Address
Assessing the U.S. Record: Afghanistan One Year Later
Friday, October 18, 2002

Transcript

Agenda:

10:15 a.m.	Registration
10:30	Introduction:	Danielle Pletka, AEI
	Remarks:	Hon. Andrew Natsios, U.S. Agency for International Development
Noon	Adjournment

Proceedings:

MR. NATSIOS: I didn't know you were from Boston, Danielle. I have to tell you, I was in the state legislature, and I voted twice against the Big Dig, and even the governor asked me to take it over when it came to financial trouble. I said, "I don't even support it." He said, "But you can clean it up." So, I did that for a year. It was the worst job I've ever had, I think. (Laughter.)

Well, it's a pleasure to be here today at an institution I've always admired. Many of my favorite scholars are scholars in residence here. Ambassador Kirkpatrick has always been (hero ?) of mine, and so it's indeed a pleasure to be at the American Enterprise Institute today. President Bush and Secretary Powell have made the reconstruction of Afghanistan a very important priority. It is still occupying a lot of my time and the senior staff's time at AID. We need to (recruit ?) at an interagency coordination meeting that takes place--it has taken place ever week since January on the reconstruction of Afghanistan. It is a central focus of the administration, and we intend to be there for a very long time. We have opened the USAID mission in Kabul--we did that--I think it was in January. Craig Buck, who is our new mission director, reports to the ambassador, Ambassador Finn--did the reconstruction of Kosovo, and before that the reconstruction of Bosnia. He is known for his aggressiveness and for moving rapid. We have this--since January spent $340 million toward the reconstruction effort. We have converted much of the humanitarian relief program into a reconstruction program. And next week we will obligate an additional $73 million for a total of $411 million--$413 million. That money will go toward the reconstruction of a road that I will be discussing in a few minutes.

So the commitment is there. We open the AID missions, and we are going to be there for the long term. We expect to be in Afghanistan for a decade or more. I have to tell you that many of our career staff want or are applying to go there, because when we had an AID mission before the civil war started in 1978, this was a post that was in great demand for our Foreign Service officers and our staff, because they like working with the Afghan people and the Afghan government, and they are back there--some of them who worked there 24 years ago, are retired now--some of them want to come out of retirement to work back on this important, important project.

The president has said we will stay the course to help that country develop in their image, not ours. It's an important qualification. It is a country on the other side of the world--has a different culture than ours, and we need to respect that culture.

In the spring of this year, as the terror war was winding down, we sent in the Feinstein Famine Center from Tufts to do a microeconomic analysis of the challenges we were facing. Sue Lautze, who I worked with in Sudan years ago, during the civil war in Sudan, led the team, and trained 30 people to do 13--12 hundred, excuse me--12 hundred three-hour interviews randomly across the country, in all regions and all social classes and all ethnic groups--regionally balanced and ethnically balanced, to get a sense of what was going on in Afghan society, because some things in the society you don't see. They are there and they are invisible, but they are very powerful. and she did that and produced an extraordinary report--it's on our website if you want to read it, but it gives you some sense of the enormous stress that the country has been under for 24 years now. I mean, you have to remember the destruction of Afghanistan over 24 years of civil war and then Taliban is beyond comprehension. Parts of Kabul look like Berlin in 1945. The only other picture I have ever seen was the pictures I've seen of Berlin--almost complete devastation of all public services, all public sector, all buildings, all homes--everything. And so the process of reconstruction is going to take a very long time. It is not going to be done in a few months.

The Lautze study that came out in the sprint that we commissioned showed us that the debt burden facing the people was so enormous that it was going to impact the ability for us through the donor community, working with President Karzai's government to get the private market economy stimulated. The Afghans are very, very gifted business people, and if we can simply get the platform correct, they will, because of their skill in business, begin to rebuild the private market system.

The drought has been going on for four or five years now in the south--five years in the north, four years--we had some relief, because we have had a substantial improvement in agricultural production this year, because there were rains sporadically in the north. But that drought has devastated the southern half of the country where 95 percent of the animals have died, and it's a herding population, a rural economy dependent on these animals.

What we also found is that there were four economies working in Afghanistan. This is sort of the template explaining what's been going on there. The first is a war economy which has functioned for the last 24 years, and it's based on weapons markets and looting and kidnapping and fighting, and drafting young men who are unemployed into these regional warlord militias that have existed over the last two decades. The war economy is not a healthy part of Afghan society, and virtually everybody everywhere are tired of it. They want it to go away. They want the guns to go away. They want the munitions to go away. And that is not just in the central government--that is a goal of people in the villages, if you talk to them.

There is a poppy economy. A large portion of the world's heroin supply comes from Afghanistan. It is a new thing. Ten years ago there was very little, if any, poppy production in Afghanistan. The Taliban encouraged it for two reasons. One is they said to destroy Western culture, because it was going to be an export to the West. And, two, it was to finance their plans. A large portion of the tax revenues that Taliban used to conduct their operations and manage their government were from the poppy crop. The poppy--at least 30 percent of the population, the United Nations estimates, is affected by the poppy production, which is to say they are either sporadic workers in the poppy fields, they process the stuff, they have farms growing it, or they work the transport system that moves the opium out and the heroin out.

There is a third economy, the AID agency economies--the U.N., the international NGOs, local NGOs. And that's a healthy thing, but it's short term. There is a reconstruction of a lot of buildings to house AID workers. There's purchase of equipment and food. There is in fact employment--huge employment for Afghan staff doing reconstruction work through these agencies. But it is only temporary. Those agencies--some of them will be there for a very long time. There are several major American NGOs that have been in Afghanistan for 30 years, and I expect they are going to be there for a long time afterwards. But many of the newer NGOs will not last very long and the U.N. agencies, and so we have to understand that is an artificial economy. It is not a healthy way of building a country over the long term.

The final, and legitimate, economy is the agricultural economy and the transport economy. Why is the transport economy so important? Because it's at the heart of Central Asia. It controls ground routes into Pakistan and into India, and of course to Iran on the other side, and to Central Asia in the north. So Afghanistan has a weakness in that it's geostrategically and economically extraordinarily well situated, which means everybody wants to interfere in it, to control those routes. That's the old Silk Road routes from ancient times. Marco Polo traversed Afghanistan. Of course we know that Alexander the Great's armies went through, and many people still remember Alexander the Great in the village. I was somewhat astonished by that. But they remember. And some of them claim lineage to Alexander the Great, if you talk to many of the people in the villages.

The fact is though that that can be a great benefit if the road system is reconstructed and the infrastructure is reconstructed. It will be a powerful source of revenue for the country.

Now, how do we deal with the reconstruction? There are five political imperatives that we face in writing the reconstruction plan. The second is--I'm sorry, the first principle is that we must strengthen the central government's capacity to govern and provide public services. That is of central importance, because if the government doesn't do that, doesn't provide services, not seen in control, then there will be a disillusion among the Afghan people over the longer term. That is our first principle. The second is President Karzai said he wants a visible role for the United States, because he has tied with his cabinet the Afghan government to an alliance with the United States, and there has to be visible evidence that the United States is helping. We have, I have to tell you, not done a particularly good job in publicizing what we have done. We have done an extraordinary amount of things since January, but we have not publicized them because we have been too busy doing them.

