Legacy Rising: DoD Business Task Force Impact Evidence Grows

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Scarcely a year after its demise at the end of 2014, evidence is now mounting that the DoD Task Force for Business and Stability Operations (TFBSO) may have been the most catalytic agent for economic growth since the Marshall Plan.  The evidence includes a state-of-the-art Task Force economic impact assessment, and early agreement on two enormous transnational energy projects that the Task Force facilitated. 

Quantifying the impact of overseas economic development projects is notoriously difficult, and until recently hard evidence of economic impact for the $638.5 million that TFBSO spent in Afghanistan had been largely anecdotal.  That changed last November, when a year-old economic impact assessment of TFBSO’s Afghanistan operations finally came to light. 

In November 2014, Vestige Consulting LLC submitted to DoD the draft of a highly sophisticated analysis of TFBSO project impacts (Economic Impact Assessment, Task Force for Business & Stability Operations in Afghanistan—Draft).  The analytical model they used was “a comprehensive state-of-the-art economic approach to capture the most relevant parts of Afghanistan’s economy, and a best-in-class political feasibility-weighted cost-benefit analysis of Task Force projects.”    

The draft report validates the dramatic economic impact of TFBSO’s work in Afghanistan, including on government revenue, gross domestic product (GDP), per capita GDP and household income.  For the $638.5 million the Task Force spent there, all projects combined are expected to double Afghanistan’s annual GDP by 2025—an increase of about $54.6 billion in 2025 alone.  While all of this impact is not attributable to TFBSO alone, the proportion that is represents a gigantic return on U.S. taxpayer investment. 

The Impact Assessment quantifies the proportion of program impact attributable to specific project groups. This analytical capability will be critical to prioritizing future economic reform interventions, in Afghanistan as well as other fragile states.  With respect to TFBSO, it found that about half of the Task Force impact came from energy projects paying off primarily before 2025, and about half from mining projects that mostly pay off after then.  The Impact Assessment isn’t perfect by a long shot.  It mis-categorizes some projects, but its biggest problem is that it underestimates economic impact by including Task Force overhead costs in the analysis.  Overhead for all development agents working in the Afghan war zone—multilateral, bilateral, NGO and other--are ridiculously high because of security and operational costs, but the reason why  it is not industry standard to include overhead costs in this kind of impact assessment anywhere is that it requires subjective allocation of indirect costs across projects.  

In spite of some shortcomings, the Economic Analysis  establishes a critical benchmark to guide future programming of economic growth money.  DoD should revise it to exclude overhead costs, update it in light of recent economic events, make it widely available, and maintain the highly sophisticated economic model constructed to enable the analysis. 

Two other major events occurred in late 2015 to help establish the legacy of TFBSO, each of which was included in the Impact Assessment.  On 20 November, the Government of Afghanistan and a consortium of Turkish and U.S. energy companies announced the successful conclusion of an Agreement for exploration and development of the Totimaidan block in northern Afghanistan.  As one of central Asia’s most promising natural gas fields, the Totimaidan development will connect Afghanistan to the region’s energy community, open export markets, strengthen the national economy, create jobs, and generate revenue. 

Early agreement on the block was made possible by TFBSO and other development agents working in Afghanistan’s energy sector.  TFBSO, inter alia, helped the Ministry of Mines and Petroleum (MoMP) with tendering on the Totimaidan, Amu Darya, and Tajik I/Tajik II projects, and with seismic surveying on Kushka.  It identified and prioritized investment opportunities, and provided technical, financial, managerial and legal expertise to help MoMP manage the exploration and production process.

The Impact Assessment projected that the $223.7 million TFBSO spent on the Totimaidan and the other oil and gas projects will generate $12.8 billion in Afghan government revenue from 2010-2025, and increase GDP by a cumulative $125.8 billion.  The Task Force “share” of the annual GDP impact is an increase of $23.6 billion in 2025 alone.  From 2018-2025 these tenders should increase per capita GDP by $539—from only $650 in 2013—and increase household incomes by $22.1 billion. 

The other major event occurred on 13 December, when the Presidents of Turkmenistan and Afghanistan, the Prime Minister of Pakistan, and the Vice President of India signed a Shareholders Agreement and broke ground on the $10 billion, 1100-mile Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.  This project, which will ultimately transmit 33 billion cubic meters of gas a year from Turkmenistan to India, is of major strategic importance to long-term Afghan stability.           

The TAPI Pipeline broke ground early because of the work of TFBSO and other development agents, especially the Asian Development Bank.  TFBSO fielded world-class technical specialists to, inter alia, vet the pipeline route through Afghanistan.  Its biggest contribution was providing legal and regulatory support, however, including legal advisors during TAPI negotiations.    

The Impact Assessment projected that the $122.9 million TFBSO spent on TAPI and three closely related projects will add $4.3 billion to government revenue from 2010-2025, and increase GDP by a cumulative $8.6 billion.  The Task Force share of the annual GDP impact is an increase of $1.6 billion in 2025 alone.  From 2018-2025, the projects should increase per capita GDP by $44.60, and increase household incomes by $900 million. 

I saw the work of TFBSO up front and personal as Director of Development under General Petraeus and General Allen at ISAF Headquarters from 2010-2012.  We suspected then that the Task Force approach to promoting economic growth could prove to be a game-changer, and the Economic Impact Assessment and Totimaidan and TAPI agreements now strongly support that thinking.

As other Task Force-catalyzed energy and mining projects come to fruition, and their economic impacts emerge, the legacy of the Task Force will only grow stronger.  Because the TFBSO business model is adaptable to countries at peace as well as countries at war, moreover, over the long run it has huge potential for successful promotion of economic development worldwide.  

This is a legacy on the right trajectory.  The biggest priority now is finding a way to adapt the Task Force model to current U.S. contingency operations, and get it back in the war.  Especially urgent is creating jobs in Afghanistan, and mitigating the hemorrhaging of Afghan economic migrants who will otherwise soon be en route to Europe and the United States. 

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