Economics and Irregular Warfare

[MM12]

Economics is arguably the second most important line of operation in irregular warfare from the strategic to the tactical level. Economics is mentioned many times in JP3-24, FM3-24, FM3-07, etc. How many of our commanders from the theater level down to the company commander understand the dynamics of economics. Who decides what type of economy should be established (Free market economy, state controlled, mixed, etc)? Can the programs established at the tactical level be sustainable by the local or national government? How much capital do we invest? There is a litany of other questions to this topic.

I ask this because we know that the other cabinets within our government lack the resources to project substantial personnel outside our nation’s borders. Therefore, this responsibility has fallen onto the hands of the military and now PRTs. Do our CPTs through COLs understand the impact they are having at the municipal level? Do our division commanders understand the impact at the state/provincial level? How do we prepare them for this task?

Interested to hear your comments on this.....

[Tom Odom]

MM12,

Congrats on your first post. You will get a better response if you first introduce yourself and explain your interests to provide context to your questions.

Thanks

Tom

[vertnyc]

I'm the Brigade Economic Development Officer for Task Force Stryker in Southern Afghanistan and I've done Zero Economic Development. I was sent to the University of Washington by the Brigade Commander for 6 months to learn about how to start small businesses in preparation for deployment to Iraq.

We are here now in Afghanistan and I spend most of my time focused on stabilization, which isn't taught in any of our officer courses or NCOES.

The COIN Academy in Camp Julien just had their inaugural Stability course in early November.

Stabilization, Development and Economics are linear processes in my mind. If the area does not have persistent security and the population's grievances are not addressed, then don't even worry about Development or "Economics."

I hate when USAID from Kabul comes down and talks about GDP. What does GDP have to do with anything in a remote village in Southern Afghanistan where they think the Russians are back?

Assuming that we get good at stabilization and start looking at development- that is a dangerous road for the military to take because we do not have the program management skills necessary for big development. If you mean development in terms of building a small well then perhaps we do...but I'd argue that we cannot even really build a well then QA/QC it.

Also building wells are stupid because it lowers the water table but that's a diffferent story.

The only other uses that my training has helped with is making sure CERP and/or other projects do not cause inflation in the economy or a rise in commodity prices like gravel and other construction material.

Anyways- fiscal discipline on the part of the military isn't good enough as other instruments of national power have programs which have budgets that I get the feeling "have to be expended" by a certain time. Which is bad. And it's really bad if you concentrate in only two Provinces and spend $240+ Million in the next 10 months.

[Hacksaw]

Kind of a loaded question since our officers come from three commissioning sources... without a doubt the USMA Grads for thorough understanding of Micro, Macro and International Economics (SOSH Rules )... seriously USMA grads do get at least a semester of economics and when I left the three highest degree granting programs were 1. Econ, 2. Intl Relations, 3. American Politics... all in the Dept of Social Sciences... ergo most (of at least the MAJ and below) USMA grads do have more than an introductory education in econ...

Perhaps without realizing it... your whole last post showed a level of appreciation for the economic impact of operations -- a good thing...

However, if the question is whether our CPT-COL Commanders understand the impact they are making at the municipal level I'd shrug and say some yes some probably no... for some as you say it is still somewhere down the priority list that they haven't gotten to because they've as yet est. conditions necessary to think about micro development...

So was your post out of frustration with the green tabs in the BCT??? Kind of a you sent me for 6 mths to UW then ignore everything I have to say???

If so, have you addressed them with the BCT CDR? Do you have a seat at the table with the planners are you interacting with the plans shop of your higher hqs???

Best of Luck, Live well and row

[MM12]

Well to introduce myself, I am a CPT in the US Army. I have some fellow friends in Afghanistan and Iraq who are commanders, BN S3A, or BN/BDE S4s. I have heard from them including my personal experience the diffculties of having to develop a local community. It seems the Joint and highest echelons of the US Army leadership anticipate (based upon current doctrine) that our officers have to develop the local communities in their AOR, but have not provided them the know how in either the schools or manuals.

I'm concerned about the long term effect this may have especially in countries that are not developed such as Afghanistan. Imagine a company or battalion commander who has significant amount of CERP funds and all of a sudden is investing these funds in a tiny community, the impact is major in a positive sense but also negative too. Its a double edged sword.