The third principle is there's extremely high expectations after 24 years of civil war and destruction and instability among the Afghan people. Ashraf Ghani, the financial minister, and President Karzai, who I visited with in January, told me a story when they came back from the Japan pledging conference where the world pledged billions of dollars to reconstruct the country, that they went to mosque to prayers on Friday after they returned from Tokyo, and they were mobbed. They were a little afraid what was happening. And what it was was the enormous outburst of enthusiasm by the people in Kabul in that mosque for what they had done at the pledging conference, and the hope that the Afghan people had in the new government to end the 24 years of nightmare and begin the reconstruction of society. So there is a very, very high level of expectation.

There's also, because of the terror war in the United States being there, and other allies, and the presence of agencies from the outside, very high expectations which have to be managed. We also have to have not just the image of improving things, but there has to be a reality that the lives of the average person in the rural areas--it's a rural society--80 percent of the people prior to the conflict lived in rural areas--their lives have to be improved. And if we simply use blue smoke and mirrors and public relations to talk about what we are doing, and there's no effect on the common people of Afghanistan, there will be disillusion, and there will be anger. And so part of what we have to do is in areas there will be no visibility to, because in remote areas no one can go and take pictures, no one will see what we are doing, except the people there. So it's very important that we not just focus in the cities where the media is and the public is, and the international community is, but in the rural areas where the people live who will provide the base of support for a stable country.

The human misery index in Afghanistan is among the worst in the world. Life expectancy is 44 years for women and 43 years for men. The risk of dying in childbirth for a woman is a hundred times higher in Afghanistan than it is in the United States. Afghanistan is tied with Sierra Leone with the highest maternal mortality rate in the world--25 percent of the infants die before their first birthday. And Afghanistan has one of the lowest caloric intakes per capita in the world.

The final principle around our strategy is to ensure ethnic and regional balance in the reconstruction effort. I was given clear instructions by State and by the White House that we are to show reconstruction in all areas of the country among people who will let us work with them. There are areas of instability. It's very difficult with people shooting at you in a couple of areas to do reconstruction. But to the extent that there's stability, we will be there to work across ethnic and regional lines.

Our three operational objectives are first to continue to provide humanitarian assistance so we do not have high death rates--particularly this winter. The Afghan winter is something that people from the United States can't even imagine. It is--part of Afghanistan is more like the Himalayan Mountains. In some areas, in the Hazarajat in the central part of the country, in a normal winter there will be 20 or 30 feet of snow, and it will be 30 or 40 degrees below zero Fahrenheit. It is an Arctic climate in the very high Hindu Kush and in the Hazarajat. And so the wintertime is particularly dangerous for the survival of the Afghan people, particularly those people coming back from refugee camps in Iran and Pakistan and who are displaced within the country and want to go back to their homes and farms. And huge numbers--two million--have returned unexpectedly without anybody's help. But they are not all prepared for the winter. So we are very concerned about that. We have an interagency task force working on plans with other donor governments and the United Nations and the NGO community to ensure that people are provided for this winter.

The second principle is to restore the private market economy, which is the agricultural system and the transport system and the markets. If the markets function and people have jobs and there's commerce going on, and money is moving in the economy, and jobs are being created, it will affect the security situation, because there will be jobs for young men. In almost every conflict in the world, if you have a very high unemployment rate among young men between 18 and 25, you will have instability. It's true everywhere in the world. And we have extremely unemployment rates now among that population. We need to do some projects, particularly in infrastructure, that will suck up that excess labor so that those young men have something to do.

The third is--the third objective is to support the reconstitution and capacity building of the Afghan national government through visible infrastructure projects and the reconstitution of public services like public health and education. Let me talk about each of these.

The humanitarian assistance and resettlement program began before September 11th. The largest humanitarian donor to Afghanistan prior to September 11th was the United States government. We provided a billion dollars in humanitarian aid during the 1990s for the Afghan people just to keep them alive. We did not run reconstruction projects, because the policy of the U.S. government across several administrations was we did not want to support a dysfunctional political system. That has changed now, and so that's why we have converted much of our relief program into a reconstruction program.

This year we have already spent $340 million since January, since the reconstruction pledge by Colin Powell was made in January at the Tokyo pledging conference. We pledged $297 million. We spent $340 million, and we are about to obligate another $73 million next week for this road and for money in the national budget to support government operations. So our spending next week will be up to $410 million. That is a substantial amount of money. That is not a pledge. That is not money in an account. It is money that has actually been spent on these projects.

Now, what are we doing to prepare for the humanitarian emergency we may face this winter? The Salang Tunnel is the major--in fact the only real transport route from the south to the north through the Hindu Kush and the Hazarajat north. That--we did provide with the Russians money and equipment to restore that tunnel, open it. We are doing some more reconstruction of that tunnel to make sure they can get through the winter. And then the road that goes up from Kabul north as it climbs up into the mountains, needs work or it won't survive the winter. And it's very important to keep the north and the south transport routes functioning.

We have begun five large-scale cash-for-work projects working through the major international NGOs at the grass-roots level, to ensure people have some money to buy food if they can't get food assistance through the World Food Programme this winter. We are prepositioning food for the winter in inaccessible areas for 1.2 million people, and that planning is going on right now.

In terms of rebuilding the economy, which I believe is of absolutely central importance, the Afghan government is creating probably the ideal policy framework for rebuilding a private-sector, market-driven economy. Ashraf Ghani, the finance minister, worked at the World Bank for 20 years. He is a believer in the private sector, as President Karzai is, and they are moving from what was a Marxist economy and government ownership of major means of production--for example all the cement factories are owned by the government--none of them are functioning right now--and Ghani keeps saying we need to get those cement companies back--privatize them, get them functioning, because we need to have that cement for the reconstruction of the country.

The irrigation systems are central. The Hazarajat snows melt and there is a 300-year-old irrigation system that is very functional, but it was destroyed systematically by the Taliban in many areas of the country as they conducted their war, particularly against the Northern Alliance. The Shomali Plain north of the city that I visited in January was a rich agricultural area. It is completely destroyed now. All the irrigation systems have been damaged or need rehabilitation. We have already begun that process. Eight hundred and seventy-three kilometers of canals have been rehabilitated in the last six months, and 1,789 karezes--karezes are a very interesting system in an arid climate--fascinating how they had technologies 300 years ago that were so effective. They dig the wells underground, and then they build underground tunnels between wells into the irrigated agricultural areas to provide water for the orchards--there are vast orchards in Afghanistan--the best apples I've seen outside the United States are from Afghanistan. They had vast vineyards. And it looks like they are all dead. But the farmers, when I talked to them, said even though they look dead, the roots are still alive. And all we can do is get the irrigated agricultural system back on line, flood the fields, the orchards and the vineyards--those in three years will begin to restore themselves. They said this happened once before, and we were able to restore those orchards, which are a very important cash crop for export purposes, which will bring income into the country.

