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AFGHANISTAN


  
   

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REPUBLICAN REFERENCE

Area (sq.km)
647,500

Population
26,813,057

Capital
Kabul 

Currency
afghani (AFA)

President
Hamid Karzai
 

Update No: 033 - (26/08/04)

Karzai gathers support
By mid-August the candidates' line up for the forthcoming presidential elections was clear, although some of the 18 candidates were expected to drop out of the race before 9 October. While nobody doubts of President Karzai's re-election, the real question is whether he will receive a mandate strong enough to fully legitimize him. In particular, many observers doubt that he will succeed in winning over 50% during the first round, which would force him to fight a run-off with the leading challenger. However, despite the fact that Karzai has not even started his re-election campaign yet, throughout August his chances of winning at the first round appeared to be increasing again. Yunis Qanuni, minister of education in Karzai's cabinet and one of the leaders of the "Panjshiri" faction, failed to gather much support for his candidature even among his fellow Tajiks, with a number of key commanders and political leaders announcing their support for Karzai. If Qanuni does not manage to attract more warlords and commanders to his side, he will find it difficult to gain more than 5% of the votes. Many Pashtun commanders and warlords also came out in support of Karzai, who however faces the challenge of two royalist candidates (Sattar Sirat and Homayun Asefi), who might be able to attract a significant number of disgruntled voters in parts of the Pashtun South and East. During August, candidates Dostum and Mohaqqeq appear to be more successful than Qanuni in gathering the majority of their fellow Uzbeks and Hazaras (respectively) behind them, which could allow both of them to reach as much as a 10% share of the vote in October. 

A messy centralization campaign
Electoral process aside, the other key event of August was the turmoil which affected the western province of Herat, where a number of local commanders mounted an assault on warlord Ismail Khan, who controls Herat. The attack took allegedly place with the support of at least some ministers in Kabul and it was likely never meant to militarily defeat Ismail Khan, who can count on the allegiance of a large and well-equipped militia, but rather to provide an opportunity to the central government for dispatching regular troops and national police units to the province and therefore expand its influence there. Ismail Khan has not declared his support for any presidential candidate yet and the maneuver could also be an attempt to pressure him into supporting Karzai. The manipulation of small warlords for the purpose of weakening the bigger ones is not something new in the policies of Kabul's government, but it is a messy and risky way to implement the ambition to rebuild a centralized state in Afghanistan.

Imports do not cease growing
Afghanistan's economic recovery continues to be driven by an expansion in consumption, fuelled by the presence of foreigners and international organizations which employ a large number of Afghans on salaries much higher than the national average. Another factor fuelling economic growth is of course the illegal narcotics trade, which might account for as much as half of the country's total GDP. As a result, Afghanistan's legal imports continue to boom, while legal exports show only a modest increase. According to Pakistan's statistics, in 2003/2004 that country saw its exports to Afghanistan rise by 62%, whereas imports only rose by 11.5%. Pakistan's surplus in its trade with Afghanistan showed a remarkable increase from US$110.9 million in 200/2001 to US$248.1 million in 2003/2004. Chinese and Indian goods are also flooding the Afghan market and in a number of cases are actually replacing their more expensive Pakistani competitors. 
Nonetheless, during July and August some signs of more substantial economic development appeared, such as the start of the building of Afghanistan's first industrial park on the outskirts of Kabul. The plan is to host there up to 100 small and medium-sized enterprises, including a Coca-Cola plant. Another sign was the launch of Afghanistan's first venture capital fund, called Afghanistan Renewal Fund. The fund plans to invest in the construction, food, textile and furniture industries. The decision of the World Bank to establish the Afghanistan Investment Guarantee Facility is also expected to encourage foreign investment, which is being held back by the perception of high political risk. The fund will provide political risk insurance for investments of up to US$60 million. 

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