the quality of the the conversation doesn't seem to be quite as good as some of had the past so there may be a delay if we want to have an exchange on that basis and so we will make here to leave mother time for the answering to make sure  make opening statements without objection so ordered and i ask unanimous consent that the hearing record be kept open for five business days so that all members of the subcommittee be allowed to submit a written statement for the record and without objection so ordered for today t subcommittee will take a look at the economic dimensions of the united states efforts in afghanistan afghanistan's stability will depend in large pot what the united states our partners and allies in most critically the afghans themselves do over the coming several years to bring economic progress to a population ravaged by thirty years of war observers note that the taliban originally secured a foothold in afghanistan in part because severe poverty continually dashed hopes for a better life for the average afghan life was simply getting worse with no good prospects for improvement anytime soon the afghan central government was unable to provide even the most basic services like electricity and possible water justice was either slow laboratory or non existent unemployment top fifty percent and police were either absent or corrupt roads and irrigation canals had fallen into disrepair and the once productive agricultural base was so severely degraded that farmers to make a decent living chose to grow poppies rather than traditional products like wheat dates and pomegranates in short following the soviet withdrawal the taliban offered a different i'll be a trickle vision for afghans increasingly wary of endless conflict and growing personal insecurity  while this the average afghan was not supportive of the taliban per se the post soviet era was so adverse that the taliban were able to find a toehold and eventually a safe haven after the fall of the taliban and the arrival of united states nato there's been a modest economic gain afghanistan has experienced rapid growth on the strength of the international donor community especially the united states as its largest donor more than two point four billion dollars a new investment has been registered since two thousand three two thirds of which represent public investment financed through donor aid and one third foreign direct investment as a result in two thousand and eight in terms of the g d p growth rate afghanistan ranked twenty fourth out of two hundred thirty one countries dollars the united states taxpayer funds afghanistan is still one of the five poorest countries in the world transparency international rates afghanistan as one of the most corrupt countries in the world one hundred seventy six out of one hundred eighty two thousand nine world bank report says afghanistan is one of the most difficult places in the world to start a business and in foreign policy magazine just released two thousand and nine failed state index afghanistan is rated as one of the least stable most fragile states seventh out of one of seventy seven last year about eighteen thousand afghans applied for asylum in europe nearly doubling the two thousand and seven outward by gratian total this was the largest spike in migration seeking for any country in two thousand and eight and one of the most common explanations offered by afghans as to why the leaving is that people can't find jobs this dismal scorecard a disturbing trend begs the question what has been the net effect of united states support to afghanistan and to remedy the underlying economic and social conditions that allow the taliban to find an initial safe haven in the first place a less we begin now to improve the quality of life for the average afghan those dismal statistics are likely to go on changed and the security conditions will continue to deteriorate everyone from development professionals to kind of insurgency experts to senior ranking afghan officials say the shift from combat operations to converse urgency operations to post conflict operations is largely dependent on growing the afghan economy as former united states commander in afghanistan general david barno recently put it only if we saw the economic problems of afghanistan can we ever hope to win the long war accelerating economic development in afghanistan as a central feature of the new united states after tax data g announced by president obama on march twenty seventh two thousand and nine reinforcing the importance of economic and about development to the overall strategy national security advisor james l jones recently noted administration wants to hold troop levels here flat for now and focus instead on carrying out the previously approved strategy of increased economic development improve governance and participation by the afghan military and civilians in the conflict economic development is vital for a stable secure and prosperous afghanistan in other words we must move in the sooner the better from policy pronouncements on paper at the concrete actions on the ground i have just one final note we originally envisioned having a second panel here this morning with administrative ministration representatives but speaking of scheduling issues require that we receive that perspective at a later date probably the end of the summer or fall but by then we should expect that the administration's new afghanistan team will have sufficient in country what we hope to accomplish here what i particularly interested in is going to play between security and economic development obviously much of the country is too dangerous for a lot of non profits or others to work in absence purity officials so i'm interested in your perspective on what we need to do moving ahead and at what point we're likely to see economic growth and investment without or unless we have not for profit manager of private equity funds investing in small and medium sized enterprises in emerging markets she also serves on the board of afghan growth finance fund a twenty five million dollar investment fund which provides long term capital to start up enterprises in afghanistan prior to joining us e a f miss cali served for almost twenty years on the overseas private investment corporation she holds a j d from georgetown university law center and a b a from the university of illinois welcome  is an agricultural