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Joshua FoustBack to OpinionJoshua Foust

Heavy on bluster, low on facts

A task force aimed at developing Iraq's economy has made strides, but how much has it really accomplished?

As Congress seeks new ways to cut the federal budget in the face of looming deficits, some have zeroed in on a particular program run by the military: the Pentagon’s Task Force for Business and Stability Operations, a relatively new organization with the Department of Defense meant to fight insurgencies through economic development. The Washington Post reported that this agency was slated to be defunded and moved from the DoD to the U.S. Agency for International Development; supporters have argued, however, that it is the only agency capable of spurring economic growth in both war zones, so it should be kept right where it is.

I’ve been studying the TFBSO, as it’s known, for several months, trying to piece together its activities and accomplishments. While no one would argue with the need to promote private sector business development in Iraq and Afghanistan, it is difficult to discern if the task force has a central role to play in either war or in the monumental task of rebuilding Iraq and Afghanistan.

A worker spins cotton at the State Company for Textile Industries in Hilla, Iraq, September 28, 2009. Photo:

The Task Force for Business and Stability Operations was originally created in 2006 to spur business development in Iraq. It was based on the assumption that a collapsed economy and a lack of jobs were aiding the insurgency. The thinking was that if the U.S. could create jobs and bring about some measure of economic development then the insurgency would have a harder time recruiting members. This way of thinking has since taken hold in Afghanistan, where the task force tries to attract foreign direct investment, create jobs and develop Afghanistan’s economy.

To its credit, the task force has performed some tasks that are essential to the rebuilding of Iraq. Its project to computerize and extend the Iraqi banking system, including electronic funds transfer terminals and a system of finance in the country, is a genuine success and one that deserves enormous praise. A functioning banking sector is vital to any plan of economic development, and this is a function the task force performed extremely well.

But leaving aside the assumption that insurgencies have economic causes (there remains a debate in studies of conflict about the precise role a poor economy plays in driving conflict), it is difficult to say how successful the task force has been at accomplishing the aforementioned tasks. Over the past five years of operations in Iraq, the task force claims it got companies to pledge investments in Iraqi state-owned enterprises, create a hundred thousand jobs and restore dozens of factories to production. There simply is not enough data to say one way or another. In the reports hosted on the task force’s website and in a sponsored assessment published last year by the Center for Strategic and International Studies (CSIS), these claims are repeated but there’s very little documentation to support them.

For example, while the amount of foreign direct investment the task force has attracted sounds impressive — nearly $8 billion in investment pledges to Iraq alone — it is important to remember that these are just pledges. From the publicly available data, it is hard to tell how much of that $8 billion has materialized, and how much is likely to. For an organization focused on attracting western investment (Paul Brinkley, the task force’s gregarious chief, is famous for flying CEOs around the war zones in Blackhawk helicopters), such a lack of concrete investment data alone should give us pause.

It is also difficult to verify other successes claimed by the task force. In its 2010 assessment, the CSIS noted that many employees at Iraqi state-owned factories were being paid money but not producing anything. The task force managed to get the factories back up to operating capacity. The state employees who are now asked to do work to justify their incomes are counted as part of those 100,000 new jobs created by the task force — some critics point out that the impressive number is more a product of tricky accounting than a benchmark of solid development work. Because the task force does not provide details about where the jobs are, who does them or if those people have remained employed afterward (not even which sector of the economy they were created in), it is difficult to judge how substantive the job creation has been.

In 2008, the task force spoke of restarting 66 previously state-owned factories — the precise number it claims in its 2011 retrospective on its Iraq. There is no tally of how many remained functioning or, almost as importantly, how many people the factories employed. After the breakup of the Soviet Union and the Eastern Bloc, privatizing state-owned factories was a nightmarish process — many in the former USSR produced goods of negative value (the manufactured product was worth less than the materials it was made of). It strains credulity to imagine 66 state-owned factories were restarted and years later continued to operate flawlessly after decades of economic devastation overseen by Saddam Hussein.

Indeed, the task force has had a lot of small successes. Even trying to turn state-owned factories into economically productive companies is laudable, and regardless of its direct value to the wars both Iraq and Afghanistan need help rebuilding their shattered economies. But there’s been precious little follow-through on the task force’s activities in Iraq: there just aren’t enough data points to say whether they were successful at kick-starting the economy or if Iraqis figured out a way to do that on their own. Too often, the task force has really good ideas, like an agribusiness school in Afghanistan, which was never spoken of again beyond noting its initial creation.

A project like the Task Force for Business and Stability Operations holds tremendous promise for a place like Afghanistan. But it has spent nearly $700 million since 2006; we need a dispassionate analysis of what that much money has been able to achieve, especially when one considers that dozens of private organizations, as well as the U.S. Agency for International Development, that do this same kind of work for far less money. It behooves us to understand and evaluate the task force objectively to make sure that its promise actually bears fruit.