Security will always be the most important line of operation, but economics is always going to be second most important (or at least it should be with the framework of COIN). If the military wholeheartedly adds irregular warfare to the spectrum of operations, it needs to find ways to educate its officers and prepare them for not only the security challenges, but the cultural challenges which includes economics as well. Each society views property differently as they do with capital, wealth and many other economic terms....these are all related to COIN, stablization, reconstruction, etc. We and the force need to be aware of this and understand the dynamics of economics to be successful.

If a community relies on the US to provide financial resources, can the local, provincial or national governments support them if the US leaves? If not, then all that was done was for nothing.

Thanks for the replies and hope to hear some more....

[Surferbeetle]

SWOT

VRINE

Balanced Scorecard

Peter Drucker

Harvard Business Review

Value Chain Analysis

From USAID: CASHMERE VALUE CHAIN ANALYSIS AFGHANISTAN

The USAID-funded Accelerating Sustainable Agriculture Program (ASAP) is committed to create broad-based, market-led agriculture development with the aim to provide economic opportunities for rural Afghans. The cashmere value chain is one of the selected value chains on which ASAP will concentrate. This report provides an overview and analysis of the Cashmere Value Chain, linking the global context to the national context, with the aim of determining Afghanistan’s competitiveness and identifying main leverage points and key strategies to improve Afghanistan’s competitiveness and promote development in a pro-poor manner. It will provide the basis for ASAP’s interventions in the Cashmere Value Chain, and will lay the foundation for ASAP’s cooperation with other agencies active in the sector.

From Roots of Peace: Baseline Survey Report on Villages for Value Chain Business in Afghanistan

Agricultural growth and development is deeply intertwined with economic progress. Afghan agriculture possesses the basis and resources for many value chain businesses like cultivation of potatoes, vegetables, oil crops, animal products, carpet weaving and other major crops (i.e. fruits, nuts, other horticultural products, spices, medicinal herbs, forestry, livestock and fisheries) that can be the basis for a large number of agro-based industries and commercial activities. Investment in electricity generation, small and medium scale dams and reservoirs, local roads, agro-training and extension activities, large scale introduction of modern practices in value chains, irrigation, research and development, agricultural and ecological education and training need to be introduced into the country.

[Dayuhan]

Originally Posted by MM12

I have heard from them including my personal experience the diffculties of having to develop a local community. It seems the Joint and highest echelons of the US Army leadership anticipate (based upon current doctrine) that our officers have to develop the local communities in their AOR, but have not provided them the know how in either the schools or manuals.

Purely an opinion, but an opinion from one's who's spent a few decades around development projects, and seen a few successes and a lot more failures.

You can't develop someone else's community. Nobody can. You can help the community to develop itself... if you do it very carefully.

There is almost always some sort of economic activity going on in a human environment. As security is established this activity is likely to accelerate. Assisting the economic activity that grows naturally out of an environment is much more effective than trying to introduce some totally new activity that you or some funding agency happens to be enthusiastic about.

Slinging money around often does more harm than good.

One piece of advice I've given to many in the development world, though few listen:

If you see people behaving in a way that makes no sense at all to you, don't assume that they are irrational or stupid. Assume that there is some factor in the picture that you don't see.

My gut reaction to the whole idea is that asking military men to do development work makes about as much sense as asking development workers to fight a war, or asking an engineer to do surgery.

[vertnyc]

Originally Posted by Hacksaw

So was your post out of frustration with the green tabs in the BCT??? Kind of a you sent me for 6 mths to UW then ignore everything I have to say???

If so, have you addressed them with the BCT CDR? Do you have a seat at the table with the planners are you interacting with the plans shop of your higher hqs???

My post isn't really out of frustration- I will always appreciate the opportunity for training or education regardless if I get to use it or not- I just happen to be using that particular skill set in an indirect way...

Most of the planning sessions believe it or not occur outside of the Brigade, at least in terms of economic development. Which is a good thing in my mind, because it's wrong to put that burden on the military. But I'm invited to those and those usually go just fine.

I've heard of theories of putting stability / non-lethal activities as a S3 function. In actuality, not much integration with the S3 shop.

[Elric]

Originally Posted by vertnyc

I'm the Brigade Economic Development Officer for Task Force Stryker in Southern Afghanistan and I've done Zero Economic Development. I was sent to the University of Washington by the Brigade Commander for 6 months to learn about how to start small businesses in preparation for deployment to Iraq.

Anyways- fiscal discipline on the part of the military isn't good enough as other instruments of national power have programs which have budgets that I get the feeling "have to be expended" by a certain time. Which is bad. And it's really bad if you concentrate in only two Provinces and spend $240+ Million in the next 10 months.