economist and a former senior advisor to afghanistan's ministry of agricultural irrigation and livestock in that role he focused on improving afghanistan's agricultural policies and public resource efficiency  hope i pronounced your name properly is the country director for afghanistan with the aga khan development network where he manages the networks programs and relations with the government of afghanistan he has served with the aga khan network since one thousand nine hundred six and has he various positions around the world including negotiating an operating a large scale humanitarian program to afghanistan in the late one nine hundred ninety s just a mouse he holds a degree from the university of london glad to have you with us sir thank you for the inconveniences and that imposed on you mr jeremy pim currently serves as the visiting research scholar for a sustainable development at the united states institute of peace prior to that he was co director of the united states central command assessment team from two thousand and six to two thousand and eight mr pam served in iraq with the united states to pop out of the treasury both as a financial attache at the united states embassy in baghdad and is a member of the governance assist susman team mr pam is a retired captain with the united states air force called j d from columbia university law school at m a from columbia university and a b from harvard college thank you for joining us or i want to thank all of our witnesses being here today to share your substantial expertise but also again is always will tell the truth the whole truth and nothing but the truth thank you the record will indicate that all the witnesses of answered in the affirmative i do want to say that all of your written testimony which we appreciate greatly has already been put on the you if we could invite you to give your remarks at the put the microphone on and pull a little closer as their little for the very good thank you i appreciate this opportunity to talk about the role of small and medium enterprises and what that means to afghanistan's long term economic development and to the security of the country because we do believe that those are deeply linked and that they're mutually dependent on one other jobs do have to be created income has to be generated if you want to improve security and in our view we are looking at where those jobs are most likely to come and what we are finding is that the sunni sector indeed is where the largest proportion of the employment base exists today and it also provides the majority of available goods and services so in our view se needs are very critical part of the equation for both economic development and security in afghanistan industry and products need to be improved more value needs to be added in the country and we think that that in fact will come if we can do a better job of linking up rule farmers and others in the rural areas to more urban processing centers distribution warehousing other other facilities that are needed to take those primary products and add value that will ultimately bring the economic growth to the country  has done this type of investing in twenty five different funds two hundred ninety individual investments all throughout the emerging markets we've been around for about twenty years so although we recognize that afghanistan has some very unique challenges we think that many of the challenges that small companies face throughout the emerging markets are indeed very similar and we we believe that you've got to approach this whole exercise not wearing your not for profit hat but with a lot of commercial discipline because in the end only a commercially successful company is going to have a long term economic benefit for the country so a little over a year ago in two thousand and eight created afghan growth finances and non bank financial institution in afghanistan were providing growth capital anywhere from fifty thousand dollars to two million dollars so we're well above micro finance but we're far below what the average target size for some of the larger projects might be we're making medium to long term loans we've got a fair amount of flexibility on how we can structure those those loans so that the companies can pay out of their cash flow so far we've committed five million dollars to ten different loans we expect ten million dollars to be committed by the end of this calendar year which would mean that we've effectively placed half of the twenty some million dollars that we have at our disposal through cooperation with opec through a risk credit facility they've made available to us the funds are being used to purchase machinery to establish processing and manufacturing facilities to broad working cap and what we're finding is that there as is in fact a strong demand for the loans because commercial banking sector is not reaching this level of company what we also are finding is that the benefits go beyond just the financial benefits  to the enterprise itself we've done a fair amount of analysis in terms of what that developmental impact is in other parts of the world and what we're finding is that afghanistan is very similar and in some cases the benefits are even stronger but what we have found that every every dollar that you invest into a small company in fact generates an additional twelve dollars in benefits to the broader stakeholder community and that means customers it means employees it means government through taxes it means suppliers it means others in the broader community and what we're seeing in afghanistan is that after a year in operation some of the companies that we've funded have been able to increase their employment by as much as fifty percent they've increased their wages by as much as thirty percent and they have taken what are largely unskilled employees and training them and provided them with a skill set that makes them much more marketable in the future the companies we've invested in several are in the agribusiness sector we've got a licorice root an extract processor that is exporting to to china dried fruit and nuts that was manually being processed and sorted now we've helped them acquire production equipment so they've got a processing line their daily production is twenty times what it was before their gross sales were up four hundred percent and we've helped them find a new export market