MEETING THE CHALLENGE
OF PROMOTING DEVELOPMENT AMID CONFLICT

Ambassador Zalmay Khalilzad
March 5, 2008

Thank you for that kind introduction. 

I feel that I am among friends here.  I have worked with some of you or your colleagues, or benefited from your work here when I was deployed to Afghanistan and Iraq.  I am pleased to have this opportunity to discuss the challenges we face together in seeking to promote development amid conflict.

I want to express deep gratitude for the sacrifices that the development community has made and is making to improve the world.  Development assistance, as a policy instrument, has a vital role to play in the international community’s struggles -- not only to alleviate poverty -- but also to defeat extremism and terrorism. 

You have already made great contributions in the current conflicts, as I saw in the two countries where I served.  A few examples included …
 
• … the Kabul-Kandahar Highway and other roads that will help Afghans overcome regionalism and build a national market …

• … the women’s dorm at Kabul University, which will enable young women from across Afghanistan obtain higher education…

• … the American University of Afghanistan and the American University of Iraq, which will give Afghans and Iraqis the benefit of the same kind of modern education from which I benefited at the American University in Beirut …

• … achieving more than 1,000 megawatts of electricity production in Iraq and thereby overcoming the decline in production after the fall of Saddam …

• … the opening of schools and clinics across Afghanistan and Iraq, which advanced our effort to enable Afghans and Iraqis to achieve human dignity for themselves and their families.

• ... helping the Iraqi government to formulate and spend its budget… and to devolve power and resources to local governments across Iraq. 

• And  ... the tens of thousands of micro-loans that have been made across Iraq that are enabling small businesses to grow, to meet demands for good and services, and to hire new employees.
When we step back and examine economic development from a historical perspective – surveying the post-colonial period of the last fifty years – it’s clear that there is both good news and bad news.

The good news is that an enormous number of countries are experiencing economic and social progress.  Of the 5 billion people who live in the developing world, about 4 billion live in countries that benefited from an annual average economic growth rate of 2.5 percent in the 1970s, 4 percent in the 1980s and 1990s, and 4.5 percent in this century – progress that the scholar Paul Collier has described as “without precedent in history.”   Though many of these countries have enormous challenges, they have achieved a significant positive economic trajectory.

It is inspiring to see what can be accomplished when the leaders of developing countries make the right choices and when their friends and allies give the needed support. 

After the armistice in 1953, South Korea lagged behind on almost all indicators … the World Bank’s first assessment said the country had no prospects for development.  Yet, smart
state building, investments in human capital, and an excellent partnership with the United States and other countries – enabled South Korean to emerge as an Asian Tiger in 25 years and to build one of the world’s top 15 economies today. 

The bad news is that about 1 billion people live in about 50 countries that are either stagnant or losing ground.  These people are trapped in dire circumstances.  Their economies grew by
.5 percent per year in the 1970s, then declined by .4 percent annually in the 1980s and
.5 percent in the 1990s.  Though they have been growing by 1.7 percent in this century, this lags far behind the rest of the developing world. 

One of the reasons why is that many of these countries are mired in internal conflict or are emerging from conflict.  I want to focus my remarks today on this challenge – how to promote development amid conflict – which I have worked on personally in Afghanistan and Iraq. 

My bottom line is that development assistance is a crucial instrument to meet this challenge but that it needs profound re-engineering if it is to make a difference.  And if we can transform this instrument, it will play a central – and maybe the central role – in the needed regional transformation of the broader Middle East, a task which is essential to succeed in the war on terror and to enhance global security. 

Because I am among friends, I will be candid … we need to change a great deal if development assistance is to step up to its needed role.  My remarks are not intended as criticism, but as a call for all of us to work together to enhance our capabilities and to make a greater difference.

In this spirit, allow me to make five major points:

First, we need to develop a more robust theory for stabilization and development amid conflict – one that provides a template for action that can be applied and adopted to the particular circumstances of individual countries.

