Over the years, the US and its international partners have directed an impressive amount of development funding to Afghanistan. Not so impressive: their efforts to ensure billions in aid are actually reaching the intended targets. Afghanistan’s foreign minister, Rangeen Dadfar Spanta, once estimated that only about $10 or $20 out of every $100 in US development assistance ends up filtering down to the communities it was meant for. Where does the rest go? Some is eaten up by unwieldy chains of contractors and subcontractors, which take their cut and pass the work on until there is little money left to actually complete the projects they were hired to carry out. Some is siphoned off by corrupt officials and contractors. Some—well, we’re not entirely sure where it went. Meanwhile, Afghans have complained bitterly about the state of development efforts. In some cases, the promised aid simply hasn’t materialized—or, if it has, the result has been shoddily constructed (yet high-priced) projects that are basically useless.

Along with an influx of troops, the Obama administration is planning a surge of civilian personnel and funding to address Afghanistan’s formidable development challenges. That’s the good news. Here’s the bad: part of this effort will likely be overseen and coordinated by a UN division that has been plagued by allegations of waste and mismanagement and the US development agency that has turned a blind eye to its transgressions.

A little-noticed report [PDF] by the Government Accountability Office, highlighted on Monday by Fox News, paints a bleak picture of what Obama’s civilian surge is up against. It focuses on the US Agency for International Development’s oversight of millions in reconstruction projects carried out by the UN’s Office of Project Services (UNOPS), which has overseen efforts to build schools and medical clinics, rehab secondary roads, and construct bridges and hydroelectric plants. Here’s the gist:

UNOPS has had a very troubled track record in Afghanistan. To begin with, the American official who directed its operations in the country from 2002 to 2006, Gary Helseth, stands accused of diverting around a half million dollars in development funds to bankroll his own high-flying lifestyle—including renovating his home in Kabul, splurging on first-class travel and fancy restaurants, and throwing lavish parties. And an investigation [PDF] by USAID’s Inspector General, obtained by USA Today in April, substantiated a host of serious allegations against UNOPS and its parent agency, the UN Development Program. “The U.N. delivered shoddy work, diverted money to other countries and then stonewalled U.S. efforts to figure out what happened,” the paper reported.

Despite UNOPS’ well documented shortcomings, ramped up development efforts in Afghanistan raise the likelihood that the agency may take on an even greater role in managing reconstruction projects. If that’s the case, the Obama administration should be planning for a surge of not just manpower and money, but oversight.

There is a joke making rounds among Afghans: A group of officials go to meet President Hamid Karzai and ask him, “What’s your plan for fighting corruption?” Mr. Karzai says, “I will tell you, but first you must give me some money.”

Afghans have a name for the huge, gaudy mansions that have sprung up in Kabul’s wealthy Sherpur neighborhood since 2001. They call them “poppy palaces.” The cost of building one of these homes, which are adorned with sweeping terraces and ornate columns, can run into the hundreds of thousands of dollars. Many are owned by government officials whose formal salaries are a few hundred dollars a month.

To the capital’s jaded residents, there are few more potent symbols of the corruption that permeates every level of Afghan society, from the traffic policemen who shake down motorists to top government officials and their relatives who are implicated in the opium trade.

Cronyism, graft and the flourishing drug trade have destroyed public confidence in the government of President Hamid Karzai and contributed to the resurgence of the Taliban by driving disaffected Afghans to side with insurgents and protecting an important source of their funding.

With casualties mounting and a decision on military strategy looming, President Obama and other Western leaders are finding it increasingly difficult to justify sending troops to fight for a government rife with corruption. This month, when Karzai was declared the winner of an election marred by rampant fraud, the top United Nations official in Afghanistan warned that without major reforms, the Afghan president risked losing the support of countries that supply more than 100,000 troops and have contributed billions of dollars in aid since the Taliban was toppled in 2001.

