Afghanistan President Hamid Karzai recently issued a controversial edict aimed at removing all private security contractors from Afghanistan this fall. Given the mounting evidence of corruption and wrongdoing by US contractors attached to the US Agency for International Development (USAID), the government’s main distributor of development contracts, Mr. Karzai for once did the right thing. In fact, he should broaden his edict and remove all development contractors from his country.

Development contracting is government-sponsored stabilization and reconstruction efforts outsourced to private contractors. But from dilapidated schools and unfurnished buildings to billions of dollars charged for projects abandoned before completion, the massive fraud and waste endemic to development contracting in Afghanistan does more than leave American taxpayers ripped off and battered Afghans disappointed. It undermines the efforts of those trying to make a difference: privately-funded humanitarian nongovernmental organizations (NGOs).

Unfinished projects
Federal prosecutors are investigating US-funded development contractor Louis Berger Group over claims that it submitted inflated invoices to USAID. With the group now managing more than $1.4 billion worth of USAID-funded contracts in Afghanistan, the potential for malfeasance is vast.

Criminal and civil investigations into Louis Berger Group follow an expose in The Christian Science Monitor about a failed $60 million USAID-funded project with PADCO, another development contractor, to provide electricity capacity in Afghanistan. One Afghan engineer familiar with the project summarized, “Fifty percent they didn’t do. They just dug this … and left.” The electricity chief for Badakhshan Province was just as upset: “Now the people are hating American companies like PADCO because many times they brought millions of dollars, but didn’t do anything.”

Scam artists
Contracting problems go beyond inflating costs or leaving projects unfinished. Christopher Shays, a former Republican congressman from Connecticut who is co-chair of the Commission on Wartime Contracting, said his team is looking into cases of contractors, or what he called “outright scam artists,” charging foreign laborers to fly them to supposed jobs in Dubai. But instead, contractors dump laborers on air bases in Afghanistan with no job, no identification, and no way home. “The bigger problem,” said one official quoted in the Washington Examiner, “is that we don’t know who they are but they are inside our installations.… This presents a security risk.”

Another troubling practice is contractor staff serving short tours, many rarely lasting more than a year. With subsequent staff rotations having little to no overlap, this inevitably results in the loss of lessons learned, know-how, and counterpart rapport.

A deeper cause: monopsony
The deeper causal explanation for development-contracting problems is a term known as “monopsony.” Unlike a monopoly, in which one seller dominates the market, a monopsony occurs when a single buyer — in this case, the US government — faces numerous sellers. Thus, the single buyer should have the ability to dictate terms and drive down prices. But because the US government has surrendered its oversight responsibility, this perverted market structure has resulted in a bonanza for US-government backed contractors.

These problems stand in stark contrast to the practices of privately-funded humanitarian NGOs, many of which have long histories in Afghanistan. For example, the International Assistance Mission began work in 1966, and the Swedish Committee began in the early 1980s. Having survived both the Soviet invasion and the Taliban regime, they have been successful by focusing on one critical element — relationships. They make connections with local people, serve lengthy tours, and stress extended overlap periods between incoming and outgoing staff. Unsurprisingly, they also speak the local languages (Dari and Pashto), and know the proper etiquette surrounding that old Afghan pastime — drinking tea.

Economic development is one part social science, one part social anthropology. It thus involves working with — not around — native people. Failing to foster relationships is America’s biggest shortcoming in Afghanistan. Broken promises, unfinished work, and a reluctance to learn local customs demonstrate not only apparent lack of interest in the aims we espouse, but also seeming disdain for the people of Afghanistan.

End the suffering
With the global economy still struggling, private donors won’t be able to give as much to humanitarian NGOs. The US government continues to finance the development-contracting world’s ongoing waste and corruption. Sadly, with contractors’ unlimited resources, they also can drain the talent pool of those likely to work for NGOs. Thus, a two-front assault on humanitarian NGOs is taking place. This is tragic, as these organizations are often the ones most able to improve the lives of the Afghan people.

Certainly, Afghans still face an uphill battle in securing their own safety and stability, and rooting out corruption. But it is clear that US-government contractors are mired in mismanagement and failure, perpetuating dependence at best. It is time for Karzai to end this suffering by drawing another line in the sand and mandate that all US-government development contractors be removed from Afghanistan as soon as reasonably possible.