For the past eight years, the emphasis in Afghanistan has been to simultaneously address the issues of insurgency by providing a military response to the insurgency itself; strengthening the capacity of the central government and its administrative flow-on to the regions; and at the same time, engages the community in a hearts and mind campaign through community development to bring the people onto the side of the government and its supporters. This latter component is largely being provided by way of public infrastructure, the construction of roads, canals, schools and clinics throughout the communities that will foster supposedly improved agricultural production and market access for those in the more remote regions where the Taliban hold command. Other avenues are though education, building capacity of the population and improving the educational standards throughout the country. The problem so far is, it is not working.
All of these apparent solutions are long term projections that even now have yet to manifest them self into tangible results. The Taliban have become stronger and their influence and reach has exceeded the capacity of all the international military might and the good will that has been projected so far and has failed to curtail. Each passing day sees them growing stronger and more diverse, extending their influence into neighboring Pakistan with increasing alacrity and ferocity.
Even now in Afghanistan, a new pro-military strategy is being devised that will see an additional eighteen to twenty thousand troops on the ground and a continued pursuit of community goodwill programs in support of their hearts and minds. The apparent near exclusion in going forward however is the unfettered support for the government without condition, a consequence of the inability of Karzai to address the ever growing level of corruption that has taken hold of it that seemingly stems from the highest office down. Corruption is endemic if the system is examined. It permeates every level of the national, provincial and district levels of administration and largely goes unchecked.
Yet the powers to be continue to look at and are planning around this revised military strategy with the same enthusiasm and expectation that was held when the Taliban were first routed at the end of 2001. What is at risk however is the fact that these are the very reasons the Taliban have gained such strength throughout the country and are now spilling their influence into neighboring Pakistan. The question that the authorities’ first need to ask themselves is what has been the root causes of the failure of the past eight years to stem their growth? Why are the Taliban succeeding when faced with such overwhelming odds as the international and national military presence provides?
The Taliban have three factors that are on their side. One is the unwillingness of the national and international governments to come down hard in eradication of the opium production in the country. This activity in itself provides the primary source of several hundred million in funding through the rural taxing measure applied by the Taliban to wage its war in perpetuity if necessary. Next is the inability and apparent unwillingness of the government to clamp down on the endemic corruption that permeates its barely hallowed halls. Political posts including provincial governors are appointments that are not merit based but reliant upon the regional power that a warlord can and does project. They are appointments to bring the tribal brigands together, to curry local favor that aims to prevent these same warlords siding with the Taliban in the event their appointment is not looked upon favorably. In Helmand province to the south of the country, the reverse has occurred. A former Taliban commander has been appointed to the position of Governor showing how closely the government is connected to the insurgency. Too often however these same governors manipulate public funds siphoning millions off the national budget for personal gain. The third factor and possibly the overriding factor above all others is the overall level of poverty that exists and continues to exist in a country where billions in foreign funds have been committed without seriously addressing that issue.
The focus of development has been to maintain Afghanistan’s rural based economy such that almost all of the international aid is directed towards providing aid and assistance to this endeavor. The problem is that for most Afghans, the best they can expect from this is the opportunity to works as low paid itinerant farm laborers whenever the seasonal work is available.
Afghanistan has about twelve percent of its vast landscape that is arable and only slightly more than half of that is irrigated. Out of that small portion, only about forty percent of the population own land, the majority being landless. Even so, eighty percent of the population is still engaged in agricultural activities. Of those that do own land, the production capacity in a good year, is only slightly more than that which would be considered subsistence level in a normal economy. The people of Afghanistan are considered to be amongst the poorest in the world with the licit and illicit GDP at less than eight hundred dollars per year. At the other end of the spectrum however is the public understanding that some of those in power have established financial empires that extend to hundreds of millions of dollars stripped out of the economy and invested in the other countries of the likes of Dubai due to the stability those economies offer. To say that poverty and all its inherent issues that go with it are the underlying factors that see the Taliban rise up is possibly an understatement.
Over the past eight years, the west has contributed more than fifty billion dollars in aid that by all accounts has gone into stimulate the economy. Out of that however is the constant drain towards foreign imports. Afghanistan imports around five billion dollars in goods per year while exporting less than three hundred and forty million. Needless to say, almost all of the fifty billion in funds contributed to over that eight years have largely been passed on to the neighboring countries on the importation of goods and foodstuffs.
Like in any country that has come out of war, the primary issue facing most people and their families is finding solutions to alleviate their poverty. Nothing substantial however that has been so far done has provided any clear long term solution to that constant cycle of poverty. Should the west not continue to provide the driving funds behinds its economy, the internal revenue raised by the government through taxation and import duties is less than one third of that necessary to continue its current meager operations. The existence of industry is limited. Less than ten percent of the people are engaged in industrial activities and the majority of that involves construction industries related to and funded by foreign intervention. Another ten percent are engaged in service industries with the government and the international organizations being the major employers.
