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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.
During the first half of 2002, the interim administration led by Hamid Karzai was mostly busy preparing the ground for re-establishing a government structure and getting reconstruction help from the international community. Perceived as a honest and well-intentioned man, but at the same time as a weak ruler, Karzai faced the resistance of the warlords who rule the various regions of the country, but also the difficulty of keeping his own coalition together. The interim government was an alliance between Pashtun monarchists of secularist tendencies and the various factions of the United Front, mostly composed of moderate Islamists from the ethnic minorities, who favour an Islamic republic. The coexistence between these radically different approaches would have been difficult in any case, but the situation was made worse by the fact that one of those factions, the so-called Panjsheris, quickly monopolised the real power by getting not just three of the most important ministries (defence, interior and foreign affairs), but also most top positions in the bureaucracy and in the army. The resentment caused by the attitude of the Panjsheris led to rising political tensions within the interim government, while the return of the former king Zaher Shah in April emboldened the monarchists to become more assertive. Other political factions, apart from the monarchists and the moderate Islamists, mostly opted to keep a low profile during 2002, siding with either faction depending on their own interests, but might become more active in the future.
The watermark in the consolidation of the regime in Afghanistan was expected to be the Loya Jirgah (June), which was to select a new transitional administration and a parliament. However, in many regards the Loya Jirgah turned out to be disappointing, although it did elect Karzai as President. The government was not subjected to approval by the Jirgah and no parliament was selected. A significant opposition emerged from the ranks of the Loya Jirgah, showing how the monarchists were increasingly divided between moderates favourable to Karzai and more assertive elements, who resented the relatively marginal role played by the Pashtuns in the new regime. As a result, Hamid Karzai, had to slightly increase the weight of the Pashtuns within the new government, succeeding in enlisting the cooperation of some groups previously opposed to him.
Starting from August, there were also signs that he was trying to reduce the power of the Tajik Panjsheri faction within army and the state administration, causing a deterioration of his relationship with them. Nonetheless, opposition to his government continued to rise in the following months, especially among Pashtun monarchists, who felt that remnants of the Taliban and other fundamentalist groups might gain from the inability of the monarchists to defend the interests of the Pashtuns.
The "Jihadi" alliance of mostly moderate fundamentalists, led by former president B. Rabbani, emerged on the other hand as an important force and ended up supporting to some extent the pro-Karzai coalition, being then rewarded with some ministerial positions and a vice-presidency, but at the same time continuing to work for Karzai's replacement. Meanwhile, the central government tried to increase the pressure on the regional warlords, to force them to come to terms with it, but only achieved moderate success. In November Karzai took his boldest step yet, dismissing about 20 officials across the country on charges ranging from negligence to corruption, extortion and drug trafficking. The move was widely welcomed, especially in Kabul, although many were quick to point out how the 20 officials were just the tip of an iceberg of wrongdoing. Karzai also tried to weaken the total control exercised by the warlords over whole regions, confining them to specific institutional roles. However, the credibility of the central government's campaign against the abuses of governors and local officials suffered a severe blow in mid-November, when Kabul's policemen repressed with extreme violence a student demonstration in favour of better living conditions in their dormitories, leaving as many as seven dead. By the year's end the discussion about the legal system began to heat up, with tensions arising between those who want the Sharia (Islamic law) confirmed as a basis for the legal system and those who want a more secular approach. A similar split was emerging within the commission working on the new constitution of Afghanistan, with the debate focusing on issues such as equality between men and women and the separation of religion and the state.
The 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, faded away from the centre stage over the summer and autumn, after having attracted much attention during the first half of the year. Russia remained relatively indifferent to the internal politics of Afghanistan, but clearly wanted to ensure the presence of a government compatible with its geopolitical aims. Its strongest links were 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 favoured Russia's alignment with Afghanistan's Tajiks.
While Pakistan and Uzbekistan kept a low profile, the role of the US in affecting events in Afghanistan was undoubtedly dominant. The debate was mostly centred on the scope of military operations and the extent of US involvement in the consolidation of the new regime in Kabul. The relationship of the US armed forces with private militias remained controversial and one of their allied warlords even ended up fighting against government militias. During autumn 2002, the scale of American military operations was cut down, although this might well be more due to lack of suitable targets than to political considerations.
The return of the old King Zahir Shah at the end of April was interpreted by many Afghans as a further sign that peace might really be at hand, a feeling that was already prompting hundreds of thousands of Afghans to come back to their native country from Pakistan or Iran. By mid-November, 1,870,000 had already done so. However, this development, while welcome in itself, added a further strain to an already difficult economic situation. By the autumn there were clear signs that scratching a living was a major challenge for most Kabulis, while in the countryside the population was often still at risk of starvation.
