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Watchdog Warns Corruption in Afghanistan Could Undermine U.S. Progress

“The initial U.S. strategy in Afghanistan not only failed to recognize the significance of corruption, but may even have fostered a political climate conducive to corruption,” he said.

Sopko said the case of Kabul Bank, Afghanistan’s largest private bank, exemplifies the country’s patronage system and the government’s failure to prosecute people guilty of corruption.

A total of $395 million, more than half of the government’s revenue in 2010, was stolen from the bank before it collapsed, with almost all of the money going to 19 people or corporations.

According to a report by a local NGO, Afghans paid approximately $1.25 billion in bribes in 2012 – equivalent to half of the government’s domestic revenue. A survey by Integrity Watch Afghanistan found out that one in every seven Afghans paid at least one bribe in 2012.

Estimates of cash taken out of Afghanistan in any given year are as high as $4.5 billion. These bulk cash flows raise the risk of money laundering and cash smuggling, which are often used as tools to finance terrorism and other illicit operations.

In a 2013 International Security Assistance Force (ISAF) survey, 80 percent of Afghans identified corruption as a major problem, while 65 percent said it was worse than the previous year.

SIGAR recently released a report that determined Afghanistan’s banking system remains fragile and poorly regulated. Sopko said the country needs a reliable banking system that follows internationally accepted rules in order to attract foreign investment. If Afghanistan fails to implement banking and financial reforms, it will “remain a welfare state to the international community,” he said.

Sopko has garnered criticism from military leaders and aid agencies that see the SIGAR reports as painting an unnecessarily negative picture of the reconstruction efforts in the country.

“It’s not my job to be a cheerleader,” he said. “My job is to ferret out, identify, and report on problems.”

But Sopko said he is the “ultimate optimist” and believes the mission in Afghanistan will succeed.

He said the upcoming elections will present the new Afghan leadership with a window of opportunity to weed out corruption. Afghanistan will hold presidential and provincial elections in April.

“The new government will be dealing with an international community that has far less patience for corruption. It must act quickly to prove that it is serious about attacking the problem,” Sopko said.

He urged the U.S. and its coalition allies to set attainable conditions for their assistance.

“The costs in Afghanistan – both in lives lost and money spent – have been enormous. If we don’t take advantage of this opportunity and get serious about corruption right now, we are putting all of the fragile gains that we have achieved in this – our longest war – at risk of failure,” Sopko said.