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Afghanistan was invaded and occupied by the Soviet Union in 1979, in the attempt to rescue and consolidate the pro-Soviet regime in place. It took 10 years
before the USSR could withdraw its forces, having been delayed by the fierce resistance of anti-communist mujahidin forces, supplied and trained by the US,
Saudi Arabia, Pakistan, and others. The pro-soviet regime survived for two years and a half, contrary to the expectations of many, and then fell in April
1992, having outlived its own mentor, the USSR. Fighting subsequently continued among the various mujahidin factions, but the fundamentalist Islamic Taliban
movement had been able to seize most of the country. In addition to the continuing civil strife, the country suffers from enormous poverty, a crumbling
infrastructure, and widespread land mines.
Afghan internal politics since the fall of the Taleban regime has been dominated by the forthcoming Loya Jirgah elections, which will be decisive in
establishing the balance of power between the different factions in the future government. Even if these will not be strictly speaking political elections
and despite the assurances by the interim government that the warlords will not be allowed to interfere, the military factions in control of the various areas
of the country are expected to determine the outcome to a fair extent. While the local warlords resist the idea of being pushed aside, after having determined
the local politics for so long, at a higher level the various political groups are worried about their share of power in the future government and are
jockeying to expand their influence. In particular, two factions are very active in trying to buy influence in the regions of Afghanistan. One is the
Panjsheri wing of Jamiat-i Islami, which is at present the strongest component of the Karzai government and needs to maximise its support within the Jirgah,
if it wants to maintain its role in the future government. For this reason, it is trying hard to expand its influence, especially in Northern Afghanistan,
where the majority of the population is Uzbek, but where a large minority of Tajiks also lives. Even more importantly, the Panjsheris are also establishing a
strong hold on the new national army, which is being formed, and on the state bureaucracy. The other faction, or rather alliance, includes the other main wing
of Jamiat, led by former prime minister B. Rabbani, and several other Islamist groups, including the warlord who rules Western Afghanistan, Ismail Khan. The
return of the old King Zahir Shah has also caused tensions within the interim administration between royalists and anti-royalists.
The international politics of the Afghan crisis is characterised by a row between the US and Iran, which is being accused of meddling in Afghanistan, with the
aim of destabilising the interim administration of Hamid Karzai. Iran fears the establishment of a government dominated by the monarchists in Afghanistan and
sympathises with all the Afghan factions that share the same feeling. Russia is rather indifferent to the internal politics of Afghanistan, but wants to
ensure the presence of a government compatible with its geopolitical aims. Its strongest links are with Jamiat-i Islami, a party mostly composed of Tajiks,
which it supported during the war against the Taliban. The former Soviet republic of Tajikistan is a Russian 'de-facto' protectorate, a fact that also favours
Russia's alignment with Afghanistan's Tajiks. Moreover, some of the top generals in the Jamiat-led new Afghan national army, are former generals of the old
communist regime and they still have good contacts in Moscow.
While Pakistan and Uzbekistan continue to keep a low profile, the role of the US in affecting events in Afghanistan is undoubtedly dominant, but continues to
encounter limits to its action. The Bush administration did exercise a considerable pressure on ministers of the Karzai government on several occasions,
especially Defence Minister Fahim, whose conduct increasingly appears biased. Perhaps more importantly, the US have been building their own "party" among
Pashtun warlords in Southern and Eastern Afghanistan, whose help they want to enlist in the hunt for the remnants of Al-Qaida. Not even the US, however, has
been entirely successful in steering Afghanistan in the desired direction. These warlords, for example, are now exploiting their privileged access to funds
and resources to try to establish their own hegemony over entire regions, but are facing a growing local opposition. Moreover, even Karzai himself has openly
refused to endorse American allegations against Iran.
The prospects for a quick recovery of the Afghan economy do not look very good. International donors have pledged US$4.5bn, but only a trickle of that money
has reached Afghanistan so far and the interim government is unable to raise funds on its own, as the provincial governors withhold any income deriving from
taxes and customs. Government revenue from domestic sources is still minimal, covering only 3-4% of the requirements. The international organisations have
decided that the Afghan government will be in charge of the reconstruction process, but now demand a properly scrutinised process of allocation of resources.
