Making the soviets look good

I have mentioned before the reports issued by the Special Inspector General for Afghanistan Reconstruction (SIGAR), John Sopko, who is the official responsible for auditing the $110 billion which the United States has spent on aid to Afghanistan. They tell of enormous waste and few, if any, tangible benefits. The latest report is typically woeful.

According to SIGAR, the US Department of Defense (DoD) spent $43 million building a compressed natural gas (CNG) filling station in the city of Sheberghan. This was despite the fact that there is no demand for such stations in Afghanistan. Converting a car from petroleum to natural gas costs $700-800. The average annual income in Afghanistan is $690. SIGAR comments that, ‘the U.S. government paid for the conversion of over 120 Afghan vehicles to CNG so that they could use the filling station: ordinary Afghans simply couldn’t afford to do it. Not surprisingly, SIGAR found no evidence that any other vehicles were converted to CNG.’ The project, SIGAR concludes, ‘produced no discernable macroeconomic gains.’

That, however, is not even the worst of it. According to SIGAR, ‘a 2005 CNG station feasibility study conducted by Pakistan’s Small and Medium Enterprise Development Authority concluded that the total cost of building a CNG station in Pakistan would be approximately $306,000 at current exchange rates. In short, at $43 million, the TFBSO [Task Force for Business and Stability Operations] filling station cost 140 times as much as a CNG station in Pakistan. To date, DOD has been unable to provide documentation showing why the Sheberghan CNG station cost nearly $43 million.’

This story caught my attention because the Sheberghan gas field, which this project was meant to promote, was the product of aid provided by another great power, the Soviet Union, in the mid-1960s. As I described in my book Aiding Afghanistan, in 1963 the Soviets and Afghans signed an agreement for the development of the gas industry in Afghanistan, after which the Soviets provided funding, specialists, and equipment to start gas production at Sheberghan. By 1967, the gas field was up and running, and the Soviets built a 101-kilometre pipeline to transmit four billion cubic metres of gas a year from Sheberghan to the Soviet Union. In 1968, they also built a 88-kilometre pipeline to Mazar-i-Sharif to provide gas for the power station and fertilizer plant there. I haven’t been able to determine the exact cost of these projects, but between 1963 and 1968, the Soviets provided around 70 million rubles of credit to Afghanistan ($63 million at the then official exchange rate of 0.9 rubles to the dollar), so the cost must have been something less than that, given that the credits also covered other things. In other words, (ignoring inflation) for around the amount that the Americans spent on a worthless gas station, the Soviets constructed an entire gas production plant, two pipelines, a power plant, and a fertilizer factory.

All of these were profitable. By the mid-1970s, the Sheberghan gas field was bringing in annual profits of around 1.7 billion afghanis a year, while the Mazar-i-Sharif fertilizer plant was making profits of 70-100 million afghanis. In the 1980s, natural gas production provided the Afghan government with about 40% of all its revenues. The contrast between the Soviet success and the dismal American failure is striking.

And this is not the only example. In a report earlier this year, SIGAR noted that USAID had spent $335 million on the Tarakhil power plant, which theoretically services Kabul. According to SIGAR, ‘from February 2014 through April 2015, the plant exported just 8,846 megawatt hours of power to the Kabul grid, which is less than one percent of Tarakhil’s production capacity during that period.’ Furthermore, the ‘underutilization of the plant has apparently already resulted in the premature failure of equipment … and “could result in catastrophic failure.”’ Compare this with the Naghlu hydroelectric plant, completed by the Soviets in 1966, which continued to pump out electricity for Kabul during the Taleban period, and was successfully restored to full operation a few years ago by the Russian company Technopromexport for a mere $32.5 million.

As I point out in my book, Soviet economic aid to Afghanistan failed to promote sustained economic growth in that country. Still, by comparison, the aid provided by the United States (and I am sure also its Western allies) is stunningly, awfully, extraordinarily, incompetently managed.