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UNITED STATES INSTITUTE OF PEACE

© USIP 2012 • All rights reserved.

“International support 

to ANSF must fit within 

an overall level of aid that 

does not crowd out civilian assistance; adequately 

funding the security sector 

but not funding high-priority 

civilian spending would be 

disastrous for Afghanistan’s 

transition prospects and 

longer-term development.”

April 24, 2012

Paying for Afghanistan’s Security 

Forces During Transition: Issues for 

Chicago and Beyond

Summary

•	 Clear commitments and arrangementsto pay for Afghanistan’s nationalsecurity forces(ANSF)

during transition and post-2014 are essential.

•	 International funding must be adequate to cover the bulk of the total cost of the ANSF at

agreed size and cost levelsfor a long time to come, and funding needsto be committed at

least indicatively for the next five to 10 years and longer as needed.

•	 A holistic approach by donors will be required, and best achieved through coordinated funding arrangementsthat build on existing trust fund and other mechanisms, working through

Afghanistan’s government budget.

•	 Security sectorsupport must not crowd out civilian assistance to Afghanistan.

•	 Sensible and practical conditionality can be associated with the provision of internationalsupport for the security sector, just asin the case of civilian aid.

•	 Flexibility and responsivenessin support for ANSF will be needed as Afghanistan’ssituation

evolves.

•	 Non-financial issues concerning Afghanistan’ssecurity sector, and itsroles and effectiveness

during transition, need to be kept front-and-center in decision-making.

Affordability of ANSF: Donor Support will be Crucial

Afghanistan isreceiving massive internationalsupport to build up large security forces—the

Afghan National Army (ANA) and Afghan National Police (ANP)—in order to progressively replace

declining international troopsin the counterinsurgency effort against the Taliban. Funding will be

a major topic at the upcoming Chicago NATO Summit in May 2012 as a key issue associated with

this ongoing security transition. Ahead of the summit, this paper focuses on the financial dimension—how to pay for Afghanistan’s nationalsecurity forces.

Fiscal analysis conducted by the World Bank1 indicatesthat Afghanistan will be unable to pay for

the ANSF at anywhere near existing or targeted size and cost levelsfrom domestic resourcesfor

the foreseeable future. This would hold true even, for example, at half the previoussize and cost

targets(total of 352,000 people and annualsustaining cost of around $5 billion). The medium-term

cost currently being discussed ($4.1 billion per year, with totalstaffing of around 230,000)2—and

which islikely to be presented in Chicago for donor funding—does not change this outlook. It is

William Byrd

E-mail: wbyrd@usip.org

PEACEBRIEF124
© USIP 2012 • All rights reserved.

Paying for Afghanistan’s Security Forces During Transition: 

Issues for Chicago and Beyond page 2 • PB 124 • April 24, 2012

equivalent to about a quarter of Afghanistan’s gross domestic product (GDP) and two-and-a-half

timestotal government revenue. Even with continuing rapid revenue growth over time, it will

not catch up with projected security sector costsfor a number of years, and there are very large

demands on government revenuesfor civilian expenditures as well.

Afghanistan is currently allocating from its domestic revenues around half a billion dollars,

equivalent to 3 percent of its GDP, annually to security. Thisis already not grossly out of line with

what many other low-income countriesspend on defense and security. The extraordinarily high

total expenditures on ANSF (currently and projected) reflect the difficult and challenging security

situation and the responsibility for counterinsurgency the ANSF are expected to take over. The

Afghan security contribution can increase over time, for example in line with GDP growth. But

a very rapid shift of the burden onto Afghan domestic resources would wreak havoc with the

national budget,squeeze out civilian spending and precipitate a fiscal crisis.

The affordability of ANSF thus depends entirely on the willingness of the international community to continue covering most of its cost over the medium-term. The Chicago NATO Summit will

need to gauge the level ofsustainable long-term international commitment in thisregard. It would

be better to come out of Chicago with a lower but credible figure, committed at least indicatively

for the next five to 10 years and beyond as needed, rather than maintaining very high ANSF targets

which cannot be paid for.

Need for Holistic, Coordinated Deployment of Funding

How internationalsupport is provided to Afghanistan’ssecurity sector will also be very important.