The economic situation was compounded by the slow start of the reconstruction. International donors pledged US$4.5bn in March and another US$600 million before that, of which a total of US$2.3 billion was for the current year. However, only US$1.7 billion has been confirmed in the form of actual commitments and by the end of August just about US$1.2 billion had been received. Of this amount, the largest part ($840 million) went to humanitarian relief, while US$160 million were spent on staff salaries and the armed forces, with just US$200 million going to actual reconstruction and development. Between the end of the summer and the beginning of autumn, however, there started to be signs of a growing willingness of donors, including the US, to make more funds available. On the other hand, the interim government was unable to raise funds on its own until the end of the summer, when some of the provincial warlords started paying in at least some of the income deriving from taxes and customs. The government itself expected to be able to raise just US$83 million in 2002.
Apart from merely trying to start to reconstruct the country, the government had to keep international donors happy. For example, the international organisations decided that the Afghan government would be in charge of the reconstruction process, but demanded a properly scrutinised process of allocation of resources. They also expected the interim government to act towards the eradication of the poppy fields in several regions of the country, but during 2002 the Karzai administration has had only a very limited success in this regard. The UN estimated the 2002 harvest at 3,400 tons of opium this year, short of the peak of 4,600 tonnes reached in 1999, but still much more than 74 tons of 2001 under the Taleban, and higher than previous estimates. Even discounting the many allegations of fraud that have been surrounding the operation, it appeared obvious that a great deal more has to be done in order to reduce the impact of the Afghan opium on the European markets. Many of the warlords and military leaders of both Northern and Southern Afghanistan were reportedly involved at least indirectly in the trade, which made the eradication of the crop all the more difficult.
The focus of the reconstruction effort during 2002 was on investment on transport infrastructure, which is in extremely bad shape. Iran was at the forefront of such efforts in 2002, in part also due to its willingness to exercise some influence on its Eastern neighbour. During the autumn, a number of other projects, funded by a variety of donor countries and the Asian Development Bank, also kicked off, but the rebuilding of the highway network is not expected to be completed before two years. Longer-term projects were discussed at length during 2002, mostly the plan for a 850 km pipeline crossing Afghanistan, which could provide the Afghan government with as much as US$205m in transit fees every year. By the end of the year the plan was slowly progressing towards a detailed feasibility study, funded by the Asian Development Bank, but it still looked likely to struggle to find suitable funding, despite the support of the Turkmen, Pakistani, Afghan and US governments, and of the Asian Development Bank. Many international financiers would regard it as the highest of high risk investments.
During the whole of 2002, the government struggled to bring the money supply under control yet and as a consequence the local currency (Afghani) fluctuated wildly. This negatively affected whatever economic life was left in the country, with traders and state employees being hit especially badly. A first serious currency crisis took place in April, when the Afghani hit a new low of 45,000 to a dollar, the Afghan central bank for a while succeeded in stabilising the Afghani at around 36,000 to a dollar. However, the currency continued a slow decline during the following months, until a new crisis developed in November, when the Afghani slipped to a new low of 58,000 to a dollar in November. The introduction of a new currency starting from 7 October, which was key to the stabilisation plans of the government, proceeded too slowly to appease a population which, wary of being left with worthless notes, rushed to the money changers to convert their savings. Despite the slow start, in Kabul and other main cities, by the autumn there were already clear signs of a new economic vitality, as small trades were re-opening or being created ex-novo, although most of the rural areas had seen little improvement yet. After some initial enthusiasm, the various communities of Afghans in exile, who were expected to play a key role in the economic recovery, are now showing signs of losing faith. Many who returned from exile in the West are already reported to have left the country again. More than the slow pace of reconstruction, these potential investors were scared off by the high level of corruption and red tape in the Afghan state administration.
Forecast for 2003
Assuming that the international community will maintain a strong presence in Afghanistan in 2003, the transitional government appears likely to survive without major crises for another year, continuing slowly to push the reconstruction of Afghanistan forward. The institutional debate is likely to contribute to gradually shaping the political landscape of the country. While the Taleban and their allies will probably cling on to some bases of support in remote areas of Central and Eastern Afghanistan, carrying out a low-level guerrilla warfare against the government and international troops, they will find extremely difficult to mount any major military offensive. Given the very limited presence of international troops and government structures on the ground, this guerrilla strategy will not be able to inflict major casualties. Among the political forces which support the transitional government, the increasingly heated debate about secularism and religion will begin to challenge the ethnic divide as a major factor in deciding political alliances.