There has been good work done on this challenge, including by Jim Dobbins and his team at RAND and by other groups.  However, more needs to be done to operationalize the best of this thinking in government.  Too often, when I asked my colleagues what are the necessary and sufficient steps needed to achieve development, I have either gotten no answer or, more rarely, lists of dozens of “essential tasks” that are so long that they cannot be implemented in any practical sense. 

I will not pretend to offer a unified field theory for development amid conflict, but I do want to set forth for consideration an approach that puts priority on several elements that I see as crucial. 

In my view, catalyzing constructive or functional politics – that is, efforts to build broad political legitimacy and mobilize social support for the new political order – is the starting point.  Development begins not with programs – but with a political concept about what can help stabilize a society and a set of steps that brings social and political groups together to work on their own problems in a constructive way.

This may seem obvious.  After all, a country experiences internal conflict as a result of profound political failure … political dysfunctions that produce violence among groups.  Yet, too often, the international community’s efforts lack a robust capability to help local leaders and groups shape their politics in constructive ways.

In this respect, holding elections is not enough.  In Afghanistan, a country that had not had a working political system since 1978, I worked with my colleagues from the U.N. and other major donor countries to help Afghans work through profound differences on the allocation of power…on the structure of the constitution…on demobilizing militias… and on other fundamental political questions.

In Iraq, a country where post-Saddam politics had gone off the rails into brutal sectarian conflict, one of my priorities when I arrived as ambassador in 2005 was to reach out to Sunni Arab groups, who had boycotted the political process . . . and to work with all groups to move toward a government of national unity, on the grounds that such a government would then be able to work on the obstacles to national reconciliation.

In such circumstances, what is required is for us to listen carefully to, and engage deeply with, local actors -- identifying the core obstacles to enabling constructive politics… mediating patiently and persistently to develop a program of action to overcome these obstacles…and working side-by-side with all parties to ensure the implementation of those actions.

This work is difficult, but we can do it.   The challenge is that our default position is to “watch and report,” not to “engage and shape.”  Moreover, our civilian agencies – which must do this work – are not organized, trained, and resourced to do so in a sufficiently robust way.

The next priority is to rapidly mobilize indigenous security institutions that are both effective and trusted by all groups in society.  The issue is, at one level, technical … how do we create capable military and police forces?  At a more profound level, it is political … how do we ensure that one group does not seize the state’s instruments of coercion and hijack them for their own purposes?

We have a mixed record here.  In the building of the Afghan National Army and the Iraqi National Army, we have found our way to relatively successful efforts in terms of developing capability and professionalism, though we have been slow to size these organizations appropriately to the security challenges we face.

The record is weaker on police.  Successive efforts in Afghanistan – many of which I pressed for – have come up short… though we have a multi-billion-dollar effort underway that I hope will produce a better outcome.  In Iraq, the initial efforts to build police capability were partially hijacked by extremists in the Ministry of Interior … producing a police force feared by some communities and requiring a complete, top-down reform effort after the formation of the country’s national unity government.

In my view, neither the United States, nor any other actor in the international community, has an adequate capability to build or thoroughly reform the police forces of an entire country.  Though we have made strides as a result of our involvement in Afghanistan and Iraq, we have not institutionalized this capability or done enough to create capacity on the civilian side.

In the modern world, security must be provided by indigenous forces – external forces will never be big enough or have sufficient understanding of local circumstances to be an effective substitute.  Foreign forces can play a bridging function while local forces are developed – but the main effort has to be the development of indigenous capability.  We are beginning to develop approaches in Iraq which incorporate this insight. 

First, we have moved security forces into communities and their local police stations, and are getting them to interact with local community leaders.  Second, we have ourselves tried to perform an “overwatch” function where possible, to keep security forces honest and fair in dealing with the local populations in light of ethnic and religious divides.  This is an on-going learning process, but we will need to do better in using our capabilities to enable local forces to be more effective.

