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In-depth Business Intelligence
Books on Afghanistan
REPUBLICAN REFERENCE
Area (sq.km)
647,500
Population
26,813,057
Capital
Kabul
Currency
afghani (AFA)
President
Hamid Karzai
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Update No: 040 - (21/03/05)
A change of the guard in Kabul
The announcement that US Ambassador Khalilzad will be transferred to Iraq
was not unexpected, but its impact on Afghan politics is still likely to be a
major one. Khalilzad is known to have been the driving force behind many of the
Presidential decisions and it is not clear whether the new Ambassador will play
a similar role. While many disagreed with Khalilzad's approach, most agree that
President Karzai needs somebody to push him to take decisions and move in a
certain direction. Without Khalilzad, Karzai might fall prey to lobbies of all
kinds and lose even the limited degree of decisiveness which he had managed to
achieve during 2004.
Among the Afghan population disenchantment with Karzai seem to be growing. He
has so far been unable to fulfil the many promises made during the electoral
campaign and the multitude of groups, factions and notables which make up Afghan
politics seem now intentioned to make sure that they will each have their own
representation in the future parliament, which they will use to extract
concessions from Karzai. As a result, the formation of a wide pro-Karzai or
pro-government front does not look likely before the elections. Karzai, on the
other hand, is once again playing divide and rule with the opposition. Fearful
that northern groups might create a united front against him, and pushed by
Khalilzad, he offered a job in Kabul to northern warlord and Uzbek leader Rashid
Dostum. Because the post is mainly ceremonial, it is not clear whether Dostum
will accept or not. On the Taleban front, a deal seems to be coming closer and
closer. Some commanders already gave up the fight, but at the top level it has
not been decided yet Military activity remained at very low levels in March,
including during the second half of the month when the weather improved
dramatically and the winter came to an end.
An unbalanced economic development
On the economic front, most of what can be described as genuine development
continues to take place in Herat, in western Afghanistan. A new industrial bread
factory was recently launched there, arousing opposition among traditional
bakers, who fear losing their business. This highlights a wider problem of
distribution of the benefits of growth. According to the World Bank, 15% of the
population receives 80% of the benefits. The government, however, does not seem
too concerned with stimulating endogenous economic growth. The focus of
government activity still rests on negotiating trade deals with the neighbouring
countries. Karzai, who visited India during February, is pushing for the
establishment of a trading corridor between India and Afghanistan through
Pakistan. An agreement with Iran was also signed recently, which is expected to
pave the way for a further increase in trade between the two countries. Iran has
been one of the few countries which has timely implemented its projects within
the Afghan reconstruction process and trade transactions between Iran and
Afghanistan are reaching US$260 million this year. India is also beginning to
show a greater interest in the gas pipeline from Turkmenistan, but the doubts on
the political feasibility of the project are far from having been removed. The
recent trouble in Pakistani Baluchistan highlights the security risks with a gas
pipeline crossing territories where state power is weak and tribes are armed.
Moreover, Turkmenistan's ranking as a trustworthy trade partner is in marked
decline since its government imposed price hikes on Ukraine and is trying to do
the same with Russia, in violation of existing agreements, a fact that will
further discourage prospective investors in the US$3 billion pipeline project.
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