Donors offer $16 bln Afghan aid at Tokyo conference

TOKYO Sun Jul 8, 2012 5:57pm IST

German Foreign Minister Guido Westerwelle, U.S. Secretary of State Hillary Clinton, Japanese Foreign Minister Koichiro Gemba, Afghan President Hamid Karzai and Japan's Prime Minister Yoshihiko Noda (L-R) leave after a photo session at the Tokyo Conference on the Reconstruction of Afghanistan, in Tokyo July 8, 2012. REUTERS/Kim Kyung-Hoon

German Foreign Minister Guido Westerwelle, U.S. Secretary of State Hillary Clinton, Japanese Foreign Minister Koichiro Gemba, Afghan President Hamid Karzai and Japan's Prime Minister Yoshihiko Noda (L-R) leave after a photo session at the Tokyo Conference on the Reconstruction of Afghanistan, in Tokyo July 8, 2012.

Credit: Reuters/Kim Kyung-Hoon

TOKYO (Reuters) - Major donors pledged on Sunday to give Afghanistan $16 billion in development aid through 2015 as they try to prevent it from sliding back into chaos when foreign troops leave, but demanded reforms to fight widespread corruption.

Donor fatigue and war weariness have taken their toll on how long the global community is willing to support Afghanistan and there are concerns about security following the withdrawal of most NATO troops in 2014 if financial backing is not secured.

"Afghanistan's security cannot only be measured by the absence of war," U.S. Secretary of State Hillary Clinton told an international donors' conference in Tokyo.

"It has to be measured by whether people have jobs and economic opportunity, whether they believe their government is serving their needs, whether political reconciliation proceeds and succeeds."

The roughly $4 billion in annual aid pledged at the meeting, attended by 80 countries and international organisations, fell short of the $6 billion a year the Afghan central bank has said will be needed to foster economic growth over the next decade.

Clinton and other donors stressed the importance of Afghanistan - one of the most corrupt nations in the world - taking aggressive action to fight graft and promote reforms.

"We have agreed that we need a different kind of long-term economic partnership, one built on Afghan progress in meeting its goals, in fighting corruption, in carrying out reform, and providing good governance," Clinton said.

According to "mutual accountability" provisions in the final conference documents, as much as 20 percent of the aid could ultimately depend on Afghanistan meeting benchmarks on fighting corruption and other good governance measures.

However, a Japanese official said that it was up to each donor whether to make its aid contingent on such reforms and that the benchmarks could vary from country to country.

World Bank Managing Director Sri Mulyani Indrawati said the pressure was on the Afghan government to deliver reforms and ensure fair elections in 2014 in order to secure aid beyond the amount pledged in Tokyo.

"This is a fragile conflict state," Indrawati told Reuters in an interview. "Three years is a very short time for a country to be able to build stable and competent institutions."

NEED TO DO MORE

International donors provided $35 billion in aid to Afghanistan between 2001 and 2010, but the return on that investment has been mixed and the country remains one of the five poorest in the world.

President Hamid Karzai admits his government needs to do more to tackle corruption, but his critics say he is not doing enough, and some directly blame authorities for vast amounts of aid not reaching the right people.

While strides have been made in schooling children and improving access to health care, three-quarters of the 30 million Afghans are illiterate and the average person earns only about $530 a year, according to the World Bank.

The government has identified priority areas for economic development, including investment in agriculture and mining, which Western officials see as a possible engine for growth. Afghanistan is believed to have up to a trillion dollars' worth of untapped mineral wealth.

Afghan Finance Minister Omar Zakhilwal said the Tokyo conference had shown aid donors were committed to the long haul. "Today's event sends the strongest message to Afghan people that the international community will be with us in 2014, 2015, 2017, 2020 and beyond," Zakhilwal told a news conference.

U.S. officials gave no figure for their aid pledge but said the administration would ask Congress to keep assistance through 2017 "at or near" what it has given over the past decade.

Annual U.S. aid to Afghanistan has ranged from about $1 billion a decade ago to a peak of about $4 billion in 2010. It stands at about $2.3 billion this year.

Japan pledged $3 billion in aid for Afghanistan through 2016. Foreign Minister Koichiro Gemba said $2.2 billion of that amount would be grants for development projects in areas like investment in roads and infrastructure.

The EU has said it will continue with pledges of 1.2 billion euros a year, but warned that if progress is not made with rule of law and women's rights, this could be difficult to continue.

The pledges made in Tokyo are on top of the $4.1 billion by NATO and its partners for supporting the Afghan security forces.

(Additional reporting by Amie Ferris-Rotman in Kabul and Stanley White in Tokyo; Editing by Jeremy Laurence)

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