They also appear to expect the interim government to act towards the eradication of the poppy fields in several regions of the country, but so far the Karzai
administration has had only a very limited success in this regard. The UN expects a harvest of 1,900-2,700 tons of opium this year, much short of the peak of
4,600 tonnes reached in 1999, but still much more than 74 tons of 2001.
The focus of the reconstruction effort is expected to be initially in investment on transport infrastructure, which is in extremely bad shape. Iran is
expected to be at the forefront of those in 2002, in part also due to the greater economic dynamism shown so far by neighbouring western Afghanistan, and has
already budgeted the necessary resources, especially for a railroad leading from Iran to the Afghan city of Herat. Longer-term projects are also beginning to
be discussed, but the plan for a 850 km pipeline crossing Afghanistan, despite the support of both the Turkmen and the Afghan governments, is certainly going
to take a long time to be defined, and even longer to be realised.
In the meanwhile, the government has been unable to even bring the money supply under control yet and as a consequence the local currency (Afghani) has
fluctuated wildly. This has negatively affected whatever economic life is left in the country, with traders and state employees being hit especially badly.
Update No: 06 - (23/05/02)
The King is back
The main development in Afghan politics between the end of April and the end of May was the return of Zahir Shah, the former king deposed in 1973. Although
the 87 year-old former monarch can be believed when he claims not to aspire to any major role in the ruling of the country, his return has wide implications
for Afghanistan, for at least two reasons. On the positive side, it signals to many Afghans how peace might really be at hand. This is shown, among other
indicators, by the success of the campaign for the repatriation of Afghan refugees in Iran and Pakistan. By the beginning of May, 400,000 had already crossed
the border, that is more than expected, given that UNHCR has a target of 800,000 for the whole year.
On the negative side, since it strengthens the royalists, the return of the former king heightens the tension between opposing political factions, especially
given that the elections to the Loya Jirgah were starting at about the same time. Apart from a new round of fighting in the North between troops loyal to
Rashid Dostum and others loyal to Jamiat-i Islami, it is no chance that during late April and May the rift between royalists and Islamists widened further.
The royalists, who had previously had difficulties capitalising on the diffused nostalgia for the period of the monarchy, are now finding it easier to
mobilise support. Some are even raising the issue of the re-establishment of the monarchy, as demanded by a gathering of Pashtun tribal elders in Kandahar at
the end of April. At the beginning of May another meeting of tribal leaders in Gardez protested at the alleged unfair share of seats allocated in the Loya
Jirgah to the Pashtuns, raising for the first time since the fall of the Taleban regime the ethnic issue so openly.
The Islamist groups outside the interim government, which oppose most strongly the establishment of any sort of liberal regime, not to speak of the monarchy,
appear to be unnerved by the development. Among others, Burhauddin Rabbani, the foremost representative of these groups, demanded the establishment of an
Islamic Republic and the adoption of Islamic laws, while at the same time accusing the interim government to be rigging the Loya Jirgah elections. A meeting
of religious scholars at the end of April supported his views.
Even within the interim government, the competition between royalists and Islamists deepened after the return of the king. In Jallalabad, the Panjsheri
faction led by Defence Minister Fahim succeeded in completely ousting Haji Mohammed Zaman, the royalist chief of security, who had already been demoted from
his position of regional military commander.
Economic difficulties worsened by Loya Jirgah campaign
The multiple political rifts had a very direct impact on the economy at the end of April, causing a new wave of fluctuations of the local currency, the
afghani. The currency fell from an exchange rate of 31,000 to the dollar to 39,000 in a couple of days, apparently due to some political factions paying off
large sums of illegally printed afghanis to local notables and warlords in exchange for support in the Loya Jirgah elections. The Afghan central bank was
forced to intervene and spend in excess of $1 million to stabilise the currency at 37,000 against a dollar.
If any progress can be seen in terms of the reconstruction of the economy, this is mostly to be found in the growing trend towards the commitment of some
donors to specific projects and tasks. In mid-May, for example, Pakistan has committed itself to spend $100m restoring highways in southern Afghanistan. At
the beginning of the same month, Iran had committed itself to the reconstruction of Afghanistan power and water installations and to providing electricity to
the west of the country.