In itself, the construction of roads and rural buildings and the like provides short term employment opportunities that are a stopgap to the economic cycle of poverty that dominates rural Afghanistan. It is not enough. Between itinerant farm work and short term opportunities in construction programs, there are no significant sustainable employment opportunities available at all. It is in this environment that the Taliban readily find its recruits with the offer of a low but seemingly regular income.
The people themselves although willing to forego the Taliban if the opportunity arises, also find them more able to solve their immediate problems if not financially, but also in the deliberation of civil law matters that the various levels of government cannot solve. In many instances, officials within that government system are themselves the primary protagonists. Experience shows that villagers will provide a part time paid service to the Taliban by planting a roadside bomb, manning an illegal road block or even participating in an attack against a government or military target and then returning to their villages to lead a more normal life until the next pending need for money arises.
It is within this background that the likes of President Obama from the US and Prime Minster Gordon Brown from the UK are seeking solutions in moving forward with their aid packages. For the moment it is a military surge now being assembled that is their focus, the emphasis is directed towards treating the problem which in this case is the defeat of the Taliban and its ideology. That ideology is however within the hands of a few at the top and not always for fundamental religious purposes but the power that it commands. It is not with satisfactorily treating the underlying cause of their continued existence, and that is addressing the national level of poverty and the need to establish sustainable employment opportunities that can alleviate that grass roots support.
So far as addressing the industrial strategy for Afghanistan it has been a laisser-faire approach that is typical of established capitalist thinking. In a number of foreign government initiatives implemented through government agencies and non-government agencies, an effort has also been directed towards funding micro finance projects. These provide a small amount of funds to individuals, normally less than one hundred dollars, in the hope that these people will start a small home based enterprise. And start they do. The problem however is that rarely do they expand beyond that base and traditionally they only employ the person receiving the funds themselves.
Again this is projecting outside of the realms of what is required. People want employment, simple jobs that provide a sustainable level of income. In the western societies more than seventy five to eighty percent of the populations work at a paid job for a living as opposed to running their own business. The same can be said for the people of Afghanistan yet there is this persistence to provide them with small home based business opportunities. The people want sustainable incomes, whether it is rural based or urban based as many are now turning towards to seek employment. Running their own business might be a nice idea however for anyone who has been in that position of entrepreneur; it takes much more than just a nice idea to make it work effectively.
Looking at the economic development and aid funding overall there is also a strange dichotomy in existence. The predominant donor to Afghanistan is unquestionably the US with some thirty billion already allocated to the development mission in Afghanistan. While the US is also unquestionably the premier nation on the world in support of capitalism within its own precincts and the performance of individual attainment through enterprise, its performance in Afghanistan could not be any further removed from that principle. The major portion of its funds are not used for industrial development and are firstly directed towards its own military with some hundred billion or so already budgeted to support that process. Then the thirty billion development aid is for the most part directed towards supporting and developing the scale and capacity of the national government while the remainder is utilized in investing in its hearts and mind campaigns though its investment in public and community infrastructure. The US government certainly provides funds to Afghanistan yet it comes with all the restrictions that government can instill. Profit is not an acceptable condition with respect to public funding.
In that sense, the US government is seemingly working on a socialist model for its assistance program to Afghanistan. One where it expands the size and resources of government while it provides for the implementation of what can be deemed social welfare projects as opposed to fostering a truly capitalist market place which it promotes as its aim. The arguments for government being that regulations are needed if industry is to prevail whereas reality dictates that in any economic system anywhere in the world, the regulations have come after the industry has established. The present banking crisis in the US should amply demonstrate that situation and that situation exist in a highly developed and sophisticated economy.
What is largely being ignored is the need for capital, large lumps of available high risk capital for the private sector to develop if it can develop at all. Government agencies are not normally the providers of capital, neither in their own countries nor in the countries where their governments provide assistance. There are a few international based banks in existence however their capacity to fund large scale industrial development of the likes that is required is limited if non existent. For the most part they are limited to retail deposit banking. In short, there is no capital base to begin with that will engender an industrial revolution.
The question is then, if the expectation for development and industrial growth are to take place through a laisser-faire approach to capitalism what is the basis for capital funding to drive that? Surely someone in the US government is able to understand that industry needs accessible funding if it is at all to develop, either through public subscription or commercial loans in order for it to expand? The prospect is similarly remote that capital that can be raised through private treaty while the population maintains an annual GDP at eight hundred dollars. Or perhaps the question that Obama and Brown need to ask, are their own government bureaucracies the best equipped promoters of an industrial and economic revolution in Afghanistan when they are not considered to be suitably equipped to provide that in their own?
And while capital is a major limitation to industrial growth, so too is the lack of provision of suitable expertise and assistance to industry that are required if the currently level of available skills and technology are to be taken into account.
