Karzai Solves Mystery of Afghan Corruption

Afghan frontman Hamid Karzai announced this past weekend that foreigners are to blame for the rampant corruption his country. It is true that foreign aid has helped bring out the worst in many Afghan wheeler-dealers. But Karzai and his cronies would likely be looting regardless of whether Uncle Sam air-dropped billions onto his land.

New York Times, December 12, 2011

Karzai Says Foreigners Are Responsible for CorruptionBy ALISSA J. RUBIN

KABUL, Afghanistan — President Hamid Karzai of Afghanistan blamed foreigners on Sunday for the corruption of Afghan officials and demanded that the United States extradite the former chief of the Afghan Central Bank in connection with the collapse of Kabul Bank, the country’s largest financial institution.

The former governor of the Central Bank, Qadir Fitrat, is living in Virginia. He fled Afghanistan, saying he feared for his life after he was involved in making public the massive fraud at Kabul Bank and removing its senior management.

Neither of the top bank officers nor any of the major shareholders, who include a brother of Mr. Karzai’s and a brother of the first vice president, Marshal Fahim, have been prosecuted, although all of them are still in Afghanistan.

Referring to Mr. Fitrat, Mr. Karzai said, “The government of the United States should cooperate and hand him over to us.”

“Bring Fitrat and hand him over to Afghanistan to make clear who is to blame,” he said. “But our hand can’t reach to America.”

Mr. Karzai made the remarks at an event sponsored by the United Nations to mark International Anti-Corruption Day. Afghanistan is one of the world’s most corrupt countries, tying for second worst in rankings by Transparency International, which tracks perceptions of global corruption.

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Following is a slightly different perspective from Barron’s –

SATURDAY, JUNE 4, 2011 The Anti-Corruption Charade By JAMES BOVARD

If there’s free money to steal, there will be more stealing

In much of the world, governing is a synonym for looting. Unfortunately, American and European foreign aid has a long history of accelerating the looting. Foreign aid created a generation of kleptocracies—governments of thieves—in Africa in the 1970s and 1980s. Mercedes-Benz automobiles became so popular among African government officials that a new Swahili word was coined: wabenzi—”men of the Mercedes-Benz.”

A 2009 Council on Foreign Relations report noted that “many public officials in Africa seek re-election because holding office gives them access to the state’s coffers, as well as immunity from prosecution.”

Zambian economist Dambisa Moyo, author of the recent book, Dead Aid, wrote: “A constant stream of free money is a perfect way to keep an inefficient or simply bad government in power.” Numerous other studies over the past dozen years showed that countries that receive more foreign aid tend to have higher corruption.

Former President George W. Bush responded by creating the Millennium Challenge Corp. to reward foreign governments for moderating their greed (see “Bribing for Honesty,” Editorial Commentary, Barron’s, Feb. 21, 2005). Bush proudly though incoherently announced: “We won’t be putting money into a society which is not transparent and corrupt.” (He probably meant “corruption-free.”)

But the Millennium Challenge Corp. quickly became another garden-variety foreign-aid program, not posing a real challenge to corruption. Governments such as those of Georgia, Paraguay and Mozambique received MCC windfalls, despite their well-deserved reputations for venality and theft. MCC’s rhetoric didn’t deter the Bush administration from lavishing foreign aid on notorious regimes such as those that ruled Nigeria, Bangladesh, Tajikistan, Indonesia and Kyrgyzstan.

Easy Promises
Afghanistan is the latest exhibit for foreign aid as a political weapon of mass destruction. In a January 2002 speech at Georgetown University, newly designated Afghan ruler Hamid Karzai gave personal assurances that foreign aid his nation received would be properly spent: “We have to promise that we will not cheat our own people. If there is cheating, corruption, I will stop it.”

More than $50 billion of aid poured into Afghanistan in the following years. The flood made Afghan politicians far more rapacious. Economists in the 1990s had dubbed this tendency the “voracity effect,” and, according to Mohammad Yusin Osmani, chief of the Afghan government’s High Office of Oversight, the surge of aid helped intensify corruption throughout the country.

Between 2005 and 2009, Afghanistan’s “corruption rating” went from merely bad to worst in the world (except for Somalia, which doesn’t have a government), according to Transparency International, a highly respected campaigner against corruption. Average Afghans believe that corruption has doubled since 2007, according to a recent survey by an Afghan-based nonprofit, Integrity Watch.

A United Nations study found that most Afghans identified corruption as the nation’s biggest problem. Foreign aid-spurred corruption is turning average Afghans against the Karzai government. Most Afghans in a recent survey declared that the pervasive corruption was helping the Taliban’s revival.

U.S. military officials tout Kandahar as the most important battleground in the Afghan campaign. But the governor of Kandahar denounced his own government officials and police officers as “looters and kidnappers,” according to the Washington Post.

Easy Applause
The Obama administration has responded with huffing, puffing and posturing. In late 2009, President Barack Obama gave Hamid Karzai a six-month deadline to “eradicate corruption,” according Secretary of State Hillary Clinton. After his re-election campaign was caught stealing more than a million votes, Karzai promised, “Fighting corruption will be the key focus of my second term in office.”

In May 2010, President Obama hailed Karzai at a White House ceremony for “the progress that has been made, including strengthening anticorruption efforts.” In June, U.S. Attorney General Eric Holder visited Kabul, and proclaimed that “we applaud” President Karzai for his anticorruption actions. Yet Karzai’s complaints led to the scuttling of U.S.-backed anticorruption teams that were nailing tainted Afghan officials.

The popular uprisings against Arab dictators earlier this year are further evidence of the failure of U.S. aid to promote good governance or political decency. The U.S. has provided more than $40 billion in aid to Egypt over the past 30 years—roughly equivalent to the personal fortune possessed by Hosni Mubarak when he was driven from office a few months ago. Regardless of how brazen the Egyptian élite’s thefts became, U.S. taxpayers were still forced to bankroll Mubarak and cronies.

Easy Policies
Foreign aid will continue to be toxic as long as politicians continue to be politicians. Imagine how Americans might react if some foreign entity foisted trillions of dollars of free spending money on the U.S. president and the ruling party in Congress. Yet we are supposed to believe that carpet-bombing a foreign nation with dollars is benevolent.

American leaders are far more concerned with buying influence than with safeguarding purity. Foreign aid is often little more than a bribe for a foreign regime to behave in ways that please the U.S. government. One large bribe naturally spawns hundreds or thousands of smaller bribes, and thereby corrupts an entire country.

There is no bureaucratic cure for the perverse incentives created by flooding foreign nations with dollars. It would be far more honest if American politicians openly admitted that aid corrupts recipient nations, but that such damage is justified when it underpins U.S. foreign policy. Taxpayers suffer enough without also having to endure politicians’ bogus humanitarian boasting.