Holistic rather than fragmented deployment of funding is needed. At a time of declining aid to

Afghanistan (both overall and for the security sector), fragmentation of programs and financing

with associated waste and extra costs will no longer be affordable or acceptable. What individual

donors do must add up to a coherent whole, and the numbersin particular have to add up.

Coordinated financing through a single or very limited number of multi-donor trust funds would

facilitate and buttress a holistic funding approach, and also leverage further improvementsin

Afghanistan’s public financial management (PFM) asit relatesto the security sector.3

Currently, U.S.support for ANA salariesis provided directly to Afghanistan’s national budget,

while ANP salaries are paid on-budget, financed by the Law and Order Trust Fund of Afghanistan

(LOTFA). Some security sector non-wage operational costs(for example mealsforsoldiers) are

paid by the Afghan government through the budget, but the bulk of equipment and supplies are

directly provided by the U.S., outside the national budget and often in-kind.

The experience with LOTFA and with paying for ANA salariesthrough the Afghan budget

provides a basisto build on for the future. Nevertheless, improvements are needed in strengthening financial controls, monitoring and accountability of LOTFA. PFM for the Afghan budget more

generally isrelatively good, but further enhancing it will also serve to strengthen the accountability of ANA salaries and other on-budget military spending. Creating a multiplicity of different

funding mechanismsto cater to individual donorsrisksfragmentation and defeating the purpose

of coordinated financing.

While more non-wage operating costs of the ANSF should be progressively transferred onbudget (and paid for through coordinated financing arrangements), government capacity will be a

constraint, especially for more sophisticated equipment and supplies and their maintenance. Thus

the U.S. will need to continue to provide these kinds ofsupport directly forsome time to come.

Finally, the need for a holistic approach and for the numbersto add up also appliesto the

balance between security and civilian aid. Internationalsupport to ANSF must fit within an overall
© USIP 2012 • All rights reserved.

Paying for Afghanistan’s Security Forces During Transition: 

Issues for Chicago and Beyond page 3 • PB 124 • April 24, 2012

level of aid that does not crowd out civilian assistance; adequately funding the security sector

but not funding high-priority civilian spending would be disastrousfor Afghanistan’stransition

prospects and longer-term development. The major donors, and those involved in organizing the

Chicago and Tokyo meetings, will need to keep the balancing ofsecurity and civilian assistance at

the forefront in the deliberations. 

Benchmarking Security Sector Progress

The“how”of paying for ANSF also includesthe question of what benchmarksthe Afghan governmentshould be expected to achieve given the very large amounts of financialsupport being

considered (likely to exceed $3 billion annually for a number of years at currently targeted ANSF

size and cost levels). While specifics would need to be worked out,some general principles can be

put forward.

First, the idea thatsupport to ANSF should be unconditional whereas conditions and benchmarks can be loaded onto civilian aid is wrong. Conditions and benchmarks can play an appropriate role in both.

Second, lessonsfrom experience with conditionality for civilian aid can usefully be applied.

Well-crafted benchmarks can provide stretch targetsfor reforms but will not work if overly ambitious, and must be broadly in line with the Afghan government’s own interests and policy agenda.

A creative combination of a medium-term perspective and flexibility will be needed, and an

understanding of the different roles of input, output and outcome benchmarks.

Third, conditionality is not appropriate forsupport which, if cut, would cause far too much

damage in relation to any positive impact of the benchmarks. Support to ANSF salary paymentsis

an example. But other kinds ofsupport, e.g. for new or additional equipment, new recruitment and

some training, can be incentivized. 

Turning to different types of benchmarks, the following distinctions can be made:

•	 Narrow financial conditions, relating to whether money has been properly spent for

intended purposes and without financial irregularities, can and should be applied to all

international security sector support (including for ANSF salaries). Coordinated financing

mechanisms, such as a multi-donor trust fund, are particularly conducive to application of

financial conditionality, for example by not reimbursing for expenditures deemed ineligible,

leveraging improvements in PFM, etc. (the Afghanistan Reconstruction Trust Fund provides

examples of good practices).

•	 Substantive security sector-related benchmarks can be associated with support whose

reduction would not cause excessive damage. Possible examplesinclude conditions around

force readiness, training completed, demonstrated operational capabilities, merit-based and

ethnically-balanced appointments and promotionsin the officer corps, observance of rule of

law by security forces, etc. Such benchmarks would need to be independently monitored.