in china and we've also got a raise and export in the agribusiness sector so we calculate that a thousand or more suppliers and farmers and input providers are now linked into these three or four agribusinesses that we've funded and of course you know all the the other message that is out there is that there are ways to make a good living as an alternative to poppy cultivation we are we've got two companies that are producing construction inputs in the country so instead of importing circuit panel by axes and metal pipe they're being fabricated locally in afghanistan going into construction projects so that more value again is being created in the country the overall cost of the construction is going down you're getting training in terms of the workers and you're seeing you know better prices overall in terms of the projects that are being built we have a renewable energy company that's that's quite interesting they are producing wind and solar panels and they have a  w unique design that is being deployed for the afghan police in their border posts they're doing on a pilot basis now they've got five underway if that successful in replacing diesel generators we could see in the future that this company will be able to expand to seventy or eighty additional posts which we think is you know a wonderful story not only for the economic benefit of this production and design in afghanistan but obviously from an energy standpoint as well we have a technology an internet service provider that's providing cheaper more reliable access to the internet outreaching to schools hospitals government military to a whole range of institutions that will make good use of it in the media area we've got an afghan language  l broadcasting program that we're funding through a media company and they're also broadcasting to the us and to the e u so the afghan perspective is getting out to the rest of the world now of course there are  challenges you mentioned many of them i think one of the comments i would make on the challenge is whether it's the security or the lack of infrastructure is that any do you have ways of being very flexible and adaptable they're less visible in terms of being targets whether its targets for corruption or targets for terrorism they're not the big high profile entities that will will gain a lot of publicity and so they tend to be left alone a lot more regularly but they are serious issues that all of our companies are dealing with the other thing they deal with is an untrained workforce but what that means they have to invest in that workforce and and overall we're finding that is in fact what's happening and that they are taking low skilled employees or training them they become more productive the wages go up and then overall what you're finding is that you've got a low skill base that's being raised and you've got wages that are better that are growing and as a workforce is training companies become more productive they increase with capital as well they're able to increase that overall size of the workforce thank you so you want to wind up for us for years because we're all going to get to questions the answers to and i'm sure we'll cover a lot of them absolutely so i think you know really at the end of the day lack of financing does remain a challenge but it's more than capital it's needed it's a partnership it's technical assistance it's a variety of support and we think that overall working with opec and others in the u s government helped to expand the program and we think that our initial year has been today first thank you for inviting me to appear before you today i'm pleased to have the opportunity to participate in this important hearing and us from ocean of the afghan economy i know your time is limited so let me start with a summary i recommend that we adopt an approach to economic development and governance assistance to afghanistan emphasizing three pillars an orientation towards afghan public finance and budgets as a strategic focal point for the entire civil side effort to the collaborative development with relevant afghan experts a road map setting out a few high impact programs in key sectors such as agriculture and three a greater use of catalytic financial instruments to share risk with afghan entrepreneurs the written testimony i've submitted places the significance of the afghan economy in the context of a broader legitimacy crisis of the afghan state that has at least three other and arguably more important dimensions security namely the state's inability to protect the population political the reluctance of a critical mass of afghans to identify politically with their government and governance the government's difficulty performing basic other mental functions and delivering essential services i thought the central idea of legitimacy to the current crisis was worth discussing at some length in my written testimony first because it helps explain why past u s and international  civil side assistance to afghanistan has been so has had so limited an impact as to be and secretary clinton's word heartbreaking if the problem is legitimacy afghan actors failing to do things afghans expect them to do then it shouldn't be surprising that international civilians trying to do those things directly to default international approach for reasons i discussed in my written testimony has not worked as a solution as an aside please note that all of my comments relate to the civilian and not the military effort although i suspect there are points of overlap with noted military experts experts like john novel published op eds with titles like we can't win these wars on our own the second reason it's worth framing things in terms of legitimacy is that seeing the afghan crisis as a as a as a problem of legitimacy explains why improving the situation requires us to adopt approaches that deliberately structured international efforts in a ways in ways that improve afghan budget a messy by helping afghans implement their priorities through their institutions despite the many frustrations and inefficiencies of such an approach this was it a messy analysis leads directly into the three pillars strategic concept for civil side assistance that my colleagues on the barrie of usaid clare lockhart of the institute for state effectiveness and i developed this spring which my written testimony describes in further detail and which was also