Congratulations on your assignment... I was up the road near Herat in 08-09 doing HA/CA. You have the luxury (?) of US maneuver forces in your AO to check the CERP project sites. You are near or in Kandahar with ready access to cash.

http://www.nytimes.com/2009/11/13/wo...m.html?_r=1&hp
Afghan Enclave Seen as Model to Rebuild, and Rebuff Taliban

A nice, easy way to ultimate victory Have you considered the National Solidarity Plan (NSP), Provincial Development Plan (PDP), the District councils, and the Community Development Councils? I worked with the US Envoy to Herat province and the USAID folks.

For my druthers, I'd rather hand off CERP for big projects to USAID (they have local staff) and return to the Emergency Response part of CERP.

[J Wolfsberger]

I suspect, based on my own MBA experience and some of the postings, that the education, guidance, planning, etc. for economic reconstruction/development has all been based on US experience. That is, it applies to a well developed economy in an industrial (or post industrial) state of development, with well developed judicial infrastructure to apply and enforce a well developed body of business law.

Absolutely none of which applies to Afghanistan. In short, it is taking a macro-economic approach in a country where the closest thing to a macro-economy is the heroin trade.

So, for what it’s worth, here’s my recommendation, based on what I understand the real situation to be on the ground in rural areas.

1. What do these villagers produce? Of that, what do they consume locally, and what do they trade with other villages, towns or cities?
2. What do they consume? How much of that is produced locally, and how much comes from other villages, towns or cities?
3. How do they exchange value? How much of this local trade is based on currency, and what currency is it? How much local economic activity is based on barter?
4. What do or could the locals produce that could go to a larger market? What do they need in the way of additional infrastructure to produce it?
5. Are there any micro-loan programs in place to finance starting or increasing production of goods for local consumption or trade? Why not?

In other words, the approach,. for now, needs to be entirely on increasing/supporting localized micro-economic activity.

These are just of the top of my head, and I could come up with more given more time. The bottom line is that the type of development plans likely to be produced by the usual suspects will be (probably have been) wildly inappropriate to the reality on the ground where it counts: rural Afghanistan.

MM12, vertnyc, I’ve had some specialized training in the area going back to my own adventure in self employment (). I may have some information or pointers I could transmit. PM me if you’re interested.

[vertnyc]

Concur with western training tailored for something way more developed than Afghanistan. Please do send me any good info.

In response to the questions:

Originally Posted by J Wolfsberger

1. What do these villagers produce? Of that, what do they consume locally, and what do they trade with other villages, towns or cities?
.

In 1 district, villagers produce only poppy. However they do not own the land. Land owners live in Kandahar City. In another district, villagers grow tobacco and wheat, tobacco to be sold in Pakistan. Wheat for consumption. Haven't really seen intra-village trade, but most goods go to KC or through Pakistan to Chaman.

Originally Posted by J Wolfsberger

2. What do they consume? How much of that is produced locally, and how much comes from other villages, towns or cities?
.

They consume what they grow. Insufficient data for other question. Which is really a point I'd like to highlight that it is the lack of data such as this which makes decisions hard.

Originally Posted by J Wolfsberger

3. How do they exchange value? How much of this local trade is based on currency, and what currency is it? How much local economic activity is based on barter?
.

Haven't seen anything based on barter yet, near KC, they use Afghani. Some contractors take dollars. Near the border, 50% they use rupees or whatever the currency Pakistan uses, and 50% afghani.

Originally Posted by J Wolfsberger

4. What do or could the locals produce that could go to a larger market? What do they need in the way of additional infrastructure to produce it?
.

In Arghandab, pomegranates. They need everything on the value chain for pomegranates in terms of infrastructure.

Originally Posted by J Wolfsberger

5. Are there any micro-loan programs in place to finance starting or increasing production of goods for local consumption or trade? Why not?
.

USAID has a program called WOCCU. CERP has $500 micro grants. We are not allowed to give micro grants at this point of time due to some people in the unit not liking that idea.

[vertnyc]

Originally Posted by Elric

Have you considered the National Solidarity Plan (NSP), Provincial Development Plan (PDP), the District councils, and the Community Development Councils? I worked with the US Envoy to Herat province and the USAID folks.

For my druthers, I'd rather hand off CERP for big projects to USAID (they have local staff) and return to the Emergency Response part of CERP.