We are running some veterinary programs now to begin to immunize the animals that are being brought in from neighboring countries to reconstitute the animal herds. Afghanistan has very little animal disease. We do not want to import animal diseases from neighboring countries. And so there is a big effort now working through U.N. agencies and the NGOs and the Agriculture Ministry in Kabul to begin that effort to reconstitute these herds. They are a very important source of nutrition and of income for people in Afghanistan.

The key to rebuilding the economy is agriculture. And I think one of the most important statistics from what happened this year is a huge increase in agricultural production--800,000 ton increase in wheat production in the last six months. We injected 7,000 tons of improved seed wheat varieties that we collected all over Central Asia that is drought-resistant, so it will grow even where there is drought--not severe drought, but it will increase production by 80 to 100 percent per hectare, and about 100,000 of the 800,000 tons of increased production comes from the seed the United States put into these areas. We also put in 15,000 tons of fertilizer. We have begun to reconstruct some of the agricultural private sector businesses that move surpluses around that are very important to job creation. And we have just had a 600 percent increase in cotton production in the poppy-growing areas where people are beginning to convert--beginning to convert--some of the poppy fields to cotton, which is a legitimate cash crop we want to encourage.

In terms of rural roads, we have rebuilt five bridges, and 857 kilometers of tertiary roads, so farmers can move their surpluses to market, which is very important. The Kabul-to-Kandahar road project will begin in two weeks. The engineering company that we have competitively bid and chosen is on the ground now, and is designing the first 47 kilometers of road that we will begin to reconstruct. And there is one bridge in that--I guess there are six bridges in total we will reconstruct--these are big bridges--going from Kabul south to Kandahar, which is the center of the Pashtun area. And then the road will be reconstructed from Kandahar to Herat in the west. That road is very important for commerce, but it is also important in terms of tying the country together politically. President Karzai and President Bush made this announcement with the Japanese government and the Saudi Arabian government. We are putting $80 million into it with support from the Congress, and $50 million is being put in by the Japanese government and $50 million by the Saudis. It will take three years to do it, but we are beginning literally immediately.

We have also redug 564 wells with food-for-work projects, several hundred schools and health clinics now. We have provided assistance to the Ministry of Water and Power in the central government to provide one-fourth of Kabul's water supply, and bring water to about 700,000 people in Konduz and Kandahar, which are two important provinces and cities in Afghanistan.

In the education area, in the spring we printed 10.6 million textbooks in record time, in Dari and Pashtu, the two chief languages. Those were distributed. And I have to tell you we ran out. The number of kids below the third grade that came back to school--because many of them had never been to school before--was double what we were anticipating, what the U.N. was anticipating and the NGOs and the central ministries. We were shocked at the number of kids. There is an obsession among the Afghan people to get their kids into school. And I have to say this is not only very healthy--it shows the Afghan value system on target. But it's also important for security reasons. If we have high school students in school learning, they are not going to be joining militias, and they are not going to get blown up by land mines. So for security reasons and for the stability of the society, in addition to education, these schools are of central importance --also very important because two-thirds of the teachers in Afghanistan pre-Taliban were women, and if we are going to reintroduce the role of women who before '78 were very influential in Afghan society, reintroduce them into prominent roles, it is through the schools that is best done. And so these 10.6 million textbooks were important to draw people--kids back and teachers back to the classroom. We have trained 1,500 teachers who will--who were trained to go back to their villages and train about 30,000 teachers, which we also provided teacher kits to. This was through the University of Nebraska. Fifty thousand teachers are being provided a monthly ration, food-for-work ration--if they don't get a salary, they are getting enough food to feed their families, and so they don't have to run around during the day trying to get--scrape up food because they don't have any ways of supporting their family.

We have also begun the reconstruction of the communications system. We made an agreement with the Japanese--they would do the TV station, we will do the radio stations. We did--there is a broadcasting system now for the whole country through Radio Afghanistan--it used to be called Radio Kabul. It broadcasts the whole country--trained a couple of hundred reporters in what we would like to think are objective standards of reporting. I am not sure we have the expertise in that necessarily in the United States, but we do know what the standards are, even if we don't always follow them necessarily. We have worked with the central government to liberalize the media laws, and also to introduce private broadcasting, privately-owned radio stations, because we don't want them all owned by the government. And there is a new radio station we are working with that will be private, done by Afghan--members of the Afghan diaspora from Australia that will begin broadcasting privately commercially in December.

In the democracy and governance area, we were instrumental in providing the logistics systems to transport people who were chosen for the loya jirga, which is the council that chose the Karzai government that is now in office, that took place this summer. By the way, we also had the radio station put in place so that the entire--almost the entire loya jirga proceedings could be broadcast to the whole country, so everybody could hear what was going on. We thought it would be a good constraint on people's behavior if they know the entire Afghan population was listening to them. It is a radio culture. The Afghan people are very familiar with radio and listen to it across the country. And it is one way that President Karzai has been communicating to the entire population his messages. He has a weekly broadcast on Saturdays. I did--sort of borrowed that from our American presidents. He liked the idea when I suggested it to him in January, and he has been doing that for the last several months.

In the health area we have spent $30 million on health services, funding 68 clinics across the country that have been reconstructed with pharmaceuticals and improved training. We have trained about 1,154 health--community-based health workers, and provided equipment for these clinics as well. And we are beginning a training program now for midwives to treat childbirth complications. We funded a U.N. effort to treat 700,000 cases of malaria, and vaccinate 4.25 million children against measles. Health is a very serious problem in Afghanistan, and without a healthy population people are not going to be able to work the fields and support themselves.

We have a lot of work to be done, but our staff both in State and AID and other federal agencies that are working on this are working overtime on it. We take it very seriously, and we intend to continue to provide that leadership and those services, working through the central government to develop the capacity so these services can be provided by the central government, not by exterior agencies.

I think over the long term what I have seen in Afghanistan right now is very hopeful. There is a--people are tired of the conflict, they are tired of chaos and instability, and there is a willingness across the population I think to try to bring peace to the country and begin the reconstruction process. They are a very talented, very rich culture, which I think is going to be very helpful to the development process and the reconstruction process. So I would be glad now to answer any questions that people might have.

MODERATOR: If you would be kind enough to keep your questions as questions--and brief please. Shall we start? Do we have a microphone? Well, we normally have a microphone, but why don't we start? Go ahead, sir.

Q Mr. Natsios, I had the privilege of being a guest of an Afghan NGO in Kabul for the last six weeks. It was an extraordinary experience. Coming back it strikes me very, very strongly that there's a huge potential to get the American private sector involved to supplement and support what you are doing. We want to do this in the educational sector--schools adopting schools--this kind of thing. Could you speak to that and how the U.S. government might help facilitate private sector involvement in Afghanistan?