referenced by patrick cronin of the institute for national security studies and his may nineteenth testimony to the subcommittee as already mentioned these three pillars are an orientation  afghan public finance and budgets as a strategic focal point for the civil side effort the collaborative development of new road maps for key sectors and a greater use of catalytic financial instruments to share risk with afghan entrepreneurs i'll return to the public finance pillar in a moment but there is more on all three pillars in my written testimony more important for this discussion is the common idea underlying the concept as a whole the requirement to use afghan institutions or business enterprises as a focal point for international assistance which should better ensure that our efforts are aligned with afghan policy or business priorities and is consistent with afghan institutional capacity thus increasing the likelihood that the efforts will both be sustained by afghans and contribute to resolving the underlying legitimacy crisis discussion thus far has emphasized explaining all of the current crisis in afghanistan the limitations of passive aside international systems and the rationale for the alternative approach we recommended solely by reference to the afghan situation and the dynamics of international assistance in other words without bringing reason experience in any other country into it i'd like to now conclude by describing briefly how the us experience in iraq reinforces both the general component of this analysis and  feasibility and effectiveness of the particular solution proposed while afghanistan and iraq are indeed apples and oranges in many respects perhaps no more so than in public finance in economic terms where afghanistan ranks near the bottom in terms of wealth and human capital indicators and iraq has the second largest proven oil reserves in the world the afghanistan and iraq efforts do have one major factor in common us in both countries the same u s and u k civilian and military organizations operate according to broadly similar organizational dynamics setting the stage for the same kinds of misalignment with local country priorities and institutional capacity and the same tendencies towards a fragmented international effort indeed i'm sure you'll all recall that in two thousand and four and two thousand and five and two thousand and six iraq after it was routinely condemned as seriously perhaps even fatally hindered by coordination challenges between civilians and the military between different civilian agencies and most importantly between the us efforts and the iraqis themselves i i think that that those stories about those coordination challenges are familiar to us from both efforts both official audit and journalistic accounts produced story after story about how the left hand didn't know what the right hand was doing and all the ways in which this was undermining our efforts to get to the point when the iraqi government and economy could stand on their own as it happened a little appreciated but significant factor in addressing some of the most important coordination problems and improving the effectiveness of our efforts to support iraqi self governance was a belated recognition of the strategic importance of iraqi public finance particularly budgets this led to a significant shift in emphasis across the entire u s assistance effort towards helping iraqi officials at both  execute iraqi budgets as recounted in the capstone report of the special inspector general for iraq reconstruction hard lessons in two thousand and six most americans in iraq were still focused on spending yes money largely independent of iraqi government institutions consequently in many cases there was a lack of sufficient iraqi participation in deciding how or what to reconstruct and ensuring that projects could be maintained afterwards the end of two thousand and six however saw quote the rise of budget execution as u s civilian as a civilian as a u s civilian and military priority by mid two thousand and seven the standard for useful expenditure of u s funds had largely shifted to quote if it can't be done by iraqis we probably shouldn't do it what is better is a project that takes sixty days instead of thirty days but it's done by the iraqi manager in a sustainable by the iraqis and that their operations can support by mid two thousand and eight iraqi public financing budgets had become such a central organizing principle to the u s effort that the embassy and multinational force iraq created a civil military public financial management action group known as the chaired by the senior civilian and military leaders responsible for governance and the economy and incorporating the participation of dozens of u s organizations working on the civil side in iraq in order to ensure that all civilian and military personnel whether working with ministries from baghdad or with provinces from provincial reconstruction teams would make assisting with the execution of iraqi budgets a paramount civil administration probably mission priority by the end of two thousand and eight an independent u s institute of peace study the p r he's had concluded the budget execution role is critical to the u s mission in iraq and is the primary strategic justification to continue the p r t program i hope it goes without saying that nothing i've just said should be taken as suggesting that an approach having worked modestly in iraq is by itself a reason to adopt it in afghanistan indeed i limited my written testimony to afghanistan in order to avoid any such implication however if we believe that there are some common daunting challenges to finally establishing an effective civil assistance effort in afghanistan which have as much to do with the international challenges of providing affective assistance in this kind of environment as with afghanistan we might find some value in the idea of public finance as a strategic focal point and in the broader idea deliberately structuring our assistance to better align our civil si efforts in afghanistan with afghan priorities and institutional capacity i believe that by strengthening the ability of afghan against and state institutions and private sector to recover from the current crisis of legitimacy and stand to a greater degree on their own such an approach would advance our national interest and greater stability