Hiring contractors to do this work (as we do on the civilian side) or fielding ad hoc organizations (as we do on the military side) is insufficient.  We need to develop standing organizations capable of training and equipping more local capability on more rapid timelines, while ensuring that these forces have the needed national, not factional, orientation and professionalism.

This security effort is part of what needs to be a more robust state-building capability to help countries in and emerging from conflict. 

In Afghanistan, I worked with my colleagues at the Department of Defense to engineer the
top-to-bottom reform and rebuilding of the Afghan Ministry of Defense.  This involved not only the political work of appointing an ethnically and politically balanced senior leadership and the basic training and equipping the forces… but also creating the manpower, procurement, and other internal systems of the ministry.  We are creating not just combat units but also the entire combat support and institutional systems of a modern military.

In Iraq, I worked hard to try to focus on what is needed to help build the broader rule of law framework that is necessary for any of these various elements to come together.  For example, without judges who have the professional training and support as well as the assurance of security to be able to render fair and professional judgments, we lack the basic framework of accountability. 

My question is … why do we not have similarly systematic efforts to build, train, and equip ministries of education, health, finance, or agriculture or agencies that build infrastructure, manage natural resources, or deliver basic services? 

The short answer is that beyond limited technical assistance, systematic capability and programs to do so do not currently exist – not in development agencies, not in their contractors, not in multilateral institutions.  We need to create them . . . and then work proactively and flexibly to adapt our best knowledge to local realities.   

The final priority for development amid conflict is stimulating private-sector economic activity. 

In my experience, the international development assistance community defaults to two approaches.  One is humanitarian relief … helping provide the essentials for human survival.  The other is based on long-term development paradigm … getting the right laws in place, supporting health and education programs, holding seminars to teach officials how to do their jobs, and so forth. 

These are fine as far as they go … but the challenge in conflict and post-conflict settings is to deliver immediate effects in terms of enabling people to earn livelihoods by meeting the needs of the market. 

I urge you not to underestimate the importance of achieving immediate effects – the legitimacy of the political order you are helping to create turns not just on elections, but on the ability of the new order to deliver results in terms of the quality of life of the people.

I think of this as a three-stage process in areas that are cleared of the enemy or have achieved initial stability.

The first involves infusing liquidity into the local economy … the kind of thing we do with funds from CERP – that’s the Commander’s Emergency Response Program -- and USAID’s transition assistance program.   We have some capability in this phase, though probably not enough.

The second requires us to stimulate local production … by ensuring the availability of small-scale credit, needed production inputs, and access to national markets.  Here, for example, think of providing farm credit, fertilizers, seeds, and so forth to rural areas, as well as creating market roads and mechanisms to enable farmers to sell their products.  Our capability in this phase is uneven and weak … we typically do not systematically provide these effects across the full extent of a country.

The third phase involves helping a country develop the industrial sectors that constitute its comparative advantage in regional or global markets.  I believe we are particularly weak on this score.  In Afghanistan, I tried, with varying levels of success, to institute enterprise funds and other mechanisms to advance this objective, and I can tell you that it cuts against the grain of our institutional cultures. 

Of course, the problem is compounded in the kind of half-way situation where an insurgency remains and terror is being used against economic activity or infrastructure, as we faced in Iraq.  As a community, we need to do more work in developing strategies to build in resiliency into economic efforts in these complicated situations.

As you think about this challenge, the best metaphor is the so-called “golden hour” – the period immediately after a person suffers a severe trauma and during which, if he or she receives treatment, the chances of recovery are much greater than if help comes later. 

If we can find better ways of improving people’s lives in the “golden hour” after a conflict ends or as territory is stabilized in a conflict, we can dramatically improve the legitimacy of our efforts, counter the potential rise of a criminalized economy, and prevent grievances that can become the grounds for appeals by extremists groups and spoilers.

My second point is that we need to better integrate our programs, both between the military and civilian agencies… and among civilian agencies.  

We all know this problem well – the challenge of bureaucratic stovepipes.  We cannot do away with the stovepipes, but we have to find better ways to integrate program effects in the field.