Pipeline dreams, opium realities
Due to the lack of signs of economic recovery in most on the country, some tensions are emerging between the UN and the interim government. The latter accuses
the donors and the UN of not delivering the promised help, while officials of the former privately complain of the lack of skills of the
warlords-turned-ministers in Kabul.
Whatever the case, the approach of the interim administration does not always look firmly anchored in reality. For example, despite the scepticism of the
business community, the Karzai administration remains keen on the pipeline project that could bring Turkmen oil and gas to the Indian Ocean. The Turkmen
government is actively encouraging what most observers think is a dream, especially since the ministers involved declared to expect works to start relatively
soon. The plan is also becoming more ambitious, as the idea of exporting Afghan gas too through the pipeline has surfaced. Smaller projects would feature
pipelines from the Afghan gas fields of the North to Kabul and some other areas, where it could be used to provide energy for industrial and mining
activities. Unocal, the US oil company previously involved in a similar project during the Taleban era, is said to be the Karzai administration's hope for
funding the main project, while the smaller pipelines are expected to be funded by the Asian Development Bank and donor countries. Executives from Unocal,
however, declared that they are now more interested in other projects elsewhere. Moreover, Afghan gas, or at least that from previously exploited fields, is
of low quality and could have difficulties in finding a buyer in a market that is soon going to be awash with gas from Dubai and Iran.
In the short term, the international credibility of the Karzai administration and its successor government, which looks increasingly likely to be led by
Karzai himself, will be determined by its performance in dealing with such issues as the eradication of the poppy fields. During May, as the 2002 harvest
time as nearing, Afghan government officials started making clams of success in their campaign. An estimated 103 tons of opium have allegedly been destroyed,
out of a total yield expected by the UN to range between 2,094 and 2,976 tons. Even discounting the many allegations of fraud that have been surrounding the
operation, it is obvious that a great deal more has to be done in order to reduce the impact of the Afghan opium on the European markets.
Iran, South Korea to set up automobile plant in Afghanistan
The Deputy Head of Khorassan Province's Chamber of Commerce, Gholam Hossein Shafei, said that Iran and South Korea will jointly build an automobile assembly
plant in Afghanistan, IRNA News Agency has reported.
He told IRNA that the provincial private sector in cooperation with Iran's Supreme Economic Council have been able to attract many countries to participate
in Afghanistan reconstruction drive.
The official said that a committee has been formed by Iran and South Korea which had useful consultations. Given the existence of many automobile spare parts
manufacturing plants in Khorassan province and the capability of the province in the car industry, it is feasible to set up an assembly plant in Afghanistan,
He declined to name the South Korean partner but added that a delegation was slated to visit Seoul after the football Word-Cup in South Korea.
He said that the agreement stipulates producing parts in Khorassan and setting up the automobile assembly line in Afghanistan. Meanwhile, while in the
India offers three planes to Afghanistan's Ariana Airlines
Pushing ahead with its diplomatic initiatives, India has decided to give three Airbus A300-B4 aircraft to Afghanistan's Ariana Airlines, IRNA News Agency
reported on 8th May.
An agreement to this effect was reached during discussions held between visiting Afghan Civil Aviation Minister, Zalmay Rasool, and India's Civil Aviation
Minister, Syed Shahnawaz Hussain. These three aircraft are 17-year-old planes being phased out by Air India and are valued at $7 million. The first of the
three aircraft would be handed over by the end of May, Hussain told reporters. Hussain said India had also offered to train Afghan pilots and told Rasool
that three Indian pilots would be deputed to handle the aircraft for three months.
The Afghan aviation minister said that talks also covered rebuilding of Afghanistan's air transport infrastructure, technical system, personnel training and
management systems. Ariana Airlines is planning to operate flights to London, Frankfurt and Paris using these three aircraft, Rasool added.
As part of high-level contacts, Afghan Defence Minister Gen. Mohammed Qassem Fahim paid an official four-day visit for discussions with his Indian counterpart
on various ways of strengthening cooperation in this sector. Fahim, who previously visited in December headed a nine-member Afghanistan army delegation, is
one of the powerful ministers in the newadministrtion, the other two being Interior Minister Yunus Qanooni and Foreign Minister Abdullah Abdullah. India's
Ministry of External Affairs spokesperson, Nirupama Rao, told reporters that India attaches importance to these visits.
