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Books on Afghanistan
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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.
Pipedreams
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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