MR. NATSIOS: Absolutely. We have had a lot of interest. It was very interesting--at the beginning of the terror war, when we were beginning the relief effort, actually people in the United States were angry we were doing it, because they sort of at the beginning didn't understand what had happened here. But the people in Afghanistan were in the same place the people in the United States were--they were being oppressed by people from outside of Afghanistan who had invaded the country basically, taken over--taken the country hostage. But over time the American people now realize that they share a lot with the Afghan people. And it's intriguing to me how much grass-roots support there is in the United States, both for the NGOs working in Afghanistan ,but secondly even at the community level, not through necessarily NGOs. So we have set up a website at USAID, United States Agency for International Development, and we can put it up, if you wish. And what we have done is put all of the charities, the NGOs doing work in the education sector in school reconstruction. So if people want to make a contribution, they can go to our website--they are not giving us the money--none of it goes to the U.S. government--but it will tell you the websites of these organizations, and you can go through our website to get to them to make a contribution, or to link a local school in the United States to a school in Afghanistan. And we think that community-to-community, school-to- school, people-to-people kind of approach would be very helpful both in educating the American people a bout Afghan society and Afghan culture, but also to help in this reconstruction project, grass roots to grass roots. So we will make that available to see if we can't elicit some public support for this wonderful effort that charities in the United States are making in Afghanistan.

Q I'm Elizabeth Stites (ph) on the Sue Lautze team from Tufts to Afghanistan, and I am wondering--one of the things that we had--

MR. NATSIOS: Did I misquote the study?

Q It was more--we trained about 300 or 400--

MR. NATSIOS: Three hundred to four hundred. I get a zero. Excuse me. (Laughter.)

Q One of the things we had predicted was a rural-to-urban migration over the summer with the effects of the drought. And I understand now that for a variety of reasons there is an increase of people heading to the urban areas. I am wondering how this affect's USAID's agriculturally-based reconstruction and assistance program in the coming months.

MR. NATSIOS: It obviously affects it. Part of the movement is from the refugees coming in from neighboring countries. We are not seeing, unless I am not hearing the reports, and I read them carefully every day--urban--a rural-to-urban migration of set people who were already in their villages. It's primarily displaced people and refugees who do not feel secure enough to move back. The United States is given a huge amount of money--I think it's on the order of $80 million--to the United Nations High Commissioner for Refugees to facilitate the reconstruction of homes and villages for the people returning from the refugee camps in neighboring countries. And so I think by far the largest contributor to the UNHCR effort is that, and it is working, I am told, in pretty good effort.

It is not clear, however, how high the volume is of this movement that you are talking about from the rural. We don't want them moving to the urban areas, but, you know, we--it's a free country. They need to make their own decisions.

We did do a whole series of initiatives to create jobs. We created 1.7 million jobs--and these are jobs at one dollar a day or less in some cases, which will keep a family alive in terms of food purchases. I'm sorry, it was 1.7 million jobs for food for work, and then 1.3 million jobs for cash for work through the NGO community at the village level. So there was a major effort to begin to move money out into the villages to get the economy moving and to reconstruct some of the infrastructure systems which people need at the village level--not at the national level--to be able to survive the winter. So we did make a major effort in that, and I think it is being effective in some areas, but not in all areas.

By the way, this Website, if you want to contribute to an NGO or charity, is www.schoolsforafghankids.org. And that will give you the websites of the organizations that are doing school construction within Afghanistan.

Q I'm Frank Method (ph). I'm working with a group that is trying to establish a variant of the American University of Beirut, or similar autonomous universities in Afghanistan. It's going very well--lots of encouragement officially and whatever. AID and the U.S. generally has made an excellent response on the back-to-school movement, and there's--as you know, there is considerable concern about the longer-term capacity building for the Ministry for Planning and the higher education capacities per se. Would you talk about your priorities on that and what you expect to be coming up?

MR. NATSIOS: If we don't have any kids educated in the lower grades, there will be no one going into college, because the illiteracy rates in Afghanistan are remarkably high and disturbingly high. So there's a problem just in terms of this lost--two generations actually now. But there are kids, some kids have graduated, in the cities in particular, who need to go to school.

We have chosen as one donor government among many, to focus our effort in primary education, because we think for security reasons, social reasons and educational reasons that we need to get these kids in school now, girls and boys.

We have made a commitment to rebuild the Kabul Teachers College that trains teachers, and I think that project has already begun. And I think we have had conversations with one of the other--I think it may have been the Agricultural Ministry--I am not sure--one of the other schools that trains particular people in particular disciplines. We wanted to put some money in. But there are--we are not rebuilding all of Afghanistan. We are doing it with the Europeans, the Canadians, the Japanese--the Saudis have put money in, other countries in the developing world actually--Pakistan has pledged $100 million, as have some of the Central Asian countries. And so we have made a decision to try to allocate some of the duties between the donors that are doing the work. We are not doing roads, big roads in the north. I think the Europeans are going to do some of those, and the Japanese were doing the ones in the south. We are doing the primary schools. Some other donors have agreed to focus more on the university system. So it's very important. But if we do everything, we will end up doing nothing. We will spread it all out. It's a multi-year effort across a donor community working with the central government. In fact, there is a matrix which has been developed by the central government of which donors are going to concentrate on which areas.

Yes, sir?

Q Thank you for coming. Jonathan Rauch of National Journal magazine. The most frequent criticism of the American effort relates not to aid but to the provision of law and order, particularly outside of Kabul, and in--in the view of critics' failure of the Pentagon to provide sufficient muscle to do that. Could you comment on that, please?

MR. NATSIOS: I would never presume to speak for the Pentagon. However, let me make some general remarks. We have publicly said that we would not object to any governments that which to staff an expansion of ISAF, the multinational force of military that is providing security in greater Kabul, outside the city. However, I have to tell you that there has been no country anywhere in the world that wishes to take that task up.

The Afghans have not always reacted well to foreign forces in their country. Now, some people say that's different. Many countries are not convinced of that. But I have to say this is not the same as Bosnia, it is not the same as Kosovo. And so the notion of having a huge force of the size that exists in the Balkans to occupy the country is probably not going to happen--either politically or from a security standpoint. This is a very rugged country with very remote locations, difficult to get to, difficult to function in. But a much more appropriate way of approaching this is what we are looking at now--we are discussing this within the U.S. government and with other governments along with President Karzai and his people, and that is a more targeted approach to those areas with the most serious security problems.

The western part of Afghanistan is not insecure in the greater Herat area, for example. The northeastern area of Afghanistan is not insecure. If you go through different regions, we can province by province tell you the areas that are stable, there is no insecurity at all, or very little. There is a problem in the southeastern area of the country. And the idea would be to take a more targeted approach, determine what the security problem is, because they are of a different nature in different areas. There isn't a lot of Taliban left in areas they are unwelcomed in. There may be some left in the southeastern area, which is one of the subclans of the Pashtuns with a support base, and they still are a little angry over what happened, and so there is some insecurity in that area. That's, I mean, indisputable. But it is not general across the country. And treating it as though this were the Balkans it seems to me would be inappropriate. So we are having discussions now about this other approach which I think could probably bring stability to the remaining sections of the country.

