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Books on Afghanistan
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Update No: 067 - (27/06/07)
Fiscal tightening
During the last several weeks the finance Ministry sent signals that tax
evasion is no longer going to be condoned. The most dramatic manifestation of
the new attitude was the closure on tax dodging charges of one of Kabul's best
known foreign restaurants. However, in typical fashion Afghan authorities moved
from excessive tolerance to heavy-handedness: the restaurant is now being asked
to pay $500,000 in arrears. Several other businesses have been targeted over the
last year, including some which have been closed. The tightening of fiscal
controls is part of a wider effort to increase revenue by the Afghan government.
Most of its cash still comes from the customs, whose output is increasing thanks
to a modernisation and computerisation effort. Modernised offices have greater
capability to contain fraud and corruption and have in some cases seen revenue
increase by 50% in the year following the improvements.
On the other hands, the government financial commitments also keep rising. The
new budget was approved by the parliament only after the Finance Ministry agreed
to increase the pay rises to state employees and the families of war victims and
disabled. However the government managed to avoid major re-allocation of funds
to the provinces, as initially requested by the lower house.
Returnees threaten to submerge Afghanistan
By June it became quite obvious that the Iranian government meant business
when it threatened to deport illegal Afghan immigrants. The threat had been
repeated many times, but never taken seriously by either the Afghan government
or international organisations. When Iran actually started deporting immigrants
earlier this year, no preparations to accommodate them had been done. Almost
three months after the deportations started and with over 100,000 Afghans
already sent home, it is clear that Iran this time is determined to proceed and
deport an estimated 1 million illegal immigrants. According to Teheran's
authorities, around 300,000 illegal immigrants are eligible for work Visas, but
they will have to apply from Afghanistan. With Pakistan also planning to send
home a couple of million of Afghans, the prospect for Afghanistan are pretty
grim given the unemployment rate already well above 30%. Only the few skilled
Afghans have relatively easy access to jobs abroad, with the result that a brain
drain deprives Afghanistan of skilled workers and professionals at a time when
unskilled workers are being returned en masse.
Pressure on the Afghan government from its neighbours takes other shapes too. In
April the Pakistani government once again responded negatively to Afghanistan's
request to grant direct access of Afghan importers to its ports.
The internal fronts
Karzai is under growing pressure on the internal front too, as old allies
clamour to be given back a greater chare of power. Protests against a pro-Karzai
governor in Jowzjan ended with a number of demonstrators killed, while one of
the main jihadi leaders, Prof. Rabbani, is now openly asking for the
re-appointment of jihadis in key positions. One of Karzai's deputies, Ahmad Zia
Massoud, is also joining hands with the opposition, which the Iranians are
trying to unify in a National United Front. Relations with the international
partners are also straining on a number of issues, such as eradication. The
debate on poppy eradication continues to make the headlines, with evidence
emerging that even the latest eradication drive, claimed to have eliminated
21,000 hectares of illegal crops, has largely been compromised by corruption. As
a result, the actual number of hectares actually eradicated is probably a
fraction of those 21,000, who themselves are a modest percentage of the 176,000
hectares planted in 2006. At the same time, new lands have been planted with
poppies. Another matter of controversy is the demand of the Karzai
administration that a larger share of aid to Afghanistan be channelled through
the government, as opposed to NGOs and foreign government departments, but
donors maintain with reason that Kabul has limited capacity to spend.
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