Taking this to the rural level where the largest unemployed sectors of the countries population are located however is going to be difficult but not impossible. In as much as the European economies grew during the period of the industrial revolution, before the advent of power, before macadamized roads were provided, before sophisticated communication networks were in place, before comprehensive legal frameworks were in place, the same scenario should be the basis of the strategy for development in Afghanistan. The idea that the country needs a television network or major reconstruction of government offices or even a truly democratic process in place before it needs steady incomes and food on the table for millions of people is laughable if it was not actually the practice that is currently being implemented albeit with good and honorable intentions. The people suffer deprivation and suffering if not starvation while the legal structures to build their economy are being put into place. The eye is off the ball.
There are a myriad industrial and business opportunities that are being forgone, mostly through lack of foresight but largely through a lack of capital backing. In as much as the present support is also for the expansion of government, the levels of corruption that exist at all levels retards national development negates a significant part of that. Previous government enterprises that were controlled under the former socialist government are still hampered because of that quest to maintain control by the government departments. In 2003 there were some three hundred state owned enterprises ranging from wheat or cotton marketing to the manufacture of cement and state owned transport systems or even the production of olive oil. Instead of allowing private enterprise build industry and competition the government is keeping control through maintained ownership and entering private treaties and leases. The inability of the government to funds the recovery of these projects with few exceptions have seen them lay idle as have the bulk of national industries them self.
Agricultural production is but one aspect of development. There is a major need for the secondary processing industries that go with it if agriculture is to provide a sustainable backbone to the national economy. Cotton for instance is exported unprocessed to Pakistan where it is converted into cotton fabric then re-imported into Afghanistan at twenty to fifty times the added value price of the original cotton crop. It is but one of hundreds of examples of loss of industrial opportunity and divestment of the international investment into the country. Afghanistan flounders while its neighbors prosper on providing its basic needs.
Although maintaining that Afghanistan certainly needs something akin to the Marshall Plan if its problems are to be resolved, the real emphasis should also be on allowing industry to enter a period of supported freefall growth for a period. Incentives to foreign investment houses and manufacturing companies to provide expertise and to establish manufacturing partnerships within Afghanistan should be entertained and funded along with investment guarantees against their failure.
While ever the turmoil exists, investment and industrial growth will always be hampered while correspondingly, the turmoil is expanding because the industrial growth and investment is not taking place. A Catch-22 situation if there ever was one.
The restrictions however are tied up through the limitations of regulations imposed by the foreign donors themselves. Capital expansion in the form of high risk venture capital is urgently needed. Capital that comes with the provision of expertise and the introduction of the necessary technologies to make them function but without the restrictive regulation that one finds in ordered societies or with a brick and mortar backing. Instead of expanding the control that government has over development of industry by the imposition of western standards and regulations, that process should be a follow on process driven by the industries them self. Let the industries develop first and then impose the operating regulation as required. This was after all the basis of growth of the strongest economies in the world.
So far as the vision towards looking for opportunities to build markets outside of Afghanistan, the initial and simplest market is at their doorstep. Almost every thing available in all of the stores in Afghanistan is imported. Finding acceptable locally produced replacements for them should be the first level of endeavor no matter how small that industry and market might be. Protection of those markets should also benefit the government through the imposition of cross border import taxation. In economies such as Afghanistan, the free market rules of globalization should be set aside until the economy is able to stand on its own feet. For the moment it suffers greatly without the small to medium industries in place and without the protection of import duties to sustain them.
What is also necessary is a commercial sense towards foreign intervention and reduce and eliminate the international governments restrictive funding that is now provided as the mainstay. The funding should be representing the economic model desired and not the foreign governments own bureaucratic but limited commercial background. The government of Afghanistan is not going to provide sustainable industries for the people. That is unless the country is to be rebuilt along purely socialist lines as it was during the Russian period of influence. The more money provided to government has only ceded to the provision of more opportunities for that money to be diverted away from the governments programs.
Necessarily, many if not the majority of these proposed supported industrial ventures will most likely fail as they do in well insulated economies such as the US. Notwithstanding, the investment into the communities and national economy will be of the same end benefit. In Afghanistan the commercial expectation should be more so allowing for the fact that an industrial and financial support mechanism needs also to be introduced to provide some insulation against that. So often however donor funding comes with the imprimatur that no profit should be made and spending should be conducted along the lines of government accountability. Other than large public companies and state owned enterprises, no private company in the world operates along these lines nor can they. Why is then that international governments and in particular governments such as the capitalist headquarters of US, the UK, Japan and Germany impose these restrictions on development aid to Afghanistan.
While ever industry fails to materialize, while ever employment remains at the current fifty to sixty percent of the communities existence, while ever the inability to resist the temptations of farming illicit crops or joining insurgency groups remain, Afghanistan will constantly be a problem and provide a source of world wide conflict that is seemingly without end. What is necessary is to treat the cause. That cause being the poverty and financial hardship of the rural people with sustainable solutions and real jobs. Solve that and the problem will eventually take care of itself.