Afghanistan’s economy: In need of rescue

Afghanistan’s economy must be spear-headed by government led initiatives, in order to break its harsh economic malaise.

As the security condition worsens, the business community is less keen to anchor its wealth in the country by investing heavily in the manufacturing industry [Hashmat Moslih/Al Jazeera]

Following the fraudulent UN-monitored presidential elections in Afghanistan, an eye-opening question was asked by various news outlets and commentators: What does the future hold for democracy in Afghanistan?

This question summed up the concern of the international community: they were more worried about the future of democracy in Afghanistan than the future of its people.

Since then, it had become clear that, first and foremost, the war is about ideologies. The call to fight to save democracy astonishingly resembles the Taliban’s call to fight to save Islam.

A war of ideology

In his last interview with Jann S. Wenner on September 28, 2010 for Rolling Stone, president Obama cited Sharia law as a threat that should not be allowed to return to Afghanistan.

He said, “I don’t know anybody who has examined the region who thinks that if we completely pulled out of Afghanistan, the Karzai regime collapsed, Kabul was overrun once again by the Taliban, and Sharia law was imposed throughout the country, that we would be safer.”

These types of remarks place the war firmly in the ideological box and that’s where the Taliban wishes it to be.

The Taliban has consistently argued that this war is about Islam and non-belief. It is the war of the infidels verses Islam. In other words, it is jihad against the crusaders.

It is erroneous to think that the people of Afghanistan opposed the Taliban because of Taliban’s adherence to Sharia law.

Opposition to the Taliban was based on a number of factors, ranging from the Taliban’s heavy handedness, misinterpretation of certain Sharia aspects, and ethnic differences in addition to its being viewed as a puppet of Pakistan.

Undoubtedly, a small community of seculars have been against Sharia, but they do not constitute the entirety of Afghanistan, even though, as it appears, the US views Afghanistan from their perspective.

Currently, in the majority of the world’s countries, democracy is imagined true or romantic democracy does not exist.

Afghanistan is the latest example of this phenomenon: it was painfully clear that the last elections were grossly fraudulent and Karzai re-assumed his presidential throne only because his rival withdrew from the run-off, which he deemed would be fraudulent anyway.

A slap in the face of many who risked their lives to vote, the Western leaders fell over each other and could not congratulate Mr Karzai’s corrupt rise to the throne fast enough.

Ironically, they encouraged him to start a clean war against corruption. This reminded the author of an old Persian proverb which says, “when everything rots, you add salt to it, but what will you do when salt rots?”

For many people in Afghanistan, the current government has no legitimacy. The fact that they do not take to the streets and burn cars (like people did in Iran) should not be mistaken for their approval of the current situation and the government.

In Afghanistan, the people have learned to bring government down by simply disassociating themselves from it.

Economic matters

As the people of Afghanistan slowly turn their back on the government, the government increasingly becomes reliant on foreign support and aid, but this comes at a price.

The donor countries have their own prescription for the country, and dogmatically pursue its adoption. Some of these prescriptions have had a negative effect on the process of real economic recovery which is crucial to a sustainable and just peace in Afghanistan.

One such prescription is the adoption of a market-based capitalist economy. Currently, the economy is based on trade and consumerism with virtually no noticeable manufacturing capacity.

Having embraced capitalism, the government has no industrialisation programme on hand and it’s no wonder the debate has become ideological and about safeguarding democracy.

According to New York University’s Centre on International Cooperation, in July 2010, the government’s economic policies have so far been limited in initiating and encouraging economic activity through signing international agreements.

But agreements are not enough: Afghanistan needs government-lead industrialisation in order to shake off its dependence on imports, which has been bleeding the economy.

The government’s economic direction has been no different to that of Taliban in the past, which was to concentrate on security and allow free market capitalism.

The Taliban have never contended the Western governments’ ability in technological advancements or their art of infrastructure construction. The Taliban are not militant bidders for the construction of Afghanistan; they only dispute the West’s intention.

From the very onset of the war, the Taliban have been arguing that the promised economic development and growth is a smoke screen, and ideology runs at the heart of this war.

However, had the Taliban remained in government, and the West extended its aiding hand, they would have been more than happy to take it, perhaps with certain conditions of non-interference in the domestic affairs of the country.

Records show that prior to 9/11, the Taliban were negotiating with the US administration for recognition and economic ties based on oil and gas pipelines crossing Afghanistan and subcontracted to US companies.

Money talks, and selling your vote at the UN is not necessarily seen as an act of treason. Indeed, a fatwa or two would have paved the way, providing the gains were greater than the losses.

Money is plentiful in Afghanistan, but with no manufacturing industry, the country lacks the capacity to absorb it.

Construction is the only booming sector; most of the construction materials are imported. Through trade, the biggest beneficiaries of aid to Afghanistan have been the neighbouring countries.

The government, on the advice of its donors, has stayed out of the economy, leaving it to the business community through privatising previously government-owned factories, which were destroyed through war.

As the security condition worsens, the business community is less keen to anchor its newly found wealth in the country by investing heavily in the manufacturing industry; instead they rely on domestic and international trade, with bank accounts abroad.

In effect, through trade, the business community has become the largest money-mover out of the country. The experience of the last ten years of free market capitalist economy in the country has shown that Afghanistan needs a change of direction in its economic doctrine.

Unemployment, spear-headed economics

For the years of 2000 to 2007, the World Bank had no unemployment estimates for Afghanistan’s private sector.

However, the CIA claims that from 2007 to 2010, unemployment rates have dropped from 40 per cent to 35 per cent. On the other hand, according to Afghanistan’s National Worker’s Union, unemployment is at a staggering 70 per cent. The 5 per cent drop in the unemployment rates cannot only be attributed to economic growth.

It is not clear whether this drop is as a result of economic growth or the increase in the number of the Afghan national army, police, security forces as well as the private security firms.

However, whether we take the 35 per cent unemployment rate or the 70 per cent, one thing is clear: that the 4 per cent drop since international commitment to Afghanistan in 2001 is bad news, and requires major policy shift.

Increasing the size of the army and the security forces may, in the short run, translate into a drop in the unemployment figures, but with a trade-dependent economy maintaining such a large force, this would be short lived.

The government must create more jobs; it must become a leading investor in manufacturing and heavy industry.

Increased indigenous production would lead to more jobs and a greater share of wealth, and a new game for Taliban to compete with, thus reorienting the ideological debate back to the material reality of everyday life.

The people would have something tangible by which to judge the government and the Taliban, leaving ideological debates aside.

In order to move forward, and for wealth generation to become indigenous, the government of Afghanistan and its western backers need to shelve ideology, abandon free market capitalism, and embrace what could be called the doctrine of ‘spear-head economics’, where certain vital economic development projects and industries are spear-headed by the government.

As economic conditions change, so would the direction of the spear-head. Spear-head economics is a springboard for smaller and unstable economies.

In more developed countries, this task is left to the major manufacturers and corporations that are too large to be bullied in the free market world.

However, young or weaker economies like that of Afghanistan need strong government involvement and direction to find a foothold in a tough free market world.

Hashmat Moslih is a political analyst who focuses on the political economy of Central Asia.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.

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