The war bubble
By May Jeong
7 April 2014
Uncertainty defines Afghanistan’s economic situation as the country anticipates the international community’s disengagement.
It’s the first cold day of the winter, and Nasaji Bagrami camp on the outskirts of Kabul is humming with the presence of a welcome visitor. Scores of men have formed an unruly crescent around a truck brimming with coal. Two years ago, more than twenty children died due to the harsh winter weather at this camp for internally displaced people (IDPs), and also the larger camp in Charahi Qambar. To prevent this from happening again, a few of us have pooled money to purchase a sack of coal for each family. At 660 Afghanis (USD 11) a bag, coal is an unthinkable luxury here. We have come to oversee the unloading of the sacks, to make sure every family gets their share.
In a nearby vacant lot children use shoes as pretend racecars, gliding them through the hand-dug tracks in the mud. A boy of four or five runs around with his bottom exposed, unaffected by the December chill that has me drawing my headscarf tighter around my neck. Those old enough to know that coal will beget warmth busy themselves by picking up the black specks that have fallen from the truck. They fight over them, the way children elsewhere might fight over boiled sweets.
Over 350 families live in destitution and squalor at Bagrami, oilcans beaten flat serving as doors so small that only the malnourished could pass through. Everything else here, from the dun-coloured mud huts to the newborns, seems like an ersatz version of the real thing. The camp elder is Wali Khan, who tells me that his clan moved here from the southern province of Helmand, where fighting had been the hardest. Most of the men claim to have been sharecroppers, growing wheat and corn. A UNHCR officer will later tell me that many had in fact been poppy farmers, driven out of their homes by eradication campaigns. Khan says they decided to head north when the airstrike made lives there unbearable. Like others among the thousands of internally displaced who have arrived in Kabul since 2001, Khan and his men had hoped for luck in the relative affluence of the capital. Since the NATO invasion in 2001, the US had spent as much as USD 100 billion in non-military aid, according to one estimate. Surely, there would be enough wealth to go around for everyone, the Helmandi sharecroppers reasoned. Instead, what greeted them when they arrived in Kabul was a war bubble on the cusp of bursting.
When they arrived in 2009, Kabul was already a city hostile to newcomers. Donor fatigue had begun to settle in, which meant that the few aid agencies working to help IDPs were scaling back their operations. Most of the empty spaces in the city had been filled by those who had come before them. Khan and his clan couldn’t find even a sliver of the city that was willing to accommodate them. After some wandering, they settled on a small stretch of barren land that had gone unclaimed. They dug holes, and with the fresh earth they built crude walls that would protect them from the elements. The better-off fastened tarpaulins as roofs. The rest made a patchwork out of plastic sheets. On the day I visit, heaps of trash are everywhere, as are children playing in them. In one house, I nearly step on a bundle on the floor before realising it is an infant. Cubicles that have been built into mud walls contain the few earthly possessions they have: a corner of stale bread, a single green pepper, a comb with most of its teeth missing, two stones used to wash clothes. There are no words for this kind of poverty.
The city dwellers resent the IDPs, who are perceived as temporary visitors. Those who are from Kabul and have the identification to prove it want the IDPs to return to their home provinces, war and the subsequent inability to make a living there notwithstanding. The government hasn’t been sympathetic either, announcing that many of the IDP camps should be cleared so public parks can be built.
Boom and bust
Not long ago, Kabul was a boomtown: rutted tracks became paved roads, and warrens of tin shacks transformed into multi-storey shopping malls. This unprecedented influx of money dramatically altered the pre-existing economic order. Those working for the expatriate community, hired as drivers, advisors, cooks, and armed guards by various NGOs, think tanks, bases and businesses began making as much as five or ten times what a civil servant would make. Ecosystems comprised of villages built on private contractor money began to form around US military bases. Today, those boomtowns are turning into ghost towns, with abandoned military bases stripped down to the bare scaffolding. In its wake, illicit economic activity – opium production being the most prominent – is emerging as a likely alternative for the newly jobless.
Presently, the city lives in the shadow of half-finished dreams. Traffic islands are full of drug addicts arguing over cheap heroin. Day labourers wait hours for work that will pay perhaps one or two dollars a day. Official statistics show no spike in criminal activities, but many incidents go unreported, and there is some indication that violent crimes, particularly against foreigners and affluent Afghans, will continue to increase as easy money dries up.
When the bulk of NATO forces leave the country at the end of this year, Afghanistan will experience a parallel cut in aid dollars. Already, the US Congress has announced that they will be halving civilian assistance. In 2013, the World Bank estimated that GDP growth went from 14.4 percent in 2012 to 3.1 percent. Then, earlier this year, to help the country transition out of a war economy – and to deflect accusations of abandoning Afghanistan – the US Agency for International Development (USAID) announced a USD 300 million package: a paltry sum compared to the USD 13.3 billion that USAID has spent in reconstruction efforts since 2002.
The trend of foreign dollars departing the country will continue, and without a sustained military presence, most foreign organisations will find it difficult to operate in the country. In an October 2013 report, the Office of the Special Inspector General for Afghanistan Reconstruction, a US Congressional oversight agency, wrote, “By next year, officials predict that only 21 percent of Afghanistan will be accessible to foreign nationals, down from 50 percent in 2009.” As the percentage continues to shrink with dwindling troop numbers, organisations will likely choose to close their operations.