Karzai has publicly acknowledged the corruption in Afghanistan and pledged to “make every possible effort to wipe away this stain.” On Monday, the interior minister, national security director, attorney general and chief justice of the Supreme Court joined forces to announce a new crime-fighting unit to take on the problem. But in the streets, bazaars and government offices, where almost every brush with authority is said to result in a bribe, few take the promises to tamp down corruption seriously.

“It’s like a sickness,” merchant Hakimullah Zada said. “Everyone is doing it.” In these tough economic times, Zada said, there’s one person he can count on to visit his tannery: a city inspector.The lanky municipal agent frowns disapprovingly when he finds Zada and five other leather workers soaking and pounding hides in the grimy Kabul River and demands his cut – the equivalent of about $40.

“He says we are polluting the river,” Zada says. “So we have to pay every day. Otherwise, he will report us to the municipality, and they will close down our shops.” A 2008 survey by Integrity Watch Afghanistan found that a typical household pays about $100 a year in bribes in a country where more than half the population survives on less than $1 a day.

Government salaries start at less than $100 a month, and almost everything has its price: a business permit, police protection, even release from prison. When Zada was afraid of failing his high school exams, he handed his teacher an envelope stuffed with more than 1,500 Afghanis — about $30. He passed with flying colors. The corruption extends to the highest government officials and their relatives. Even Karzai’s brother, Ahmed Wali Karzai, has long been suspected of cooperating with drug barons, charges he denies.

Abdul Jabar Sabit, a former attorney general who between 2006 and 2008 declared a jihad, or holy war, against corruption, said he quickly learned that a class of high-ranking officials is above the law. They include members of parliament, provincial governors and Cabinet

The most corrupt countries in the world:

1. Somalia
2. Afghanistan
3. Myanmar
4. Sudan
5. Iraq
6. Chad
7. Uzbekistan
8. Turkmenistan
9. Iran
10. Haiti

Western officials were troubled by the recent return from Turkey of Abdul Rashid Dostum, a notorious former warlord who endorsed Karzai’s campaign. He is accused of overseeing the deaths of up to 2,000 Taliban prisoners during the 2001 invasion, charges he denies. Karzai’s two vice presidents, Mohammad Qasim Fahim and Karim KhaI, are also former warlords accused of rights abuses.

“There are also new figures who will try very hard to get their supporters in government,” said Fahim Dashy, editor of the independent Kabul Weekly. “They are coming with empty pockets and they will see this as a golden opportunity to make money, either by legal or illegal ways.”

An investigation by the High Office of Oversight and Anti-Corruption, set up more than a year ago to oversee the government’s efforts to fight graft, found that on average it took 51 signatures to register a vehicle. Each signature had its price, for a total cost of about $400. “It is hardly surprising if Afghans prefer to bribe policemen on a daily basis to turn a blind eye to their unregistered vehicles,” said Ershad Ahmadi, the bureau’s British-educated deputy director.

Ahmadi said his office helped streamline the process to four or five steps, and it requires that payments be made directly to the bank, thereby reducing the opportunities for corruption. But without the minister of transportation’s cooperation, he said, his team would have been powerless. “We do not have the necessary powers and independence to fulfill our mandate,” Ahmadi said. For a start, it was never given the legal authority to investigate or prosecute corruption — only to refer cases to law enforcement agencies, themselves part of the problem. “The police are corrupt. The prosecutors are corrupt. The judges are corrupt,” Ahmadi said.

It was not clear whether the new anti-corruption unit, which was set up with the help of U.S. and British law enforcement agencies, would be more effective at pursuing individuals who indulge in corrupt practices. It is the third structure set up by Karzai’s government to tackle the problem; the first was disbanded after it emerged that the head had been convicted and imprisoned in the U.S. on drug charges.

“The main problem … is that people have no confidence about the future,” Ahmadi said. “That makes them make hay while the sun shines. With out radical change in Afghanistan political system, the international community will abundant Afghanistan and millions will die in the hand of Pakistani ISI and their puppets from the dark ages The Taliban.

To save Afghanistan we need to persuade the people of Afghanistan that there is no returning to the miseries of the past, the Taliban is not coming back. The international community is not abandoning Afghanistan, and there is going to be slow but steady improvement.”