Creating Public-Private-Military Partnerships to Fill Administrative and Financial Gaps in U.S. Infrastructure Reconstruction Projects in Afghanistan

By Jackson Celestin 

On March 11, 2016, the Special Inspector General for Afghanistan Reconstruction (SIGAR) John F. Sopko released a report reviewing 45 Department of Defense (DOD) reconstruction projects in Afghanistan. Of the 45 projects, 28 did not meet structural contract requirements or technical specifications, 16 were structurally deficient to the point that they were considered unsafe for use, and 7 of the 15 completed projects had never been used. According to Sopko, the projects suffered from inadequate contractors, project management and oversight; and faulty building materials. To limit deficient projects, Sopko suggested the DOD improve its project planning and design procedures, hire contractors who are qualified and capable of complying with construction requirements, and conduct adequate oversight to guarantee that projects are built to protocol and contractors are held accountable

 Though Sopko’s recommendations are reasonable solutions, they ignore larger trends visible in the U.S.’ reconstruction budget in Afghanistan. Of the $114.92 billion the U.S. has spent since 2002 through the Afghanistan Reconstruction Fund, the DOD has dedicated $10.68 billion (9 percent) to Operations and Oversight and only $990 million (less than 1 percent) to the main infrastructure fund, the Afghanistan Infrastructure Fund (AIF).

Between Sopko’s report and the allocation of U.S. reconstruction funds in Afghanistan, there appears to be an expertise, administration, and funding gap that is preventing the United States from establishing sustainable infrastructure projects in Afghanistan. In the field of international development, this is a common challenge, and more agencies are turning to public-private partnerships (PPPs) to address it. Inspired by PPPs in international development, this blog presents a new model that partners the public and private sectors with the military. This article will refer to this model as Public-Private-Military Partnerships (PPMPs). Though they may face challenges in attracting private investors, working with low starting budgets, and addressing anti-Western and anti-military perceptions, PPMPs can combine the groups’ comparative advantages to fill the knowledge and funding gap in the United States’ Afghanistan reconstruction projects. They can also further connect the military to global development for better military assistance in conflict areas and help conflict and post-conflict areas to pursue global development and sustainability goals.

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This graph is an original creation of the author, Jackson Celestin, based on data from the July 30, 2016 SIGAR Quarterly Report to Congress.

PPPs in International Development

Governments and development agencies are increasingly turning to PPPs when they lack funding for development projects, specifically public works projects such as infrastructure and public services. PPPs are also a mechanism for the public sector to leverage resources, market access, and expertise from the private sector. To attract private investors, governments and development agencies often demonstrate that they create shared value; they have benefits for both development outcomes and business operations. Agencies also reduce the investment risk for private organizations by committing their own sizeable investments and sharing project risks, responsibilities, and rewards.

Since 1990, the Philippine government has frequently turned to PPPs to finance infrastructure projects. The government first used PPPs in 1990 to address a power crisis. With private sector funding and expertise, the partnerships built 38 new power plants and ended the supply problem by 1995. Shortly thereafter, private investment in infrastructure skyrocketed, peaking in 1997 at 15.5 percent of gross domestic product (GDP). This growth was short-lived though, as weak governance and unsolicited proposals caused private investment in infrastructure to decline to an average of 2.1 percent of GDP between 2000 and 2009. In an effort to save the dying infrastructure sector, Philippine President Benigno Simeon C. Aquino III turned again to PPPs and established the Philippines PPP Center in 2010. Its mission is to facilitate public infrastructure and other development services through PPPs. Since its conception, the Center has supported 12 infrastructure projects worth approximately $4.069 billion and currently has 27 projects in its PPP pipeline worth $23.27 billion.

PPPs and U.S. Reconstruction Projects in Afghanistan: PPMPs

Today’s US reconstruction projects in Afghanistan share similar pitfalls with the Philippine infrastructure projects, and therefore have a lot to gain from adopting a PPMP development model. By incorporating the private sector, US reconstruction projects in Afghanistan can gain access to the expertise, administrative, and funding resources they currently lack to implement sustainable infrastructure. Looking specifically at the projects’ funding, the AIF is extremely underfunded -just as infrastructure was in the Philippines. This is perhaps the AIF’s biggest barrier. By following the Philippines’ example, the AIF projects can obtain further financing to pay for more qualified and accountable administration, oversight, and contractors, as well as better building materials.

PPMPs can also bridge the military and global development gap to provide better assistance in conflict areas. Development agencies are oftentimes hesitant to work in areas of conflict due to security concerns. That said, it is hard to provide quality development and reconstruction assistance in areas surrounded by violence. Within PPMPs, the military can provide security and strategic assistance to make development agencies feel more comfortable about working in conflict areas. As with the way that private organizations can provide market access in a PPP, the military provides its partners access to a development market that was otherwise not easily accessible.

Lastly, PPMPs can help conflict areas pursue development and sustainability goals. Conflict creates security concerns and investment insecurity that delay or even destroy development efforts for potentially long periods of time. These setbacks stagnate development and lead to higher costs. This is especially a critical problem today as the world pursues the 2030 Sustainable Development Goals (SDGs) with limited resources. Assuming it costs less to maintain a development project during a conflict than to redevelop it post-conflict, PPMPs can keep conflict areas progressing in line with the SDGs and defray the loss of resources.

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Working without accountable oversight from the US Department of Defense or the Afghan Government, contractors in Afghanistan regularly left infrastructure projects incomplete despite being paid the full contract amount. Photo courtesy of Flickr user the Special IG for Afghanistan Reconstruction, under a Creative Commons Attribution 2.0 Generic License.

Challenges to PPMPs

Though they could be useful in Afghanistan reconstruction and conflict area development, PPMPs also face challenges that can make implementing a PPP model in conflict areas difficult. In terms of attracting private investors, development agencies would struggle to create shared value and present infrastructure projects in insecure and unstable countries as responsible and profitable investment opportunities. Private companies also normally want to see short-term returns on investment (especially with risky investments), which conflicts with the long-term nature of infrastructure projects. From a monetary perspective, the small AIF budget restricts the DOD’s ability to commit its own funds and limit private companies’ investment risk. Lastly, nationalist and anti-western groups in conflict areas can deny international aid and make development efforts counterproductive if they perceive it as a neo-colonial threat rather than assistance.

Conclusion

Today’s US reconstruction projects in Afghanistan have shortcomings that can be remedied by partnering the public and private sectors with the military in a PPMP.  However, given significant challenges there is an opportunity now to think through how PPMPs can be operationalized and incentivize the involvement of the three parties. To get PPMPs off the ground, leadership must come from the DOD. The DOD has been an active and important member in rebuilding Afghanistan and currently funds about 63 percent of the Afghanistan Reconstruction Fund.  Wielding both political and financial clout, the DOD has the influence and resources to bring the public, private, and military sectors together and change the tide of Afghanistan reconstruction.

 

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