International fair on Afghan reconstruction to be held in Mashhad in October
An international fair concerning Afghanistan's reconstruction and development is due to be held in Iran on the Mashhad permanent fairgrounds on October
2nd-9th, 2002, IRNA News Agency has reported.
According to the report released by the Public Relations and International Affairs Department of the Export Promotion Centre of Iran (EPCI), the fair was
approved following the first round of talks on Afghanistan held at the EPCI. Special emphasis is
being placed on the construction aspect as well as the exchange of commercial data and technical know-how among traders of both countries, the report
The participation of private sector in the fair will serve as the basis for the presence of the state sector aimed at strengthening and preparing the grounds
for private sector participation.
One section of the fair is to be allocated to foreign countries intending to participate in the reconstruction and development of Afghanistan, while another
will include technical and engineering services, basic services such as transportation, insurance, banking, customs affairs, standardization and public
According to the report, another section of the fair will display
the potential of Khorassan province. Iran's export goods will be exhibited in one section while a data bank, investment guidelines, the Afghan market
opportunities and EPCI data processing will be featured in another.
Afghan, Pakistani leaders to visit Turkmenistan to discuss gas pipeline
The leaders of Afghanistan and Pakistan will meet in Turkmenistan to discuss a pipeline to pump Turkmen gas to their countries, Turkmen state television has
The meeting was agreed upon during a telephone conversation between Afghan interim Prime Minister, Hamid Karza,i and Turkmen President Saparmurat Niyazov, the
report said. No date for the meeting was announced. The two leaders and Pakistan's Pervez Musharraf will discuss speeding up efforts to resume work on a
pipeline to pump Turkmen natural gas to neighbouring Afghanistan and on to Pakistan.
The 1,500-kilometre (900-mile) pipeline is expected to cost from US$2bn to US$3.5bn, and to supply 15 billion cubic metres (525 billion cubic feet) of gas to
Pakistan annually, according to the Turkmen Gas and Resource Ministry.
Iran provides electricity for three southern Afghanistan provinces
According to an agreement reached between the Tehran and Kabul governments, Iran will supply electricity for Afghanistan's Forah, Herat, and Neemroze
provinces, said an Afghan spokesman, IRNA News Agency has reported.
Deputy Water and Power Minister Mohammad-Amin Monsef also told IRNA that provision of electricity to the said provinces by Iran would be based on a protocol
signed by Iranian energy ministry officials and Afghan Water and Power Ministry. He added that an Afghan delegation from the Water and Power Ministry visited
Tehran recently and had constructive talks with Iranian authorities focussed on providing electricity for Afghanistan by Iran. Monsef said that Iran has also
agreed to train Afghanistan's Water and Power Ministry technicians and improve their technological
India, too, has agreed to provide electricity for a part of Afghanistan, and the relative agreements will be signed in New Delhi and Kabul by
relevant officials in near future according to the Afghan official.
FOREIGN ECONOMIC RELATIONS
CII identifies opportunities in Afghanistan
The Kabul office of the Confederation of Indian Industry (CII) has identified six mid-sized projects that can be taken up by Indian industrial houses, Shweta
Rajpal Kohli writes.
These include a distillery, a spinning mill, a food processing factory, a tannery, a cement factory and a woollen garments factory. These projects have been
identified with the assistance of the ministry of industry of Afghanistan. CII is now approaching leading Indian business houses that specialise in these
areas to start work on these projects.
The chamber is also taking a delegation of engineers from the National Small Industries Corporation (NSIC) to Kabul to conduct a preliminary study for
rebuilding the industrial park in the Afghan capital. A CII business delegation visited Kabul in February and an office was set up in March. CII
deputy-director Shreeram Lakshman spent a month in Kabul identifying key areas where Indian companies could work. "This is the right time for Indian industry
to get a foothold in Afghanistan," Lakshman told Business Standard. "Indian companies should see these projects as great opportunities," he said.
A brief market survey was conducted in Kabul on select items imported from bordering countries. "The idea was to assess the feasibility of selling Indian
goods in Afghanistan," said Lakshman. The items that can be sold in Afghanistan include generators, water pumps, grinding mills, textiles, ceramic tiles,
batteries for vehicles, hand tools, washing machines, refrigerators, ceiling fans, industrial paints, cycles and computers.