During 2003 Afghanistan will continue to be kept afloat mainly by international help. Towards the end of 2002, the Oslo meeting of the donors to Afghanistan indicated that the level of international support will be maintained in 2003 at roughly the same levels of 2002, that is US$1.7bn. The government appears considerably less optimistic and stated that it would be happy to receive half that amount, perhaps trying to prevent the negative impact that a drop in the levels of help actually received might have among the population.
The growing presence of foreign personnel, both military and civilian, will stimulate the economy, but any recovery that will take place will be limited to the services. Even the agriculture will need to wait for much reconstruction work to be done before starting to climb out of its present depressed condition.
In other terms, 2003 will still be a year of transition in Afghanistan. At the end of it, the country will still not be able to function on its own, even if all the current plans are accomplished. No viable independent army is expected to be deployed before 2004, that is about the same time when the highway network should be completed. Even the repatriation of Afghan refugees should be mostly complete only by 2004. The United Nations expect another 1.2 million refugees to return to Afghanistan in 2003.
During 2003, however, the first elements of a banking system should be re-established in Afghanistan, contributing to create a somewhat more favourable business climate. The government will likely continue to be short of cash, much to the chagrin of officials, soldiers and policemen, who will continue to be underpaid (if at all). Social tensions might mount as some elements of the middle class, involved in trade or working for the international community, will increasingly lift themselves above the mass of the population, who will by contrast continue to scratch for a living. Despite a much better harvest than in previous years, many areas of the countryside, on the other hand, far from recovering are still at risk of starvation. International aid agencies estimated in December that between 2 and 4 million Afghans will be at risk during the 2002-2003 winter.
Update No: 014 - (04/02/03)
Movement around Afghanistan
In the run up to a very likely new war in Iraq, the international politics of Afghanistan was characterised towards the end of 2002 by renewed efforts to secure its freedom from the interference of neighbouring states. The fear is that if the presence of Americans and ISAF forces in Afghanistan weakened after the start of a war in Iraq, neighbouring countries might seize the opportunity to sabotage the pacification efforts. On 22 December China, Iran, Pakistan, Uzbekistan and Turkmenistan pledged not to interfere again with the internal affairs of Afghanistan. However, such signature took place amid reports that Iran continued to support Ismail Khan, the warlord who rules over most of Western Afghanistan, that Russia continued to provide arms for the Panjsheri faction of Jamiat-i Islami and the Pakistani intelligence service was helping the radical Pashtun groups in the East of the country. Certainly, local warlords showed between the end of December and the beginning of January that they maintained strong links to neighbouring countries, often negotiating themselves business and trade agreements with them.
Competing for Afghanistan's friendship
If the consolidation of a central state in Afghanistan succeeds, in the longer term those countries will be rewarded which invested in befriending the Kabul government rather than regional factions. In this regard, a potentially very important development was in early January the signing of an agreement for the routing through Iran of Indian goods aimed for Afghanistan and Central Asia, with the concession of preferential treatment and tariff reductions. At about the same time, Afghanistan and Iran signed an agreement which allowed Afghanistan to trade with the rest of the world through the Iranian port of Chabahar, where it would enjoy a 90% customs discount. Taken together, the two agreements represent a massive blow for Pakistan's aspirations in Afghanistan and a resounding victory for both India and most of all Iran. Most commentators agreed that Pakistan courted disaster in recent months, by exercising pressure on the Afghan government through raising the costs of Afghan imports and exports though the Pakistan territory and increasing the restrictions on Afghan goods. The choosing of Iran as a leading trade partner for Afghanistan might even have contributed to President Bush's decision to grant Afghanistan preferential trading status in mid-January. In December, reduced transit tariffs had already been granted to Afghanistan by Uzbekistan and Tajikistan.
Sparse signs of reconstruction progress
Although not a single large-scale reconstruction project has been achieved so far, some progress is being made in the right direction. The Iranians are reported to have reached 80% completion of the highway linking Herat to Iran, while Uzbek engineers arrived in Afghanistan at the beginning of 2003 to rebuild 10 bridges on the Salang highway over the following three months. Moreover, an entirely new highway is now being planned to link the town of Khost with the Pakistani border. Even the establishment of a more viable economic environment appeared somewhat nearer in January, with the final replacement of old (and extensively faked) Afghani banknotes with new ones, although there were soon reports of faked new notes circulating in some parts of the country. By January, after having suffered from a crisis of confidence during the transition from the old to the new currency, the new Afghani appeared to have stabilised at 43 for a dollar, up from a low of 58 touched in November. A somewhat symbolic development was the registration of the first foreign company in Afghanistan, a Pakistani construction firm, following the earlier approval of a foreign investment law.