This is vital to defeating insurgencies.  If the template for effective counterinsurgency is “clear, hold, and build,” it is clear that civilian agencies will play critical roles in “holding” and “building” … and that the overall effort cannot be successful if these civilian efforts do not follow immediately after the “clearing” is achieved.  Thus, integration is indispensable.

In Afghanistan, I developed with LTG David Barno an integrated civil-military planning and operations system.  It required all department and agency heads in the field to work together to develop an integrated and synchronized plan to achieve goals that required civilian and military effects … for example, road-building in contested areas.  It worked well in its time, but has not been sustained.

While this approach was a good ad hoc structure, what we need is a standing and institutionalized civil-military capability.  We should create civil-military command structures and train and deploy together as one team.  Also, we should work toward a unified
structure – headed by either a commander or ambassador – that controls all U.S. instruments of policy in dealing with a conflict or
post-conflict setting.
Third, we need to partner more effectively with host governments.

We have to recognize how much the world has changed in the last fifty years.  As the European empires dissolved, it was not unusual for some countries in the developing world to have only a handful of college-educated officials.  Today, with the globalization of educational opportunity, most countries have a far greater level of indigenous talent and human capital.  Yet, too often, we operate as if they do not.

The reason is partly that we are organized to deliver services or programs to the people – either directly or through contractors or NGOs – but not to strengthen the indigenous capability to do so. 

For example, typically, we fund contractors to build clinics and NGOs to staff and run them…. or we build facilities without sufficient local
buy-in to the plan – assuming that if we build it, we can just turn it over when we are done and everything will work fine.  We do not focus enough attention on how to ensure sustainability in local hands.  We bring in contractors to build roads or infrastructure, but we do not use this effort to strengthen the local ministry of public works or to create a vibrant and competent local contractor community.  And so on down the line.

We talk the talk of “capacity building,” but we walk the walk of creating “parallel structures” to the indigenous state. 

This can have the perverse effect of actually hollowing out the local government.  I saw an article in the Financial Times that stated that senior officials in the Afghan ministry for counternarcotics were resigning to take IT positions with NGOs because the salaries that the Afghan state could provide paled next to the pay of those of support roles to NGOs.  You cannot build a state if the parallel structures you create hire off the best and most senior talent to serve as technicians and drivers.

I see some encouraging progress in this regard.  The crafting of the Afghanistan Compact and the Iraq International Compact represents efforts to set a common agenda between local leaders and donors.  Each compact requires local leaders to undertake reforms and other actions in exchange for commitments of sustained external support.  We also see analogous efforts in the work of the Millennium Challenge Corporation. 

This kind of collaborative thinking and programming is vitally important.  The next step would be to develop joint planning, management, procurement, and evaluation structures. . .and to implement as much as possible through indigenous organizations.

Fourth, we need to overcome operational weaknesses and flawed ways of doing business.

I will not dwell at length on this point … and instead will just highlight a few items.

• The “reinvention of government” in the 1990s has tilted the scales too far toward contracting out functions … to the point that agencies have little or no ability to implement anything themselves.

• We do not take advantage of the vast expertise of our society to tackle the tasks before us.  Sometimes we fail to field the engineering talent needed to manage large infrastructure projects.  At other times, we have expertise but fail to take advantage of it by creating too many layers of management or by separating our experts from our contracting officers.  What is needed are highly skilled and integrated management teams controlling our contractors.

• We implement projects through chains of subcontractors, which means that we lose accountability and that very little is spent on actually delivering benefits for the people.

• We spend excessive amounts on overhead expenditures under the guise of allowing for the “industry standard.”  We simply spend too much of our money on ourselves … and this produces enormous disillusionment and resentment among the people we are ostensibly trying to help.

• We have some mechanisms for distributing assistance – for example, cooperative agreements and grants … with no prescribed deliverables and timelines.

• In a word, money obligated or disbursed is not the same thing as outcomes achieved.