"Almost all consumer, food and industrial items in Afghanistan come from Pakistan, China and Iran," said Lakshman. "Indian goods will be around 30 per cent
costlier than the Pakistani and Chinese goods, but they can win in terms of quality," he said.
CII also feels that the Indian industry can be a great contributor to the agriculture sector in Afghanistan, both at the supervisory level and as a major
supplier of equipment to the agriculture department of the Afghan government. CII will also organise a "Made in India" show in Kabul in September.
Iran-Afghanistan's border markets should be rearranged
The head of the Afghan general chambers of trade and industries, Mohammad Avaz Fadaie, has stressed the need to rearrange Iran-Afghanistan's border markets,
IRNA News Agency has reported.
Attending the joint meeting of Iran-Afghanistan chambers of commerce, Fadaie claimed that given the consequences of war and crisis in Afghanistan over the
past years, border markets have been arranged unilaterally by Iran at some points located on the two countries common borderline.
He added that Iran-Afghanistan's trade ties should be based on scientific and fundamental principles without which problems for both countries will certainly
emerge. He said that some 25,000 national and international tradesmen have so far been active as members of Afghan general chambers of trade and
Fadaie added, "The construction of a bridge over the borderline Hirmand river under the supervision of senior officials and experts from both countries will
have a decisive role on Iran-Afghanistan's political and trade ties."
He said that the goods displayed at the Iran-Afghanistan's first specialized trade fair which is currently held in Zahedan, are desperately needed in
The first Iran-Afghanistan joint trade fair was inaugurated on April 20th and was attended by Iran's cooperatives minister, Sistan and Baluchestan
governor-general and a number of other Iranian and Afghan officials.
Fadaie referred to the establishment of the joint chambers of commerce, industries and mines in some of the significant Afghan and Iranian cities including
their capital cities as an effective factor in strengthening mutual trade ties between the two countries.
He underlined that the Islamic Republic of Iran should proceed with the construction of the Zarang-Delaram road inside Afghanistan as soon as possible. Also
the Afghan official in charge of the international transit, Nour-Aqa Mozaffari, said that a trade agreement will soon be signed between Afghanistan and the
Central Asian states to facilitate the dispatch of commercial goods from Iran to those states via Afghanistan.
Councillor of the Afghan general chambers of trade and industries,
Najibollah Rahimi, also said, "an agreement will soon be signed by both sides to establish joint Iran-Afghanistan's chambers of commerce, industries and
He concluded that the law of foreign investment will be discussed by the members of a special committee of the Afghan interim government.
UK companies are racing to secure contracts to reconstruct war-ravaged Afghanistan
Afghanistan is facing another invasion - this time by a formidable army of western builders, engineers and architects, Conal Walsh of The Observer reported on
As Britain and America hunt for Al-Qaeda's mountain hideouts, their businesses are eyeing the choicest reconstruction deals.
Billions of pounds in transport, power, agriculture and construction projects are up for grabs. And the UK is trying to stake its claim, with the Department
of Trade and Industry launching a special website this month 'to signpost opportunities for British companies.'
UK plc has been in Kabul since last November, in the shape of development experts Crown Agents. The Surrey-based company, originally set up to advise
countries of the British Empire making the transition to independence, is disbursing £260 million in aid committed by Britain. The word is that Afghanistan's
transitional government is impressed. The World Bank may soon hire Crown Agents to advise it on the best ways to address the country's humanitarian
But the big money is in building, digging and drilling, which will begin in earnest over the next 12 months. Civil engineering firm Fitzpatrick Contractors
has worked in nearby Kazakhstan and is one of a number of British companies keen to get into Afghanistan first.
"We have already started a dialogue with the mayor of Kabul on hospital facilities that will be needed in the city, and begun preparing outline designs," says
Bernard Woodman, managing director of Fitzpatrick's international division.
Construction giant, WS Atkins, which built temporary housing for refugees and the military in Kosovo, is also interested. A spokesman said: "We will look
closely at tenders in Afghanistan. Its infrastructure has been decimated and the other leading consultancies will also be looking."
