KABUL — About halfway through “Obama’s Wars,” Bob Woodward’s mesmerizing account of the Afghanistan debate inside the Obama administration, Richard Holbrooke dropped a quiet bombshell.

“All the contractors for development projects pay the Taliban for protection and use of the roads, so American and coalition dollars help finance the Taliban,” Holbrooke, special envoy for Afghanistan and Pakistan, told a meeting of White House insiders in October, 2009.

He was not challenged or asked to explain. Everyone present, including the secretaries of state and defense, the chairman of the Joint Chiefs, the directors of National Intelligence and the CIA, accepted the comment without objection.

So a recent report from the Office of the Inspector General of the U.S. Agency for International Development detailing concerns that up to $5.2 million in taxpayer money may have fallen into Taliban hands should come as no surprise. The only part of the document that raised eyebrows was the comparatively modest amount estimated to be flowing to the insurgency.

The Taliban are now controlling larger and larger swathes of the country. A recent map published in the New York Times shows more than half of Afghanistan as either “contested” or “under Taliban control,” and that figure is unlikely to shrink any time soon.

In almost any area with a significant Taliban presence, large chunks of donor funds are being diverted to the insurgents, by various mechanisms, to ensure that projects can progress without interference.

The total amount is difficult to gauge, but many analysts, including senior NATO military specialists, calculate that the Taliban receive at least as much from extortion as they do from drug trafficking — and that figure hovers around $100 million per year.

USAID makes no pretense that the review is exhaustive. The inspectors examined only one implementer — Development Alternatives, Incorporated, or DAI — out of nearly 100 on its roster of partners in Afghanistan. Other major players, such as Chemonics and Louis Berger, also operate in volatile areas, and could conceivably be subject to the same pressures.

USAID officials in Kabul were not immediately available for comment.

The report admits that the choice of subject was a judgment call, motivated partly by the size of the grant — DAI is to receive $349 million over five years — and by the fact that DAI’s major project, called Local Governance and Community Development, operates mainly in insecure, high-risk areas.

“USAID and DAI have tried to implement LGCD community development subprojects too soon in high-threat kinetic areas … resulting in a failed outcome,” opined one unnamed USAID official in the report.

“Kinetic” is government-speak for “active battle.”

U.S. intelligence officials followed suit, saying “Security first, governance, then construction.”

But this flies in the face of the U.S. counterinsurgency strategy, which mandates that success can only come when all elements of a triad are present. Like a three-legged stool, success depends on the simultaneous application of security, economic development and good governance.

Without a reliable government and economic opportunity, the reasoning goes, the local population has little incentive to stand up to the Taliban, who at least provide some sort of rudimentary security.

But without security, it is difficult to get a capable government into place or initiate economic development projects.

Like the proverbial chicken-and-egg debate, the conundrum has never been resolved.

DAI lost no time in fighting back, issuing an internal memo to its staff reassuring them that DAI had nothing to be ashamed of, and sharply criticizing the USAID report.

GlobalPost obtained a copy of the document, written by DAI President and CEO James Boomgard.

He dismissed the USAID report as “largely circumstantial, speculative, and unsubstantiated,” and sniffed at “the degree of equivocation and qualification” in many of the USAID assessments.

Still, he was forced to admit that there were areas in which DAI could not adequately monitor its projects, nor ensure that U.S. funds did not find their way into insurgent coffers.

“The question for our critics and for anyone serious about executing U.S. policy in Afghanistan is whether it would be worth giving up on all such projects just because we cannot provide assurance — to an auditor’s satisfaction — that not a penny of U.S. funds is reaching undesirable elements,” he said.

It is a reasonable query.

For many in the assistance world, payoffs to the Taliban are simply the price of doing business. It is almost impossible to track, since the costs can be hidden in a variety of ways — inflated estimates for equipment, padded transportation costs, substituting inferior materials for the top-grade ones billed.

No one who has spent more than a few weeks in Afghanistan can be under any illusion that the donors and implementers are able to control even a fraction of the funds that pass through their hands.

Even in the relative stability of Kabul, it is difficult to monitor procurement adequately. In the growing parts of the country where the Taliban have a significant presence, internationals are barred from leaving their heavily guarded compounds without armored cars and flak jackets. Real monitoring is all but impossible.

Add to this the pervasive corruption that has engulfed Afghan society, and chaos ensues.

Over the past six years I have personally witnessed graft both great and small in Afghanistan. The anecdotes range from the humorous to the mind-boggling, but they all testify to the fact that the international community cannot hope to plumb the impenetrable depths of Afghan society.

While shopping for stabilizers and other equipment to protect computers from the vagaries of the Kabul electric supply, I was repeatedly offered secondhand, reconditioned equipment in place of new.

“They will never know the difference,” winked one merchant. “And we will give you a receipt for new equipment.”

For a small kickback, of course.

I declined, but I am aware of at least one USAID-funded project where hundreds of such units were purchased under just such circumstances. The finance officer suspected that he was being hoodwinked, but his international manager instructed him to be quiet and not rock the boat. The total amount of the swindle was in the tens of thousands of dollars.

Another international contractor recently told me of her experiences with one of the Kabul ministries.

“They stole $3 million of our project money,” she sighed. “It just disappeared. We think they just inflated the procurement costs for equipment and just pocketed the difference. “

Her project is about to fold its tent with less than half the allotted money spent because of problems with the ministry, she added.

If major donors cannot hope to control their partners even in Kabul, they have very little possibility of being able to do much in war zones.

No matter how unpalatable the Talban’s more repressive practices might be to most Afghans, they are a reality that must be dealt with. A weak, corrupt government and a foreign presence whose commitment seems to be waning precipitously cannot provide much of a defense against an insurgency that shows few signs of flagging.

I wrote a series of pieces on Taliban funding a little over a year ago, and for a while I became a favorite interlocutor for USAID officials, Congressional staffers, and others involved in the process. With something close to desperation, they would all ask the same question: how can this be stopped?

I was unable to provide an answer.

We cannot expect those who risk their lives to bring development projects to some of the most insecure areas of the country to forego the small measure of safety they try to purchase by negotiating with the Taliban. Nor can we hope to catch it all — there are simply too many bureaucratic nooks and crannies where payments to the Taliban can be hidden.

The question as formulated by DAI’s Boomgard, remains: Do we give up completely, or accept the risk that some of our funds are going to finance the other side?

It’s not much of a choice.

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