Q Hi, my name is Sarah Pietrin (ph), and I work with the International Catholic Migration Commission, which is working directly with UNHCR on the ground to assist returnees, and I'll soon be in Kandahar to help them work on these projects.

I have two major questions for you. The first one is: Can you give us a picture of what the Afghan government, the central government, looks like outside of Kabul in terms of its capacity to bring services to other people regions? And then, secondly, could you address a concern of mine, and probably many others, that potentially U.S. actions in Iraq might distract attention from the reconstruction effort in Afghanistan?

MR. NATSIOS: Let me just answer the first question very quickly. I am not in the conversations about Iraq, if they are going on; and so I cannot comment on what is going to happen or not happen in Iraq. I can tell you that our commitment to do this is going to continue, regardless of what decisions are made in other areas of the world, and that is an instruction--very clear commitment to Afghanistan over the longer term. And so the planning is now going on for this fiscal year and the next fiscal year, and we will not be disrupted by any foreign policy decisions anywhere in the world--not just Iraq.

The second point, or the first question you asked, was the Afghan government--once again, it's spotty. I think a lot of people are making generalizations about Afghanistan, not understanding there are dramatic differences between different areas of the country. There was more destruction during the Taliban period because of the war that took place, and much of the war that took place under the Russians, the damage never got repaired, as you know. The Taliban was not a functioning government in what we would regard as the traditional sense of that word. So they were not engaged in major reconstruction efforts. They simply--they had another agenda, let's put it that way.

If you go to the Herat area--and one of my deputies just returned, and he said there are electric lights functioning--the electrical system functions, the water system functions, the schools are all open--I mean, not just sporadically, but systematic. The health clinics are in much better shape. This is in Ismael Khan's (ph) area in the western part of the country. The northeast is much more stable. Kabul and the cities--things are beginning to return far more quickly--Mazar-e Sharif, Kandahar in the south. We have teams down in Kandahar now working with the Ministry of Electricity--I think that's what it's called--to put new generators in, to pump water, because there's water problems, a serious water problem in that city; restore the street lights at night, because it makes safety a little bit better, and electricity in the cities. These are spot projects that are being constructed right now. The equipment is being ordered. Some of it has already been installed in some areas. A quarter of Kabul now has running water, which actually is quite good--CARE runs that project, and actually we did that even before the reconstruction started, because I thought it was so important to health.

But some of the NGOs are stepping up to the plate to work with the ministries to do some of this work to restore these systems.

In some of the regions, the ministers, the governors, asked us for drilling equipment, because the wells have gone dry, and they need to dig more wells. And so we--I think we provided three major drilling rigs and training and spare parts, and they are now--they have been doing that since March of this year, digging wells. And that is done through the Water Ministry in the regional areas. So probably the most functional ministry in terms of affecting the people is the Education Ministry, because I think it's three million children are back in school now. I mentioned earlier what we had done to work with other countries to get up and running. We put these 10 million textbooks that we ourselves printed--they were printed with the Ministry of Education. And so that probably is the most visible public service. But the Agriculture Ministry did the distribution of the seed with us and the fertilizer. So it depends on the ministry, it depends on the region, it depends on the sector.

Q Hi. My name is--(inaudible)--I am from American University, Washington College of Law. I have actually two questions. One is would you please give us a little bit more detailed description about the--(inaudible)--forum human rights situation and how it's functioning--constitutional commission, judicial commission and the--how is the training education of--(inaudible)--The second question--

MR. NATSIOS: Let me answer the first question first, because I'll forget it by the second. With respect to legal reform, part of the work we are doing in legal reform is in the economic governance sector, and we have just begun a program--actually begun two weeks from now--on constructing a legal framework for the private sector in terms of commercial law, in terms of investment law, in terms of sanctity of contracts, in terms of a court system to adjudicate commercial issues, because if you don't have that people are not going to invest money. And so part of legal reform that Ashraf Ghani, the finance minister and the commerce minister and President Karzai wanted us to focus on first, working with his government, was in this area of what we call economic governance. And that is ongoing now, and we agreed to put specialists in there to help them--give them options and let them choose which of the options they would like for their society.

On the question of the constitutional commission that will draft a national constitution, I think the '64 Constitution and legal framework is in effect now until the new laws can be enacted, because they had to have something in place. And we have given granted to some international commissions that are expert in writing constitutions in countries recovering from war. They are working with them now, I believe. Those grants have been ongoing since the loya jirga met in the summer. We are also providing grant money to the civil rights or the Human Rights Commission and the Women's Commission, because they are also involved in the legal reform area, but in their particular sector. And that work is ongoing. But it is just now--everybody has to remember nine months since we had the pledging conference in January. There's a huge amount that needs to be done. It will take years to do it. I mean, even in Europe or Japan after World War II it took 10 years to reconstruct their countries. And the notion that we are going to do this in six or eight months, I am sure everybody realizes is immature. But we are beginning to work in all these areas, and grants have been made to support the effort of these three commissions.

Q Can I ask the second question? The second question is related to the financial support in this area--(inaudible)--area. I wonder whether USAID is providing money, putting money in the legal sector, and other donor organizations or donor countries putting money in this legal sector? Because we know that a number of projects presented to USAID and donor organizations have been declined--they didn't get money for these projects.

MR. NATSIOS: The reason is because we got several proposals in the same area to do the same thing, and we are not going to fund three organizations to do exactly the same--that is a waste of taxpayer money. We made a decision in these three sectors to provide assistance grants to institutions that we worked with before in other areas of the world that do a good job that were acceptable to the Afghan government. That does not mean there won't be other things to do in the future. But we didn't do it in one grant for the whole legal system. We did it in the commercial law area, which is just beginning now. And there may be sub-contracts given to some institutions that will be doing work specifically on the legal codes part of the economic governance stuff. And then we have the constitutional convention, which is a separate set of grants to assist technically in the writing of the new constitution through the commission that was appointed by the loya jirga.

Q Jennifer Brickerhoff (ph) from George Washington University. You mentioned the role of the Australian diaspora in helping with the radio station, and I wondered if the U.S. government was working at all with the U.S.-based Afghan diaspora.

MR. NATSIOS: Oh, yes.

Q Can you talk to that a little?

MR. NATSIOS: No one from the U.S. has proposed a radio station. It was Australian Afghans that did, and they said they could make it profitable in a couple of years, and so we are going to hold them to that. It is not a huge amount of money. They just needed--we want more than one radio station. We don't want just one government-run one. We want some private sector so that people get different points of view and people have access to the different communications systems in the country.