After 25 years of conflict, Afghanistan needs rebuilding almost from scratch. Half of its urban housing has been destroyed, and one-third of a population of
28 million people displaced. Only one Afghan in 10 has access to sanitation, and the country has just 3,000 kilometres of road, of which 1,700km needs
It also has the world's lowest electricity consumption, and telephones are virtually unknown. The United Nations is devising a programme of reconstruction
that will swallow an estimated $10 billion by 2006.
Afghan minister seeks Pakistani help to rebuild telecoms
Afghanistan's Telecommunications Minister, Abdul Raheem, made a three-day visit to seek Pakistan's help in rebuilding its telecommunications network in the
war-ravaged country, Dow Jones reported, quoting the official APP news agency report on its Web site.
Raheem arrived in Islamabad and held talks at the Ministry of Science & Technology - which oversees the telecommunications sector - to discuss Pakistan's
contribution in the rebuilding of communications networks in Afghanistan, APP said.
"Different organizations under (the Ministry) and some private sector telecoms organizations will present their proposals for rebuilding of the telecoms
infrastructure in Afghanistan," the report said.
Pakistan Telecommunications Co. (C.PTL) had provided phone connections to southern Afghanistan during the Taleban rule, which were cut after the US launched
airstrikes in October last year to target the Taleban and Osama bin Laden's al-Qaida network.
Afghanistan's first commercial mobile phone network covering the country's principal cities was launched in April and GSM cards went on sale in Kabul in April
offering the first non-satellite links in the war-battered country.
The network has been built and will be maintained by Afghan Wireless Communications Co., a new Afghan-US joint venture.
Chahbahar a key potential route for goods transit to Afghanistan
Afghan businessmen said recently that Iran's southern port, Chahbahar, could be an effective route for transit of goods to Afghanistan, IRNA News Agency has
reported. The remarks by the Afghan merchants came when a 30-strong delegation of Afghanistan's officials in the trade and commerce sectors visited the free
trade zones of Martyr Beheshti and Martyr Kalantari in Chahbahar. First secretary of the Afghan Embassy in Tehran, Haqjou, said the Iran's great initiatives
have made Chahbahar emerge as a growingly prosperous region. He went on to say that great changes have been made in Chahbahar over the past years and this is
due to the good policies and measures adopted in the trade area.
An official in the Afghan Chamber of Commerce, Mohammad Aref, said that conditions in Chahbahar made it an effective route for transit of goods to
Afghanistan. He said Chahbahar should be given priority since it has many more advantages in comparison to the United Arab Emirates's Jabal Ali port. However,
he called for the removal of the red tape for it to be replaced by more relaxed laws and regulations to help the Afghan merchants engage in the trade
activities with Iran. Some 450 tons of goods and commodities were transited to Afghanistan and Central Asian countries last year. The first joint trade and
industrial exhibition of Iran and Afghanistan was set up a few days ago in Zahedan where a message by the Iranian Minister of Commerce Hussein Shariatmadari,
called for the Iranian and Afghan business people to profit from the new situation to use the potential of both states to boost the economic activities
Reportedly, Iranian products are welcomed by the Afghan consumers and that is why the Iranian companies are more and more interested in playing an active role
in the trade activities between the two neighbours. The Afghan people are placing more confidence in Iranian-made products and the many commonalities of the
region - language, culture and civilizations are among the major factors that contribute to the expansion of ties between Tehran and Kabul. Direct flights
between Tehran and Kabul as well as flights between the cities situated at either side of the two countries are thought to be of great help to boost the ties
between Iran and Afghanistan.
Iran-Uzbekistan-Afghanistan plan joint highway
Iran, Uzbekistan and Afghanistan are to begin talks on plans to construct a highway linking the three nations, the transport ministry said, AFP has reported.
The 1,010 kilometre (630-mile) highway is to go from Iran's northeastern border at Dogharoun to Uzebekistan's city of Termez across northwestern Afghanistan.
It will aid in the reconstruction of Afghanistan, and aim "to activate regional cooperation and to promote exchanges between Iran and Uzbekistan," which have
been decreasing in recent years and were worth only US$135m in 2001.
The project is a scheme of the Economic Cooperation Organisation (ECO), grouping of Iran, Turkey, Pakistan, Afghanistan and the Central Asian countries of the
former Soviet Union.
In March the first railroad between Almaty and Tehran was opened, financially backed by ECO.
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