in this critical region i thank you mr chairman for giving me the opportunity to testify today i look forward to any comments or questions you may have thank you a span we appreciate your remarks mr moshi again we thank you for joining us from a investments even though they are for profit companies and these profits go back into social and cultural development as a cycle i welcome to be able to share with you some of our experiences here in the field and to draw some conclusions  of war in this country there really is total devastation and this devastation is not only just institutionally but it's also in terms of the country and i think we should not be putting content that we're going to need along at the very sustained and gauge much enough to understand  buying people together in a coherent fashion the next point i would make that we need to continue to encourage public private partnerships today we are running a hospital with the french medical institute for children which is just receive the civil society and business to go forward in afghanistan and you see there is a road map that came out which is been submitted as part of the testimony but you know the issue is a very very clear there is very weak policy enforcement ministry of finance four times to pay my taxes my income taxes and nobody could tell me when i could pay these taxes and she said finally somebody said i'll help you pay your taxes but you need to pay me to help you pay your taxes in which case she was paying number one i strongly encourage that we put in resources to address the issues outlined in the aging and violence conference roadmap which are clear and to push the afghan government to be able to prioritize these in a up seventy seven percent of the food that they actually produce if you really want to rebuild the economy afghanistan to do what it traditionally was when it was thriving and that was a land bridge of the silk route and how do least amount of amount of development assistance i think we need to really address that audience because if there is one other thing we have in our experience is that success stories spread very quickly enough kind of stuff and if you want to get three afghanistan thank you very much sir i think the testimony here this morning has been excellent and very helpful i notice that we didn't keep anybody within the five minutes and i think that's fine because i think we all benefited from  win the prize because you couldn't see the fidgeting when you got the five minute point so we were able to get all of your information which was quite helpful we appreciate that let me just not the questioning section if i can i thought mr pam phrased prioritizing a different projects can you tell me what your view is of mr pam's comments that he thought one way to best prioritize them would be work through the public budget in other words to work with the afghan government's budget question what about the corruption issue of all touched upon here and i think everybody has a concern that the investment might not get where either the governmental budgeting process of afghanistan wanted to go or where individual investors want to go now let me start by addressing the previous comment i think i think that the suggestion that the government that government programs government efforts to deliver services take advantage of all of the capacity that exists in afghan society including afghan n g o s and you know in places where the government doesn't reach  think i think that that is perfectly consistent with a public finance using public finance as a as a focal point for our efforts i think that that ties into a second one is the second pillar of the three pillars approach of these new sector roadmaps which would create new national programs sort of on the model of the national solidarity program which is a national program in the sense that there is a ministry in kabul that's responsible for it but it's implemented through not in many cases through non governmental entities down at the village level and so you've got to marry up the formal governmental structure with whatever capacity exists in afghanistan whether it's at the formal or the informal level and i think you've got to the answer to that will be context dependent but i think what we've got to avoid is is saying that because a ministry in kabul doesn't have officials that allow it to reach all the way down to a particular province or minus a pallet or district or village we should therefore give up on the state structure and and devote our efforts to parallel internationally funded efforts that go directly to n g o s at the district i think there are ways of combining the two but we can't give up on on the public process if we want to address the underlying legitimacy crisis which is at bottom of a crisis of what the state can can do it the suggestion that we place a greater emphasis on on the afghan budget which entails greater u s and international financial support for the budget greater of budget support for instance is a risky proposition and i think that one would do that as part of a multi step process which would also involve some intensive technical assistance work assessing the quality of the public finance systems the world bank of the i m f have already done a tremendous amount of work on the systems and my sense from them in general is that those systems are actually in decent shape but but obviously the u s would want to hear that directly and see that directly and do some work preparing the the national budget and then if there's going to be a degree of fiscal decentral n subnational budgets to receive additional money so money will be lost but some money is lost when it's done through parallel systems to the argument is that only by putting money through their system and concentrating our efforts on making that system work which is which it will be you know which it will only do imperfectly at the beginning will we ever get to the point where there is a functional system that can respond to that can perform all of the we have to to to funnel through that system and not through a parallel system but i mean give us some guidance here where what kind of structures or mandates or whatever can we put in place and if they're not met what are our choices at that point because it's a difficult thing i can tell you to sell foreign aid in general but when a significant chunk of