The CDCs of the NSP are intact and useful on a case to case basis. So far, not much movement in our districts. A little more activity for DDAs, but no concrete results. Trying to explore ASOP but I heard there is an artificial turf war between ASOP/NSP. NSP "didn't work" in Helmand, so ASOP went. NSP works in some parts of Kandahar...but no ASOP here...yet.

USAID is trying to get CERP to pay for their projects so I guess we do live in an upside down world.

[marct]

Being the somewhat pedantic person I can be at times , I think it is important to point out that the English word "economics" comes from the Greek oekos nomos or, transliterated, "household management". I would also second M-A Lagrange's suggestion about reading Bourdieu; the particular reference in English is Distinction: A Social critique of the Judgement of Taste.

While Bourdieu has some good ideas, he can be tricky to read and apply (especially in translation). Personally, I prefer Bronislaw Malinowski, from whom Bourdieu "borrowed" extensively. I would recommend Dynamics of culture change and Towards a scientific theory of culture; both are fairly easy to read and have some fairly simple, yet power, analytic methodologies in them.

Cheers,

Marc

[Cavguy]

Wish I had more time to write.

This is what I have concluded about economic development from my personal experiences and two years at the COIN center, which doesn't all agree with theory. The key is to realize that all aid "takes a side" as you alter the power balances between communities, governments, families, and tribes. That well you just built may fundamentally alter a centuries old power dynamic.

You'll never get to the bottom of the 2d and 3d order effects in a society you are not a part of. Therefore, it is my opinion that $$ employed by tactical commanders must be transactional. Our temptation is to do good works. As some others have indicated, that's nice but not what a tactical commander should be doing. He should use it to gain influence with targeted groups and individuals critical to defeating the insurgency in that AO. The key part is that for such assistance you MUST get something tangible in return. That can take many forms - security force recruits, safe passage, governance participation, etc. But don't ever do a project HOPING it will "buy" goodwill. Analyze your AO, determine what populations or people you find most critical, and use your limited funds accordingly.

If you click on my sig and read about my experiences, you will see that money was employed tactically at those who were cooperating by providing security, information, and cooperation. Bottom line, good behavior rewarded, bad behavior - no $$ to your AO.

A good example was in Ramadi - instead of just doing good works and providing security with our forces, BG MacFarland made it transactional. In exchange for protection and aid they provided police recruits - half guarded the local area, and half were used elsewhere in the city as we needed. We also received guarantees of safe passage. Read the articles linked in my sig for more. Granted, this example was from Iraq, but I think that is one of the few non-location specific messages out of Ramadi. As Kilcullen says, giving the locals something without a return only gains their contempt, not cooperation. Some may sneer at it as bribery, but that's what CERP really is for anyway, no? Disguised as civil works, but at its essence a bribe to keep the population content? I guarantee it costs much less than an MRAP, Stryker, or the SGLI/medical care of dead soldiers. It may even have positive long term effects on the region and nation, if done right.

Bonus win if you can employ the $$ through local or national security forces. It doesn't matter so much what the Afghans think of you, only what they think of their own government.

Just random Sat night musings. I'll be more coherent tomorrow.

[Bill Moore]

Posted by Cavguy,

If you click on my sig and read about my experiences, you will see that money was employed tactically at those who were cooperating by providing security, information, and cooperation. Bottom line, good behavior rewarded, bad behavior - no $$ to your AO.

Although you're just touching the issue, you are looking at from the right perspective.

Posted sy Slapout,

IMO the real 800 pound Guerrilla in A'stan is the Economy. Without a stable Economy no country can survive.......Including the USA.

The insurgency is based on a lot of things, but very little has to do with the economy. What is really different with the economy today (other than the occupiers Russian and U.S. who provide a temporary foreign economy) than say 1975? There are several countries with very weak economies that continue to survive year after year. My argument is you're supporting a major effort that isn't solving the problem that we need to solve. Putting it simply, even if our efforts to establish a better economy are effective, the insurgency would still exist.

