* Afghanistan's President Karzai mandated changeover
* US says may be able to negotiate waivers for some projects (Adds NGO signs contracts with Afghan force, paragraphs 13-14)
By Susan Cornwell
WASHINGTON, March 9 (Reuters) - The main U.S. foreign aid agency is preparing to switch from private security contractors in Afghanistan to Afghan government-provided security this month under a new policy mandated by Afghan President Hamid Karzai, raising concern in Washington that this could put U.S. civilians at greater risk.
U.S. Agency for International Development Administrator Rajiv Shah says the agency may be able to negotiate waivers from the policy for some major infrastructure projects so that they could continue to have access to private security.
But U.S. AID officials also said this week that only 25 percent of U.S.-funded development projects in Afghanistan require security guards, suggesting the changeover to Afghan government-provided security this month that Karzai has ordered may not be so dramatic.
"Seventy-five percent of our assistance portfolio does not require private security contractors today. So a lot of our partners, and a lot of the way we are doing business is not affected by this at all," Alex Thier, Shah's assistant for Afghanistan and Pakistan programs, said in an interview.
Private security contractors working for foreign companies, who have numbered in the thousands, are no longer allowed on aid and development programs after March 20 under Karzai's decree. If these programs want armed escorts or guards for their compounds, they are supposed to contract with a branch of the Afghan police, the Afghan Public Protection Force (APPF).
Karzai has long been critical of private contractors and other "parallel institutions" in Afghanistan and wants them under the control of the Afghan government.
Yet it's far from clear that the Afghan Public Protection force can provide the same level of security.
Security has deteriorated markedly across Afghanistan over the past two years. A spate of bloody protests and attacks on U.S. soldiers in Afghanistan following the recent burning of copies of the Koran by U.S. troops have raised more concern on Capitol Hill about the safety of American soldiers as well as civilians in programs to improve Afghan health, education and the economy.
"In fact, this new violence calls into question whether the current assistance strategy can be successful if Americans are not even safe to work in ministries alongside Afghan staff who should be our partners," Representative Kay Granger, chairwoman of the House subcommittee on foreign aid, said this week.
Shah told Granger's panel that his agency was working with Afghans as well as NATO forces to negotiate a series of "exclusions" from Karzai's decree for some U.S. assistance projects. He said he believed this would work out for some of U.S. AID's most "visible" projects, but did not name them.
Some major U.S. AID-supported infrastructure projects are in dangerous places, such as repairs to the Kajaki dam in southern Helmand province, where it has been a challenge to get materials needed to install a turbine because of the dam's location in one of the Taliban's strongholds.
GRADUAL DECLINE IN AID?
U.S. AID has about 380 employees in Afghanistan, and also funds many projects that are carried out by non-governmental organizations and the Afghan government.
A major implementer of U.S. foreign aid programs, the Arlington, Virginia-based International Relief and Development (IRD), signed the first contracts with the Afghan Public Protection Force this week, a statement from IRD said on Friday.
The contracts will cover security protection for agricultural, civilian assistance and engineering services programs implemented by IRD and funded by U.S. AID in Afghanistan, the statement said.
Foreign forces in Afghanistan are in the process of handing responsibility for security over to the Afghan army and police. The United States and other western nations plan to withdraw most of their troops by the end of 2014.
But Thier argued that there should not be a sudden drop-off in U.S. assistance after 2014.
"I think that everybody who thinks about Afghanistan, on the civilian side, sees this incredible investment that we have made in Afghanistan, and nobody wants that to unwind," Thier said.
In recent years, U.S. AID funding for Afghanistan has averaged about $2 billion annually. The Obama administration has requested $1.85 billion for these programs in fiscal year 2013, which begins Oct. 1. This remains a tiny fraction of the huge amounts Washington spends on military operations in the country.
Whether Congress will fund that level of assistance is uncertain.
"It's very important that our funding levels are predictable, and even if there is some decline, that it's gradual," Thier said. "Because what we really need in Afghanistan is a ramp, not a cliff. Cliffs are dangerous." (Editing by Warren Stroebel; Desking by Eric Walsh)