it will be drained off it's tough to just accept that as a matter of doing business yeah i understand congressman i think i would give three answers to that question the first is what the alternative is we've been in afghanistan for years the chairman gave a figure for the amount of money that's been appropriated to afghanistan during that time it's been a very large number the question is what results have we received for that investment my it's my sense that that there's that there's a broad consensus that we haven't received a very good return on that investment by the u s taxpayer this is why secretary clinton said that looking at the effort looking at the results achieved was heartbreaking and i mentioned the iraq case because that's another case that has happened contemporaneously with our investment in afghanistan where we appropriated congress appropriated twenty forty billion dollars for civil side assistance and it produced very poor results now who used u s contractors who are used to the u s rules for accounting for the money the problem with it is that in too many it is too often the investments made with that money we're not seeing done with afghan priorities and institutional capacity in such a way that it it moved the the afghan government towards greater capacity and self sufficiency and self governance and to do you know it in other words further towards a point at which we could eventually scale down our presence both military and civilian so the first point  is what alternatives are i'm suggesting that the business business as usual has not worked very well i think this is consistent with the president's new strategy for afghanistan pakistan which calls for a new  approach my second point is is what this the new produce approach that i'm recommending would entail again i'm not suggesting that we simply you know transfer all of the money that we would have appropriated through the systems we know and trust into directly into the afghan budget by no means i think this is something that has to take place has to be done gradually and i think it's already the first steps of it may already be in motion there has been some cases where where intensive work with particular ministries has given our agencies comfort that that ministry is now ready to receive a greater degree of budget support and i think u s a s work with the ministry of health is is one of the examples there but but my argument is that we need to do that on a broader scale and doing that is is something that will require intensive technical assistance in public financial management fortunately we're not starting from scratch that as i said the world bank and i m f have been working on this since two thousand and one have produced reams of documents about it have have have you know there are detailed assessments of how that of how the state of the system and the confidence that we can have in it and we have a further advantage in that we appear to be in the process of sending over a significant number of additional civilians and or military reservists to focus on civil side assistance many of those people could be  used to help enable this public finance focus stationed at every level of the afghan government given sufficient training and public financial management that they could help us track it but the point is that the money has to go through the iraqi institutions with us on the outside helping the institutions work rather than going through us on the outside providing the benefits to thank you thank to the afghans thank you very much they just like it was fun to be recognized  i recommended to anyone that it's very sobering reading to understand the huge chasm that exists between a modern functioning western legal system and what was in place at least in one thousand nine hundred eighty five and it's probably gone backwards is my guess because of the wars in the time period and so my questions to mr perelman mr manji are what is the structure of the afghan legal system today and what are the useful alliances that could be encouraged to build a functional legal infrastructure are the alliances with western or islamic countries more going to be more valuable in the us and if islamic alliances are the best with home you know where are the islamic partners that may have high functioning legal systems that could be most easily culturally adapted to afghanistan to ask the question of either one well i'll answer briefly because i'm not although i'm a lawyer i have never worked on on legal issues with respect to afghanistan i would just say point there is that we face a general we face a decision generally in providing assistance whether we want to our goal is to set it up to look like our system which in many cases is a huge implies a huge kilian effort because they're coming from very different starting points not only in terms of economic development but culturally religiously legally or whether we want to focus on what's certain parts of the legal system which would you know which we can associate with internationally you know do we have a policy for investment that we have a policy to trade and so on and so forth i think when the islamic issues come it is when it comes into conflict resolution and most communities amongst the middle of the well so on and the constitution about going to make provision for the islamic system to be as being an impediment you cannot make development i remember my father talking about a plot of land that was claimed by six different people and they've been arguing about it for generations as to who actually owned it and it strikes me there may be  opportunity for us to make a contribution by actually establishing a central database of who owns what this is a sort of technical project that the us actually could help out with and then of course you'd have to go through and  earlier this year we heard stories about farmers who were spending more money paying customs charges paying tariffs paying different forms  of extorted payments as they transported their goods through the country to whatever port the goods were going to to the extent that it essentially cancelled out the benefit of producing the goods in the first place  which was consequently driving people to the illicit trades in which they were not responsible for the transport of those goods can you talk a little bit about where we stand today in terms of the difficulty