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RENEE MONTAGNE, HOST:

And it's been nearly two years since Afghan president Hamid Karzai ordered that the many private security companies working in his country be brought under state control. But the Afghan force set to replace the foreign-funded contractors is off to a rocky start. And that sparked a public dispute among U.S. officials in Afghanistan over what impact the new Afghan security force will have on aid projects there.

NPR's Quil Lawrence reports.

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QUIL LAWRENCE, BYLINE: Jingling cargo trucks squeeze into a bottleneck on the Jalalabad Road, arriving from the mountains around Kabul. Vaulting cliffs and blind curves have made these routes ambush country since the time of Alexander the Great.

For many years these crucial supply convoys - and the warehouses they're headed for - had private security companies guarding them. But resentment grew, and the image of burly foreigners stopping traffic and blocking off roads became a political issue for President Hamid Karzai. Two years ago he ordered an end to the private armies. That end began last month with the creation of the Afghan Public Protection Force, the APPF.

SADIQ SEDIQI: (Foreign language spoken)

LAWRENCE: According to our policies and calculations, the APPF cannot fail, says Sadiq Sediqi, spokesman for the Afghan interior ministry.

Sediqi explains that the APPF is a state owned enterprise - an Afghan state security company to replace all of the security contractors in the country - which the Afghan government has long condemned as costly and corrupt. But that would imply that the APPF is going to be less costly, and less corrupt.

BENNIE PICCOLO: As a result of the switchover to an Afghan Public Protection Force, there would be a increase in the of cost of an afghan laborer. This could be as much as 46 percent, based on our analysis.

LAWRENCE: Bennie Piccolo, is assistant inspector general at SIGAR - the Special Inspector General for Afghanistan Reconstruction. SIGAR sent out an urgent warning this spring that USAID projects were at risk. SIGAR expressed concerns that the guards were poorly trained and equipped.

Ken Yamashita, director of USAID in Afghanistan, says that SIGAR's information was out-dated.

KEN YAMASHITA: Our point was if you're going to come to these conclusions, then you really need to look at updated information, and we felt that in the final report they chose not to.

LAWRENCE: Yamashita says setting up the APPF was complicated and is still a work in progress. But he says no projects so far are in danger of closing. He estimates an initial cost increase closer to 16 percent. Both sides stand by their estimates, and their dispute continues, even after a Congressional hearing in Washington.

Lawmakers there raised questions about why Americans taxes are paying a for-profit Afghan state-owned enterprise to protect the reconstruction projects that are also paid for by American taxes. Especially because the APPF has levied an across the board profit margin. Again Bennie Piccolo.

PICCOLO: As part of their cost they are applying a 20 percent profit on top of the overhead charges and the other costs to come up with their fully loaded rate. We don't have a position on whether that is an appropriate amount. But we did want to make sure that everybody understood that this was part of the cost and part of the reason why the costs were going to be higher with the APPF.

LAWRENCE: The Afghan government's reputation for corruption did lead one congressman to wonder if the 20 percent was going right into the Karzai family's personal account. Ken Yamashita says USAID can keep a close watch on contracts for signs of graft. But the bottom line is, President Karzai has ordered the creation of the APPF as part of the transition to Afghan sovereignty. And Yamashita says that leaves the U.S. only one option.

YAMASHITA: If you are working in Afghanistan, and if you need a security guard force, then APPF is the only way to go.

LAWRENCE: Yamashita says if the APPF can't do the job - USAID can ultimately cut its losses and cancel the reconstruction projects.

Quil Lawrence, NPR News, Kabul.

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