Afghanistan : foreign aid and state building, 2001-2009

Sources of state revenue have major implications on the patterns of state formation. While this issue has been increasingly attracting attention in academia, its impacts have been little explored in aid-dependent contexts, particularly in terms of how the delivery mode of revenue shapes the impacts. Accordingly, this thesis studies Afghan state building in relation to its sources of revenue as it has experienced many experiments since 1747, with tribute, subsidies, and foreign aid playing a striking role in the development of state institutions, and consequently the formation of state-society relations. However, the amount of foreign aid received by Afghanistan in the post-2001 dwarfs that received during any previous period. Although scholars have extensively examined Afghanistan's politics, society and its relations with external powers, very little attention has been directed to the economy, to the sources of state revenue or to the specific relationship between revenue sources and state building. This thesis examines how foreign aid and its delivery mode have affected Afghanistan's state building from 2001 to 2009. It analyses the particular effects of aid on taxation, budget transparency and state-society relations. The relationship between state building and external revenue is a distinct feature of Afghanistan's modern history; the study therefore situates state building in a historical context. This thesis argues that, between 2001 and 2009, externally aided state building reiterated a historical path of dependency, in that foreign aid reinforced building of a rentier state and had mixed effects. Foreign aid has contributed to economic growth, the promotion of education, and the expansion of health services. However, these improvements remained largely dependent on continued foreign aid inflows and were not supplemented with effective institution building and improvements in state-society relations. The inflow of huge amounts of aid outside of Afghanistan's own state mechanisms, together with a concentration on military priorities and a general lack of coordination or coherence amongst the aid donors and the pre-aid socio-political dynamics and institutions, have thus contradicted the initial goal of state building. As a result, the focus of government accountability has shifted from the Afghan legislature and the citizens of Afghanistan to international donors, resulting in poor budget transparency. Tax reforms have also failed to achieve the development of a social contract around taxation, despite the strong desire of Afghanistan's taxpayers for such contract. These factors have further weakened state-society relations