of transporting agricultural products throughout the country and what we need to be doing as a government in terms of trying to make that process easier so i think you know the situation  i indicated in my paper that these farmers association produce that associations marketing association has to be farmed because farmers in afghanistan or small and weak that way  military or diplomatic or economic progress in countries in which we occupy benchmarks you know continue to be a problem in terms of trying to identify our levels of success so if you look five years out maybe even ten years out to the afghan economy what are the benchmarks for success that we should be looking at to try to decide whether our investment there  made the kind of gains that we hope what are the what are the indicators that we need to be looking at in a five or ten year time frame that help us understand the success or failure of our mission there written testimony the benchmarks i suggest we use as a benchmark budget execution performance and that is which is to say how much they are spending through their system it is obviously just merely spending money is is a very gross measure as as we know but  in my experience focus using a metric like that would have the benefit of focusing the americans working in the country who are supposed to be building capacity of the afghan institutions focusing them on ways to improve that that approach that specific element of performance and it's something that everyone understands and it's the number will start out low i think there was a reference in previous testimony to the afghans only being able to spend forty percent of their development budget those numbers numbers like that are common in the developing world budget execution as it is a problem in every in every emerging market but you start with a number like that you give the effort the objective the task of doing what's necessary to improve that number so that that money does flow more effectively through the system with glass leakage and producing more results at the end and i think what you end up with is both a more focused and effective u s effort on the one hand availability of credit that was really spoke about it has in government credibility with better credit in the agricultural realm all that was the pam talk about the need to better use afghan capacity so there was plenty of entrepreneurial spirit out there about the afghan growth fund and expanding the capital flow to small medium enterprises in afghanistan so let me start with you because we haven't heard enough from you does the infrastructure exist to  apply that desire in a very practical way because access to capital has been been lacking but it's more than just the capital it's also providing the various other kinds of support we're talking about the need for proper accounting and so on so it's  a it's a business building effort that requires capital but also various types of technical support and i think we've also said it's important to make sure that the reaches beyond kabul you know we're trying at a limited way to do that i think in order to reach some of the other areas we would certainly need some additional support but it's a very important thing because i think otherwise you know in answer to one of the other questions a lot of the potential economic benefit is being left on the table because you're not doing the value addition in countries you're exploiting you know raw product or you're not getting the distribution to the places where it needs to go so the demand is there it's challenging  these challenges are not all unique to afghanistan and and i think you know in terms of what's needed whether it's an enterprise fund or more for for larger investments or more smaller investment it's the combination of the capital and the technical assistance and then trying to structure in a way that's culturally sensitive in islamic culture as well as dealing with the constraints that one has and the legal system but there are ways to do it and you can get good repa because if you had the technical capacity improved accounting system improved the banking system in especially in agriculture that if you connected these associations farmer associations w documents then you know that would open up fog of one stone product inside that country in and then later on like if you could they could establish to make that quality control where it seems that the government is as certainly as i said that a couple of visits i've made afghanistan for the first his second visit there seemed at least with the president's office less of a commitment to fight  drug war if you will and to less and less less candor in terms of what's going on outside of kabul to what extent i mean how difficult is it going to be to  offer the incentives how long is it going to take to move to others pomegranate or whatever else to offer something sustainable particularly if the government doesn't seem as committed  that increase commitment or lessen commitment over the last couple of years to to transition away from from poppies i'm not sure i haven't had any discussions with the government on on that subject mr when you look like you're itching to answer that but i think i think based on my experience that government is fully committed to  think in a city to five us then was that then you have to teach the fatness how to do mixed farming but you know that unfortunate thing is that a lot of experience farmers me to think that the government really committed to the restriction of poppy growth when you see the enormous economic value that it provides for the country of afghanistan what is currently  it would be difficult to convince the people to actually apply that but if you go in this other route then probably the government would be you know make the argument that the idea was that people in the people would be to telling us that they cannot meet the demand in the in the indian market for the for the higher value you know better quality process knots and that goes directly to his point that the the agricultural infrastructure needs to be there to support the production so that when you've got the capital for the processing facility and the ability to bring that value added back to the farmer level you know you will be able to do it if you augusta that the abductor i'm what i'm trying to figure on this journey is why there's a missing