Apart from these meagre first results of its policies, the Karzai government continued in its efforts to build a more investment-friendly environment in Afghanistan. In January, a privatisation commission was launched, with the purpose of handing over to private businessmen what is left of Afghanistan's state industries. Only about 74 state-run business are still in existence and those active in the transport, construction and agricultural sectors will be targeted for privatisation, while the energy and water sectors are expected to remain under state control.
Is Karzai about to switch friends?
Gossiping about a possible reshuffle of the government continued to abound in January, as Karzai was being attributed the intention of strengthening the hand of the government in reforming the ministries and the police. This was accompanied by speculations that later in the year a number of provincial governors would be replaced with others more aligned with the central government. There were also reports of US pressures on Defence Minister Fahim to address the ethnic imbalance within the defence ministry, currently dominated by Tajiks associated with Fahim's own political faction. The importance of the issue was raised by the revelations that planned Russian deliveries of military equipment were actually aimed for Fahim's own private army, rather than for the new national army currently being formed. However, as the end of January approached there were no signs yet of any actual change. Both the poppy eradication efforts and the disarmament of the private militias were virtually stalled by January.
With the start of the new year the debate about the future institutional framework of Afghanistan continued to heat up. The draft constitution is now expected to be ready by March, but little is known about how it will actually look. It is widely expected to turn out as a blend of Islamic and secular laws, but the exact mix remains uncertain. Some political groups and factions support the establishment of a federal state, which however is vehemently opposed by others. Karzai is known to have approached the Swiss government for advice.
The reform of the justice system is no less controversial. On the basis of existing Sharia laws, a conservative judge banned cable television in part of the country in January, accusing it of being "indecent". Together with previous controversial sentences, this act highlighted how it might be difficult to bridge the gap between supporters of Sharia laws and secularists. Islamic conservatives dominate the judiciary at present. However, even supporters of Sharia law are divided amongst themselves, not least between sunni and shi'a interpretations of Sharia.
FOREIGN LOANS & AID
Finnish Foreign Ministry announces increased aid for Afghanistan
The Ministry of Foreign Affairs has granted a little over 2m euros [US$2.08m] in additional aid for the reconstruction of Afghanistan. Of this amount, 1.7m euros [US$1.77m] were earmarked for the international Afghanistan Reconstruction Fund.
The fund is primarily occupied with paying the day-to-day expenses of the country's interim government, Helsingin Sanomat web site has reported.
Three hundred and thirty thousand euros [US$344,000] were granted for aiding the Independent Human Rights Committee of Afghanistan. These funds are channelled through the UN's Development Programme, UNDP, and are for improving the rights of women.
Finland aided Afghanistan last year with a total of almost 12.9m euros [US$13.47m] from funding for partnerships with developing countries. Of this, 7m euros [US$7.3m] went into humanitarian aid.
The Afghanistan Reconstruction Fund was started last year to help with the administration and coordination of the aid.
The Human Rights Committee of Afghanistan was formed last June to improve the realization of human rights in the country. The committee puts pressure on the government and local authorities to abide by the laws of the land and also to become involved in human rights issues for women and girls.
MINERALS & METALS
Afghanistan 'to tout its copper mines'
Afghanistan is to invite foreign companies to develop its copper mines by the middle of this year, a report on Radio Afghanistan has said, Marc Lanteigne reported on BBC News.
The station quoted the minister of mines as saying the country would officially invite several international firms to submit bids for exploration by September this year.
According to Russian estimates, the area holds reserves of 11 billion tonnes, which would make it the biggest copper mining area in the world.
The exploration area in question is in the Logar Province where mines were previously used by the Russians.
An international consortium was also signed up to work in the area in 1998, but work was never carried out due to the civil war, and the mines fell into disrepair.
Afghanistan's copper mines have been highlighted in numerous economic reports as one potential area for future growth. But experts warn that the estimated reserves were never proved and some doubt that Afghanistan's geology could be so rich in copper.
Gareth Price, an expert on the region at the Economist Intelligence Unit, also points out that the Afghan government has been talking up potential natural resource in an almost desperate bid for foreign companies to get involved.
But the foreign companies themselves are still very wary of the political instability in the region, and are likely to want to see better infrastructure and a stable monetary system before committing, he says.
Afghanistan was ravaged by war for almost 10 years before the 2000-2001 US strikes, and is now left with the gargantuan task of trying to rebuild its economy.
