Government Performance and Previous Breakdowns

Amid the turmoil and problems Afghanistan faces, it is only too easy to forget that some things actually work in the country. For example:

• The Ministry of Finance and Central Bank are functional and implement responsible macroeconomic policies—as evidenced by low inflation, modest fluctuations in the exchange rate, respectable growth in government revenue, a credible national budget and improvements in budget processes.
• Some national programs—such as public health and community-based rural development, among others—deliver services to the population, supported by functioning ministries. Such good-practice examples stand up well in comparison with similar programs in other developing countries.
• The Afghan government has demonstrated the ability to effectively spend large amounts of civilian aid—around $1.5 billion per year, plus well over $2 billion annually of domestic revenues—through the budget and national systems and programs. External assessments have found expenditure processes to be credible despite shortcomings.
• More generally, the architecture of a functioning state has been put in place; the government is staffed and capacity though weak has increased; and there have been reforms in the civil service, recruitment of qualified younger people, and improvements in some regulatory processes.

This is not to say that everything is working smoothly. There are huge gaps in delivery of many services; variation in effectiveness across ministries and agencies is enormous; much of the government remains mired in corruption; and politicization affects the bureaucracy at all levels. So, there is great room for improvement.

The salient question now, however, is not how to achieve further progress but how to preserve what is working and avoid sharp deterioration, or even a collapse, in government functionality. Afghanistan’s recent history provides grounds for concern.

The fiscal crisis during the 2014 presidential election is a notable example. Shortfalls in revenue and aid receipts (partly self-inflicted due to failure to achieve reform benchmarks and spending targets) led to a cash shortage and the government’s inability to pay its bills. Moreover, uncertainty around the election had a corrosive impact on government functioning during an interregnum between the Karzai administration and the National Unity Government (NUG). It took three years and great efforts by the Ministry of Finance to restore revenue as a share of GDP to its pre-2014 peak, so at least three years of fiscal progress was lost.

Current Risks

The downside risks Afghanistan faces at present lie somewhere between what happened in 2014—when the U.S. played strong mediating and security roles and together with other donors provided emergency assistance—and the disastrous collapse of the Najibullah government and outbreak of urban civil war in 1992, precipitated by the abrupt ending of Soviet aid when the USSR collapsed. Prospects will more resemble 2014 if abrupt international abandonment of the country, as occurred in the 1990s, is ruled out. However, the delay in the presidential election—now scheduled for September 28—and a lengthy period of uncertainty around a peace process would be aggravating factors. Specific risks include:

• Slowdown or paralysis of government functioning. To some extent this is natural during an election period and even more likely in a prolonged peace process. Not only may reforms slow down or stop, but day-to-day operations of government may get adversely affected or grind to a halt.
• Frequent turnover of government leaders and senior managers. Effective Afghan leadership and management teams have been key to success and sustained progress where it has occurred. While some turnover of ministers and agency heads is to be expected in the run-up to an election, if the personnel churn is too great and extends down to senior- and middle-management levels, government functionality will suffer.
• Policy instability. New political initiatives, policy reversals accompanying personnel changes, and use of government machinery for election-related purposes would not be credible or implementable and would create more confusion and uncertainty. Moreover, policy instability would further worsen the already poor environment for private business.
• Flight of human capital from government. In past years there was a “brain drain” of Afghan talent from the government to lucrative jobs with foreign agencies, contractors, and the private sector. The paucity of local job opportunities outside of government means that human capital flight to foreign countries is now important and would increase during an interregnum.
• Resource squeeze resulting from shortfalls in government revenues and aid. This occurred in 2014 and was extremely damaging. In addition to weaker revenue mobilization efforts and diversion of revenues for election campaign funding, lower budget aid in the form of reimbursements or policy-conditioned disbursements would contribute to a cash crunch.
• Short-time horizons incentivizing corruption. Uncertainty over elections or during a peace process, combined with frequent personnel changes, would exacerbate short-termism, a major corruption driver since officials and politicians facing less time in office will endeavor to increase their collection of bribes and other corrupt receipts before losing their access to these revenues.

How to Keep Government Working

Maintaining basic government functionality during elections or an extended peace process is critically important. How can it be done in the face of the current political realities in Afghanistan?

Formal interim or transitional governance arrangements lie at one extreme of the spectrum of possible approaches, though international experience has been mixed. In some countries a caretaker government is put in place during elections to avoid giving the ruling administration and party an unfair electoral advantage. There may also be formal interim or transitional governance arrangements during a peace process.

Informal political norms can also protect basic government functionality during elections or other political changes—for example, norms against misuse of government machinery to benefit the party in power. These kinds of norms develop over long periods of time and are lacking in low-income developing countries facing fragility and conflict. Relying on such norms alone is currently not an option for Afghanistan.

Interim governance arrangements were not resorted to in Afghanistan during the 2009 and 2014 presidential elections; indeed the country’s constitution does not provide for an interim government. However, the Bonn Agreement of December 2001 put in place a process involving an interim authority and transitional administration, leading up to promulgation of the constitution and the first presidential election in 2004. The NUG agreement following the 2014 presidential election could be considered an interim arrangement pending an envisaged change in the constitution (which did not happen), but the NUG came out of the disputed election and was not an arrangement for the electoral process itself.

Given the delay in the 2019 presidential election until over four months beyond the current administration’s term, demands from some quarters for an interim government may intensify. The Taliban also have been suggesting an interim government—apparently a very limited caretaker government composed of technocrats. In any case, an interim government does not guarantee maintenance of basic government functioning.

Critically, the downside risks listed earlier need to be mitigated, even though this would go against natural tendencies during electoral and political transitions. At the very least, key government functions and the agencies concerned should be insulated from these tendencies as much as possible. The Afghan government should:

• Avoid over-centralization of and interference in day-to-day government management by letting key agencies such as the Ministry of Finance and Central Bank carry out their core functions. Ministers and management teams should be empowered in their areas of responsibility, not weakened or supplanted by higher-level interference and micro-management.
• Avoid reshuffling leadership and management of key ministries and agencies, not engage in large-scale personnel changes in middle management, and maintain personnel stability to help minimize human capital flight.
• Not change macroeconomic or other core policies, nor suddenly introduce new policy initiatives, and in particular avoid divisive policy decisions that may appear to be politically motivated.
• Maintain realistic expectations regarding reforms, and not attempt to push forward complicated or controversial reforms; better to avoid backsliding and focus on protecting basic government functioning.

If an interim government is established, preservation of basic government functionality can be written into its provisions. Otherwise, the administration should announce clear arrangements in this regard. The Taliban and other political groupings can be brought into a discussion on the importance of maintaining core government work and how to do so during the peace process.

International partners should encourage and incentivize maintaining government functionality:

• They should support, and if necessary pressure, the government to carve out core functions and insulate them to the maximum extent possible from political interference.
• They must adhere to modest expectations regarding reforms and not pursue all the ambitious government commitments made at the Brussels international meeting in 2016 and the Geneva meeting in 2018, while insisting on sound macroeconomic and fiscal policies, remaining on-track with the International Monetary Fund program, and avoiding diversion of government revenues for election campaign financing or other political purposes.
• These reasonable expectations can be backed up by financial conditionality around funding for the government budget.
• And they can reinforce key messages about avoiding frequent government personnel and policy changes, new policy initiatives, or over-centralization and micro-management of core functions.

It will not be easy to avoid another damaging interregnum during the presidential election or an extended peace process. Nevertheless, all efforts should be made to prevent such a breakdown from materializing, which likely would be worse than in 2014 and jeopardize political stability, security, and peace prospects.