connection that would it be useful for us to try to get you know physicians without borders to those who do rehabilitative medicine to try to help morse communication and so forth help consult with doctors there for more rehab medicine excellent point in emphasising the need for infrastructure and and i think the infrastructure that that he's referring to is it's worth noting that it's state infrastructure the need for to rebuild an agricultural extension get the statistics on these injuries as a result of landmines and what it would be your proposal to see what n g o s could help in terms of rehabilitative medicine for those farmers and the like who get injured as a result of the because i understand afghanistan is littered with landmines and i just want to know what we're doing to help and rehabilitate of medicine but i wasn't saying anything about landmines i know you are and i'm asking you out because you are part of the store sustainable development of u s institute of peace to help us with this sort of and and in terms of infrastructure for health care there's very little  drinking water and sewage what is going on with that for for the farmer and for the population there in terms of public health can you tell us about what what's going on there terms of building infrastructure i mean you can't have much of a farming life and community if people can't have drinking water yes i'm afraid i can't give you any detail on on the  efforts the water efforts in particular but i can i can look into it along with landmines because i made can i make a comment points being made on agriculture and so on absolutely valid and i do believe that infrastructure needs to come into place in terms of improving the agricultural prospects we would not be able to really address the not cost six issue until there is a sense of consequence for the people percent and that was eighty percent of the economy so for all of our witnesses i guess a staggering point i can speak for is the flag as well to us would be who's doing the central planning here who's doing the overarching view of what needs to be done that's important who's who's deciding what projects are the ones that ought to be prioritized and then making sure that something gets done i don't know the ag a congress done significant work there they're the  largest private investor in afghanistan is there any functioning entity a comprehensive planning group that pulls all of the n g o s all the private investors all the go to together  you for that for the question i think it's i think it is is one of the most important questions that we have to ask and i agree with with the way dr smith has just framed it and i addressed this in my written testimony when development intervention a is the priority for donor x and develop an intervention b is the party for donor y and in the case of afghanistan you have to multiply that you have you know a through z double a double z to include to include all of the countries all of the n international body like the like the un assistance mission in afghanistan performing that coordination function coordinating function and your mama has tried but you nama doesn't have the authority to  direct the programs of individual donors and so my conclusion is that the only way to accomplish that kind of coordination is to fall back on the entity that has the strongest  authoritative claim to be responsible for coordinating and prioritizing which is the government of afghanistan itself the system worked when it was the government the ministry of planning working but the ministry of planning the ministry of finance has been taken out has been disempowered and my recommendation to to focus on afghan public financing budgets is in part motivated by the desire to find a way to put them back in the loop in order in substantial part to solve this coordination problem because that's part of the tension you know that we find up here if we were to look at trying to put the money through the afghan government because that's a way of coordinated around the budget priorities but the see that one of their priorities is to weaken those very agencies that would probably be best to coordinating all the various ever so they put the conflict up there as a cause i've given particular weakening those agencies is mr marsh he said you know having no gone because there were no jobs no it was taken advantage of the skills and and moved on so i just throw in one more level of frustration here in the well as a potential part of the problem which is i understand your reservations about putting all your eggs in the basket  that you have you know finite confidence and but this is why i think that part of the solution might lie with fiscal decentralization and you know in my terms creating multiple entities that have budgets and that have some that are closer to the people and that have responsibility for providing some of the performing some of the governmental functions providing some of the essential services that then creates a competitive environ where we're not solely reliant on the national government we neither we nor the people of afghanistan are solely reliant on one government and instead can sort of go to multiple governments and and and try to encourage at least some of those governmental entities to perform and i guess think you hit on the most relevant point here there seems to be a need and we've heard this again and again and again i think for greater coordination and so i'm very anxious to hear the administration's  we've really benefited from having your expertise and congratulate you on the work that your agency is doing in afghanistan and elsewhere other witnesses that are here today thank you very very much for you both the written testimony you're conceptualizing of this helping us frame the  questions as well as look at some of the answers and the time spent here this morning i agree with my colleague mr flake that we want to really grill the administration on where there are or where they're going on this i think we might expand it out to as to where some of the international organizations are playing into th where is the u n in terms of coordination whether international agencies might be playing a role in that or at least if mr pam says that nobody seems to have the authority to do it who has had a first class city to step up and suggest that we all volunteer to work together