U.S. aid to Afghanistan needs sharper focus - report

Girls, who sell water, sit on a grave at a cemetery in Kabul June 5, 2011.

WASHINGTON (Reuters) - The benefits of U.S. foreign aid for Afghanistan could melt away with a planned U.S. troop withdrawal, according to a congressional study that recommends the Obama administration focus on long-term, sustainable development.

The two-year study by the Senate Foreign Relations Committee's Democratic majority, which is to be released on Wednesday, urged the administration to make more effective use of the roughly $320 million a month in foreign aid it spends in Afghanistan, with a focus on sustainability.

The administration's fiscal year 2012 request for Afghanistan includes roughly $3.2 billion in foreign aid.

The report comes as President Barack Obama prepares to announce a decision on when to start bringing a sizable number of the 100,000 U.S. troops home from Afghanistan, a step toward decisively ending the long, costly war.

On Tuesday, Senator Carl Levin, chairman of the Senate Armed Services Committee and a member of Obama's Democratic Party, said the president should withdraw a minimum of 15,000 troops by the end of this year.

The congressional report said roughly 80 percent of U.S. Agency for International Development funds allocated in Afghanistan's south and east -- the traditional heartland of the Taliban and other insurgents -- were being used for short-term stabilization programs instead of long-term development projects.

"The evidence that stabilization programs promote stability in Afghanistan is limited. Some research suggest the opposite," the report said.

The document also warned that misspent foreign aid could fuel corruption, distort labor and goods markets and contribute to insecurity in Afghanistan. It noted an estimated 97 percent of Afghanistan's gross domestic product was derived from international aid.

"Afghanistan could suffer a sever economic depression when foreign troops leave in 2014 unless the proper planning begins now," the report said.

The report also raised concern about the U.S. government's heavy reliance on contractors in Afghanistan and a lack of oversight. It said an over-reliance on international technical advisors to build the capacity of Afghan institutions may undermine the efforts.

"Our aid projects need to focus more on sustainability so that Afghans can absorb our programs when donor funds recede."

(Reporting by JoAnne Allen; Editing by Paul Simao)