And in Washington there are maladies that profoundly undercut our ability to use
non-military instruments with the same dispatch as our armed forces:

• As a result of the budget process in the executive and legislative branches, civilian agencies lack the flexibility of “operational” accounts in the military … a junior military officer can spend $50,000 on a JDAM with a few words on a radio, but spending on the civilian side requires working through a two-year budget cycle and the federal procurement rules.

• And unlike the armed services, civilian agencies are not given “stand-by capability” to be able to deploy real capability quickly or even a sufficient personnel “float” to create highly trained operational personnel.  The proposals of the S/CRS (the State Department’s Office of the Coordinator for Reconstruction and Stabilization) to develop a civilian response capability are a good start … but much more will need to be done.

Fifth – and here I want to look to the future – we need to open more widely the aperture of our thinking on the contribution that development can make to the defining challenge of our time … the political and economic transformation of the broader Middle East.

Just as Europe and East Asia were the sources of most of the world’s security problems in the twentieth century, the broader Middle East is the source of these problems today.  These threats are the product of the dysfunctional politics of the region – authoritarian regimes that have lost popular legitimacy, the attempt by extremists to exploit grievances to seize power, unresolved regional conflicts, and violent political rivalries among major powers. 

Addressing these problems – in effect, normalizing the region’s politics – is the defining challenge of our time, just as managing the balance of power in Europe and defeating or containing extremist ideologies in Europe and East Asia were the defining challenges of the previous era.

We are already deeply involved in such efforts … supporting the new democratic governments of Afghanistan and Iraq … working with moderates in Pakistan … helping the government of Lebanon … supporting the peace process between Israelis and Palestinians … and encouraging political reform in the region as a whole.

In my view, the immediate intellectual challenge is to elevate our sights.  We need to raise our thinking above the narrow, individual goals we might have for one program or another in individual countries.  We need to challenge ourselves to formulate a comprehensive regional strategy and to design the programming and implementing structures to carry it out.

For example, we need to increase dramatically our involvement in education – particularly higher education – to support cultures of critical thinking and public reasoning that can counter extremist rhetoric and that can enable nations to work through their social and economic challenges. 

American universities abroad can have an enormous positive impact, and I was proud to help start such institutions in Afghanistan and Iraq.  We should also look to create large-scale exchange programs – particularly for future leaders – on the model of the efforts to help the countries of the former Soviet Union. 

Today, we are still thinking too small.  Just as we carried out the Marshall Plan to save Europe and undertook major state building efforts in South Korea and other Asian countries, we need to develop the architecture for a similarly ambitious effort tailored to the circumstances of today’s Middle East.   We cannot copy from those previous efforts – there are too many differences between these cases – but we need to strive to match the scale and ambition of those efforts.

In closing, I hope that none of you will find my remarks too critical.  My intention is not to offer tough love, but rather to issue a call for action – to take our collective efforts to a higher level and to highlight the fact that the mission for those in the development community is becoming ever more important, demanding, and central to the interests of the United States.

Although we have experienced many difficulties and face continuing challenges, I want to stress that fundamentally America takes the right approach – helping other societies to make progress while respecting their cultures and sovereignty. 

I remember a telling conversation I had with an Afghan delegate at the Constitutional Loya Jirga in December 2003.  He, like all Afghans, knew chapter and verse of the history of the brutal actions of the foreign forces (such as the Mongols and the Soviets) who came to Afghanistan.

Yet, he was perplexed by us.  He said, “I want to visit America someday.  I want to understand these people – these Americans.  Our country under the Taliban attacked America and killed many people.  And the American armies came here.  But they did not kill us.  They did not make us give up our religion.  Instead, they respect our faith.  They let us choose our own government.  They are helping us stand on our own feet.  This America, it must be a very special place.”

I know that America is a special place.  As an American born in Afghanistan, I have seen how America inspires even from afar.  I have seen the positive difference we can make as a nation working with our friends and allies across the broader Middle East.  We are making progress, and with patience and perseverance we will succeed.