to say how much this program has contributed to the reduction in poppy,” acknowledged the PRT spokesperson. “But this is about more than agriculture and poppy. It is about showing the face of the government in the districts.”

That face has taken a beating, given the recent scandal. This may make it much more difficult for new programs like the one now proposed by the United States to gain traction in the future.

“I accuse the whole government of fraud, and I can prove it,” said a resident of Nad Ali district, who was shopping in Lashkar Gah’s bazaar. “If the government does not stop thieves, it means the government is also stealing.”

Aziz Ahmad Tassal and Mohammad Ilyas Dayee contributed to this report from Helmand.