Afghan government seeking bigger slice of aid pie

Afghan President Hamid Karzai leaves from the podium after delivering a speech at a seminar hosted by the Japan Institute of International Affairs in Tokyo June 18, 2010.

KABUL (Reuters) - Afghanistan will ask for more control of billions of dollars pledged to reconstruct the war-torn country at a major international conference this month.

Critics accuse the government of squandering millions in foreign aid, but President Hamid Karzai says most waste occurs on development projects outside official control, and he wants direct access to more of the $13 billion pot.

The Kabul Conference, scheduled for July 20-21, will draw foreign ministers from more than 60 nations to Afghanistan, including U.S. Secretary of State Hillary Clinton and U.N. Secretary General Ban Ki Moon, to review government projects the international community hopes will kick start the economy.

Western diplomats, in a series of background briefings ahead of the gathering, said they expected presentations detailing how billions already committed would be spent in perhaps the most crucial year for the country since the Taliban's 2001 ousting.

"This is probably the most important meeting Afghanistan has ever held," said one.

International donors frequently complain that millions spent on Afghanistan has been wasted through incompetence or graft, but the government -- while acknowledging problems -- says it has been responsible for only 20 percent of the money spent, and most of that has been well managed.

President Karzai wants at least 50 percent of nearly $13 billion pledged for the next five years to be channeled through government coffers, but donors first want anti-graft guarantees.

Finance minister Omar Zakhilwal told a news conference on Monday that if the international community offered to double aid under current conditions, or keep it the same but allow the government more direct control, "we would take the latter every time."

With the Taliban insurgency stronger despite around 150,000 foreign troops in the country, Afghanistan's partners hope a security crackdown coupled with a drive to improve governance will pave the way for major infrastructure projects to start.

TEN DOLLAR TALIBAN

Creating government jobs will also discourage thousands of young, unemployed Afghans from joining the insurgency as "$10 Taliban," the fighters-for-hire that Washington says fill the ranks of the militants.

After decades of war, Afghanistan's estimated $12 billion economy yields a per capita GDP of just $435, but the country sits on $3 trillion in untapped mineral wealth as well as being strategically located as a conduit for trade between central Asia and the Indian subcontinent.

Distracted by Iraq, U.S. troops never eliminated the Taliban they helped overthrow nine years ago, and critics say Washington made scant effort at nation-building until the last years of former President George W. Bush's administration.

There has been some success, however.

Millions have been spent on a circle road system linking Afghanistan's main cities around the central Hindu Kush mountain range, although construction has been marred in parts by shoddy work or graft.

While energy capacity is still way below the 2,200 megawatts sought to fire-start manufacturing or mining, some 630 MW is now available compared with just 150 MW under the Taliban in 2001.

Modern mobile technology has put even remote mountain communities in touch with the rest of the country; TV, radio and newspapers are flourishing, and a thirst for education has seen millions of children attending school for the first time.

Agriculture too has thrived, although no crop more than the poppies that make Afghanistan the source of over 90 percent of the world's heroin.

With most of the 47 nations that contribute troops to ISAF planning their exits sooner rather than later, questions remain over the ability of Afghan forces to take on an increasingly bloody insurgency.

Mindful of the need for an Afghan solution, Karzai has also started making overtures to the Taliban, although the hardline Islamist group's leadership insists there will be no peace until all foreign forces leave.

A report released on Monday by a rights group said it would take "a miracle" to win the war under Karzai's government.

Western powers are anyway slowly resigning themselves to some sort of an accommodation with "acceptable" Taliban, but leaders with close links to Osama bin Laden and al Qaeda remain still have a price on their head.

(Additional reporting by Sayed Salahuddin in Kabul and Mohammed Abbas in London; Editing by Alex Richardson)