TUM Library

Includes bibliographical references.

Aid and state building -- Why are state revenue sources relevant? -- Tax states -- Aid-dependent states -- The effects of oil revenue -- Distinction between aid and oil-revenue rentier effects -- Conclusion -- Reliance on external revenue : Afghanistan from 1747 to 2000 -- The society : an inheritance of history -- Relying on tribute for state building : the importance of external revenue to the Durrani empire (1747-1824) -- The Durrani empire ineffective tax system -- Subsidies and state building : the loss of tribute and search for alternative revenue (1824-1879) -- Institution building -- Consolidation of a modern buffer state (1880-1919) : the significance of subsidies and external military support -- And military administration -- State-society relations -- Amanullah Khan's reforms : the loss of subsidies, budget surplus and fiscal decline (1919-1929) -- Foreign aid and state building : reshaping the state building process (1929-1978) -- The rise of a weak aid-based rentier state -- Decline in foreign aid -- The state and the Mujahidin Tanzims (organizations) and sources of revenue : conflict in state-society relations (1978-2000) -- The Mujahidin government financial crises and Pakistani aid to the Taliban -- Conclusion -- Rebuilding an aid-based rentier state -- Establishing a new political order -- Building the state institutions -- Responding to the flow of aid -- Chaotic aid coordination : a challenge for state building -- Access to foreign aid : a prime focus -- Improving fiscal management -- Aid modality : undermining institution building -- Government preoccupation with foreign donors -- Relations at the administration level -- Relations in regard to senior appointments -- Conclusion -- Reforms and setbacks : rebuilding the revenue system -- State revenue sources -- Aiding the revenue reforms -- Reforming revenue policy and laws -- Reforming revenue administration -- Improving revenue infrastructure -- Confrontation and consultation -- Failing to enforce tax compliance -- Failing to prevent illegal taxation and extortion -- Ambiguity to end aid-dependency -- Fragmenting the tax system -- Conclusion -- Budget spending : fiscal fragmentation and patronage -- Some improvements in government budget transparency -- The citizen's role -- Underreported on-budget items -- Poor off-budget transparency -- Secret cash payments -- Conclusion -- Interactions between the state and society -- Reinforcing the state-society inherited gap -- Commanders -- Traditional actors -- Urban intelligentsia -- Reshaping the state-society relations -- Building and undermining the state -- Conclusion -- Conclusion : findings and implications -- Path dependency : Afghan state reliance on external revenue -- Building and undermining the state : Afghanistan after 9/11 -- Upward accountability to donors -- Creating a parallel public sector -- Paradoxical tax outcomes -- Divergence in state-society fiscal relations -- The future -- Implications fo externally aided state building.

Foreign aid plays a crucial role in the process of building fragile states, so it is vital to understand its effects. Afghanistan provides a prime case study. Following the removal of the Taliban regime by the US-led military intervention in late 2001, it has received unprecedented amounts in aid donations, with the US alone, after adjusting for inflation, appropriating $109 billion to reconstruct the country. This book examines how foreign aid has affected Afghanistan's weak state since the US intervention in late 2001 until the end of President Karzai's first term in 2009. It argues that the relationship between aid and state building is highly complex and that the effects of aid on weak states depends on donors' interests, aid modality and the recipient's pre-existing institutional and socio-political conditions. In the case of Afghanistan, the book claims that it inherited conditions that were not favourable for effective state building. Although some of the problems that emerged in the post-2001 state building process were predictable, the types of intervention that occurred--including the aid architecture which largely bypassed the state, the subordination of state building to the war on terror, and donors and domestic policy choices--decreased the effectiveness of the use of aid and thus contributed to maintaining a weak state. The book also explores how aid dependency and aid distribution outside the government budget affected the interactions between the state and society. Unprecedented attempts of state building and the massive flow of aid in post-9/11 Afghanistan makes an in-depth study of this country crucial for understanding the effects of aid on building fragile states.