We are working with the Afghan diaspora, and there has been some discussion of some formal mechanism through which we could recruit--President Karzai has mentioned this, Ashraf Ghani has mentioned it, and several of the other ministers--I think Ambassador Abdullah Abdullah, the foreign secretary, has mentioned it to us as well--attempting to create a system by which we can recruit a very, very gifted group of people from the United States to go back. You know the ambassador to the United States from Afghanistan was an American citizen, a very, very successful businessman from California who resigned his citizenship to become ambassador--did something that's difficult to do--and--but he's doing a wonderful job as ambassador. So we have people already returning.

I think the largest problem will not be a mechanism for doing it. It will be living conditions in Kabul. Many of--all diasporas are used to it when they move to the United States or Western Europe, or expect public services in the same way that we have them here, and of course right now in Kabul that is not what we have.

I think it will take a little bit longer before we can bring large numbers of the diaspora back. But these discussions right now recognize that there's huge talent out there, and very prosperous talent I might add--there are a lot of Afghan business people--Afghan-American businessmen and European Afghans who would like to go back and invest privately, and we want to facilitate that. There is a new effort that will be run by the Commerce Department--the secretary of Commerce. The president has asked to move at the request of Chairman Karzai to bring business delegations back to Afghanistan, which will undoubtedly involve some Afghan-American business people.

Q (Inaudible)--Institute. Back on the subject of capacity- building, which you have addressed in your remarks, and particularly focusing on education, what about the rest? I mean, you have indicated quite correctly I think that there is a sense of showing the legitimacy of the government and its ability to deliver services to the general population. What is your assessment from your standpoint as to how long this is going to take? And, more importantly, what is going to happen in the interim? In other words, until such a point in which capacity will be sufficient to deliver adequate services, who is going to do it, and how is the general population going to fare?

My last point, which you mentioned briefly, de-mining--how serious an issue is that? And how has it been addressed, whether by the United States or by the rest of the donor community? Thank you.

MR. NATSIOS: Let me try to remember both questions. One was de- mining--capacity building. The first one, capacity building--there are different forms of capacity building. One is to reconstruct the buildings of the central ministries and the regional ministries just so that their function was buildings. We I think have rebuilt three ministries now physically--because they were blown up. One of them didn't have a roof on it. And, secondly, they had no equipment. They had no telephones to talk to each other, so, you know, if someone from the ministry went out to a province, they could not speak to them--which is, one, dangerous; but it also is very inefficient. So we worked with UNDP and other donors, and there's a system--a telephone system that has been put in place, computers have been put in place so that they can type things and keep records--and some equipment in the ministries--to make them functional now.

There is a large bureaucracy that actually continued to function through all this chaos that dates back to the period when the king was still in power in the '70s, early '70s. Some of them have retired, but there are people in the bureaucracy who have gone through the Soviet period, the Taliban period--these are career people--many of them medical doctors or agronomists. And I have to tell you some of them are very dedicated people. And the question is some of them haven't had much training in that period of time because of the chaos that existed in Afghan society. So one of the things we are doing by sector is to work with the ministries to train their staffs. We are focusing right now primarily on health and education, because those are two critical areas. We have now trained about 1,300 workers. These health workers that I mentioned earlier are Ministry of Health staff were paid for by the Ministry of Health, worked for the Ministry of Health. The teachers is the largest scale training exercise going on now. We trained these teacher instructors, who were going to go back and then train the teachers in their systems, and a quick training course in the spring. There was more training being developed with UNICEF, some of the NGOs, the Ministry of Education and AID and a couple of the other donors--we have got a consortium working on this now. They want to have the instruction, because some of the people who are teachers really never went to school for it. They are educated people and they are in the classroom, and they don't know really how to design a curriculum and that sort of thing. So that is probably the largest scale empowerment and capacity building that is going on, in the health sector--and other donors are doing similar things working together--and in the education sector.

But other ministries, you know, the Agriculture Ministry I think is absolutely central to this. We have got to get food production up and export crops--one, to get people away from poppy production, but, two, also to feed people. Having the lowest caloric intake in the world is not something you want to brag about. It's affecting children's ability to grow. It can cause mental retardation. I am sure you all know the statistics on that. So having the private agricultural sector functioning is to some degree dependent on some things that only the Ministry of Agriculture can do.

Oh de-mining, I'm sorry. I'm trying to remember the other--Cambodia is probably the other country with Afghanistan that shares another distinction in the misery index of being the most heavily mined country in the world. The benefit is that--or the good side of the story is that over the last decade the one thing that has not been interfered with has been the U.N. office that does de-mining. The largest employer in Afghanistan, sadly, in the last five years has been the U.N. de-mining operation. They have a huge number of Afghans who are trained with dogs to do de-mining, and they have been doing a lot of work. Now that there is peace in the country in most areas they are able to expand that effort. We are supporting it, the State Department is supporting it very strongly, as well as the other donors, because it is critical, particularly on the major routes. If you don't get the land mines out of the roads--I don't mean just the major routes--it's also the farmer market roads that allow people to take the surplus from the rural areas and bring it to market, because you are not going to reestablish food security unless the farmers can take their surpluses and move them around. And that has to be combined with the de-mining effort. It's a very serious problem.

Q Bob Simpson from Management Sciences for Health. I have two questions--

MR. NATSIOS: Aren't you helping us in one of these--

Q Yes, we are. This is not about health. This is a question about appropriations and the administration's position. I understand that the White House impounded $94 million from the supplemental appropriation for fiscal year '02. And I understand that from the committees on the Hill that there was no request for fiscal '03 appropriations for reconstruction for Afghanistan.

MR. NATSIOS: First, the government didn't impound anything. There was a bubble--it's called the bubble--that was in the supplemental budget that went through for the whole federal government, and it contained huge amounts of--I don't remember the--I thought it was $30 billion--but five billion of the 30 billion I think--a $30 billion supplemental bill--five billion was added on by the Congress, and they told the president, You can either spend the whole five billion or you won't spend any of it. In other words, you can't selectively choose which five billion to spend. The president said, I actually want the money for Afghanistan, but I can't get at it without approving the whole five billion. So he refused to sign the bubble part of the appropriation. It was segmented out by the Congress. There was a little political debate going on, because there were some--a lot of pork barrel projects in that $5 billion that I don't frankly think were defensible.

The decision was made, but in that same budget there was I think $90 million in additional--there was money in the bubble for Afghanistan that was added by the Congress, in addition to what we asked for. I think we asked for $90 million, and that was appropriated--how much--40 million--was appropriated and we are spending it now.

The appropriation for '03, the actual bill was proposed--just to be fair to everyone--was proposed in December of last year, in the middle of the terror war. The notion that we were going to put a full reconstruction program in place in that budget--December of last year--that's one of the problems with the federal budgeting process--you know, it gets outdated fairly quickly. The budget was submitted in January by the president, but it was designed in November and December. We didn't even know we were going to win the war. Okay? So the money is not there. That is absolutely true. But we do have discretionary accounts within AID in the Office of Foreign Disaster Assistance, which is not allocated by sector or by country; the Office of Transition Initiatives, and the Food For Peace budget. Those three accounts we have set aside, plus some other accounts in AID in the child survival area--$100 million of money, that regardless--as long as they appropriate what we ask for in the January budget from last year.

