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Afghanistan Waives U.S. Military Customs Fines to Avoid Showdown

Aug. 1 (Bloomberg) -- Afghanistan averted a clash with the U.S. by agreeing to waive fines on the transport of military equipment ahead of next year’s drawdown of troops after some senators called for cuts in foreign aid to the country.

President Hamid Karzai’s government reached an agreement with the U.S.-led International Security Assistance Force to waive $70 million in penalties and fines associated with the removal of military materiel, Abdul Qader Jilani, a spokesman for the finance ministry, said in a phone interview from Kabul.

Goods shipped into Afghanistan by foreign armies are exempt from taxes or custom duties. To claim the exemption though each container must be accompanied by the correct paperwork and most of those forms were not filled out. Without the paperwork each container faced a $1,000 fine, Jilani said.

Senator Patrick Leahy, a Vermont Democrat who heads the Judiciary Committee, and Senator Lindsey Graham from South Carolina last month said the U.S. should withhold $5 in foreign aid to Afghanistan for every $1 in fees imposed on repatriating equipment, the Associated Press reported.

U.S. government contractors in Afghanistan are being hit with millions of dollars in “mostly improper” fees and penalties on top of nearly $1 billion in improper tax assessments, a U.S. watchdog agency said last month.

To contact the reporter on this story: Eltaf Najafizada in New Delhi at enajafizada1@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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