Two theories exist about the current economic transition. One is that fiscal collapse is inevitable. This theory holds that the annual aid that Afghanistan receives annually – which, at USD 15.7 billion, contributes 97 percent of the country’s GDP – is unstable and cannot continue. It echoes the Afghan government’s warning that without proper budgetary assistance, the country will collapse. They say this will undo 12 years of counterinsurgency efforts which has cost USD 500 billion. The World Bank supports these claims, warning that an abrupt cutoff in aid will provoke a collapse of political authority, encourage the illicit drug market, and potentially incite civil war.
Others argue that concerns of an imminent financial collapse amount to fear-mongering that overlooks two major factors. First, most of the aid committed to Afghanistan was never spent inside the country, with as much as 60 percent of aid spending leaving the country to pay for projects that are meant to “indirectly benefit Afghanistan’s economy”. Secondly, current projections do not factor in the significant role of the black market; the informal sector makes up an estimated 80 to 90 percent of economic activity in the country, opium sales being the most popular.
Whichever camp proves to be correct, as the war enters its 14th and final year, the biggest mistake to make will be in confusing the NATO troop pullout with the end of the war. Neglect after intervention has contributed to Afghanistan becoming a fertile breeding ground for international terrorism in the past, and history will repeat itself should the international community choose to abandon Afghanistan again.
Those adopting an overly optimistic approach elevate mining or telecommunications as industries that will lead Afghanistan to an aid-free future. According to the US Geological Survey, the country’s untapped mineral wealth includes coal, copper, lithium and gold, not to mention gemstone deposits and natural gas and oil fields worth USD 1 trillion.
There is also the New Silk Road strategy promoted by the U.S. State Department. In 2010, then Foreign Minister Zalmai Rassoul spoke about Afghanistan “resum[ing] its central role as a land bridge between Central Asia and South Asia, the Middle East and the Far East, reestablish the Silk Route, and increase trade and export opportunities within the region and beyond.” However, he was overlooking the country’s tenuous relationships with its neighbours, the government’s inability to control vast swathes of the country, and the extent to which the current economy has been built on unchecked foreign capital rather than self-sufficient institutions.
Those holding such Panglossian views do so because they have an interest in maintaining the narrative of progress. In their argument, they often ignore the sine qua non that is long-term investment, which brings infrastructure that in turn requires sustained security. “Businesses hate uncertainty,” Ibrahim Shams of Afghanistan Investment Support Agency told me. And, he pointed out,“The election and who will be president, the security situation after 2014, they are both immense uncertainties.”
An uneasy future
How far the security transition will impact Afghanistan’s economy is currently anyone’s guess. Projections depend on the weather, as Afghanistan remains an agriculture-intensive economy. They also depend on the arc of Taliban resurgence, which remains a mystery. Given this reality, the best indicators remain human ones. As the international community continues to discard its grand designs, ordinary Afghans are already beginning to feel the first signs of a major economic recession.
As with any catastrophe, the truly rich are immune. Afghanistan’s ‘one percent’ own properties in Dubai, wield talismanic Western passports, and will be on the first plane out should anything go wrong. Among the hardest hit, then, is the country’s burgeoning middle class, whose gains are swiftly coming undone with the sharp cuts in foreign aid.
Abdul Amir Amirzada, who runs a car dealership in northern Kabul, remembers the golden years of 2006-2011. Back then, he used to sell three to four cars a day. But in June 2011, President Obama announced that US troops would start withdrawing from Afghanistan in 2014, and almost immediately, sales froze. Today, he is lucky to sell three to four cars a month. “Everyone is waiting for 2014,” he tells me, something that has become a familiar refrain throughout Afghanistan. To supplement his dwindling income, Amirzada began driving armoured vehicles for an American-funded NGO. But with foreign aid continuing to shrink, he is not sure how much longer he can keep his job.
Naqib, who runs a property dealership in downtown Kabul, finds himself in a similar situation. He remembers when the 2014 deadline was announced because he remembers it being followed by property prices falling by as much as 20 percent. In some neighbourhoods, property value fell by more than half. He believes the trend will continue, as worries mount about President Karzai’s unwillingness to sign a long-term security pact. The Bilateral Security Agreement, as it is known, would allow Western forces to stay in the country beyond 2014. Naqib may not know much about geopolitics, but he knows that the longer the security pact goes unsigned, the less likely it is for NATO forces to stay behind. This, he intuits, will be bad for business.
The fear that grips the business community is reflected in the way the exchange rate of US dollars has climbed from 51 Afghanis to 57 Afghanis in the past few months, around the time when the security pact became a topic of heated debate. Most of the business that flourished during the NATO presence were based in the construction and logistics industries. They were built on the assumption of a continued foreign presence and the promise of industry it brought, but now that’s all changing.
Recently, I saw Wali Khan again at Bagrami. He told me that it had been a good winter, by which he meant that it had been an unusually mild one, and only four children had died from the cold. Wali Khan then produced a stack of laminated cards bearing logos of various UN agencies. They came by from time to time, Khan explained, dispensing bags of flour or jerry cans of oil. The women would then bake bread with this flour, which they ate for breakfast, lunch and dinner. If the men managed to bring home a dollar or two, children would be sent to buy potatoes that they would cook as a treat. “A lot of money came into this country, but the high ranking officials embezzled it all,” Wali Khan lamented. “We are the real losers of this war,” he added, while his children played in the dirt, mock-strangling each other for fun, for lack of something better to do.
~This article is a part of Reclaiming Afghanistan: web-exclusive package.
~ May Jeong is freelance writer currently based in Kabul.