We can use economic development at the micro level to influence behavior if we're skillful enough (read not politically correct), but I quote Kilcullen from his book "Accidental Guerrillas" on p67,

Governance and development, tied to a security and information strategy that gives the population incenttives to support the government, are thus extremely powerful COIN tools

break

There is also a belief, unfounded in reality, that deveopmental assistance generates gratitude, or "hope", in the population and encourages them to support the government. Field experience in both Afghanistan and Iraq, however, has shown that insurgent intimidation easily overcomes any residual gratitude effect, while historical studies have shown that in civil wars and insurgencies, popular support tends to accrue to locally powerful actors rather than those actors the population sees as more congenial: the more organized, locally present, and better armed a group is, the more likely they'll be able to enforce a consisttent system of rules and sanctions, giving the population the order and predictability it craves in the deeply threatening , uncertain environment of insurgency.

We (the coalition) should be most powerful force in that village making the rules, not diverting efforts building the economy unless it is relevant to influencing the population. After we suppress the insurgency, then we can do some real economic development for the long term win like we did in Germany and Japan.

[slapout9]

Originally Posted by Cavguy

Some may sneer at it as bribery, but that's what CERP really is for anyway, no?

Bribery is very effective so I wouldn't be to concerned about it.........just think of it as a Campaign contribution, that's how most US Politicians look at it.

[MikeF]

Originally Posted by Cavguy

The key is to realize that all aid "takes a side" as you alter the power balances between communities, governments, families, and tribes. That well you just built may fundamentally alter a centuries old power dynamic.

You'll never get to the bottom of the 2d and 3d order effects in a society you are not a part of. Therefore, it is my opinion that $$ employed by tactical commanders must be transactional. Bottom line, good behavior rewarded, bad behavior - no $$ to your AO.

Either transactional development or coercive civil affairs, we use money as a weapon. We're the military. We use everything as weapons. As Schmedlap noted, we finally fixed our process to get access to money and flood the community w/ short and simple projects; however, our output is still skewed. Niel talks to that issue. Many times, we just don't know how our actions effect the community. By flooding cash to certain leaders, our armed social work may disrupt the natural order of things that only stokes underlying tensions.

A commander must use discretion and discernment with all of his weapon systems. In my case, I would go in once a week to meet with the elders. I would flash $5000 and tell them there was more where that came from, but I refused to do any reconstruction until the level of violence diminished. To me, it didn't make sense to pave roads that would just get blown up again. Additionally, I was having to give the elders respect for others classes- "no, it's not okay to behead your neighbor and take his property." As we went back and forth, I learned something very disturbing. Their grievance was not about what they did not have. It was envy over what others had. In cases like that, there's not much we can do.

In the clearance and hold phase, money can be used effectively to achieve security and stabilization, but this short term effect does not equal long term development and prosperity. I'm not convinced that this type of work can be accomplished by those in uniform. As I studied others that are having success (Greg Mortensen and Mohommed Yunnis), their work is often ad-hoc and decentralized. I'm not sure how to incorporate their work into our centralized, bureaucratic processes.

[slapout9]

Originally Posted by Cavguy

This is what I have concluded about economic development from my personal experiences and two years at the COIN center, which doesn't all agree with theory. The key is to realize that all aid "takes a side" as you alter the power balances between communities, governments, families, and tribes. That well you just built may fundamentally alter a centuries old power dynamic.

Which goes right to the heart of the SBW mantra of the 3 F's to understanding a Human Organization System. IMO Family,Friends and Finances are all you really need to know about the Human Terrain. With the possible exception of the 4th F.....who is foolin around with who

[Ross Wherry]

Alcon - I've been uncharacteristically quiet the last few weeks. Work got in the way. I hate it when that happens.

Vertnyc,
I'm a retired AID officer, enjoying the Iraqi sun for past 3 years, with a bit of time in Helmand before that. Lovely place.
You are correct in your assertion that all economics, like politics, is local. Village residents aren't concerned with Khandahar, let alone Kabul, until political authorities involve themselves in the economic sphere. For example, when it got on its feet in 2003, the first act of the state-run cotton gin in Helmand was to have the police burn the nine private gins so as to regain its monopoly. So the AID program got out of cotton. We tried lentils -- big Indian market, durable commodity, and a simple value chain -- except that we misunderstood the friction costs of transport. By the time the payoffs were done, there was no profit left for the marketer. So we got out of lentils. Wheat was the default crop, and we noticed a lot of dried poppies hanging in sheds.
Nonetheless, the adage about think globally but act locally works in conflictive situations. If you can survive the Kabul-speak, we found that the best approach in crops was to ask villagers what they could sell. We traced the truckers and their routes to sketch the market links to estimate returns to the farmer. This approach was successful in Charikar with raisins, but we never found a good (licit) crop for Helmand.
Hope you have better luck!!