South Asia

Afghanistan faces 2014 'cash crisis' when troops leave

US Secretary of Defence Robert Gates speaks to troops in Afghanistan on 6 June 2011
Image caption The report comes as the US considers reducing troop numbers in Afghanistan

Afghanistan faces a financial crisis when foreign troops leave in 2014, Democrats on the US Senate Foreign Relations Committee have warned.

The two-year study by the committee's Democratic majority is to be released on Wednesday.

It calls for better use of the roughly $320m (£195m) in foreign aid the US spends every month in Afghanistan, with a focus on sustainability.

It concludes that misspent foreign aid can result in corruption.

It can also alter markets and undercut the ability of the Afghan government to control its resources.

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

War-weary lawmakers

The State Department and the US Agency for International Development are spending about $320m (£195m) a month on foreign aid in Afghanistan, arguing that the money is an essential part of the campaign to win "hearts and minds".

Among the successes has been a sevenfold increase in the number of children attending school and gains in health care.

Image caption Afghanistan has received about $18.8bn in US foreign aid over 10 years

But the report says that the US must scrutinise more closely how it spends the money and how it relies so heavily on contractors.

It says that the US must have a better overview of how it channels aid through the Afghan government.

"Transition planning should find the right balance between avoiding a sudden drop-off in aid, which could trigger a major economic recession, and a long-term phase-out from current levels of donor spending," the report states.

The Congressional report said that about 80% of US 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 stabilisation programmes instead of long-term development projects.

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

Afghanistan has received about $18.8bn (11.6bn) in US foreign aid over 10 years - more than for any other country, including Iraq.

Correspondents say that the conclusions of the report mean that Ryan Crocker - President Obama's choice to serve as US ambassador to Afghanistan - is certain to face several sceptical and war-weary lawmakers questioning the level of US investment in Afghanistan in the 10th year of the war.

Republicans and Democrats are pressing for a robust drawdown of the 100,000 US forces in Afghanistan, a process that is expected to begin in July.

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