Criminal economies flourish in Afghanistan

Parallel economies in Afghanistan are thriving on smuggling, illegal taxes and customs.

    Many antiques from Afghanistan's
    museum have been smuggled out
    of the country. AP

    Regional strongmen in Afghanistan continue to develop criminal economies based on smuggling, exorbitant customs and private taxes, despite a central government in Kabul.


    Local commanders generate revenues through private customs, taxes and smuggling to maintain their grip over regions in Afghanistan. Following the 2001 US-led campaign in the Central Asian state to unseat the ruling Taliban these economies have continued unchecked.


    “In many cases they’ve increased,”  said Mark Sedra, a researcher and expert on Afghanistan at the Bonn International Centre for Conversion (BICC), noting it was previously safe to travel on the road to the southern city of Kandahar from Kabul but this was no longer the case.


    “One of the primary goals is to gain control over taxation and customs,” he added.


    Afghanistan is the smuggling heart of cross-Asian trade: cheap refrigerators and tyres find their way from Russia, petroleum from Iran and food from Pakistan.


    Afghanistan’s neighbours continue to meddle in the internal affairs of the country despite the 2002 so-called Kabul Declaration in which foreign ministers or ambassadors from China, Iran, Pakistan, Uzbekistan and Turkmenistan pledged to stop interfering in Kabul’s internal politics. Officials from Russia, India and Saudi Arabia were also present.


    Ismael Khan, a former governor of the Western Herat province, continues to cultivate one of the most decentralised economies in Afghanistan. Khan, a Shia, has strong ties with Tehran, and the Iranian Revolutionary Guards are reported to provide him with cash and military support. Khan generates an estimated $500,000 to $1 million daily through taxes imposed on goods crossing the border from Iran to Afghanistan, said Sedra. None of this reaches the coffers of the central government in Kabul.


    Powerful regional commander

    Ismael Khan


    to Afghan President Hamid Karzai’s government the national treasury received $10 million in taxes from Herat when it should have received over $100 million last year.



    Products from cars to household goods enter western Afghanistan

    through Herat, a key trading point that collects the largest single source of revenue in taxes in the country.


    In 2002 Kabul collected $80 million nationally in taxes, less than what Khan alone collects from Herat.  


    Khan, who also enjoys ties with the United States, established five filling stations providing Turkmen natural gas to Herat supplied by Iranian company Zarin earlier this year, without the authorisation of the central government, said Sedra. 


    One of the reasons Khan is able to continue these practices is because of his private army, ranging from 15,000 to 20,000.


    “Maintaining an army enables these leaders to preserve control in areas and exert economic monopoly,” explained Sedra. 


    Afghanistan’s Defence Minister General Mohammad Fahim, another regional strongman who generates revenues for his own treasury, has one of the most well-organised forces. It is unclear how Fahim feeds his coffers but it is widely believed that in 2001 Russia provided $100 million in military aid to Kabul which made its way to Fahim’s forces.


    Western governments have pressured Moscow to halt its alleged funding to Fahim but say they have made little advance.


    The Afghan defense minister maintains his treasury by taxing local constituents in his power base of north-east Afghanistan surrounding the city of Jalalabad, imposing duties on goods and running legitimate businesses.


    Regional strongmen also generate income through criminal activities, such as setting up roadblocks and imposing tolls on travellers or robbing them, particularly in eastern Afghanistan where the central government has yet to take a firm hold.


    Deputy Defence Minister Rashid Dostum continues to operate an economy in his power base surrounding the northern city of Mazar-e-Sharif through taxing constituents and imposing customs on goods. Neighbouring Uzbekistan provides Dostum, an ethnic Uzbek, with aid and a close protection unit.


    Some observers believe Dostum is negotiating with Russian oil companies to resume supplies of Afghan gas to Central Asia.


    Not to be outdone, experts say the CIA money pipeline continues to flow to regional militias in southern and eastern provinces to fight al-Qaeda.


    Continued political ties with these regional commanders undermines the legitimacy of the central government, said Sedra. Karzai is too weak to isolate Dostum and Fahim and is therefore trying to integrate the powerful commanders into the central government.


    Treasures looted from archaeological sites in western Afghanistan have found their way into the markets of the Pakistani city of Peshawar, according to Sedra. There is still little government control on the Afghan-Pakistani border route leading to Peshawar, allowing illegal trade and taxation to flourish.


    A World Bank study estimated that $2.5 billion worth of merchandise is smuggled between Pakistan and Afghanistan yearly, equal to half of Afghanistan’s estimated gross domestic product


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