Rich donors try to finesse flow of $4.5 billion into Afghanistan

New system should help prevent funds seeping away through crime, corruption.

The nations of the world gave Afghans an unprecedented vote of confidence in their ability to rebuild their shattered nation yesterday by pledging more than $4.5 billion over the next five years.

Amid lingering insecurity in Afghanistan and concern among donors about how the money will be spent, leaders of the Tokyo conference say they are working out formulas that they hope will prevent corruption and crime from siphoning off much of the aid.

"We all know that it's going to be tough to make sure that the money gets to the place that it should go," says World Bank President James Wolfensohn. "But I think with a proper, transparent system, with a lot of auditing, with accounting, there's a fair chance that we'll get most of the money where it's supposed to go.

"Can I guarantee that there won't be some slippage at the margin? I think that would be a hard guarantee anywhere, including in some of the developed countries," he says. "None of us thinks this is a utopia."

A document signed by the conference participants says that an implementation group made up of representatives from donor countries will regularly be based in Kabul to coordinate reconstruction projects and oversee aid distribution.

The implementation group, to be chaired by Afghan Finance Minister Hedayat Amin Arsala, held its first meeting during the larger conference here, and will hold its second meeting in March in Kabul.

In the past, poor management has often complicated the already difficult job of giving aid in developing and war-torn countries. With the sudden rush of foreign assistance, there is often an overlap in services while other needs go unanswered, and funds funneled through too many different agencies are hard to monitor. To help reduce this tendency, the donors agreed to streamline spending by creating a single fund for Afghan reconstruction, which will be en- trusted to the World Bank.

"The point of the trust fund is to make governance smooth," Mr. Wolfensohn says. "Many donors want to have their own show and put their own flag on their own building," he adds, suggesting that phenomenon will be kept to a minimum.

The donors also endorsed a proposal by the United Nation Development Program (UNDP) for a code of conduct to avoid "distortionary wage and rent inflation," which may be caused by an international presence in Afghanistan, according to the summary of conclusions.

Of the $4.5 billion, about $1.8 billion will be earmarked for spending this year. Of the conference chairs, the United States said it was ready to provide $296 million over the next eight months, Japan offered up to $500 million over the first 30 months, the European Union pledged 550 million euros (about $500 million) this year, and Saudi Arabia offered $220 million over three years.

Afghanistan's immediate neighbors - which have for years meddled in the conflict by funding various military factions - showed their willingness to turn a new page with the Afghan government. Iran offered $560 million and Pakistan $100 million over the next five years.

A recent assessment report by the World Bank, the Asian Development Bank and the UNDP estimated that the reconstruction process will cost about $15 billion over the next decade, with $1.7 billion for the first year.

Briefing reporters Tuesday, a senior US delegation official said that pledges in Tokyo for the first year had "exceeded expectations."

But many here say that donor countries will need continuous reminders that rebuilding Afghanistan is in their interests: Stabilizing Afghanistan will help drive out the anarchy and extremism that allowed terrorist groups like Osama bin Laden's Al Qaeda to take root.

"It's not just about writing a check, it is about decisions of self-interest," Wolfensohn says.

Donors and other observers remain concerned about the aid reaching those it is intended for. The World Food Program says armed men stole about 40 tons of food headed for drought-stricken north Afghanistan, the second such attack in a week.

Also, in Kabul yesterday, officials failed to meet a deadline to present a list of 21 Afghans who will be in charge of preparing for a grand council, or loya jirga, that will choose the next government. The current government is an interim administration with a six-month mandate.

UN officials in Kabul were quoted as saying that the loya jirga commission was held up because the top decisionmakers were at the donors' conference in Tokyo. But other reports suggest that the task of forming the commission was already embroiled in competition between tribal and military groups.