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Books on Afghanistan


Update No: 070 - (24/09/07)

Drugged growth
The latest ADB forecast for Afghanistan's economy sees a 13% GDP growth during the current year, up from 7.5% last year, mainly due to the injection of reconstruction cash. Inflation is expected to rebound slightly to 5.9%, but should fall back to 5% next year. The other major contribution to economic growth comes from the poppy harvest, which has risen to new heights. As for more sustainable growth, the private sector is estimated to have created 800,000 jobs since 2001, but this is still small stuff in a country of nearly 30 million. Evidence has been emerging in the meanwhile about the reasons of the successful eradication in parts of the country. In the north, where the cultivation of poppies was never very widespread, the farmers are switching to marijuana, as anti-narcotics agencies are not targeting its producers. In the north-east, traditionally a major poppy production area, the existence of large stocks of opium and heroin facilitated the task of the anti-narcotics agency, which could buy off local power holders with American money. The success achieved so far does not seem sustainable: as stocks fall, there is nothing to prevent the farmers from growing more poppies next year. In the meanwhile, sustained prices (due to eradication in the north and north-east) have driven up production in the south, luring even more farmers into the business. These farmers will not be keen to quit even if the north-east goes back to producing more in the future. The end result of these short-term eradication policies might well be of stimulating greater production. 

Surprise, surprise: Turkmenistan has put off indefinitely a decisive meeting on the TAPI pipeline project, which was to clarify how much gas that country would commit to the project and how much each partner would buy. The project has been dogged by difficulties since the very beginning. Costs keep rising and are now forecast at US$4 billion. Security concerns have also been rising, given the worsening security situation in western Afghanistan, which the pipeline is supposed to cross. A number of risk mitigation measures proposed in a feasibility study of the ADB are proving more difficult to implement than originally thought. The main problem however is and has always been the unreliability of the source, that is Turkmenistan's government. It was never clarified how much gas it could commit to the project and at what price. Some suspect that the Turkmen meant to use the pipeline project as a tool to increase their leverage in price negotiations with the Russians, more than as a serious enterprise.

Karzai's popularity rides south
The mood among Kabul's expatriate community is increasingly negative, not least because of the wave of kidnappings, which is affecting the capital. The positive conclusion of the kidnapping of Korean hostages on the Kabul-Kandahar highway has highlighted the weakness of the government and seems likely to encourage more kidnappings, as it is alleged that money was paid for the liberation of the hostages. The general feeling among diplomats is that uncertainty over future appointments and constant reshuffles represent a incentive to short term attitudes among key members of the cabinet, such as filling their pockets as much and as quickly as possible. Karzai's habit of luring respected critics of his administration into it, in order to compromise and demolish their reputation, is resulting in that the few individuals with the skills to turn things around are either staying aloft from the administration or distancing themselves from it. In the meanwhile the 'war' between the British and the Karzai administration continues. The British do not hide their extreme dissatisfaction with Karzai, in particular because of his unwillingness or inability to fight corruption within the government. Members of the administration have retaliated by pointing out the utter failure of the UK 'war on drugs'. 

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