Afghanistan launches privatisation drive
Afghan President Hamid Karzai has launched a commission charged with privatising his country's ailing state-run enterprises and breathing new life into the conflict-weary economy, AFP News Agency has reported.
The privatisation commission, ordered by presidential decree last year, is an inter-ministerial body under Mr Karzai's control, which will set about encouraging private businessmen to take the helm of state industry.
Some 174 state-run businesses existed under the 1979-89 communist regime, but 100 have been closed down by subsequent years of fighting and economic hardship in Afghanistan.
In a speech to launch the commission, director Abdul Khaliq Fazal said an international conference would be held in Afghanistan in February to drum up both domestic and foreign support for the privatisation programme.
Western sources involved in the campaign said transport, construction and agriculture companies would be the main privatisation targets while the energy and water sectors would remain state concerns.
Afghan government gives OK for second mobile phone network
Afghan authorities have given the final go-ahead for the struggling nation's second wireless telephone network, signing an agreement that promises to provide nationwide coverage within five years, Associated Press reported on 11th January quoting state television and radio reports.
The new network, operating on a GSM system, will extend coverage to at least 80% of the capital within eight months -as well as the major cities of Herat, Kandahar, Mazar-e-Sharif, Kunduz and Jalalabad, the stations reported.
Investors who will contribute US$75m in the initial phase, are led by the Aga Khan Fund for Economic Development, the reports said. According to reports in October, the foundation controlled 51% of the consortium, with other stakes held by Alcatel (F.ALC)(5%), Monaco Telecom International (35%) and U.S.-based MCT Corp. (9%).
The move will break the monopoly held by Afghan Wireless Communication Co., the country's first mobile phone network.
A partnership between the government and New Jersey-based Telephone Systems International, Afghan wireless began offering wireless service in April, but call congestion frequently leads to breakdowns in the network and complaints from users. Establishing the second network marks a first step toward promoting private investment in the Afghan economy, Communications Minister Mohammad Masoom Stanakzai was quoted as saying by the television and radio reports.
"We are sure that with the cooperation from the government, we can make more positive developments for the economy," Stanakzai was quoted as saying.
Wireless telephones are used in Kabul by everybody from government ministers to moneychangers, though they remain unaffordable for most residents. Start-up fees for a mobile phone average around US$300, many times the average government worker's monthly wage of US$40 a month.
Its infrastructure wrecked by years of fighting, Kabul has just 12,000 functioning phone lines for its almost 2 million residents.
About 7,000 are analog telephones, while another 5,000 phones are a digital system built by a Chinese company under the former Taliban regime.
Many foreign aid agencies and news organizations with offices in Kabul use satellite telephones to communicate.
Afghan telecoms chief buzzes Asia show for help
Afghan's new minister of communication once sold firewood to survive. Now he sits in Hong Kong amongst cutting-edge cell phones, and the latest wireless technology, looking for ways to get his country back on line, Reuters News Agency reports.
The longer future of a peaceful Afghanistan is fibre-optics lighting up contacts from city to city.
But Mohammad Masoom Stanekzai says his real job now is simply to build a basic communications system after two decades of war, and the rule of the Islamic Taliban, who were not known for their promotion of high technology before their defeat a year ago.
During a visit to the ITU Telecom Asia 2002 show, the bearded, unassuming minister spoke of modest goals for his country.
For one, officials have told the lone wireless phone carrier AWCC, which operates in Kabul, Kandahar, Mazar-i-Sharif and Herat, to stop taking new subscribers until it can handle the ones it already has.
Stanekzai said the system, which has only 17,000 users, can theoretically handle 150,000 subscribers, but actual capacity is closer to 20,000 due to a lack of base stations and other supporting equipment.
"We have told them to improve the quality and stop selling handsets," says Stanekzai in his hotel room, overlooking the waters of Hong Kong harbour. "The demand is so high there is a long waiting list."
His task is a daunting one, not only because of the damage from the wars, but also because funds are limited.
The challenge is just another in a long list of life's obstacles for a telecoms institute graduate, whose past jobs have run from civil servant, to working with refugees on the Pakistani border, to selling wood at one time just to eat.
Stanekzai said he is trying to finance reconstruction of the telecoms network with a patchwork of private investments, loans from organizations like the World Bank, and financing from telecoms equipment makers who want to sell to Afghanistan.
Wireless service provider AWCC is itself a joint venture between the Afghan government and a U.S. company. That system has been in use since early this year, shortly after the current government of Hamid Karzai took over from the defeated
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