The House version of the budget has $295 million in additional money for Afghanistan, and the Senate budget, as it was appropriated by the Senate, was $157 million--I believe. I may be off a couple million here. My impression from informal discussions is there is a general consensus in both parties, in both branches, that the budget that will probably come out in the '03 budget will be about $300 million, so there will be plenty of money for the reconstruction program. And then in addition to that we still have money in these allocated accounts we will add in.

Q Good morning. I am William Ryan from the United Nations Population Fund. The Afghan government recognizes that there is an urgent need for population data, both for development reasons and for the political process. The government has asked UNFTA to help strengthen the national statistical office the capacity to undertake household survey and develop capacity eventually leading up to a national census. Will the U.S. support this process?

MR. NATSIOS: The United States has been engaging with UNICEF and WHO in a national survey of all of the health sector--not just one element of it--working with one of the NGOs that is here today, as a matter of fact--and the Ministry of Health. That has been going on since April, I believe, of this year. And that survey will provide the data we need, including in the population area. So I am--I don't know what your office is doing. The problem is there are three U.N. agencies that do health, and even though they've segmented to some degree, the fact is there is a lot of overlap. We chose a private NGO, but they are working with the other U.N. agencies on this. And your office--there are political issues, I am sure you know--

Q (Off mike)--National Statistical Office leading to a leading national census?

MR. NATSIOS: Well, the one we're doing--oh, national census.

Q That's the ultimate objective, yes.

MR. NATSIOS: I have to tell you that's the first time I've hard of a census. We are doing a census of health care needs in the country in every sector of health, and I don't know about a census. I never heard of that.

Q Thanks for mentioning schools for Afghan kids. I helped--(inaudible)--with that idea--it's so wonderful.

MR. NATSIOS: Oh, you did. It's a wonderful idea.

Q I represent Shelter For Life in Afghanistan, and the second question off this gentleman's question about approps--there has never been a real line item for shelter in appropriations, and that's one of the reasons we generated the idea for the American people's generosity to send money direct to NGOs to help build schools specifically, because that's a first over there for us and them.

MR. NATSIOS: Sure.

Q And as for shelters, we are concerned that double the population has been immigrating and migrating into the country, and the displaced persons go back to homes that 12 years after all this strife is not there, and they'll freeze this winter. We are concerned about that, and need to do some building within the month of October before the winter starts in November. There has got to be an emergency set aside to help out this horrible problem that is looming there. And I would like to see shelter being a line item in somebody's budget along the way.

MR. NATSIOS: It is a major line item. It is a large portion of what UNHCR is spending its money on, is for shelter. And when we speak about shelter, just so everyone understands, we are not talking about a $50,000 house. The average Afghan house costs about $100. What we do is we purchase the roofing material, which is usually corrugated steels, the beams, the wood for the roof, and then a door and maybe one window. And the rest of it is mud brick, and people build the houses themselves. So the houses cost maybe $100, $150, depending on the region and the price for these commodities on the market.

We have rebuilt since last December 70,000 homes in Afghanistan through our NGO networks. I actually saw the stuff being purchased myself when I was in Afghanistan during the terror war in November of last year, and it was a little disturbing, because it was eight o'clock at night--it was up in the northeast, and right three miles from the front were the Taliban and the al Qaeda. And one of the--I have to tell you this story, because one of the NGOs said, It's time for you to leave now. And I said, Well, I want to see--I want to count whether--how many roofing boxes and roofing material. They said, Well, if you do, you may not go back home, because the Taliban is advancing on this city right now, and if your helicopter does not get you out of here you may have to spend the night, and that is not a good idea. So that--my last stop in my first trip to Afghanistan was just on the shelter issue.

But my understanding is UNHCR is coordinating the return of two million Afghan refugees, and there is a package they do with cash for them to use to buy materials. But I think there's some shelter initiatives in that as well.

Q Can I ask a subsequent question?

MR. NATSIOS: Sure.

Q So many issues in Afghanistan to deal with, but one is seismic activity in that country that has beleaguered--it's built all over on faults. We sent a U.S. geological expert over there along with your Jim Smith, that you have in-house, and noticed that if we don't build these--reconstruct Afghanistan with seismic understanding then the first move on the earth will bring it all back down. And we would like to put that back on your radar.

MR. NATSIOS: It's on my radar, only because I ran the Office of Foreign Disaster Assistance under President Bush 41, and all I did was respond to earthquakes. And I know about housing construction and buildings, and we are very sensitive--and the Agency staff is, because they know I have a little obsession with this. We also want to make sure we don't build buildings, larger buildings. The houses that are being built for the most part are not going to be a huge risk for people the way they are being built. A larger problem though is with the schools being built, the buildings in the large cities that are larger, that might be multi-story. It's very dangerous, because it is a fault line and it is something we are deeply concerned about.

Q (Inaudible)--IRG. The energy infrastructure of Afghanistan was very badly damaged over the years, and the core infrastructure is key to private sector's ability to operate and flourish. And access to energy in rural areas is key to the poverty alleviation issue, and even to agriculture. And I wondered to what extent, given AID's very rich history of working on energy in that part of the world, that is part of your future plans?

MR. NATSIOS: Well, there are two more immediate issues. One is keeping people alive this winter, because if you have got 40 degree below zero temperatures, you need heat in the building and your home. There are very large anthracite coal mines in northern Afghanistan, and one of the local groups was trying to convince me just to pay people in the villages to go--because it can be mined without equipment--it's a little dangerous in some areas. I am not--I think we did a little bit of that last winter. We are going to be doing more of it this winter, because we don't want to cut any more trees down. Too much of the country has been denuded of tree cover, and it's affecting the agricultural system, increasing erosion, soil erosion, and damaging the environment. And so--and it's very clean coal--it's anthracite.

The problem we have is we are finding people just burn the coal in the house with no stove, and the fumes are causing serious respiratory problems. So we are looking at whether or not some kind of a very inexpensive, $50, stove can be built by people in the villages to use the coal in. So there is actually very productive coal mines in the north.

In the larger question of the national economy, we have an issue with the electrical system. The larger-scale reconstruction of the transmission system and the electrical grid is going to have to be done by the international banks--the World Bank, the Asian Development Bank, the Islamic Bank--only because they are so expensive, and we don't do--we do the policy structures, as you know, and the frameworks. But in terms of the actual infrastructure in the energy sector, we leave that to the banks. There has to be some division of responsibility here, and that is something we have all agreed the banks need to do.

