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afghani (AFA)

Hamid Karzai


Update No: 059 - (26/10/06)

Oil future for Afghanistan?
During October a riddle of information about Afghanistan oil and gas reserves contributed to confuse the issue. New estimates released by the US Geological Survey had revised substantially upwards, previous estimates from Soviet and Russian geologists. From just over 120 billion trillion cubic metres of gas and 15 million tons of oil, the new figures have gone up tenfold. Moreover, some of the new fields, it now appears, would be located away from northern Afghanistan, where the old fields were all concentrated, in areas such as Herat in the west, Helmand in the south and Paktika in the east, making end-markets closer and potentially diversified, and transportation out of Afghanistan easier. While the more advanced technologies used by the Americans might well have discovered new fields, it is still far from clear how much of this oil and gas might be effectively recoverable. Much of it would come from deep-drilling fields, many of which might not be large enough to justify the financial investment required. For the moment, attention remains focused on established gas and oil fields, which the government intends to start privatising soon, but there is hope…. 

The ongoing drought is now impacting on GDP growth forecasts, which the IMF cut in October down to 8% from 12%. Another sign that the Afghan economy might be slowing down is that imports of construction materials, paints and varnishes and mild steel have been slowing down during the first half of the current year, according to Pakistani data. Despite this, the Afghan government succeeded in convincing the World Bank to fund an increase in the wages of government employees of about 40%. The Bank will fund it for one or two years, then the burden will fall on the shoulders of the government.

Doubts about the anti-corruption campaign
Corruption and the fight against it are increasingly seizing the centre stage in Afghan politics. The extraordinary case of the security chief of Kabul airport, removed from his job by the attorney general (!) after he accused officials of colluding with drug smugglers, caused quite a stir and prompted the speaker of the upper house of parliament to threaten his resignation unless the officer was reinstated. Following Karzai's launch of an anti-corruption drive, in recent weeks the office of the attorney general, which removed the airport chief of security, had been unusually active in prosecuting allegedly corrupt officials, a number of which were sacked. Now, however, some are beginning to doubt the attorney general's commitment. The recent case of Ariana, Afghanistan national airline, also highlights how attempts to reform such a deeply corrupt system are failing. After re-launching the company just a few months ago, ordering new planes, establishing a proper budgeting process and reorganising the administration, the director now stands accused of embezzlement. Is he really guilty or did powerful interests which were milking money out of the company organise his demise? Nobody seems to be quite sure of the answer. 

Pakistan edges closer to 'victory'
During September and October the ongoing diplomatic conflict between Afghanistan and Pakistan and the effort of President Bush to mediate between them attracted much attention. Bush's effort to rein in Musharraf was clearly half-hearted and did not sort any effect. Quite the contrary, it appeared as if the US were increasingly adopting Pakistan's view that negotiations with the Taleban are necessary. Although no member of the Bush administration came out in public with a statement to that effect, Republican Senate majority leader Frist was quite explicit in this regard.

Musharraf was travelling widely in October, in the USA and UK and elsewhere, promoting his biography and was happy to defend his position in all matters in the media, which he robustly did. Karzai, also in the USA was less forthcoming. The only apparent outcome of Bush's negotiating effort was the decision to call tribal assemblies in both Afghanistan and Pakistan's North-west Frontier Province, whose utility most observers seriously question. 

The Bush administration's failure to broker a serious agreement between Pakistan and Afghanistan shows signs of leading to the decline of US influence on both countries. Following reports of Russia approaching elements of the opposition to the Kabul government, Afghanistan appears to be veering towards a more conciliatory attitude in its relations with the large northern neighbour. During his recent visit to Moscow, Foreign Minister Spanta invited Russia to become more involved n the reconstruction of the country. Below government level, the strengthening of Iran's and Russia's influence appears to be moving even faster, as various regional power holders and political groups prepare 'for the worst', or whatever might follow.


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