•	 Economic conditionality may not be suitable for direct application to the security sector,

but it may become relevant indirectly; for example, some donors may be reluctant to meet

aid commitments for the security sector if Afghanistan goes seriously off-track on its IMF

program or does not raise sufficient revenue to pay its share of security sector costs, just as

in the case of civilian aid.

•	 Broader conditionality, including political benchmarks, should be limited to key actions

considered essential; if it is decided to include such benchmarks there is no reason why

they should not be applied to security sector support.
© USIP 2012 • All rights reserved.

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About This Brief

William Byrd is a development 

economist with long experience at 

the World Bank and has worked 

extensively on Afghanistan in 

various capacities over the past 

decade. During 2002-2006 he was 

stationed in Kabul, Afghanistan, 

where he served as the World 

Bank’s country manager for 

Afghanistan and then as economic 

adviser. He recently joined USIP 

as a senior expert in residence. 

This report reflects his research 

interests and several publications 

on security sector reform from 

a financial and development 

perspective. It is intended to lay 

out key issues and trade-offs in 

this area, and brings in concepts 

and tools of public financial 

management which are applicable 

to the security sector. The views 

expressed in this brief do not 

necessarily represent the views of 

the U.S. Institute of Peace, which 

does not take policy positions.

Strategy, Size, Quality, Effectiveness

This paper hasfocused on the cost and funding of the ANSF, but this cannot be seen in isolation

from the roles and activities of the ANSF, and their quality and effectiveness(including costeffectiveness). What are the strategic nationalsecurity objectivesfor Afghanistan, and how do they

link to the strategy for developing ANSF? What is being bought with the large resources devoted

to ANSF? Will ANSF be able to carry out leadership and execution responsibilitiesfor counterinsurgency asthe combat role of international forcesis phased out (assuming COIN remainsthe

primary focus)? Will the internal cohesion and command and control of the ANSF hold together as

the international military presence declines? Will the civil authorities maintain effective oversight

of ANSF, a key ingredient in successful transitionsin other countries? What continuing logistical

support from international forces will the ANSF require to function effectively?

The model for the ANA has evolved from that of a small garrison force mainly for regime protection, to one centered on counterinsurgency—at least implicitly assuming that the insurgency will

continue, even if atsomewhat lower levelsthan in recent years. On the other hand, protection

against external conventional nationalsecurity threats, which would necessitate an even more

outsized ANA than currently envisaged, would not make sense as Afghanistan has never depended on its official military forcesfor defense against the armies of neighboring countries.

Issues around the roles and effectiveness of the ANP are even more serious. There is heavy

emphasis on counterinsurgency (where the ANP have taken many casualties), but also issues

about law enforcement, criminal investigation, community policing, etc.—roles normally played

by police in other countries. There are questions about the ANP’s cohesion, itsresponsivenessto

local powerholders, accusations of corruption and perceived involvement with the drug industry.4

While it is beyond the scope of this paper to weigh in on the non-financial issues, they will be

crucial for the ANSF’ssuccess, and to the justification for continuing large investmentsin the ANSF.

Endnotes

1.	 World Bank, Transition in Afghanistan: Looking Beyond 2014, Executive Summary and Powerpoint Presentation, at http//www.worldbank.org/af.

2.	 These lower numbers are referred to in articlesin the Wall Street Journal (February 18, 2012),

The Atlantic (April 2012), and The New York Times (April 10 2012), among others.

3.	 The importance of PFM for the security sector, and the need to apply good-practice in PFM

just asin the case of civilian public expenditures, is emphasized in Byrd, William,“The Financial

Dimension of Security Sector Reform”, in The Future of Security Sector Reform (CIGI, 2010).

4.	 See Wilder, Andrew, Cops or Robbers? The Struggle to Reform the Afghan National Police (AREU,

2007). For a discussion on police involvement with the drug industry,see Shaw, Mark,“Drug

Trafficking and the Development of Organized Crime in Post-Taliban Afghanistan”, in Afghanistan’s 

Drug Industry: Structure, Functioning, Dynamics, and Implications for Counter-Narcotics Policy, 

UNODC and the World Bank, 2006.

Paying for Afghanistan’s Security Forces During Transition: 

Issues for Chicago and Beyond page 4 • PB 124 • April 24, 2012