In terms of the legal framework, this economic governance package that we begin to work on in the next two weeks includes some regulatory frameworks, I believe in the utility sector. So there is an effort right now to create that framework so that there can be some private investment. But it's a complicated subject, as you know, and I could go on for a little time on it. But it is central to economic development and to stability. We are replacing just in terms of public safety--there are a lot of lines down in the large cities, and we have got teams out now of engineers working with the Ministry of Electricity to--or the Public Works Ministry--to put the lines back up, because they are dangerous--some of them are live. And, two, the generators are in very bad shape--some of them are 30 or 40 years old, don't work any more, and they work only sporadically. So we are replacing some of those generators. But in terms of the wholesale reconstruction of that system, it will be done by the banks.

Q Paul--(inaudible)--with the Services Group. I just got back from Kabul two weeks ago. And in conversations with people at the Ministry of Finance and in other parts of the government there was a great deal of concern expressed about the inability of the central government to exercise its authority out in the regions and the provinces. So the first part of my question is: How is USAID trying to deal with the issue of the provincial powers that are powers unto themselves in many situations?

The second part of my question is related, which is 11 days ago, just a few days after I left, the country started a currency conversion project. And I was wondering if you had any current information about how that process is actually unfolding.

MR. NATSIOS: Well, I'll answer the second question first, since I have a longer answer for it. We were deeply involved in the currency conversion--Alaine Grisby (ph) from our staff is an expert in this--we have done this in many countries in the world. Ashraf Ghani, the finance minister, and the president, asked us to take a central role, as did the president of the central bank, the governor of the central bank.

And the things we did were first provide the machinery for the conversion. You have to shred the old currency and provide the shredding machines, the equipment to do that. You have to have counting machines to count the new dollar, the new Afghan--it's call an Afghan. It was printed in Germany, but I don't think it was a foreign aid program. It was commercially-printed paper, so we didn't do the printing of the paper. And we set up--most importantly--I didn't realize how complicated this was until I was given a briefing on this--the system for distributing the currency around to the markets and the bazaars and the banks and the other provincial cities beyond Kabul is very complicated, because you are transporting a huge amount of money, and you don't want to get shot or have disruption or attacks. And so we set up a logistics system with planes and armored cars and guards, to set up a regional distribution system so that the economy can distribute this around the country, because it sounds like a simple thing--you think of Fort Knox here--to do that. But those structures don't exist in Afghanistan. And the head of the central bank was very concerned about the security of this, so we took over the logistics system at his request, and that is now ongoing. I think it started October 7th, and it is doing quite well. The report I got yesterday was we are well advanced, and President Karzai is quite pleased. He just thanked our deputy Fred Scheck (ph) for all the help. He said this is actually next to education the most visible presence of the central government across the country. They did, by the way--I gave Colin Powell and the president a copy of the old currency. Twenty cents was 10,000 Afghans. The new currency is one Afghan is two cents--okay? We took--the central bank decided this--to take the four zeros off and just have one. The problem was before when you paid people--you know, if you paid their salary you would have to take a box in to take the currency to pay, because the currency was so devalued. And the other thing we helped with--I don't know how much of it we paid for, but we worked with the central bank on the public information campaign, because if you don't tell the public that the old currency--and it wasn't just one national currency--some of the regional warlords have printed their own currency as well. This replaces all of that. And unless you get the public on your side and the merchants, they won't accept the new currency. There appears to be from the initial reports we have from across the country widespread acceptance of the new currency--by the business class in Afghanistan, the bazaars, and by the banks. And that information campaign we helped organize with the central bank, once again, and the minister of finance.

In terms of capacity of the central government outside the capital--someone did ask that earlier. But there are two issues. One issue is the capacity building and the bureaucracy, which once again I mentioned earlier we are working on in terms of training people in the bureaucracy in the skills they need to conduct their public services.

The second question is around the power of the warlords. There are still--I am not supposed to use that term now--the militia figures around the country--call them whatever you want to--they are there in some areas. And in some areas they are being very cooperative, and they are not disruptive at all. In other areas they are disruptive. Over time as the central government begins to deliver more services and the cabinet is more visible on the media, and more things are announced, the central government is delivering, I think the attraction of the warlords will diminish. I have worked in about 12 other reconstruction efforts, either in the NGO community or through AID in the first Bush administration, and there is a whole psychology of this--it is not a matter of putting troops from an international peacekeeping force in the field--it's a psychology that the increasing competence of the central government makes the warlords no longer relevant. And over time in a peaceful way that has happened in a number of countries--I could go through a list of countries where we have successfully negotiated that. But you do it best not with weapons but with increasing public services and public visibility for the central and provincial governors who are loyal to the central government. And that will take time to do, but it is beginning to happen.

Q (Off mike)--Women's empowerment is featured very much up front in your rebuilding Afghanistan document, and you have noted in passing some of the areas in which you are working. Could you give us a clearer sense of what you are planning to do in women's empowerment and the level of resources that you are thinking about putting into that?

MR. NATSIOS: Well, we did reconstruct the Ministry of Women's Affairs prior to the loya jirga, when Suma Sumara (ph) was still there--Dr. Sumara (ph) is of course a prominent doctor, and I think she's the head of the Human Rights Commission, as I--and she asked us--I think that was the first ministry that we rebuilt at her request. There is an international human rights law group for literacy, human rights for refugee women--we have been funding them, because they are working with refugee women to empower them. We have begun to build at the request of the central government, working with them in the Education Ministry a set of kindergartens in the central ministries so women officials who are in the ministries, who work for the central government, can go to work with their kindergarten-age children, put them in the kindergarten in the ministry and they are safe. The first one of those opened up last week, and we will be expanding that network of these kindergartens, because it's very important that some of these very skilled women are back in the ministries in a visible way.

The minister of health is a woman. She is actually a folk hero in the country, because she survived the Taliban, refused to wear a burka even under the Taliban. And because she was so effective as a surgeon and as an administrator, they left her alone, I am told. And she apparently does not brook opposition from people who interfere with her work. She is quite an able lady. I have been very impressed with her.

We have funded a number of women's NGOs, Afghan women's NGOs. I visited some of them in January that are doing microenterprise development, small grants of 25 or 50 dollars, a hundred dollars, that will allow women to set up businesses--many--the country has a huge number of women who are widows. The war over the last two decades has been devastating, and we are targeting women who are single heads of households who have no other way of supporting themselves --through these microenterprise programs run through the NGO community.

And, finally, we funded actually through one of the NGOs a women's newspaper run by women's groups in Afghanistan. I don't know how large the circulation is, but I hear it's quite an influential publication.

The big thing we are doing is the teachers in the schools. And that will be done through the education system. We also have special incentives to make sure girls are sent to schools in an equal way with the boys. We want to make sure there's a new generation of educated girls. And the way to do that is through incentive systems that actually I am told are very effective. They are working, and we are seeing a huge return of girls--not return--some of them have never been to school. But they are in the schools now as a result of these incentives which we will keep in place, working with the NGOs and the United Nations and the ministries.

MODERATOR: The "A" in AID doesn't stand for Afghanistan. The administrator is responsible for dozens of countries around the world in which we work, and I am really impressed with your grasp of the details of Afghanistan. Thank you very much. And thank you all very much. (Applause.)