Afghanistan Strategy Questioned as New Report Warns of Long-Term Economic Crisis

June 8, 2011— -- Corruption and poor governance remain key challenges in Afghanistan, career diplomat Ryan Crocker testified at his nomination hearing for U.S. Ambassador to Afghanistan, the day Senate Democrats reported that the war-torn nation risks falling into a crisis when U.S. troops hand over power in 2014.

"I'm under no illusions of the difficulty of the challenge," the former ambassador to Iraq and Pakistan testified today before the Senate Foreign Relations Committee. "If Iraq was hard, and it was hard, Afghanistan in many respects is harder."

The United States has provided about $18.8 billion in foreign aid to Afghanistan in the past decade, more than any other country, including Iraq, according to a report compiled by Senate Democrats for the Foreign Relations Committee.

The State Department and the U.S. Agency for International Development (USAID) spend roughly $320 million a month on aid in Afghanistan, mostly on short-term stabilization programs in the south and east of the country.

While the aid has "achieved some real successes" -- mainly in the education sector -- the report questions whether the money and the United States' counter-insurgency focus is making Afghans more reliant on outside forces and will change the equation in the long term.

"Foreign aid, when misspent, can fuel corruption, distort labor and goods markets, undermine the host government's ability to exert control over resources, and contribute to insecurity," the report states. "Afghanistan could suffer a severe economic depression when foreign troops leave in 2014 unless the proper planning begins now."

The United States hopes to hand over security power to Afghans by 2014, although some troops are expected to remain.

President Obama and his administration have carefully acknowledged that gains made in the country in the past 10 years are fragile and reversible.

Proponents of the war use that to argue that the United States shouldn't indulge in a hasty withdrawal of troops from the country, especially as discussions ramp up ahead of the July deadline. But critics use the same argument to make the case that the United States should bring back its troops from a country where the future is, at best, uncertain.

"This is a messy situation that isn't getting any better," Sen. Jim Risch, R-Idaho, said today. "The problems here are very very significant. ... I am very skeptical about how we're going to be able to handle this."

The issue of how many U.S. troops should be brought back when the drawdown begins next month has been a touchy one. Outgoing Defense Secretary Robert Gates has warned against a "premature" move and the White House has said the president's decision would be based on conditions on the ground, a sentiment that Crocker echoed today.

"As we go through a responsible transition, I think it has to be conditions-based to ensure that as we draw down our forces," he told senators. "And I'm keenly aware from my consultations of the mood both here on the Hill and publicly, there has to be transition. But at the end of the day, we have to be sure that the safe haven doesn't then relocate from Pakistan to Afghanistan."

Some argue that with Osama bin Laden's death, the terrorist threat against the United States has diminished. But Crocker warned against that argument, saying that much more still needs to be done to contain al Qaeda.

"Osama bin Laden's death is an important step and much needs to be done to ensure that al Qaeda can never again threaten our efforts there," he said. "Our efforts to pursue this goal are focused on three military surges all aimed at stabilizing Afghanistan so that it will not become a safe haven for terrorists again."

Mounting Pressure to Leave Afghanistan

Given the war's hefty price tag and deficit concerns at home, however, Obama is facing increasing pressure from within his own party to make significant changes in the number of U.S. troops on the ground while facing resistance from the Pentagon and some Republicans on making such a move. There are about 100,000 troops on the ground in Afghanistan.

Sen. Carl Levin, D-Mich., head of the Senate Armed Services Committee, has said he wants 15,000 troops out by December. But Sen. John McCain, R-Ariz., a proponent of U.S. engagement, has said the number should be no more than 3,000.

The administration is reportedly mulling pulling 5,000 combat troops in July, and about an additional 5,000 by the end of the year. Sources say that when Obama announces the July withdrawal numbers, he will also announce a timetable for the return home of the 30,000 surge troops he ordered into Afghanistan 18 months ago. Those troops are likely to return by late next year.

Crocker, who has served as ambassador to Lebanon, Kuwait, Syria, Pakistan and Iraq, is expected to be confirmed on a bipartisan basis.

ABC News' Luis Martinez contributed to this report.