By Alistair Scrutton
KABUL (Reuters) - President Barack Obama's Afghanistan troop withdrawal is likely to be accompanied by cuts in billions of dollars of civilian aid, bringing a precipitous shift of control many fear could tip the country into further corruption and chaos.
Parallel with Obama's draw-down of combat troops by 2014, the United States plans to pull back hundreds of civilian advisers involved in helping govern Afghanistan, whether helping organize the annual budget or FBI agents setting up crime units.
The aim is to wean Afghanistan off foreign aid to form a sustainable state, allowing the West to exit without being accused of abandonment -- an image that has haunted the international community since the Soviet exit in 1989 ended in civil war.
The strategy risks leaving fewer resources for one of the world's poorest countries. Giving what is left to President Hamid Karzai's government -- widely criticized for endemic corruption -- may just end in unchecked graft and political interference in civil projects.
The U.S. disengagement will deprive the economy of spending generated by the presence of more than 100,000 troops and it could bring a drop in aid from bilateral donors and the United Nations, especially if the Taliban insurgency quickens.
"The president has even said we are living in a picnic," Karzai's spokesman Waheed Omer told Reuters. "We are living a luxurious life because lots of countries, including the U.S., are pumping money here and that is not sustainable."
U.S. aid has fallen from $4.2 billion in 2010 to a budgeted $2.5 billion this year and could fall further because of an increasingly skeptical U.S. Congress.
Total international aid of around $10 billion may drop by half, according to defense analyst Michael O'Hanlon of the Brookings Institution think tank.
That may mean cold turkey for a country where a U.S. Senate report has estimated 97 percent of its GDP is derived from spending related to the international military and aid organizations'' presence.
"Over the past two months the president has started an intensive round of meetings ... over the fact that our economic situation in 2014 will not be the same as it is today," Omer said.
"We will have a reduced flow of aid, a reduced interest on the part of the donor community."
The question is not just whether there will be enough funds.
In many ways, some analysts say Afghanistan was getting too much aid given its small GDP. Much of the $18 billion in U.S. aid since 2001 was wasted on short-term projects linked to winning hearts and minds in the battle against the Taliban.
In an effort to make aid more accountable to Afghans, donors have promised to channel more than half of aid through the Afghan government, compared with about 20 percent now.
But the concern is whether Karzai's government will be able to implement what aid there is without billions of dollars being funneled out to provincial strongmen or government supporters.
Washington plans to withdraw from some 80 field locations to between two and four regional hubs or consulates with fewer than 200 people, down from 400 now.
The aim is to end aid projects through ad hoc Provincial Reconstruction Teams that Karzai has blamed for creating parallel, unaccountable institutions. More funds would be channeled through the government and provincial governors.
The move comes as a scandal over the failed Kabulbank, in which hundreds of millions of dollars were lost thought a mix of corruption, bad loans and mismanagement, has highlighted worries of unchecked governance by Afghanistan's elites.
RULE OF LAW WEAK
There has been progress since the chaos after the Taliban were overthrown in 2001, especially with schools. There have been a myriad of small steps, often unnoticed outside Afghanistan. The FBI, for example, has helped set up a police investigation unit, while the Federation Aviation Administration is setting up an Afghan equivalent.
But the tasks facing Afghanistan are huge. Many Afghan ministers have not even spent their funds because they don't have the capacity to implement projects.
"Afghanistan is lodged at the bottom of the transparency index, civil service capability is weak, the rule of law is absent or predatory in many areas," NATO's former senior civilian representative to Afghanistan Mark Sedwill said in a speech earlier this year.
"Many district posts are vacant and half the district governors lack offices, transport, facilities and staff."
While many experts agree the international community must move away from the kind of war-dominated aid projects of the past 10 years, there is a sinking feeling that Afghanistan may not be up to the task.
"It's the right thing to do," said Thomas Ruttig, co-director of the Kabul-based Afghanistan Analysts Network. "But first there is the question of the absorption capacities of ministries. And second there is the problem of corruption."
"I don't think it (the transition) is feasible by 2014."
The nightmare scenario is that transition will end in a more corrupt Karzai government, unable to spend its own aid funds while outside donors dry up, combined with a growing Taliban insurgency against a weak Afghan army and police.
"By 2014 there will be still probably at least a low-level of insurgency. They are going to be fighting narco-trafficking gangs, there's going to be violence in the country," said a senior U.S. official.
"If democratic representative government does not hold here and indeed strengthen ... our concern is that it will all collapse again and we'd be back here paying an even bigger price."
(Editing by Paul Tait and John Chalmers)
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